Conservative group that supports spending cuts, Right to Work to lobby for Pence tax cuts

AFP will run TV ads in Indianapolis, elsewhere

INDIANAPOLIS - A conservative group is launching television and radio advertisements aimed at pressuring reticent Indiana Republican legislative leaders into writing Gov. Mike Pence's proposed income tax cut into the state's next two-year budget.

The Indiana chapter of Americans for Prosperity, a tea party-fueled organization funded by the Koch brothers, will launch a "six-figure" advertising buy in Indiana and accompany it with emails, phone calls and door-to-door efforts.

Its goal is the same as Pence's: To lower Indiana's individual income tax rate from 3.4 percent to 3.06 percent, a move that would save taxpayers – and lower state revenue – by about $520 million annually.

The group's new campaign will send a message to Republicans who dominate both chambers of the Indiana General Assembly after winning supermajorities in November's election, said Tim Phillips, Americans for Prosperity's national president. 

"This is meant to encourage them – to show them that there are folks that have their back," Phillips said. "A lot of Indiana families, and I think the nation really, is watching to see what they're going to do with this power. Are they going to kind of float along with the comfortable status quo, or is it going to be a genuinely bold attempt to get this economy moving again?"

Legislative leaders have balked at the tax cut because they prefer to boost education and transportation funding. The House did not include it in the budget the chamber passed, and key senators have said they are hesitant, as well.

Senate Appropriations Committee Chairman Luke Kenley, the Noblesville Republican who is his chamber's top budget-writer, said Indiana is already in the process of stepping down the state's corporate income tax and phasing out its inheritance tax.

Pence's proposed income tax cut "sort of cuts across our present plan, and I think the trick is going to be, how do we meld these plans together and still fund the things that we think are priorities?" Kenley said. "Obviously we want to fund schools, we want to fund roads, we want to fund higher education, and even a conservative Republican would say these are the kind of investments in the future that you have to make. So we have to reach that right balance."

Kenley said he wonders whether Americans for Prosperity event know how much Indiana has done to reduce taxes in recent years.

"I doubt if they have any idea what we've done in the past," Kenley said. "I think this is kind of the idea of the day, and it's important to them so they're going to try to push on it."

Both Kenley and House Speaker Brian Bosma, R-Indianapolis, said Thursday that a key moment will come on April 17, when an updated forecast of how many tax dollars Indiana will take in over the next two years is released.

That forecast will trigger an intense period as the legislature speeds toward the April 29 end of its 2013 session. Lawmakers say the rosier Indiana's revenue picture looks, the more likely Pence is to get the top item on his first-year legislative agenda.

The Americans for Prosperity ad is a one-minute spot styled after one that former Gov. Mitch Daniels once ran.

It starts with powerful music and green-and-white headlines that tout the state's economy and its surplus. Then, it abruptly switches to foreboding music and red-and-white headlines that point to House Republicans' decision to exclude Pence's tax cut from their budget.

Bosma said Thursday that lawmakers have cut 10 different taxes over the last decade, and are sending $360 million back to Hoosier income tax filers as credits during this year's tax-filing season.

The House Republican budget sped up the pace at which Indiana would phase out its inheritance tax. Under current law, that tax would be gone by 2022. The House's budget would eliminate it by 2018.

"There's going to be a tax cut by the time we're out of here, I'm confident about that," Bosma said. "The question is which tax, how much, and when. My pledge is, we're going to do the right tax in the right way in the right time."

Pence's budget proposal included a 1 percent bump in education funding during its first year, and more to divvy up through performance-based measure in his spending plan's second year.

House Republicans, meanwhile, boosted education funding by 2 percent in their budget's first year and another 1 percent in its second year. Bosma said they aimed to raise K-12 education funding to its 2009 levels, prior to a cut Daniels ordered as the state grappled with the economic downturn.

After setting aside 12.5 percent of what the state spends in a year in reserves, Pence's budget also would have sent half the remaining surplus – if revenues meet projections, that'd be about $347 million after closing out the current budget period

and next one in two years – for transportation.

House Republicans, though, said municipal officials are desperate for more guaranteed transportation dollars. Their budget included $250 million per year in extra transportation funding, and that money would not be subject to economic upticks or downturns.

"You can't be the 'Crossroads of America' if you have a crumbling infrastructure," Bosma said.
 

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