State tax receipts down $141 million so far this fiscal year

By Lesley Weidenbener
TheStatehouseFile.com

INDIANAPOLIS – Republican Gov. Mike Pence ordered universities to cut their state spending by 2 percent and said Monday he will sell a plane as part of a larger plan to account for lower-than expected tax receipts.

Gov. Mike Pence ordered budget cuts on Monday, just days after proposing tax cuts and new spending on preschool. He’s shown here during his speech last Thursday laying out his legislative agenda. Photo by Lesley Weidenbener, TheStatehouseFile.com

Pence will also require state agencies to cut their budgets by an additional 1.5 percent and delay planned spending on the Indiana Biosciences Research Institute.

Combined, the steps are projected to save the state about $57 million in the current fiscal year, which ends on June 30.

So far this year, tax receipts are down about $141 million from projections and are lower than during the same period last year. The state spends about $15 billion annually and at the end of the last fiscal year had about $2 billion in cash in its reserves.

“Fiscal integrity is the foundation of prosperity,” Pence said in a statement. “The cost-saving measures we are implementing today will ensure that Indiana remains fiscally sound during these uncertain times.”

The announcement comes just days after Pence said he will ask the General Assembly to approve significant new spending and more than $1 billion in tax cuts, most of which will hit local governments, not the state.

Pence wants to fund a preschool voucher program for low income children. Senate Appropriations Chairman Luke Kenley, R-Noblesville, has estimated that would likely cost at least $200 million a year.

Pence also wants to spend $400 million for roads that the General Assembly had previously set aside for future projects. And he’s proposed to phase out the tax on business inventory, which helps to fund local governments, schools, libraries and other services.

Kenley said last week that those spending requests should be considered in 2015 in the context of a larger budget debate. Lawmakers wrote the current two-year budget earlier this year.

But Pence’s budget director – Brian Bailey – said in a memo to state agencies that new cuts are necessary to “boost the state’s bottom line.” They include:

-       Requiring state universities to reduce spending by 2 percent, which will save about $26.5 million through the end of the fiscal year.

-       Requiring state agencies to make an additional 1.5 percent in spending cuts for a savings of $25 million. Agencies already had been ordered to cut 3 percent from the amount the General Assembly had appropriated.

-       Selling a King Air plane that has been used by the governor’s office. The plan is expected to fetch $2.5 million.

-       Delaying $2.5 million in spending on the Indiana Biosciences Research Institute, a new collaboration of government, universities and private industries meant to focus on the life science industry.

Officials at Indiana and Purdue universities did not immediately return a message seeking comments about the governor’s order.

The cuts come on top of $110 million savings the budget agency ordered in earlier this year. Those changes included agency cuts and some shifts in spending among funds.

Pence and lawmakers will get a better look at the state’s financial situation next week when a bipartisan committee of fiscal experts presents a revenue forecast that will cover the current and next fiscal year.

That report is designed to help lawmakers make decisions about spending and taxes during the 2014 session of the General Assembly. At the end of the last fiscal year nearly six months ago, the state had about $2 billion in cash on hand.

Since then, however, sales and income taxes have not met projections. Also, an arbitration panel ruled the state would receive $63 million less in tobacco settlement payments, a decision the attorney general has appealed.

Lesley Weidenbener is executive editor of TheStatehouseFile.com, a news website powered by Franklin College journalism students.

 

AG: IRS oversteps authority in imposing employer mandate on schools

INDIANAPOLIS – Another 24 school corporations have joined the lawsuit the State of Indiana and 15 schools filed against the Internal Revenue Service, challenging the multi-million-dollar tax penalties the IRS potentially could impose against state and local governments in 2015 under the “employer mandate” of the Affordable Care Act (ACA).  Plaintiffs today filed an amended complaint in federal court listing 24 additional schools that joined the lawsuit since the original group of 15 schools and the State filed it October 8.

Reiterating the initial complaint, the total 39 schools and the State allege the IRS exceeded its legal authority under the ACA, the federal healthcare restructuring law that Congress passed in 2010.  The IRS this year issued a regulation that has the effect of charging large financial penalties in all states against large employers who do not offer health insurance to those working more than 30 hours per week as full-time employees.  The lawsuit alleges the IRS regulation contradicts specific ACA wording Congress passed, which had authorized the IRS to impose employer-mandate penalties only in those states where state-established health-insurance exchanges exist.  Indiana is one of 27 states that opted not to create a state exchange, meaning the federal government runs an exchange for Indiana residents.

Under the employer mandate, the potential penalty for large employers for non-compliance is $2,000 per employee for all full-time employees in the organization.  The State of Indiana is employer to approximately 28,000 executive branch workers.  In the lawsuit, the State is represented by Indiana Attorney General Greg Zoeller’s office.

“Before being subjected to draconian IRS tax penalties, the State and 39 schools ask the federal court whether they are under federal taxing authority like private-sector employers.  The objective of this case is to defend fundamental state authority to structure our government workforce to provide services; and individuals’ access to health insurance never has been the focus of the suit,” Zoeller said.

