Welcome to Politically Speaking.

I'm Elizabeth Tenney and director of community engagement and the American Democracy Project at Indiana University.

South Bend.

Indiana's 2025 legislative session wrapped up last week with a major issues such as tax reform and Medicaid spending taking center stage with a projected $2 billion budget shortfall.

Legislators were forced to make some difficult decisions about their budget priorities.

Joining us today to break down the Indiana legislative session are Brandon Smith, statehouse bureau chief for Indiana Public Broadcasting, and Kayla Dwyer, government and politics reporter for the Indianapolis Star.

Thank you so much for being here.

I want to start by asking you to indicate who you would say are the biggest winners and losers in this budget negotiation process.

Kayla.

Oh, okay.

I love this question.

It's a great way to understand how, when it comes down to brass tacks, how things worked out.

I would say a big winner would be anyone who advocated for the cigaret tax over the last several decades.

So, you know, the chamber, the Cancer Society, it took a $2 billion forecast, dip.

But they got it.

And, you know, definitely folks who are interested in and, expanding school choice say they got they fish their wish in the second year of the budget with, with, removing any income barriers to that program.

Losers.

Well, on this platform we're speaking, you know, they there's been a loss of state funding entirely for public media.

That sort of was a direct result or came within that final 24 hours when they when they released their post revenue dip, version of the budget.

And, who else lost?

Maybe I'll let Brandon cut in here to think about it.

Losers.

Yeah.

I mean, you saw you saw a few different organizations, get zeroed out in the budget beyond Indiana Public broadcasting, the Next Level Trails program, the Housing First program, which is only $1 million a year that got eliminated from the budget.

The Hoosier, the Indiana Women's Commission, the Native American, commission.

These these all got just.

Yeah.

And the biggest loser, I think, other than maybe Indiana Public Broadcasting, selfishly, is definitely, local public health funding.

So Indiana, in the last budget in 2023, did this, you know, historic, monumental investment in local public health funding.

And it went from what is $150 million appropriated this current year that we're still in in the last budget, down to $40 million a year.

That is a, a loss that that some experts are saying will really the growth that we were already seeing and improvements in health metrics and the and the programs that were out there are going to be, not completely eliminated because they did continue funding it.

But certainly the growth will be stymied, at least temporarily.

Yeah.

And it came as we think about public health in particular, what kind of programs were being supported that will be cut back?

These are pretty much preventative, you know, kind of educational, disease, chronic disease management.

And, you know, any anything that speaks to trying to prevent expensive health outcomes later or trips to the hospital or the E.R.. Actually, I recently spoke to someone who works for the, tobacco prevention, tobacco free.

You know, there's these county based programs that get funding from the state, trying to, you know, educate kids about the dangers of vaping and those those kinds of intervention programs are that specifically were funded by this investment, this extra investment are probably on the chopping block.

Now, what about that increase in the cigaret tax or any of those dollars earmarked toward education or prevention of tobacco use, or does that go to the general fund for other purposes?

Well, typically, typically the cigaret tax would there's the tobacco program within the Department of Health like this would go toward that.

But, the Republicans who who decided to put this into the budget, this, this increase into the budget so that the increase was going to go toward Medicaid instead.

So it doesn't seem like any additional dollars are going toward, tobacco, prevention programs.

Now, speaking of Medicaid, we heard a lot of talk going into this session about the huge, problem there in terms of that $1 billion shortfall or hole in the budget.

What changes do we expect to see in Medicaid?

Brandon.

So there's a few things that the lawmakers did to try and rein in spending on that program.

For one thing, they kind of put a few more restrictions on, advertising around, Medicaid.

But a lot of what they did with Medicaid was looking more at the Medicaid expansion program, known in Indiana as the Healthy Indiana Plan 2.0, which Indiana did under then governor Mike pence.

About a decade ago.

Because there's not a ton they can do right now to, to to affect the core Medicaid program because that's controlled by the federal government.

And now this particular federal government will probably be amenable to a lot of the changes that Indiana may want to make, down the line.

But that's an ongoing process that involves federal waivers and all that.

So what lawmakers could do is they could affect the the expansion program, which serves, I think somewhere north of 700,000 Hoosiers right now and gives them access to health care.

They put in work requirements.

They put in.

They're going to be checking their eligibility more often to make sure that only people who are eligible for the program are on it.

