INDIANAPOLIS — The question of how Indiana should spend approximately $35 billion in tax revenue over the next two years now is in the hands of the Republican-controlled Senate.

On Monday, the Republican-controlled House voted 65-32, along party lines, to approve in House Bill 1001 its spending priorities for the 2020-21 budget period, which begins July 1, 2019.

The biennial budget legislation allocates 50 percent of state revenue to kindergarten-through-12th-grade education, with an additional 12 percent for state colleges and universities.

Medicaid comprises 15 percent of appropriations, health and human services 9 percent, general government 6 percent, corrections 4 percent, public safety 2 percent, and state building projects 2 percent.

The budget features an annual surplus in both years, with Indiana spending $63 million less than projected tax collections in 2020, and $55 million less than its 2021 revenue.

That keeps the state's reserve funds around $1.9 billion, or about 11.5 percent of annual spending, an amount lawmakers believe will maintain Indiana's highest-possible "AAA" credit rating that ensures low interest rates for state and local borrowing needs.

The legislation increases elementary and high school funding by 2.1 percent in the first year of the budget and 2.2 percent in the second.

Altogether, K-12 schools will see approximately $611 million in new money, including $70 million a year in local funds freed up through a change in the teacher pension contribution rate paid by school corporations.

Education funding, however, will continue following each student. So districts with projected enrollment declines will receive fewer dollars in total, even as the basic grant for each student grows 1.7 percent in 2020 and 2 percent in 2021.

The legislation also boosts school safety funding to $19 million a year, adds $286 million for the Indiana Department of Child Services, spends $3.3 million on new infant mortality prevention programs, fully funds state college scholarship and Medicaid cost increases, grows funding for workforce training programs, dedicates $10 million to election security improvements and puts $150 million toward deferred maintenance at state buildings and parks, among other provisions.

It also continues the $12 million in annual state support for the South Shore Line's double-track project and West Lake expansion.

"This budget is financially responsible, it doesn't raise taxes, keeps us on our strategic path for economic growth and prioritizes our investments," said state Rep. Todd Huston, R-Fishers, co-chairman of the House Ways and Means Committee.

Democrats argued that the budget doesn't do enough for working families, especially minimum wage workers who will not see a pay increase, and teachers who are not guaranteed a pay hike despite all the additional money for Indiana schools.

They also said Indiana can afford to do more than just maintain funding levels for essential programs, such as food banks, senior citizen health care, disability services, pre-kindergarten education, community mental health and tobacco cessation, among others.

"We need to do better," said state Rep. Greg Porter, D-Indianapolis, the House Democrats' budget chief. "Unfortunately, this budget, yet again, has neglected the human infrastructure of our state."

State Rep. Vernon Smith, D-Gary, bemoaned that charter schools and private school vouchers continue gobbling up education funding at the expense of local public schools, especially urban districts, which he said are struggling to meet the needs of their students.

"If all these alternative forms of education were great, they wouldn't just be in the 'hood," Smith said. "They would be in suburbia. You don't see the charter schools in suburbia. You don't see vouchers in suburbia."

In response, Huston pointed out that Indiana's traditional public schools still receive 93.3 percent of state education funding, while only serving 92.2 percent of Hoosier students.

The Senate Appropriations Committee next week is scheduled to begin its assessment of the House-approved budget.

The committee also will conduct an independent review of Indiana's spending needs.

The budget proposal ultimately approved by the Senate, likely in mid-April, will be the basis for negotiations between the Senate, House and Republican Gov. Eric Holcomb over a final spending plan that must be re-approved by both chambers on or before April 29.

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