(INDIANAPOLIS) - A senate committee has approved an automatic tax rebate for Hoosier taxpayers once the state's budget picture brightens.
But one taxpayer activist complains the idea has already been gutted. Governor Daniels suggested during his reelection campaign the state should issue automatic rebates to taxpayers whenever Indiana's reserves top 10% of the state budget.
There's no chance the state will meet that standard this year, as it struggles to keep spending in check without cutting services too deeply.
The governor has argued that makes it a perfect time to consider the rebate idea on its own merits, without the lure of a check waiting to go in the mail. Watchdog Indiana founder Aaron Smith says Daniels' original idea was a good one. But he told the Senate Tax and Fiscal Policy Committee a subtle change in the bill renders the proposal meaningless. The committee's revised bill now calls for the rebate to kick in if the unobligated surplus is more than 10% of spending.
That means specific reserve accounts, including the Rainy Day Fund and the Medicaid and tuition reserves, wouldn't count in the calculation. Smith contends that means there's no way taxpayers would ever see a dime. Indiana closed the last fiscal year with a total reserve of $1.4 billion, 10.9% of the amount budgeted for the year.
The unobligated reserve was just 4.6%. The committee approved the bill 10-1, with South Bend Democrat John Broden casting the only "nay" vote. The full senate will consider the bill next week.
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