We look back at the creation of this year's state budget from Governor Mike Braun's initial proposal to an unprecedented revenue forecast and more on this special episode of Indiana Week in Review for the week ending July 18th, 2025.

Indiana Week in Review is produced by WFYI in association with Indiana Public Broadcasting Stations.

A look back at the week ending January 17th.

Governor Mike Braun unveiled a state budget proposal that provides nearly $700 million in tax relief, inflationary funding increases for K-12 schools, and enough money to eliminate child care waitlists.

It's built in part on Braun's promise to cut hundreds of millions in government spending.

The tax relief in Braun's proposal includes increasing income tax deductions to match inflation, eliminating the tax on Tips and retirement income, and creating sales tax holidays for school and youth sports supplies and outdoor recreation equipment.

To help make that funding work in a tight budget, Braun is pledging to cut $700 million in government spending over the next two years.

-"And that's not because you're trying to be stingy.

It's because that's called productivity. "

The Braun administration provided almost no specifics about what cuts will be made, though the budget proposal doe include a $50 million per year cut to the local public health funding program.

Democrats say there are things to applaud in Braun's budget, but questioned how he'll cut government spending without slashing jobs and services.

I'm Indiana Public Broadcasting Statehouse bureau chief Brandon Smit Ann DeLaney, can Mike Braun cut that much spending without slashing jobs and services?

Well, my understanding is $500 million that that's coming out of the IDC budget.

Okay.

So, you know, the legislature's been looking for a way to rein them in.

That would do it.

That would do it.

-Definitely do it.

-I think the proposal that would cut the public healt funding is absurd on its face.

And I hope it's going to die quickly.

I mean, we've actually got all 92 counties invested in this now, and we're going to make, hopefully make our population healthier and cut down on the need for more expensive health care services.

The other thing that gets me about this is, you know, he's cutting the spending and then he's doing tax cuts okay.

The tax cuts.

All right.

Fine.

On on tips and and on school supplies and stuff.

I don't care about that.

But not taxing retirement income.

You know almost a quarter of all Hoosiers are on Social Security alone.

And they're the most needy.

And this does absolutely nothing for them.

Okay.

The average pension income in Indiana is $21,000.

This saves $600 a year.

Not bad.

Not bad.

But if you're making $200,00 a year from your 401K retirement plan it's going to save you $6,000.

It's the same kind of thing Republicans always do.

They give a little bit to some of the needy, but certainly not all of the needy.

And the bulk of the resource go to the people who can afford to pay them in the first place.

We should be taking that money and and using it for young families, dow payments on houses, childcare, preschool, things that would grow the economy by allowing people to work.

We don't do any of that.

We don't have the vision to plan ahead, to talk about how we're going to make this state more prosperous for everybody.

And not a lot of specific on what he's going to cut yet.

But he talks a lo about efficiencies, efficiency, squeeze every can you squeeze $700 million of efficiency out of the Indiana state government?

Yeah, I mean, I think the $700 million number is there for a reason.

I think the the budget director and the new, agency that presented the budget did pointed out that the state, all the state agencies submitted their budgets back in May.

So as soon as the transition team got in, they got the budgets in November.

So I think between November and now they were able to formulate that $700 million number.

I don't think that's that's a pie in the sky number.

So I think they do have some plans to potentially implement some of those safety or some of those savings, whether it be through the state contracting power.

You know, there's talks about trying to upgrade technology across agencies that I think can have some long term savings potentially.

And I mean, when it comes to how the budget looks now, I think they did a pretty good job considering the kind of the landscape they face.

There's so many different moving parts.

You have a road funding bill in the House, you have Medicaid caps in the Senate.

You know, there's a bill to potentially kind of revolutionize how unemployment works in the Senate as well.

So there's a lot of moving pieces.

And we've talked about how you started at education.

And then you looked at Medicaid, which is fully funded, by the way.

When it comes to helping those in need when it comes to health care.

There was no cuts there.

Despite the Senate potentially capping that, on that side.

So with all of the moving pieces around, I think they did a really good job of using the money that is available whenever it's expected to, you know, flatline over the next Couple of years.

A look back at the week ending February 21st.

2% per year increases in K-12 education funding.

Hundreds of millions of new dollars for the Department of Child Services and Department of Correction.

And no new tax cuts.

Those are some of the highlights of the House Republican state budget proposal.

