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Think about the General Assembly's budget writing process as something akin to mapping out your own family's spending priorities.

And then toss that comparison into the nearest trash can.

The fact is, aside from their shared focus on finances, the two undertakings have little in common.

Unless, that is, you employ a veritable army of analysts who crunch reams of data to equip you with detailed projections of your earnings and expenses.

Oh, and unless you're blessed with tens of thousands of self-interested relatives who pay third parties big bucks to persuade you to give them ever increasing slices of the family's financial pie.

So grab those calculators, don those green eye shades, and just in case, keep those checkbooks handy.

Indiana lawmakers from the state House to your House.

Indiana's biennial budget begins to take shape long before the General Assembly's actual budget writing session commences.

The process picks up speed in the spring, more than six months before the session's formal start, when the state budget agency invites other state agencies to detail what they think they'll need to maintain existing operations to fund any proposed service expansions, and to pay for any capital projects or new facilities.

The agencies submit their wish lists in late summer, then defend their requests in the fall and a series of public hearings before the state Budget Committee.

A bipartisan panel comprising four legislators and the director of the budget agency in December, armed with a newly released revenue forecast, the Budget Committee puts together a preliminary spending plan.

That proposal goes to the governor, who in turn delivers his spending priorities to the General Assembly, as required by Indiana's constitution.

All budget related legislative deliberations begin in the House in the Ways and Means Committee, to be precise.

Once that committee, and subsequently the full House settle on their spending priorities, the spotlight shifts to the Senate and its primary budgeting panel.

The Senate Appropriations Committee as you might expect, this mid-session milestone kicks off more hearings, more debates, and more revisions, if not downright overhauls.

If the budget that emerge from the full House and Senate differ.

And spoiler alert, they always do.

The two chambers leaders appoint a four person conference committee to hammer out a compromise.

Those negotiations inevitably push up against the budget session's April 29th deadline, not only because of lawmakers time honored affinity for brinkmanship, but also because of their reluctance to lock in decisions before the release of an updated revenue forecast in mid-April.

Once the spending plan passes both chambers and gains the signature of the governor, it's provisions take effect July 1st.

The start of Indiana's fiscal year, and you might be wondering what happens if the General Assembly fails to enact a budget by that date.

Presumably, the bulk of state government would have to shut down, but the answer is shrouded in uncertainty.

Despite a scare in 1993, when the budget didn't come together until late on June 30th and the final moments of an emergency special session, Indiana hasn't started a fiscal year without a budget since the Civil War.

Joining me to discuss the budget writing process and what it might yield are for people who will be doing a good deal of that writing.

Republican Representative Jeff Thompson of Lizton, chair of the House Ways and Means Committee, Democratic Representative Gregory Porter of Indianapolis, the ranking minority member of that committee.

Democratic Senator David Niezgodski of South Bend.

Ranking minority member of the Senate Appropriations Committee.

And Republican Senator Ryan Mishler of Mishawaka.

Chair of the Senate Appropriations Committee.

Lots of titles.

We got to get out of the way there.

Thank you all for for for being here.

Let me by show of hands, how many of you do your own taxes?

I'm just a oh, boy.

For the radio listeners.

not a person has raised his hand.

I'll assume that that means you could do them.

But you're so busy crafting Indiana's fiscal policy that you don't have time for your own.

Correct.

All right.

Good answer.

Good answer.

Jeff Thompson, is this during session the best job in the legislature or the worst job in the legislature?

Some days it is the absolute best job.

Wow.

Other days.

That's the day after signing day.

Yeah.

when he was here.

The other day, that's a little more difficult.

But I signed up for it, and if I signed up for it, I have responsibility.

Work with people like Representative Porter and try to come to the right spot.

And so it just depends on the day.

Maybe it depends on the hour, Tell us your approach.

Do you go into this thinking?

Do you start with the forecast with the projected dollars that are available?

Do you start with what you see as your own mental wish list?

walk us through that at the unofficial part that isn't in the civics lesson.

All those things.

Yes.

I mean, the forecast, the.

Above.

Forecast is critical.

You have to know how much you will have in.

Two days ago introduced the governor's budget.

Proposed budget.

And that's our starting point.

And he has some good ideas in there.

We'll work on those.

We'll have hearings over the next couple of weeks.

Everything part will be part of those and we'll learn some more things.

It's a constant learning process, and as we learn, we want to try to land in that ideal spot for our Indiana citizens.

And you talked about the importance of the revenue forecast for those who weren't paying close attention back.

I think mid December, December 17th and 18th, about $700 million in new money in the first year of the biennium, down to about 70 million in the second year.

