Senate Republicans balk at Holcomb’s tax refund proposal

Signaling their opposition to Gov. Eric Holcomb’s plan to issue $1 billion to Hoosier taxpayers in the form of $225 tax refund checks, Indiana Senate Republicans presented an alternate plan Wednesday to provide some financial relief for Indiana residents during a period of record-high inflation.

Authored by State Sen. Travis Holdman, R-Markle, Senate Bill 3 would suspend the state sales tax on residential utilities for six months, including the 7 percent sales tax on electricity, water, gas, internet and phone bills.

“By suspending the 7% sales tax on residential utilities, we can provide relief to nearly every Hoosier, with an estimated statewide savings of $260 million,” Holdman said in a statement. “This concept would benefit more people than the proposed taxpayer refund, and all of the savings would go to Indiana households.”

The plan aligns with earlier comments Holdman made about the governor’s proposal in which he indicated that he was lukewarm about sending out another taxpayer refund on top of the state’s automatic taxpayer refund that was triggered last summer.

SB 3 would also cap the state’s gasoline use tax at $0.295 per gallon through June 30, 2023, suspend the increase to the gas tax and special fuel tax that took effect July 1 until June 30, 2023, allocate an additional $400 million to the pre-1996 Teachers’ Retirement Fund and provide $215 million to help fund capital projects that were included in the 2021 budget but have not moved forward due to increasing construction costs.

“Senate Republicans are today proposing a package that can provide financial relief to all Hoosiers in multiple ways while continuing to pay down our outstanding debt,” Senate President Pro Tem Rodric Bray, R-Martinsville, said in a statement.

Holcomb is not abandoning his proposal. Imagine Indiana, a not-for-profit that has helped host inaugural events and cover travel costs to Israel for the governor, recently paid for a 30-second radio ad supporting the tax refund, the Indiana Capital Chronicle reported.

The ad, voiced by Gov. Holcomb, says “Even as Indiana’s economy is thriving, Hoosier families are struggling to deal with this national inflation. It’s hitting hard at the pump and at the register. The best way to help is to send you back some of your own hard-earned money by August.”

House Republicans remain more bullish on Holcomb’s proposal.

Indiana House Speaker Todd Huston, R-Fishers, unveiled House Bill 1001, which includes the language of the governor’s tax refund proposal while adding a provision that allows Indiana residents who didn’t file taxes for the tax year 2020 to file an affidavit with the state revenue department to claim the $225 refund.

Huston said House Republicans are prioritizing the tax refund in light of the state’s fiscal year closeout, which showed Indiana has a record-breaking $6.1 billion in reserves.

“Our state’s fiscal year closeout 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,” Huston said in a statement.

Lawmakers are set to convene Monday for a special session, which Holcomb had originally called to consider his tax refund plan. The session was later expanded to consider abortion legislation after the Supreme Court’s decision to overturn Roe v. Wade.

The House Ways and Means Committee plans to begin hearing testimony on HB 1001 on Tuesday. The Senate Committee on Appropriations will convene at 2 p.m. Tuesday to hear SB 3.

Under Indiana code, the special session must end no later than Aug. 14, but legislative leaders have said they expect to conclude their business by Aug. 7.

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