K-12 schools will receive about half $1 billion more in core funding i the House GOP budget proposal, with a significant portion of that estimated to be for eliminating the income limits on the state' private school voucher program.

Hous Republican budget architect Jeff Thompson says those increases are enough for schools in a tight budget year.

You can manage, like the governor plans to manage, by looking at how do we spend our money the most efficiently?

Thompson says there's a lot of alignment with governor Mike Braun's budget proposal that includes 5% cuts to most state agencies, reduced dollars for the local public health funding program and Medicaid funding that does not eliminate existing waitlists.

Chris, does this budget do enough positive things?

I think it does enough positive things that $45 billion can afford right now, for sure.

Because that's -A billion here and a billion there.

And that's right.

The last thing I want to be in Indiana right now is a state budget writer and not just because you have to be constantly hounded by people like me at the statehouse, but you also have just so many variables and factors that you have to take into account.

And it's by most accounts people would agree, the hardest budget to craft in over a decade.

So you have no idea what's happening at the federal government level.

We have a now controversial property tax proposal floating around out there that's directly tied to a lot of revenue streams.

And then we even found out last week that local sheriffs are telling us that they're not getting paid for, local inmates that they're holding for, the Department of Corrections.

And that's something we didn' even know, like two weeks ago.

And it seems like news like that just continues to break.

And just putting more o a burden on these budget riders.

So you mentioned positive things.

I think doubling the income tax for low income, low income seniors, increasing the career, education scholarships and the special education scholarships as well.

And we're still fully funding Medicaid.

The Senate should be happy that we're throwing $2 billion at the 1977 pension fund.

So I think there is a lot of positive things.

I know it's probably more fun to nitpick about things that are and aren't there.

But I think this is a really good foundation for com April with the revenue forecast.

I want to- I want to ask about something Chris just brought u because it was the subject of, I'll be honest, most of the floor debate on third reading in the House on the budget yesterday, which was the looming threat of potential federal funding cuts and what that does t the budget, does that make this an unusually difficult budget?

It certainly does, because we talked about this on Medicaid last week.

If they cut the percentage, you know, I don't know what the, chaos president is going to do.

And I don't think he even knows from day to day.

So it it could wreak havoc with the budget.

But the an there are some positive things in this budget as already outlined.

Education funding is not amon them for the 90% of the students in traditional public schools, they get a 1.3% increase.

Okay, that doesn't even come close to meeting inflation.

And there's no extra money either for special education or for kids in poverty.

And when we talk about an opportunity, that's an opportunity missed, okay.

It really is.

I mean, I think the fact that they're doing something with the with the child services is a good thing.

But it isn't enough for students that are in school struggling with a terrible reading problem we have among third graders.

And we're, we're we're not even meeting inflation for those expenditures.

And the reason is not only the chaos in Washington, but because these Republicans insist on cutting income and corporate taxes going forward.

They want to now do it to 2030.

That is absolutely crazy economics.

Crazy economics.

And then they say, oh, we we don't have any money.

Well, they don't have any money because they keep doing those stupid things.

That wasn't a very good Jeff Thompson impression.

He hopes it wasn't.

-[laughing] right.

I wasn't trying Jeff Thompson.

In a budget this tight, is it a little harder for Republicans to sell?

Sell it as a good news budget?

Yeah, I think it's probably a status quo budget.

You know, we are going to see some cuts but they're trying to make them, you know, s that they're not as noticeable.

You know, they did approve more than $100 million in new money for wealthy citizens to send their child to private school at the same time as cutting a reading program for all Indiana youth at the same time, as cutting public health funding.

So, I mean, there are certainly some prioritization that, you know, some people won't agree with.

But yeah, I mean, there's not a lot to, like, jum up and down about in the budget.

I will, I will.

This is, I think, part of the thing that I'm struggling with as we try to talk about what is what what is the effect of this budget, which is you kind of alluded to to just now with it.

We can't I was I was watching that committee hearing where a sheriff was talking.

He was about the immigration bill, whic we're going to talk about next.

And the sheriff kind of offhandedly said, and by the way, we just found out we're not getting any money anymore for the people we have for the state.

Oops.

And Representative Greg Steuerwald was like, hold on, let's stop everything else.

What did you just say?

And then, you know, so I think this there's there's an indication that lawmakers want.

- That's when I emailed the Department of Corrections to confirm that.

But this this goes to Governor Braun is saying he needs to slash state government spending and this budget is built- his budge and this budget is built in part on cutting most state agencies 5%.