So sort of flattens out a little bit.

So that's what you're working out So let's move to the Senate now.

And the chair of Senate Appropriations.

how open are you to literally taking what the house has?

Or do you see it as just, okay, we have theirs now we start our part of the process.

Walk us through that.

I take a little different approach.

So several months ago we took the 23 budget and pretty much stripped it down, took all the one time out some of the programs.

And so that's kind of our starting point.

And now we have the governor's budget.

So we start backfilling.

So with some of the governor's, wish list and put that in and because if we wait and start when we get the House budget, there's just not enough time.

So we've already started.

And then when we get the House budget, then we kind of backfill a little more, and then we talk to our caucus members, kind of, you know, find the programs are important to them and then backfill again.

So I do it a little different.

So I try to start earlier to try to get done in time.

And then when you get the forecast you make those adjustments.

So we've already started.

We make the adjustments on the revenue based on the forecast.

And that changes our numbers.

So we work off a spreadsheet that we started.

Gregory Porter, let me ask you, as the ranking minority member, you're in a super minority.

even if you walked out of the committee, had you, walked off the floor as some of your predecessors did to prevent there being a quorum doesn't work anymore.

They couldn't pass the budget.

So when you go into this budget process, is it or you just defensive posture from the get go?

I know you have a wish list, but does that just go out the window from day one?

Well, I, I, I met with the chairman.

We talk about issues.

I, I had my own blueprint as a, as a Democratic caucus or what we would like to see and the programs that are there, within the programs, you know, for, for the upcoming budget, I think we we have our wish list.

We, we meet, we discuss, we analyze what we can't happen.

But I think one thing that's important when you refer to the April forecast a couple of times, we as a caucus, we would like to see a march forecast, because I think over the years you get a forecast and then four days later, three days later, then you come up with the budget depending on those dollars.

And I think there's more dialog if we have a march forecast and, and see where we are, for the for the next biennium.

Probably not going to happen this session, but that's something you'd like to see happen.

Well, I guess.

I would say I mean, I mean, anything's possible.

I mean, I mean, we're going to keep saying it, we're going to keep encouraging, that so hopefully that that happened and I'm quite sure I mean, there's always some preliminary numbers every month you have monthly we have now.

Even.

Revenue forecasts.

So you kind of know what was matriculating toward those dollars.

But I think when you have that debate, you know, sheet and says, this is what we have and etc..

It tends to bring everybody together.

At least, you know, you agree on the rules of the board game.

I guess at that point, more to sort of the parameters through which you can negotiate.

Yeah.

Right.

And and we also look at the skills, capital projects that may be there.

And I've said this before on the House floor.

I mean, in the first go round of that, Mr. Ryan, he laughed at me when I said that the back of the, budget Apple, you know, the four bites.

And that's my that's my little thing.

I say, you know, there'll be some things there'll be items in the final budget that we never have really discussed.

Depends on what is occurring within, the state at that time.

And I saw that in that same context.

You like Fuji apples.

And I should also point out, have you ever seen Snow White?

The apple?

Sometimes the bite of the apple is not a good thing, I understand.

Go back and look at some Disney movies maybe, I don't know, but not in this case.

These are nice folks.

But David, these guys same question.

You're a you're in a super minority.

You're outnumbered 40 to 10. you go into this in a defensive posture.

Same question that I asked.

Gregory Porter.

I think I go into it.

I look at it as a realistic, posture.

truly, since my early days in local government, I've always said that, once you're elected, you're elected to serve all the people.

So I try to look at it just straight down the middle.

I I'm not naive.

I know that politics exist all, all around us.

But at the same time, I think that, the, the things that we were trying to accomplish, they may be different the way we view them, but in the end, we're all trying to do the right thing to help, Hoosiers back home.

Trying to help them, trying to help their families succeed, making sure that we have the the kids are safe in their schools, making sure public safety is well funded.

I think those are things that we can all agree on.

It's so, I don't look at it from a defensive posture.

sometimes it's not so easy when someone tells you no, but at the same time, well, then you pick up and you look at something that you can do, and that's what I that those are the things I try to look for.

And that's something we should point out.

There is a lot of agreement.

It's the disagreements that get the attention.

But, but certainly there is a lot of agreement and it and I heard you Jeff Thompson mentioned Gregory Porter twice in the span of about a minute.

How important is it for you to even though you don't have to listen to the other side, how important is it to have input and their involvement in this budget process process?

Well, just in, you know, it's philosophical, the people in everything Porter's district elected him.

