Braun backs up his tough talk with cuts in the state budget

Gov. Mike Braun’s proposed budget is only step one in the process. (Getty Images)

Gov. Mike Braun has no patience for local governments upset by possible property tax cuts. He has told them directly they have grown too fast and it’s time to get back to reality. And, to his credit, he is doing the same thing with state government in the budget he proposed to lawmakers.

I recently drilled down into Braun’s budget proposal to see how he is handling state finances. Starting with a wide-angle lens, he is growing general fund state expenditures only 2% the first year of the biennium and 1.7% in the second year. In comparison, expenses grew 4% this year under the budget passed by lawmakers and signed by Gov. Eric Holcomb in 2023.

At the same time, Braun’s budget proposes almost $700 million in tax relief for Hoosiers: from eliminating taxes on retirement income and tips to a new tax credit for farmers and a sales tax holiday for school supplies.

So, how is he dealing with modest revenue growth and giving tax cuts at the same time? The answer: he isn’t giving agencies and officeholders what they want.

Slashing spending

Braun flatlines the operational budget of the Secretary of State’s Office, Office of the Attorney General and Office of the State Comptroller. Also in the secretary of state’s budget, he reduces election security and voter education outreach funding.

The Lieutenant Governor’s operational budget was also slightly reduced. And several programs that the office oversees will take hits. For instance, the Office of Community and Rural Affairs line item drops 28%; rural economic development was zeroed out and the Indiana Destination Development Corporation would see funding drop from $20 million a year in the last budget to $5.5 million a year.

Under the Indiana Economic Development Corporation, the 21^st Century Research and Technology Fund drops from $32 million to $20 million a year; the Manufacturing Readiness Grant is halved to $10 million a year; Braun wipes out programs for direct flights as well as business promotion and innovation.

Large pots of money for site acquisition and deal-closing that used one-time excess dollars are not renewed.

Breaking down the fiscal issues that will dominate 2025 legislative session

There are currently no capital projects in Braun’s budget — either for state facilities or higher education.

As for agencies, he flatlined the Indiana Department of Health operational budget while also cutting a major public health initiative. He dropped slightly the base budget for the Bureau of Motor Vehicles and Indiana Department of Environmental Management.

Some agencies will still see significant growth, such as the Indiana Department of Correction and Indiana State Police.

Most of the agency numbers I compared are operational base budgets from the general fund and don’t include separate line items that might be covered by other direct appropriations or revenue streams.

But it’s clear Braun is following his own guidance to local governments and tightening the state’s belt. There is an important caveat about these cuts, though.

Right now, they are just numbers on a page — how those savings are achieved is key. Will Hoosiers see diminished service? Or, what opportunities will be lost by cutting taxes instead of investing strategically in education, health or other vital needs?

The Indiana House will now have its say, releasing its own version of the budget next week. We are far from the end, but Braun started the process with a bang.