Not all of them, some of them were flat.

Some of them had to- have to grow.

Some go away altogether.

Yeah, but yeah, but do we know wha the impact of all of these state agency cut will actually mean for Hoosiers?

No.

I mean, and I'm not sure to be honest about it.

We even know what the budget's going to look like.

So much of it is going to be dependent upo the updated forecast in April.

And certainly it's important to go through this process and to hold the hearings and to hone the budget here and trim it there and add to it there.

That is the process.

But as a practical matter, we really won't see the the closest thin or the to the finished product.

Until then I would think, and it's, it's, I'd say a realistic budget.

I thought you summed it up well, Niki, by saying there aren't a lot of people jumping up and down with joy.

A look back at the week ending April 18th.

all options are on the table for the state budget, as lawmakers will have $2 billion less to spend than previously expected.

The state revenue forecas unveiled Wednesday is the worst since at least the Great Recession.

National economic uncertainty is driving the sharp decline in projected tax revenue.

$2.4 billion less over a three year period than what was expected just four months ago.

Senate Budget architec Ryan Mishler says these numbers scare him a lot more than during the Great Recession.

-"Back then, if you remember, we had federal money to backfill it.

We don't have any federal money to backfill.

This is all on us."

Lawmakers say all options are on the table, from budget cuts to increasing some taxes, like those on cigarets or alcohol.

Democratic Representative Greg Porter says K-12 education should be spared from the chopping block.

"We don't have a good education system and that's why people are not going to come here and live.

We have to create a pipeline of of of development."

Lawmakers intend to finalize the budget within the next two weeks.

Ann DeLaney, how bad is this forecast?

Oh, it's pretty bad.

It's.

And we're not talking about a rounding error here.

We're talking about a substantial difference.

And the Republican who have controlled this entire state for so many years have been completely irresponsible fiscally.

I mean, they have.

We have this voucher program that's mushroomed out of control.

We have tax cuts that go on for years without regard to these kinds of situations.

And it's completely fiscally irresponsible.

They have to step up now, and they're going to have to make up that revenue.

They're at least goin to have to do it until January.

But then I'm sure Trump says he's goin to have the economy just humming away, like he' going to settle the war in Gaza, and he's going to settle the war in the Ukraine and everything is going to be hunky dory.

So it's just a short term fi that they have to come up with.

That's good news.

Um, lawmaker say everything's on the table.

I don't think everything is on the table, I think.

Cannabis legalization, which some have floated as a way to generate revenu that doesn't seem on the table, - Not in a budget year.

- Dramatic gaming expansion which has been floated as a way to generate revenue, doesn't really seem on the table.

But beyon that is everything on the table.

Yeah, absolutely.

I mean, that's I think that's one of the- this situation is not good.

But one of the good things is I think there are more obvious options there.

I mean, I'm actually thankfu that we have the budget writers in power that we do now, because the people that have been praising the reserves have just been on a roll recently.

We have Covid, you had the billion dollar Medicaid shortfall and now you have this.

Thankfully, we continue to have a really nice level of reserves to help address certain issues like this.

And when you talk about the the options that are there, you know, are you going to pause the the income tax restrictions that you see?

the cigaret tax, Just hearing comments from the different legislative leaders seem something that's.

$2 would generate $800 million.

That's 800 800 million.

Like I said, you have the reserves there.

So while this is bleak, a lot of it isn't the state's fault.

I'll give you that.

I think all of the the budget forecast folks kept referencing just the uncertainty at the federal level.

So while these drastic cuts- -and who's in charge at the federal level where all that uncertainty- All these drastic cuts aren't there per se.

It's just the uncertainty, again, wanting to be responsible, making sure that we approach this in a responsible way, to make sure that, you know, thing that Hoosiers need aren't cut.

Legislative leaders have said, I think, I think the number that House Speaker Todd Huston sai when talking about the reserves.

So the the House budget put the reserve level at something like in the 12% range, of the total budget.

That's how much would be left in reserves.

The Senate budget, bumped that up even more than the 13 to mid 13% range.

Now Todd Huston is talking about taking that down closer to like 10%.

Gives you a little more money to spend in the budget whil still keeping a healthy reserve.

But at the same time these numbers in the forecast, our projected revenue could get a lot worse in the next few months.

So doesn't that, conversely, almost make you want to pad the reserves a little more?