And that's about, you know, 1% of our state population.

I should respect that.

I don't have to agree.

And we'll try to find those places we can find in common.

But out of respect for him in in his thoughts is best for his people.

I should at least listen to that.

And to not do that to me is is disrespecting those voters.

And so I want to do that.

Yes, in the end, I know that I'll probably know more things my way than his, but at least I should have respect for him to do that and the state he has appointed.

And theoretically he represents, I don't know, down to the very person, but basically the same number of people see that that's the way that that that that's right.

Same approach you take, Senator Mishler.

Yeah.

I mean, we we all represent different areas with different ideas.

You know, I you still Senator Melton, when he was the ranking member, remember?

And, you know, people in Gary who had much different ideas and people in, you know, Bremen or Warsaw.

But again, like Jeff said, they're elected to represent those people.

So their voice is just important.

But I will say it's ironic.

Now we're sending this guy ski.

We're from the same area, from the same county.

And so we talk all the time.

So and we represent the same people pretty much.

So I would say for the most part, I'd say 97% of the time we're probably on the same page because we go home to the same people.

We're from different parties.

But when we sit at home, I don't think people even realize that sometimes because we're talking about what's good for our people at home and not what's good for, you know, different members have their different ideas.

We talk about what we should do for our folks.

So it's a little different dynamic now, having Senator Niezgodski because of the geographic.

Saint Joe County caucus look out for him.

They probably got a handshake, secret handshake and everything.

Gregory Porter, you know, let's get to some of the we talked a little bit about the process, but the official process and sort of the, the reality of it.

But let's talk about now some of the specifics the governor did put forth his budget, basically 5% cuts across the board.

Some things, a few things he wrote out you said there's some areas of agreement and I'm guessing a whole lot more that you disagree.

Give us a thumbnail.

Well, I think, you know, we're very concerned about the inflation in regards to school funding.

I think his proposal is about average of 2%, 2%, but that's not necessarily inflation rate.

So, you know, we we want to make sure that the schools have have more dollars.

They are pitching a sweeping voucher program that that we don't we do not agree with.

remember if you recall the last budget, we had $400 million toward a voucher program on $2, which now is entitlement.

So it seems like, you know, we'll have to look at between 750 to $1 billion more for the expansion of a program that the governor did.

well, that's the whole program.

And I think 180 million maybe to go because it's already 95% of Hoosiers families.

And that's fine.

That's it's not as much of a hit as it might have been, has not been those intermediate steps.

And and some other things that we kind of agree with.

He, he's talked about, Social Security as you know, taxes and, you know, doing 25% kind of phase out.

So retirees.

Retirees.

Don't have to pay.

I think we have to figure out it's where those dollars come from to, to, to backfill those dollars that when we do, relinquished, back back to the taxpayer.

And I think a tax on tips and things like that are very important that we but if you look at it holistically, there are some things that we can't agree with.

But we're I'm going to be continue to be cautiously optimistic.

however we will we're here to help to give constructive criticism.

but also to accept some things that we can agree across the board.

But we have a long way to go.

On that first bite of the apple.

As you pointed out, Dave, David needs, is education going to be the rub?

Because I think for your caucus.

Education is a big part of it.

public safety is another big part.

just trying to make sure that Hoosier families, a lot of them are, are falling behind.

when we look at affordable housing, the we know that there's a big, shortage of affordable housing.

education.

I hope that, we can find a way to do more.

I come from a slightly different perspective also, in terms of the vouchers.

The vouchers we know are here to stay.

and that what I want to see is if we're going to have a program that is going to be trying to do better by your kids.

I just I want to be able to see that transparency.

I want to know the schools that are failing.

And if they're failing, then we need to do something else, because that's a dollar, a lot of dollars going to those particular schools.

I want to just shut down a school, but I want to I want them to succeed the very same as I want to see our public schools succeed.

So, the need is great.

And, are the burden upon us to try to take care of that need is even greater.

So I, too, will be, cautiously optimistic that we're going to find a way, to, do what's right by Hoosier families.

Well, it does sound as if the vouchers will become universal.

The governor wants it.

the majority caucus want it.

Which begs the question, I think Ryan Mishler, last year, you got some eyebrows raised when you talked about time to just dispense with a little fund for scholarships or, as they're called here, voucher scholarship, this much less just once or for all, say, dollars follow, you know, stick the money figuratively in the kid's backpack and send him off and you're still going to be pushing that discussion.

Or are you satisfied with the incremental changes that will yield universal?

Well, what that brought out is just what I thought.

I mean, everybody wanted to protect their kingdom.

