House and Senate Reach Compromise on Inflationary Relief and Support Plans

An agreement was reached Friday between leadership of Republican majorities in the House and Senate to provide a $200 tax refund to an estimated 4.3 million Hoosiers and a $200 refundable tax credit for an additional 469,000 to 626,000 non-filing individuals. Some taxpayers may find that if they itemized deductions on their federal tax return and claimed the state and local tax (SALT) deduction that these state tax refunds are taxable income on their 2023 federal return. It is estimated that the state tax collections will exceed projections in fiscal year 2023, and Senate Bill 2 obligates the first $1 billion in excess reserves to be transferred to the Pension Stabilization Fund.

The measure also appropriates funds and establishes various policies promoting wraparound services for expectant and postpartum mothers and infants. The priorities of the Governor and Republican legislators largely remain intact in the compromise which effectively doubles the cost of the legislation.

House Ways and Means Chairman Tim Brown (R-Crawfordsville) announced Thursday afternoon a compromise amendment to SB 2, which was adopted mostly along party lines. On Friday morning, the House gave final approval to the compromise with a vote of 93-7. Hours later, the Senate reconvened to concur on the House approved version of SB 2, which passed 37-9. Governor Holcomb had praised the bill in a series of tweets and has now signed it into law.

Details of what is in the now-passed SB 2:

SB 2

• The first $1 billion of excess reserves in calendar year 2023 is transferred to the Pension Stabilization Fund. Any remaining excess reserves are refunded to taxpayers
• Provides a tax refund of $200 per eligible taxpayer and a $200 refundable tax credit of $200 on the 2023 individual income tax return
• Establishes the Hoosier Family First Fund and appropriates $45 million to be administered by the State Budget Agency. Any remaining funds at the end of the fiscal year revert to the state general fund. Appropriated funds may be distributed to the Department of Child Services, Department of Health and the Department of Homeland Security for the following purposes:
  • Support the health of pregnant women, postpartum mothers and infants.
  • Support pregnancy planning
  • Support low-income families with children younger than four years old
  • Increase the number of families served by the Child Care Development Fund
  • Support foster and adoptive families
  • Support programming to prevent children from entering the DCS system
  • Support funding for newborn safety devices (baby boxes)
  • Provide funding for providers of maternal support services and support services for expectant mothers (providers affiliated with any abortion clinic are ineligible). Providers seeking funds under this section must apply and funding must be competitively awarded
• Exempts children’s diapers from state sales tax
• Amends the gasoline use tax rate from the current 7% to the lesser of 7% and $0.295 from the date of enactment to June 30, 2023
• Provides a $3,000 exemption for an adopted child (younger than age 19 or age 24 if a full-time student)
• Augments the adoption tax credit to 20% of the federal adoption tax credit up to a maximum of $2,500 per eligible child. Provides that the tax credit is refundable
• Requires the Office of Medicaid Policy and Planning (OMPP) to research and compile Medicaid reimbursement rates, by Medicaid provider type, in states bordering Indiana for certain prenatal, pregnancy, postnatal and pediatric wellness services
• Establishes the doula reimbursement advisory board within the Family and Social Services Administration (FSSA) for the purpose of making recommendations to FSSA regarding appropriate reimbursement methodologies for doula services
• Provides that the postpartum period determined by the office of the secretary of FSSA during which Medicaid coverage is available to a woman must not be less than 12 months beginning on the last day of the pregnancy
• Adds donated breast milk to supplies and services covered by Medicaid and the Healthy Indiana Plan
• Requires OMPP to seek approval from U.S. Health and Human Services and adopt policies to reimburse for long acting reversible contraception
• Providing instruction on the use of fertility awareness-based family planning methods (often referred to as natural family planning) is one of the eight activities given preference when awarding Safety PIN (Protecting Indiana’s Newborns) grants
• Allows a local health department to use Safety PIN grant funds to assist individuals seeking contraceptives
• The Indiana Department of Health may not award a Safety PIN grant that will be used to: distribute a contraceptive to a student through a school run program; or to distribute a contraceptive to an individual who is less than 18 years of age without the consent of a parent or guardian of the individual
• Requires the Indiana Department of Health to contract with a third-party vendor to conduct an evaluation concerning access to low-cost birth control and access to education and services concerning unwanted pregnancy
• Appropriates funds in addition to HEA 1001-2021 ($58.5 million)
  • $2 million to Real Alternatives, Inc.
  • $10 million to expand Nurse Family Partnership program
  • $5.5 million to the Safety PIN Grant Fund
  • $1 million to provide grants for newborn safety devices (baby boxes)
  • $10 million for the Child Care and Development Fund voucher program
  • $700,000 augmentation to FSSA budget for Medicaid and HIP supplies and services as described above

David Ober is the Indiana Chamber’s vice president of taxation and public finance. Ober, a native of Noble County, started with the Chamber in June 2022 and is a former state legislator and commissioner for the Indiana Utility Regulatory Commission.