Well, thank goodness we do have a reserve, and I guess budget architects get credit for that.

But let's not forget that it's the supermajority in both chambers that, prevented the, surplus from being even bigger than what it is no because of some of the automatic refunds and disbursements that were triggered at certain levels.

And over the past several budget sessions, there were people who wanted to, rather than return small.

No, every money, all money's important.

But what's the average check?

I mean, we're talking dollars.

Enough for dinner, maybe, for one, McDonald's.

There we go.

I don't do commercials, but, I'll defer to you for that around that.

Or keep the state, you know, flush with with resources so it can weather these kinds of storms.

So good.

Yes, that we do have a surplus.

Thank goodness we're better off than most every other state in that regard.

But too bad, I guess, in a certain way.

Some would say that we don't because of the various tax cuts and because of all the various refund triggers that were set up in recent budget cycles, we didn't have even more to to deal with this sort of crisis.

Obviously, Republicans really don't want to increase taxes.

The Senate Republicans more resistant to that than any other caucus in the state House.

But at this point, would it be harder to justify the cuts that are going to have to be made, no matter what, if they don't do anything to generate more work?

Yeah.

And even, you know, we got this forecast on Wednesday.

On Tuesday, Mishler Senator Mishler was saying, I don't want to put the cigaret tax increase in until we have the Medicaid fore-until we have the new forecast, because you don't know.

Well, now we know.

And so the fact is, is if Senate Republicans aren't amenable to a cigaret tax increase now, it's just never, never going to happen.

They obviously desperately need the revenue.

It statistically reduce smoking and health care costs.

So yeah.

It's not a long term solution because that money decreases over time, which is part of the goal of increasing this.

Yeah.

They're going to have to you know they're already cutting child care access, you know, lowering the entitlement or eligibility for that.

You know, the voucher progra that House Republicans expect.

You know, that's going to be hard expanding that to a family that makes $1 million a year while you're cutting, you know public health funding and SNAP.

And those are going to be hard discussions to have.

I mean, it feels feels a little like the trade, right?

House Republicans and Democrats in both chambers.

But Hous Republicans have been on board with increasing the cigaret tax for years.

Well, they get that.

Maybe they don't get their voucher expansion to to true universal vouchers.

A look back at the week ending April 25th.

Republican leaders made up a $2 billion budget revenue shortfall by raising the Cigaret Tax, cutting public health and higher education funding and spending down budget reserves.

Republican leaders sa they started closing the revenue shortfall by making cuts, and then turned to a $2 per pack cigaret tax increase to finish closing the gap.

Senate Leader Roderick Bray says that tax hike will also help people stop smoking, or prevent them from starting in the first place.

"I think it's going to have a huge benefit for the Medicaid cost going forward."

- But Democratic Representative Greg Porter says cutting local public health funding down to $40 million a year from 150 millio this year is very disappointing.

"Is that making Indiana healthy again?

I think it's making us extremely vulnerable when it comes to health care."

Higher education institutions will receive a 5% cut to their primary funding, along with a 5% cut to the dollars they use to maintain buildings.

Ann DeLaney they finished with the budget.

Does it make the best of a bad situation?

Well it is a bad situation There's no question about that.

And the cigaret tax increase is something that should have occurred a decade ago.

So that's good.

But they are so, so shortsighted.

And the Republican priority is to protect business and to protect the rich.

Are ingrained in this budget.

I know that they the vouchers for millionaire isn't taking effect this year, but it's guaranteed to take effect next year.

And the business personal property tax is suspended for this year but it's doubled for next year.

So those were protected.

On the other hand, we we finally got to the point where we were beginning to fund public health.

And we were seeing results from that funding and they have decimated that.

At the same time, they complain about Medicaid being so expensive and health care costs in general being so expensive.

They don't put the little bit of money i in advance to help cut that off.

And the other one, that's absolutely appalling.

Besides the higher ed cuts, is that the child care we have been doing little tiny steps to increase the state support for chil care, which is a huge impediment for many families and particularly to increase the workforce.

And we finally got to 72,000 children on that program, and now we're going to cut it back by 20,000.

I mean, talk about shortsighted.

That's what this budget is, their guarantee.

We're not guaranteeing.

They are betting on the fact that Donald Trump, who, by the way, has tanked the dollar internationally, is going to improve the economy so much so that we're not going to have the same problem next year.

Let's wait and see.

