INDIANAPOLIS — A proposal by the Indiana governor to give each taxpayer a $225 rebate on the state’s growing budget surplus would be scuttled if lawmakers were to pass a much more modest plan from Senate Republicans. State.
Gov. Eric Holcomb’s proposed rebate payments would total about $1 billion, while the plan the Senate released Wednesday and will pass next week focuses on suspending utility taxes with savings for residents of about a quarter of that amount.
Leaders in the Republican-dominated House support Holcomb’s proposal and have introduced a bill that would distribute about 16% of the state’s record $6.1 billion cash reserves through refunds.
While Holcomb described the payments as a relief from inflation, Republican Senate Speaker Pro Tem Rodric Bray said he had ‘apprehension’ about fueling inflation further with the reimbursement .
The Senate proposal would suspend the state’s 7% sales tax on electric, water, natural gas and other utility bills for six months, which Republicans say would allow customers save about $260 million.
The plan would also cap state gasoline taxes through next summer at about one cent lower than the current record high of 62.1 cents per gallon. Republican lawmakers for several months have pushed back on calls from Democrats to suspend gasoline taxes to help motorists.
“We believe suspending the utility sales tax and capping fuel taxes is the best way to relieve nearly all Hoosiers and ensure the money stays in the state,” Bray said.
Republican House Speaker Todd Huston, however, fully endorsed the governor’s reimbursement plan, saying the statement of the state budget “shows an incredibly strong economy and it underscores why providing this reimbursement does not is not only fiscally prudent, it is the right thing for Hoosiers to do.”
Both House and Senate leaders plan to advance their tax proposals next week following the start of a special legislative session on Monday in which lawmakers will also debate a bill to tighten restrictions on state-mandated abortion. The session is currently due to end on August 14.
Some Republican senators have raised concerns about spending state cash reserves on reimbursements when inflation increases the cost of state building projects. The Senate bill would direct $215 million to cover rising construction costs and $400 million for future obligations of a teachers’ pension fund.
Senate Democratic Leader Greg Taylor faulted the Republican proposal for doing little to help families or address urgent needs in the state.
“Where is the teacher’s salary? Taylor said. “Where is the support for families and child care? Where is the support for families who need help just to get by?”