GOP, Pence continue Statehouse tax cut battle; tea party group joins on Pence's behalf

House Speaker calls campaign for cuts 'erroneous'

INDIANAPOLIS - A tea party group's effort to pressure Indiana lawmakers into supporting Gov. Mike Pence's push for a slight income tax cut is "erroneous" and could backfire, a top legislative Republican said Thursday.

House Speaker Brian Bosma, R-Indianapolis, said the governor isn't being helped by a television and radio advertising campaign launched by Americans for Prosperity, a conservative organization funded by the Koch brothers.

He said Pence's team did little to consult with leaders in the Republican-dominated General Assembly before announcing his proposal to lower Indiana's individual income tax from 3.4 percent to 3.06 percent on the campaign trail last year.

Had Pence done so, Bosma said, he might have avoided the conflict with lawmakers who are hesitant to approve a tax cut that would chop $520 million annually out of the state's budget and would save individuals around $100 on average per year.

"We had about 45 minutes' notice or less before it was announced. I really discouraged the announcement at the time so that we could give it some more analysis. We've had a long history of well-thought out, smart tax cuts here," Bosma said.

He said Republicans are still willing to consider the governor's tax cut proposal, but that if Pence's team had vetted their idea with lawmakers, his campaign might have suggested cutting a different tax.

"Had we had a thorough discussion and had the opportunity to have some input on the history and the context over the last 10 years, they might have picked a different one, in all honesty," Bosma said.

The two leaders have been at odds for months over the wisdom of Pence's tax cut proposal.

Pence's administration has proposed a two-year, $29 billion budget with modest increases in education and transportation funding. House Republicans approved one that drops the Pence tax cut in favor of more funding for schools and roads.

Pence has said the state can both fund its priorities and cut the income tax, but Bosma said he wants to use some of the state's surplus to retire its debts and to restore K-12 education funding to its levels before economy-driven cuts that former Gov. Mitch Daniels implemented three years ago.

On Thursday, State Superintendent of Public Instruction Glenda Ritz told the budget-writing Senate Appropriations Committee that schools need more funding. Mayors, meanwhile, told the panel that their local roads budgets have been pummeled by the recession and are in need of more state assistance.

Asked about Bosma's comments, Pence's office said it is confident that the governor's proposal to cut the state's income tax will land in the final version of the two-year budget that lawmakers approve before the April 29 conclusion of this year's legislative session.

"Governor Pence remains confident that all concerned will come together and produce a fiscally-sound budget that funds our priorities and includes the kind of income tax relief that Hoosiers need and deserve," said Pence communications director Christy Denault.

Pence said he encouraged Americans for Prosperity to advertise with a more positive tone.

"We wanted to show that there was frustration out there with the way the budget process has been going," said Chase Downham, the Indiana state director for Americans for Prosperity, told the Evansville Courier & Press on Wednesday. "This is not a personal attack on them. It's not an attack on the Republican Party. It's not an attack on a particular caucus. We fight for taxpayers and for less government spending."

The Americans for Prosperity ads accuse House Republicans of passing a budget that spends $1 billion more than Pence's.

That's not true, Bosma said. His staff handed reporters a fact sheet titled: "The Truth about the House Budget."

"We thought we'd put a little truth sheet together for you so you can see just exactly how exaggerated some of the claims are," Bosma said. "When my wife and I pay down our mortgage, we don't count that as spending – we count that as smart, conservative budgeting."

A huge chunk of the difference comes in the area of transportation funding. The House's budget includes $250 million each year more for state and local roads budgets, for a total of $500 million over the biennium.

Pence proposes increasing transportation funding by $347 million, but that money isn't counted in his budget's bottom line because it would come out of what's left over as a surplus, even though House leaders argue that money should be included in any comparison.

House Republicans' budget uses $197 million to pay off the state's long-term debts, puts $300 million in the state's tuition reserve account in case education funding cash dries up, and speeds up Indiana's current nine-year phase-out of the inheritance tax.

"These paid advertisements

are completely erroneous, and we really haven't seen an outpouring of folks, even with erroneous information, saying that they'd rather have this at this point as well," Bosma said.

A reporter asked Bosma how he felt about being cast as a "RINO" – Republican in name only – by a supporter of Pence's tax cut proposal.

"Wow – if I'm a RINO, I think we're all in trouble. I'm a pro-life, pro-tax cut, conservative budgeter, and I'm happy where I am," Bosma said. "Labels don't matter much – particularly labels from folks that don't live around here."

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