Political analysts: K-12 cuts unlikely as lawmakers face revenue gap

By GARRETT BERGQUIST
WISH-TV | wishtv.com

Two members of Indiana’s best political team on Friday said they suspect lawmakers will find a way to avoid cutting K-12 funding to close a revenue gap.

State lawmakers on Wednesday afternoon learned they are now projected to have $2.4 billion less to work with between now and the end of the 2027 budget year than they thought. The legislature’s top budget writers said all options are on the table in terms of spending cuts or tax increases. Both Republicans and Democrats said they will do everything they can to avoid cutting K-12 education, which accounts for 47 percent of the state’s budget.

Senate President pro tempore Rod Bray, R-Martinsville, said lawmakers will work through the weekend, and he hopes to have a budget proposal ready by Monday.

Hamilton County Republican Party Chair Mario Massillamany said he suspects lawmakers will find a way to preserve K-12 funding.

“I think both sides have decided (cutting K-12 funding is) not something that they’re going to get done,” Massillamany said. “The House, the Senate, Democrats, Republicans, they’ve agreed that, I believe, that education is one thing they will not put on the table as a cut. So, I think that there are still opportunities to make sure that we cover this revenue shortfall.”

Democrats have said the state needs to look for extra revenue. House Minority Leader Phil GiaQuinta, D-Fort Wayne, and the House Ways and Means Committee’s top-ranking Democrat, Rep. Greg Porter, both have said the state should raise its cigarette tax, a move Democrats and some House Republicans have long advocated. Senate Minority Leader Shelli Yoder, D-Bloomington, said the state could raise nearly $3.6 billion over the next two years with measures including a managed care assessment fee, or MCAF, on health insurers to help cover Medicaid costs and legalizing and taxing marijuana.

Massillamany said Republicans likely will be amenable to raising Indiana’s cigarette tax, currently the 13th-lowest in the country. He said it’s extremely unlikely lawmakers will go for legalizing marijuana for revenue purchases, and such a move should only be considered as a last resort.

Democratic strategist Lindsay Haake said lawmakers should seriously consider the assessment fee idea. Besides covering the revenue shortfall, she said it would help take care of Indiana’s Medicaid waitlist.

“These are kids that, sadly, will not get better that are on these waivers, and so we can’t have waitlists for that type of funding,” Haake said. “They have to get that care.”

State budget analysts told lawmakers they had to revise their revenue estimates downward because of weaker-than-expected job growth and a drop in corporate income tax revenue due to economic uncertainty caused by President Donald Trump’s tariffs.

On Thursday, former state Sen. Jim Merritt told News 8 it’s too soon to tell how the tariffs will affect tax revenue. Massillamany said he agreed. He pointed to short-lived tariffs earlier this year against Canada and Mexico and said something similar could happen with China over the coming months. Still, he said Indiana is particularly vulnerable to tariff wars with China because China accounts for such large share of its exports – $5.1 billion last year, according to the Office of the U.S. Trade Representative.

Haake said the tariff war further compounds challenges Indiana’s most vulnerable already face because it threatens the programs they rely on.

“You’re essentially playing a game where the poorest and most vulnerable citizens are a pawn in the political conversation at the Indiana Statehouse,” Haake said, adding no one yet knows if Congressional Republicans will be able to follow through on their proposed $880 billion federal budget cut without cutting Medicaid, Medicare, or Social Security.

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This story was originally published by WISH-TV at wishtv.com/news/allindianapolitics/political-analysts-k-12-cuts-unlikely-as-lawmakers-face-revenue-gap.