INDIANAPOLIS (WISH) — There's an agreement on a new state budget proposal that includes a cut in the state income tax. It's not the cut the governor wanted.
Mike Pence sought a 10 percent immediate cut in the in the state income tax. He's getting a 5 percent cut that will be phased in over a period of more than three years.
The first cut won't take effect until January of 2015. It's a 3 percent cut. The second, smaller cut will take place in 2017.
By then, if you make $50,000, it will save you $85 a year. GOP House Speaker Brian Bosma revealed the budget agreement first calling the tax cuts responsible.
"It's at the right amounts, it's at the right time to be sustainable for the future," said Bosma.
The GOP governor didn't get what he wanted but his office issued a statement nevertheless, calling the agreement a "great victory for taxpayers." Mike Pence echoed the speaker calling it "the right tax relief at the right time."
State Senate budget negotiator Luke Kenley (R-Noblesville) pointed out that the time is not yet here.
"Actually the first cut does not begin til January 1st of 2015," he said, "so there's a delay in that." Kenley also suggested that lawmakers could reverse the second tax cut before 2017 if state revenues fail to meet expectations.
The state budget also has new money for roads and increases for public schools.
"This will be the most money appropriated for public schools in state history," said Speaker Bosma.
The agreement also calls for elimination of the inheritance tax and cuts in corporate taxes.
The Tea Party group American for Prosperity spent thousands on ads seeking public support for the governor's tax cut.
It issued a statement in support of this budget agreement. Both the state Senate and the Indiana House will vote on it Friday. With Republican super majorities in both houses, passage is guaranteed.
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