Gov. Eric Holcomb lays out big spending priorities for education, public health

Gov. Eric Holcomb is calling for a record-breaking increase in funding for the state’s K-12 schools as part of a $43 billion two-year budget proposal — a roadmap of priorities for his final two years in office.

Over the course of the next two years, Holcomb is calling on the state to spend $5.5 billion more than it did during the previous biennium. In addition to a $1.2 billion increase in K-12 tuition support, he’s calling for a major investment in the state’s public health system, a boost in higher education spending, a raise for state employees and another round of economic development grants for local communities.

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He laid out his vision during a speech at an elementary school on the far east side of Indianapolis, providing a charge to lawmakers who return to the Statehouse next week for the 2023 legislative session. While the governor proposes a budget, it's lawmakers who actually write the state's two-year spending plan and there are often differences — sometimes big ones — between the spending priorities of the governor and those of the majority, even with Republicans controlling every aspect of state government.

To fulfill his vision, Holcomb is frontloading his budget and proposing approximately $2.5 billion in new spending in the first year of the biennial budget and an additional $500 million in the second year. The $43 billion ask is a marked increase from the previous budget, written in 2021, which was considered groundbreaking at the time when a windfall from the April revenue forecast — delivered just weeks before the budget was set to be finalized — allowed lawmakers to spend $37.4 billion over two years.

Here are the highlights from Holcomb’s agenda proposal:

Big boost to education

Holcomb is calling for a 6% increase to K-12 tuition support in the first year and an additional 2% increase in the second year of the budget for nearly $1.2 billion in new money for schools. It would build on the historic increase schools received in the last budget, which was designed to boost the state’s flagging teacher salaries.

The state’s minimum and average pay have increased over the last year, from less than $54,000 in 2021 to $56,600 last year. Should his budget be adopted, Holcomb will push for the bulk of these new dollars to continue going toward teacher pay with the goal of raising the state’s average to $60,000 before he leaves office.

Even with what looks like a large increase, though, that could be a hard target to hit while schools are also contending with inflation. Inflation over the last year topped 7%, meaning that even the 6% proposed increase fails to keep pace.

He’s also proposing to eliminate textbook fees with a new $160 million appropriation to cover the cost of books and other curricular materials. Indiana is one of seven states that currently allows schools to charge families textbook fees.

Holcomb’s budget also calls for matching increases for the state’s public colleges and universities. A 6% increase in the first year and 2% in the second year of the budget would cost $184 million over the biennium.

His budget also increases eligibility in the state’s On My Way Pre-K program to families earning up to 138% of the federal poverty limit — an additional 5,000 families. His budget would use federal funds to cover the cost initially and then state funds would cover the $15 million expense.

'We need to get healthier'

Indiana ranks near the bottom in many health outcomes, something Holcomb said needs to change. He convened a group to study the issue and is calling for his budge to fund a large chunk of what that commission recommended — though not all of it. Lawmakers had already signaled they would not be prepared to fully fund the original ask, which was for $242 million in new public health dollars each year.

Instead, Holcomb is asking for $120 million in the first year and $227 million in the second year of the budget. The vast majority of that would be directed to local county health departments to expand their programs and standardize governance, infrastructure and services to all 92 counties.

"We need to get healthier," Holcomb said. "There are no two ways about it."

Another round of READI grants

Holcomb is asking lawmakers for another $500 million to fund another round of the Regional Economic Acceleration and Development Initiative. The first round of READI grants, funded with federal rescue dollars, were awarded to regional participants that covered all 92 counties to fund economic development projects.

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In addition to community development efforts designed to attract workers to live in Indiana, Holcomb is also proposing a raft of workforce initiatives to develop the skills of under-educated Hoosiers. One of those is a pilot program that would incentivize adults receiving unemployment benefits to earn their high school diploma by awarding them up to $4,000 for completing a diploma or equivalency program.

The governor is also asking for $300 million annually for the Indiana Economic Development Corp. to create a "deal closing" fund, an annual $300 million tax credit cap and a one-time investment of $150 million to create a revolving fund for site acquisition to help attract new businesses to the state.

Pay raises for state employees

Teachers aren't the only state employees who would potentially see a raise under Holcomb's proposed budget. His agenda also includes $160 million to fund raises for other state employees, in alignment with a compensation study implemented late last year to attract and retain state workers.

He’s also proposing to raise the state pay for state police troopers to $70,000, up from the current starting rate of $53,690.  

Holcomb's budget proposal would also spend some additional revenue from the current fiscal year to offset the impact of inflation on current capital projects. The price tags on four major projects — the new Westville Correctional Facility, a new state archives building, co-locating the state’s blind and deaf schools and a new state park inn at Potato Creek State Park — have ballooned since they were budgeted. Holcomb is proposing the state take $1.25 billion from the current fiscal year, which has exceeded earlier revenue projections, to complete them.

Budget-writing up to Republicans

Holcomb's team is expected to present his detailed budget proposal to key lawmakers at the state budget committee Thursday. Indiana General Assembly leaders said in statement Wednesday that they were ready to work with the governor on at least some of his priorities.

"We share the governor's goals of improving our public and mental health infrastructure and providing new funding to that end, as well as paying down the pre-1996 Teachers’ Retirement Fund, supporting law enforcement and continuing to fully fund the state’s K-12 public education," said Senate President Pro Tempore Rodric Bray, R-Martinsville.

Statehouse Democrats, though, questioned how far that support would go. House Democratic Leader Phil GiaQuinta, D-Fort Wayne, applauded Holcomb's proposals to eliminate textbook fees and make "historic investments in public health."

"Democrats and Gov. Holcomb are on the same page and I’m glad to see support for the ideas we’ve championed for years," he said in a statement released Wednesday afternoon. "But I’m afraid the real question is whether Statehouse Republicans are as forward-thinking as Statehouse Democrats and the governor.”  

The budget committee is set to meet Thursday at 10 a.m. The legislative session starts Jan. 9.

Call IndyStar state government & politics reporter Arika Herron at 317-201-5620 or email her at Arika.Herron@indystar.com. Follow her on Twitter: @ArikaHerron.