They originally had a cap on that program of 500,000 people, which would have put 200 plus thousand people on a waitlist.

They got rid of the cap in the bill, but they didn't really get rid of the cap.

What they did was they said, well, the secretary of the Family and Social Services Administration can just stop the program, cap the program whenever they basically run out of money.

So the cap is still pretty much there.

It's now less less specific and more arbitrary based on the funding that they receive.

But the kind of confounding part of all of that, though, is lawmakers are preaching about the cost of Medicaid, and the state budget is growing and growing and growing, and that is absolutely accurate.

It is the fastest growing part of the budget, by far.

This won't affect that.

All of the changes they're making to the health care expansion, the Healthy Indiana Plan 2.0.

That's not coming out of state coffers for the most part, that is paid for by the federal government.

90% and then 10% is paid for by the state through hospitals, what's called a hospital assessment fee.

So state hospitals are paying for the Healthy Indiana plan, the Medicaid expansion program in Indiana.

So if you take more people off of that, either by checking their eligibility more often or, or capping the program, eventually you're not going to actually be saving the state general fund any dollars whatsoever.

Now, as we think about health care, I know another thing that folks have talked about are these wait for people who are looking at home or community based care.

Do we see any relief for for these people?

Get them off those lists, Kevin.

No, I don't think so.

And I would say, in terms of your earlier question about the impact of that billion dollar gap in Medicaid, this is probably the one that Hoosiers have noticed and felt the most.

These waitlists weren't there before for specifically for home and community based services like assisted living facilities and such.

So the 10,000, I think 11,000 Hoosiers are on these lists, both elderly and, children with complex needs.

So but the the budget certainly does not allocate extra dollars to remove people from these waitlists.

The prevailing theory among Republican budget writers is that, you know, if they increase the stringency of, these, of, of regular Medicaid, the eligibility checks that Brandon was talking about, that, they will get certain people off who maybe don't deserve to be on Medicaid.

And, this process of being more efficient will eradicate the need for the wait list.

That's kind of the grand theory.

I think that if that works, that would take years to play out.

As it stands right now, the wait list continues to be pretty stubbornly high.

And, I don't see a solution to that in the near term.

Now, Brandon, you mentioned the zeroing out of public broadcast funding.

You've been following the Indiana General Assembly for a long time.

Was this a surprise to you?

I know many people said that that early projections still had it looked like the governor and the House and the Senate would be providing some funding and they were surprised.

Were you surprised by that or not?

Yeah.

I was incredibly surprised because the budget, the line item for Indiana Public Broadcasting stations had been flat.

Which in this particular budget, that was a win as far as everybody else was concerned.

It had been flat in all three versions of the budget.

Governor Braun's the House Republicans in the Senate, Republicans.

This was, this was clearly, you know, you got to find I mean, we had the $2 billion shortfall, the cigaret tax increases, and the other tobacco product increases.

Account for about $800 million in savings.

They brought down the budget reserves from where the previous, budget proposals had had them.

They spent those down a little bit further than they were originally planning to.

But that still leaves you with hundreds of millions of dollars close to $1 billion to find in cuts.

Basically.

So.

And the one hand, no, it's not surprising that that that would be the sort of thing that they would pick off, especially since, for Republicans, it's not unpopular necessarily among some of their core base, the idea of defunding public broadcasting.

But I also get the sense, at least from those at the top, of the House and Senate, the budget writers and leadership.

This wasn't a political move.

This isn't the the move we're seeing in Washington, D.C., among national Republicans to defund NPR and PBS.

This isn't that this was this is an easy one to find $7 million of savings.

Public Indiana Public Broadcasting has been, taken out of the budget before.

Once before, in 2008.

In the middle of the Great Recession.

And then they were put in in the next budget.

It's possible that will happen if the next budget looks a lot better.

But certainly in the interim, it it put some stations, in Indiana at risk.

I mean, shutting down.

Yeah, I, I have to agree with Brandon.

The impression I got was not the motivation for this was not the same as the what's going on federally, but what's going on federally.

Definitely makes it so that it's not politically harmful for them to do this.

So I want to ask you, about another loser in the budget.

Is somebody sitting here at Indiana University?

We had a similar surprise.

I think, really, the governor had proposed a 1.5% decrease to all public universities and colleges.