And what I thought was ironic was money follows the child, and that's how vouchers started.

But it was the vouchers that gave me the most pushback on the flexibility for the money file the child, because they thought that they would lose the most if we opened it up.

And I said, well, that's kind of funny because that's how you got started, because with public schools, they said the same thing, but we allowed that to happen.

So as a little disappointed in some of the pushback, because all I really did was say, I'm going to do what we say we do, and money actually follow the child and found out that that's not what that's not really what people wanted.

Jeff Thompson where is this going to end up.

I mean I think we everybody agrees universal vouchers are if there's a safe prediction that's it.

Probably true.

And then and then funding.

You know the governor want to see more money for teacher salaries.

have a minimum level I think a $45,000, up from 40, and wants to see, as one of you mentioned, the 2% increase in base tuition support K through 12 in each year of the biennium.

is that palatable to you and your caucus?

and, of course, you can anticipate my next question, which will be about the impact of property taxes on schools.

So feel free to, take all that and run with it.

I think the 2% is probably in a reasonable spot in terms of the total revenue we have right now.

And what we do on property taxes and how to fix schools.

Those all intertwine.

And so those two ideas you really can't separate in your mind.

So they'll be separate bills most likely.

But you have to think at.

Least initially.

At least initially, and think of the two of them together and what it does at the local level.

But right now, and in terms of, the type of money follows a child, the largest is public.

The public is still is where we're in the rural parts of the state.

That's for basically it's public to public and some cases significant, parents vote with, with their feet, so to speak, and how they send in their children.

I think that's the right way to do it.

Ready to give up on the voucher fight?

Great, great.

Absolutely not.

we're going to continue the conversation.

I mean, yes, I mean, it's, minority.

However, I think it's important that we, we continue that conversation.

I mean, we have, you know, 90% of the students, you know, go to public institutions here.

Used to be 95%, right?

They won't be 85%, I guess.

Right.

And so, as you well know, there's some other legislation floating around there that's detrimental to, to some urban schools.

And so we're going to, to.

Do like the teacher raises idea though.

As well.

But, but we be talking about $60,000.

So I mean he said 45,000, from 40 to 45.

And we've been talking about, average, I mean, a 60,000.

Dollars like it, but doesn't go far enough in your estimation.

So not enough.

It's not enough for those individuals who who continue to help mold our children and and work, work hard.

And David needs Gonski.

This notion of, I mean, property taxes really will tell the tale here.

And that's something the governor campaigned on.

He talked about, you know, rolling back perhaps to pre-COVID levels or capping any number of all sorts of solutions.

And in fact, we've seen some of that start to, to gel.

Now, the problem, of course, is, as you all know, property tax dollars, you may decide how much you're going to collect, but they all go to local government.

And I've seen some of the numbers as you have, that show an impact of upwards of $1 billion in each year of the biennium on local government, schools alone.

I think about a half $1 billion impact.

I mean, in certain schools, you know, more hurting more than others.

Is that tenable, do you think, for your caucus?

Well, again, we're at the very beginning.

We saw the governor's budget just last week.

I would, I think there's probably a good chance there are many things that are going to change in the governor's budget.

Of course, the governor's probably going to work hard to see that budget come through.

But that's one area where I think that, we're going to have to have some more work.

that, residential property owners are crying out for property tax relief.

But if you if you reduce one area like agricultural taxes, then you're causing, the residential and business taxes to go up.

So I don't know what the true mechanism for lower people's property taxes is going to cause a much greater burden on our local governments.

I think that they will, it would be good if we give them some form of tools that they can work with to, to accommodate the laws, but at the same time, they're not going to be very happy with us that we've said, well, we're not going to do this or we're going to.

Now it's your turn.

So, I mean, it's a much larger pie we're looking at.

And I that's one area that I would think is a good chance we'll see some changes.

then exactly how the governor has proposed.

Well, one of the tools that you've equipped them with, and you just mentioned the term tools was the referendum route that schools.

Yeah, they had the ability to go and ask their voters to say, hey, we need this new building.

We need to know Jim, the new library, or we need this additional operating expenses.

They're part of the property tax, sort of the attempt to rein in property taxes.

Ryan Mishler is to, for instance, I don't want to say they'd be hamstrung school districts, but they they might not have as much latitude, for instance, they might be able to do those have those votes only in general election years when more people are watching and ostensibly more people can have a say in the process, is there can you have your cake and eat it too?

as the cliche goes on.

The system works.

The system we have, the assessed value system works because property values are going up.

So assessed values are going to go up.