The amended lawsuit asks the federal court to issue an injunction blocking the IRS and other federal agencies from applying the unauthorized regulation and penalties against the school corporations and State as government employers.  Plaintiffs also ask the federal court to issue a declaratory judgment finding the IRS regulation as applied to State government and schools is unconstitutional and void under the Tenth Amendment.

“Our State should be protected as is constitutionally guaranteed from federal government overreach under our American system of federalism, and the participation of so many school corporations in the challenge reflects mutual concern that this principle has been undermined by the IRS’s actions,” Zoeller said.

The 24 additional school corporations who joined the lawsuit in the amended complaint filed today are:

• Area 30 Career Center Education Interlocal, Greencastle, Ind.
• Charles A. Beard Memorial School Corporation, Knightstown, Ind.
• Cloverdale Community School Corporation, Cloverdale, Ind.
• Daleville Community Schools, Daleville, Ind.
• Eastern Howard School Corporation, Greentown, Ind.
• East Porter County School Corporation, Kouts, Ind.
• Eminence Community School Corporation, Eminence, Ind.
• Fayette County School Corporation, Connersville, Ind.
• Greencastle Community School Corporation, Greencastle, Ind.
• Monroe Central School Corporation, Parker City, Ind.
• Nettle Creek School Corporation, Hagerstown, Ind.
• Northeastern Wayne School Corporation, Fountain City, Ind.
• North Putnam Community School Corporation, Bainbridge, Ind.
• Northwestern School Corporation, Kokomo, Ind.
• North West Hendricks School Corporation, Lizton, Ind.
• Old National Trail Special Services Cooperative, Greencastle, Ind.
• Salem Community Schools, Salem, Ind.
• Shelby Eastern School Corporation, Fairland, Ind.
• South Gibson School Corporation, Fort Branch, Ind.
• South Putnam Community School Corporation, Greencastle, Ind.
• Taylor Community School Corporation, Kokomo, Ind.
• Union School Corporation, Modoc, Ind.
• Western School Corporation, Russiaville, Ind.
• Western Wayne Schools, Pershing, Ind.

The original15 school corporations who were plaintiffs along with the State in the initial complaint October 8 are:

• Metropolitan School District of Martinsville, Martinsville, Ind.
• Perry Central Community Schools, Leopold, Ind.
• Benton Community School Corporation, Fowler, Ind.
• Community School Corporation of Eastern Hancock County, Charlottesville, Ind.
• John Glenn School Corporation, Walkerton, Ind.
• Monroe-Gregg School District, Monrovia, Ind.
• Mooresville Consolidated School Corporation, Mooresville, Ind.
• North Lawrence Community Schools, Bedford, Ind.
• Northwestern Consolidated School District of Shelby County, Fairland, Ind.
• Shelbyville Central Schools, Shelbyville, Ind.
• Southwest Parke Community School Corporation, Montezuma, Ind.
• Vincennes Community School Corporation, Vincennes, Ind.
• Madison Consolidated Schools, Madison, Ind.
• South Henry School Corporation, Straughn, Ind.
• Southwestern Jefferson County Consolidated School Corporation, Hanover, Ind.

The 39 school corporations are represented by Bose McKinney & Evans LLP, while the State is represented by the Attorney General’s Office.

No court dates have been scheduled yet in U.S. District Court for the Southern District of Indiana.  No response has been filed yet by the federal defendants, which include the IRS and its acting commissioner Daniel Werfel, the U.S. Department of Health and Human Services and HHS Secretary Kathleen Sebelius, the U.S. Department of Treasury and Secretary of the Treasury Jacob Lew, and the U.S. Department of Labor and Labor Secretary Thomas Perez.

NOTE: The amended complaint in State et al v. IRS et al is at this link.

A recent opinion piece by Indiana Attorney General Greg Zoeller on the lawsuit is at this link.

More information about the State et al v. IRS et al lawsuit is at this link.

INDIANA UNIVERSITY
REQUEST FOR PROPOSAL
FOR THE DEVELOPMENT OF A MULTI-INSTITUTIONAL ACADEMIC HEALTH
SCIENCE AND RESEARCH CENTER IN EVANSVILLE, INDIANA

PROJECT NUMBER 20131788

Request for Proposals Issued December 9, 2013

Time and Date of Pre-Proposal Conference – I

Time and Date of Pre-Proposal Conference – II

11:00am (CST) December 19, 2013

11:00am (CST) January 22, 2014

Location of Pre-Proposal Conference Old National Bancorp

Richard A. Schlottman Auditorium
Fourth Floor
1 Main Street
Evansville, IN 47708

Deadline to Submit Proposals to Indiana University January 31, 2014

Anticipated Review Period February 2, 2014- Feb. 28, 2014

Contract Negotiation & IU Board of Trustee Approval March – April, 2014

Project Planning Start Date May, 2014

Project Construction Pending Funding 2015-2017

Project Open for Occupancy July 1, 2017

Prospective bidders to the project may visit the official IU website for more details. www.iuplanroom.com

All questions regarding the proposal must be submitted in writing to John M Lewis, Associate Vice President for Capital Planning & Real Estate: jmlewis5@indiana.edu