We also saw that the Higher Education Commission suggested, of course, an increase in funding.

And so a lot of people thought that that would be flat.

And instead we saw a 5% cut plus an additional 5% hold back that the universities will only get if we exceed our projected revenue.

So that was quite, a quite a hit and was a surprise, I think, to the public colleges and universities.

Do you see that falling into that same category or what what is the lesson to take from that?

Yeah, I mean, yeah, go ahead.

Kill.

Well, I was just going to say there is, of course, the 5% across the board that brought him is, Governor Mike Braun was preaching that he would do for everyone.

But then, yes, there was the additional hit to higher education universities.

I, I do think there is, correlation there with the national environment around higher ed.

Where are you going to say Brennan?

Yeah, almost exactly the same kind of story.

Obviously, they didn't get zeroed out the way Indiana Public Broadcasting did, but it's it's not driven by animus towards public colleges and universities.

The way you you are kind of seeing at the, at the National level, but the political calculus at the national level makes it so that it was an easy target.

I mean, talking to the lobbyists ear after we saw that budget version come out and they saw the 5% cut for higher ed and then a 5% cut to the, what's called R&R funding, which is the the rehab and rebuilds.

It's funding that the higher ed uses for maintenance of its buildings, of its, of its campuses.

That was also cut by 5%.

That was a little bit of a double whammy for them.

But they also when you're talking about a $2.4 billion shortfall.

Yeah.

You got to be expecting a hit.

And the only almost I mean, with very few other exceptions, the only certainly the only big category in the budget that didn't face a cut after the forecast was traditional and charter, K-12 education.

And speaking of that, K-12 education, kind of I mentioned earlier wealthy families who would like to be able to participate in that Indiana toy scholarship program.

Sometimes known as vouchers.

We'll see that that cap of $220,000 for a family of four will be removed in that second year.

How much of a hit is that, budget wise, given the number of people who would actually take advantage of it?

Do we know?

We do know in a sense.

So there was a fiscal estimate that was based on it.

If that number of, students that that that income, that smaller, highest income bracket applies to, if they were all previously attending public schools and weren't in private or.

No, if they were, sorry, if they were, if it's new public dollars going toward them.

Which is kind of the, the highest case scenario for state spend, then it would be, oh, gosh, do you remember the estimate brand?

And it wasn't like close to 100 million or something.

Yeah.

Because it's only for the second year.

It was, it was like 80 something or 90 something million dollars because over the two years it was almost $200 million.

Yeah.

But then by cutting it in half, by making it only in the second year of the budget, it's a little under $100 million.

And again, that is just an estimate.

We don't know exactly what's going to happen.

There are some wealthy families who might not take advantage of it.

Although if I could get a free several thousand dollars from the government, I would certainly get it.

But it is important to note, because this was a big shift from what had been written in the budgets before them, was, in the governor's budget, in the House Republicans budget, who had the expansion in both years of the budget that was part of the 2% each year increase in K-12 education funding.

And so that big chunk of that increase for K-12 education was the voucher expansion.

The way they did it in the final budget is it's 2% average increases in K-12 education and each year of the budget for traditional public and charter schools.

And then the expansion is an additional like they found the money for that on top of those 2% increases.

So it's not the expansion is coming out of that 2% essentially, which was important, I think, to Senate Republicans who have been much more hesitant to just go full expansion as much as House Republicans.

House.

And that's a really important point.

As we look at overall at the balance of sort of cutting spending and increased or decreased revenues, what is happening with property tax reform, that was a huge conversation heading into this session.

A big part of Governor Braun's campaign, what will happen with that moving forward based on this budget?

Well, it's it's important to note it's not really affected by the budget.

Those are two very separate bills because property taxes don't affect Indiana's state budget.

They affect local government budgets entirely.

There is not a single dime of property tax dollars that go into the state coffers.

They get collected by the state and then distributed to local governments.

So that, that, that, that, that property tax reform that they, that they did, which is about two thirds of homeowners will see lower bills in 2026 than they did in 2025 because there is a new, tax credit, property tax credit for all homeowners.

That is 10% of your final bill up to $300.

So a lot of homeowners will see savings next year as a result of that.

Certain categories of homeowners will see even more savings.

So, if you're over if you're age 65 or older, you get an additional $150 credit on top of that other homeowner credit.

