Indiana GOP senators not keen on governor’s tax rebate plan

July 21, 2022 GMT
Senate President Pro Tem Rodric Bray, R-Martinsville, and State Sen. Sue Glick, R-LaGrange, outline proposed legislation on abortion and financial relief at the Statehouse in Indianapolis, Wednesday, July 20, 2022, that will be introducing in the upcoming special session. (AP Photo/Michael Conroy)
Senate President Pro Tem Rodric Bray, R-Martinsville, and State Sen. Sue Glick, R-LaGrange, outline proposed legislation on abortion and financial relief at the Statehouse in Indianapolis, Wednesday, July 20, 2022, that will be introducing in the upcoming special session. (AP Photo/Michael Conroy)
Senate President Pro Tem Rodric Bray, R-Martinsville, and State Sen. Sue Glick, R-LaGrange, outline proposed legislation on abortion and financial relief at the Statehouse in Indianapolis, Wednesday, July 20, 2022, that will be introducing in the upcoming special session. (AP Photo/Michael Conroy)
1 of 3
Senate President Pro Tem Rodric Bray, R-Martinsville, and State Sen. Sue Glick, R-LaGrange, outline proposed legislation on abortion and financial relief at the Statehouse in Indianapolis, Wednesday, July 20, 2022, that will be introducing in the upcoming special session. (AP Photo/Michael Conroy)
1 of 3
Senate President Pro Tem Rodric Bray, R-Martinsville, and State Sen. Sue Glick, R-LaGrange, outline proposed legislation on abortion and financial relief at the Statehouse in Indianapolis, Wednesday, July 20, 2022, that will be introducing in the upcoming special session. (AP Photo/Michael Conroy)

INDIANAPOLIS (AP) — A proposal from Indiana’s governor to give each taxpayer a $225 rebate from the state’s surging budget surplus would be scuttled if legislators were to adopt a much more modest plan from by state Senate Republicans.

The refund payments Gov. Eric Holcomb proposed would total about $1 billion, while the plan that the Senate released Wednesday and will take up next week focuses on suspending state utility taxes with savings to residents of about one-quarter that amount.

The leaders of the Republican-dominated House back Holcomb’s proposal and have put forth a bill that would distribute about 16% of the state’s record $6.1 billion in cash reserves through the rebate payments.

While Holcomb has described the payments as inflation relief, Republican Senate President Pro Tem Rodric Bray said he had “trepidation” about further fueling inflation with the rebate.

The Senate proposal would suspend the state’s 7% sales tax on electricity, water, natural gas and other utility bills for six months, which Republicans estimate would save customers about $260 million.

ADVERTISEMENT

The plan would also cap until next summer the state’s gasoline taxes at about one cent less than the current record level of 62.1 cents a gallon. Republican legislators for several months have rebuffed calls from Democrats to suspend the gasoline taxes to help motorists.

“We believe suspending the sales tax on utilities and capping fuel taxes is the best way to go to provide relief to nearly all Hoosiers and ensure that money stays in the state,” Bray said.

Republican House Speaker Todd Huston, however, has fully endorsed the governor’s rebate plan, saying the state’s budget condition “shows an incredibly strong economy and it underscores why providing this refund is not only fiscally prudent, it’s the right thing to do by Hoosiers.”

House and Senate leaders both plan to advance their tax-related proposals next week after Monday’s start of a special legislative session during which lawmakers will also debate a bill aimed at tightening the state’s abortion restrictions. The session currently must end by Aug. 14.

Some Republican senators have raised worries about spending the state’s cash reserves on refunds when inflation is increasing the cost of state construction projects. The Senate bill would direct $215 million to cover rising construction costs and $400 million toward a teacher pension fund’s future obligations.

Senate Democratic Leader Greg Taylor faulted the Republican proposal for doing little to help families or address pressing needs around the state.

“Where’s teacher pay?” Taylor said. “Where’s support for families and childcare? Where’s support for families that need assistance just to get by?”