The problem is just because you're assessed value goes up, doesn't mean your property taxes have to go up.

And here's where the catch is, is when the property taxes go the assessed value is go up.

The locals don't adjust their rate, so they have a lot more revenue coming in.

They could easily just the rate and still have a little bit of increased revenue.

Keep the property taxes low and everybody would be fine.

We wouldn't be hearing from the people we're hearing from.

It's because they don't adjust that rate.

So I have a little different thought process that it does work if it all has to do with that rate.

Now, as far as the referendum back in oh seven and when you did the property tax caps, the referendum was the tool for some of the locals to, to bring back some of the lost revenue that they were getting from the caps.

So we don't want to take that away from them.

But the argument is when you have it, sometimes communities have it.

Even in a local election year when the turnout's really low.

So I think the argument is.

Sometimes that's by design, strategic, strategic.

So I think the thought process is by moving it to the general election when you have the largest turnout, more people would have a say.

So I've been supportive of moving them to the general election.

I think you still have the referendum, but I think it's more of an accurate, display of how people would, the ability to vote for it.

Jeff Thompson can can, homeowners fail to breathe easy?

can farmers, I mean, because, again, you push the balloon here and it kind of tends to pop out somewhere else, one person's relief is another person's burden.

I guess you could say when it comes to property taxes, we're.

Going to look at short term.

I call short term, fixes, if you will.

That will help out homeowners and in the short term, but also be a long term look.

And the biggest issue in my opinion is when a local unit today not all now, but for lots of taxpayers, when you lower the rate, the people pay no less.

You raise the rate, they pay no more.

And that causes some really interesting behavior that occurs by local units.

I found nobody yet disagrees with this statement.

When their rate is lower, the taxpayer should pay less.

You raise the rate they should pay more.

And so we could now talk for a couple of hours on all the insight underneath why that's happening.

And then the calls on the local income tax are all intertwined.

But we don't have have two hours, I don't think at least.

Oh well let's go ahead.

Let's just clear it out and let's get your I think you should do your own taxes when you've got a command of, of, the finances like that, you know, another big wildcard, Gregory Porter.

And this is Medicaid funding.

It's the fastest growing part of the budget, kind of nibbling away.

Used to be more than 50% of the budget was k-through-12 education.

Now because largely because of Medicaid, it's 47% out of who's to say what it will be.

How does that problem get fixed this session?

We've been talking about this situation for a number of years now.

I think the gentleman to my right has a bill that is going to attempt to address our Medicare.

Is is reality.

But if we can't build, our budget on the back of the most vulnerable, and I understand Medicaid may, may be, it is on the rise.

however, you know, I think we can those individuals as children, you know, most vulnerable, seniors or access.

We need to make sure that they have good health care and have the services they need.

I understand that it is on the rise.

I mean, but but there's some sometimes that we have to have some real robust conversations and some meaningful outliers out there to take care of citizens.

And I just hope that, the Senate where this is started.

Well, we'll send it over and we can really have some conversations.

It is.

Important.

Well, you mentioned Ryan Mishler, the man of the hour on this issue.

The governor's, spending proposal Give us quick, 22nd down and dirty on what you want to see happen.

I think I, I made people nervous when I used the word scared last time, so I'll just say, for the last few years, this has caused a lot of heartburn for me.

You know, the last budget, we increased Medicaid 2.3 billion.

You know, six months later, we find out it's an additional 900 million.

Now we're 1.7.

So basically over four year period, medicaid's increased by $5 billion.

That rate of increase is greater than our percentage increase in total revenue.

And you can't sustain growth like that.

And as you said, as that ticks up, the percentage of our budget on K-12 ticks down because that was our largest, you know, 50% of the pie.

Now it's down to 47.

So if we don't if we don't get a handle on Medicaid, it is going to to eat into education, other programs.

And I know you're right.

We have to provide services for the vulnerable, but we also have to figure out a way to do it in more efficient ways.

So I think there's a lot of efficiencies that we need to find within the Medicaid program to preserve our other programs.

believe it or not, we are out of time.

I thank you for being here to share your thoughts on, what obviously will be the front burner issue this session.

My guests have been Republican Representative Jeff Thompson of listen, Democratic Representative Gregory Porter of Indianapolis, Democratic Senator David Nizgodski of South Bend, and Republican Senator Ryan Mishler of Mishawaka.

Some Hoosier lawmakers are targeting diversity, equity and inclusion policies in Indiana schools and universities.

Is Dei about to die on the next Indiana lawmakers?

Well, that concludes another edition of Indiana Lawmakers.

Until next week.

Take care.

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