So that's significant savings in some cases.

Veterans, disabled veterans particularly get even more support on top of that, in the form of the the property tax deduction that they've been getting for the last few years.

So and then what that does to local government budgets is it cuts local government budgets statewide by I mean hundreds of millions of dollars, up to more than $1 billion a year over the next few years.

But they also have some new or expanded local income tax, tools that state lawmakers are saying, if you really can't cut and you really need the money, go basically raise people's taxes at the local level and shifts that burden on the damn or shifts the political blame, at least on to them.

But all of that is independent of the state budget.

So the state legislature takes action to reduce the ability of those more local governments to raise that money.

And now the local governments have that difficult decision to make about whether or not to raise taxes or what services they're going.

Yeah.

And all for, you know, for $300 off your bill, which can be meaningful.

I think it'll be up.

There is some, discontent among Braun's base at the moment because they feel that the property tax relief didn't go far enough.

And it's interesting that this has been, Governor Brown's first real political test.

That, I think he's still working his way through, if you ask me.

It's also important.

It's also important to note.

It's also important to note that, you know, after session, a group of us talked with Governor Braun kind of about the session and how it went.

He wants to keep pushing on property tax reform like he's not done.

He wants to push to reduce, property tax bills even further.

I don't know that lawmakers are all that eager to do that.

Certainly some are.

There are some who believe we should abolish property taxes entirely, but I don't see that happening in the in the near future, certainly because that's too big a hit to local governments that they just cannot make up otherwise.

Unless you, like, create local sales taxes and really dramatically increase local income taxes, which I don't think lawmakers are at this point eager to do.

But yeah, that'll be interesting to see going forward.

Is Bron's going to want to keep pushing a little bit, but I don't know that lawmakers are eager to to run into the fire of a property tax debate all over again and pushback, perhaps from their own party members and constituents at the county and local levels.

Governor Braun also was pushing for capital investments in rural areas employer upskilling, training and workforce development dollars, and also some help for young farmers starting out in agriculture, as a business venture.

Did he get these priorities enacted into law in this session?

I think they're not there.

I think they all didn't make the cut.

The, the all those tax credits you just mentioned.

Especially after the revenue forecast, they were all cut out of the budget.

But, you know, I think, I think few people are surprised about that.

Actually, I don't even think, some of them were even shaved just between the House and the Senate versions of the budget.

So, this is this is sort of the perennial issue with campaign promises, right?

Meeting the realities of the legislature is bound to be disappointing for some of his voters.

I mean, I think a lot of those things are popular among Republicans that are popular among Democrats in a lot of cases.

There was a, there was a measure about young farmers, that did make it through the Senate that was sponsored in part by Senator Shelley under the Democratic leader in the Senate.

So so it's not that they're unpopular.

It's just they cost money.

And this was a year where anything that cost money, just if it was new, it wasn't going in there.

And if it was old, it was getting cut out.

So if you felt some pain this budget cycle and your favorite program didn't get funded, you certainly weren't alone.

Now, what about any thing else in this last minute we have that you think people should know about this session or what you're predicting moving forward that we should keep an eye on?

One thing I'll say.

Yeah, one thing I'll say is about health care.

They did a lot of health care bills aimed at nonprofit hospitals, pharmacy benefit managers, health care prices in general.

But those were dramatically scaled back from where they started.

But governor Mike Brown, this is a personal passion of his.

He wants to push a lot further on health care reform.

And so I think going forward in the next session, that's going to be a major focus for him and maybe lawmakers again.

Yeah.

My last a little bit for was also related to health care because there are two, I think, important things Hoosiers should look for.

Thanks to some of the bills that got passed this session.

One is in the all payer claims database.

You'll now be able to see, if you know what insurance agents are, getting for commissions.

And also they have to include that in their quote to you now.

And, when you go to see a doctor in some office park or something, hospital systems can no longer charge you, an extra facility fee for those visits.

So you should be looking at your bills and checking out that all payer claims database.

All right.

We'll be checking into that.

That is all the time we have for this week's Politically Speaking.

I want to thank our guest, Brandon Smith of Indiana Public Broadcasting and Kayla Dwyer of Indy Star.

I'm Elizabeth and reminding you that it takes all of us to make democracy work.

We'll see you next time, This WNIT local production has been made possible in part by viewers like you.

Thank you.