I want to ask about the voucher expansion, because I think afte the revenue forecast last week was so bad, I think a lot of folks kind of assumed it just wouldn't happe this session and that they do it in the next budget.

Assuming the next budget is better, which, dear God, I hope the next budget is better.

Are you surprised that even waiting to the second yea that it that it happened at all?

I'm not.

I think the governor wanted it.

Speaker Huston wanted it.

Ryan Mishler didn't want it.

It's like this dance between doing every, every two years for, you know since vouchers became a thing.

So no, I wasn't I wasn't surprised they kicked it out.

Frankly, I think what they did, you know, you had like five minutes to, like, go, oh, no, we don't have $2.4 billion we thought we had.

Right.

Like last week.

And then you had to pass the budget yesterday.

You know, so I think my, my let's paper through the rest of the year set, you know, maintain our priorities in year two, but we're back next year.

We don't know what' going to happen in six months.

We don't know what's here.

So, you know, we don't know what President Trump's going to do, do next on on tariffs I mean, or.

Federal funding or any funding.

Or any number of things.

Right.

So, and neither does he probably, you know, so let's let's at least just like, okay, snapshot in time we're $2.4 billion down over the, you know, over the nex to two years and a few months, so let's just maintain ou priorities but maybe delay them.

And then we have the opportunity to come back next year.

And I think there are good things in this budget that that were surprising that they were able to be able to do that they haven't been able to do in previous downturns.

You know, we're kind of like increase the K-12 education funding by 5% you know, like- - for vouchers.

In previous budgets.

But but immediately, in previous recession budgets you know, pre-recession budgets, that's been that's been hard cut, like the.

Basis of- - But you didn't have vouchers in previous recession budgets.

And I think we're if you look at the if you look at the charts on revenue growth, obviously we've fallen off, but we're only 1% off of growth pre-COVID.

And we got we I know we don't want to admit it, but we got really used to having a lot of federal money flowing around.

Two straight budgets of that.

Were you had 26% revenue growth.

And, you know, the last biennium, you know, that's all federal money.

And we got and we got pretty used to living on it.

Rod Bray called this, called crafting this budget the toughest challenge lawmakers have ever faced.

Tough.

If you do have sacred cows, I mean, if if, in fact you have these favored programs such as the universal voucher expansion and other sorts of things that are essentially- -and cut in health, and cuts in- - essentially off the.

Table- -income tax.

It doesn't the they said K-12 was going to be is off the table as they could make it.

And it was it didn't get changed.

What I think this budge reminds us of it's this is not this is again an obvious statement that our system, whether you're talking Washington or here, it's based on instant gratification because they face in the House voters every two years or in the Senate every four years.

We- it doesn' really lend itself to long term growth and strategy and strategy development as a state.

So what you see is where the cuts, if you if you were focused on the future and building a healthier more robust Indiana, literally and economically, it seems to me you wouldn't cut child care.

You wouldn't cut our our research institutions and other, higher education institutions which are grooming people for this, workforce, which we often talk about how we need to have people, the same thing with, with public health.

The most obvious example, where you cut from 100 to 1 million to 40 million and it does remind us not that any of us needed reminding.

That's all about what can I go this week?

Next week when I wake up from my slumber and go to voters, down at the coffee shop and face them, can I what can I tell them?

They don't want to.

And it's not necessarily legislators fault that that no one wants to hear what they're doing for ten years down the road.

It's interesting to me, too, on that subject, because if you listen to, the final debate on the budget in the House and the final debate in the Senate, you got wildly different messages from the people who wrote those budgets in the House.

And the Senate.

-Really was, Representative Thompson.

He, he really he picked a theme and it was freedom.

Although I never really understood the theme to the budget, but it was freedom.

And he was very clear about that, and he was pretty excited about the budget.

He was very passionate about it.

And then, you know, we move over to the Senate.

And Senator Mishler, he's jus a lot more you know, even keel.

And he said, look I don't think there's a lot of people are going to see that this is a win.

But, you know, it's what we have to do to get through.

That's Indiana Week in Review for this week.

You can find Indiana Week in Review's podcasts and episodes at wfyi.org/IWIR or on the PBS video app.

I'm Brandon Smith of Indiana Public Broadcasting.

join us next time.

Because a lot can happen in an Indiana Week.

The views expressed are solely those of the panelists.

Indiana Week in Review is produced by WFYI in association with Indiana Public Broadcasting Stations.