TERRE HAUTE, Ind.—April 15 will be a little less painful in the Hoosier State thanks to what can only be described as a financial and political anomaly—a $2 billion state budget surplus. While the federal government continues to drive up the national debt at a rate of $50,000 a second, defying all attempts at fiscal responsibility, Indiana taxpayers are reaping a tangible benefit of conservative policies in action.
Approved by the state legislature in 2011, former Gov. Mitch Daniels’ Indiana Auto Taxpayer Rebate kicks in for the first time this spring, thanks to the 2012 surplus. The law guarantees taxpayers a rebate every spring, as long as the state posts a surplus the previous year and the state’s reserves top 12.5 percent.
This year’s rebate will amount to $111 for individuals and $222 for families, a per capita, blanket approach Daniels touted as “maximum simplicity.” The flat rate will be especially beneficial to middle income earners, “for whom every dollar counts,” Daniels said in a November press release: “It’s better to leave this money in the pockets of those who earned it than to let it burn a hole, as it tends to do, in the pocket of government.”
Mike and Heather Gossett, who live in central Indiana, still feel the pain of the economic downturn, a pinch shared by a lot of Hoosiers.
“Seems like there’s no middle class anymore,” Mike Gossett said. “Either you have money or you struggle to make it.”
Gossett agrees with Daniels that the money is better off in the hands of people who made it. And he doesn’t mind the flat rate, even though a percentage would give some taxpayers a higher rebate.
“It’s better than nothing,” he said. “Everyone pays enough taxes.”
Gossett, a father who works as a tube welder, plans to use his family’s $222 rebate to buy groceries or pay bills.
The tax rebate is just the cherry on top of what Daniels supporters consider a very successful tenure as governor. The two-term Republican left office last month to become president of Purdue University. He is widely considered as a likely contender for the 2016 Republican presidential nomination. Daniels was one of the few governors to deliver on campaign promises to cut spending and balance budgets, making him a darling among conservatives nationwide.
But Daniels isn’t universally popular in his home state. Critics said Indiana couldn’t afford to give a tax rebate when so many programs, especially in education, suffered from budget cuts.
Rep. Scott Pelath, the Democratic minority leader of the Indiana House of Representatives, told television station RTV 6 Indy too many teachers lost their jobs under Daniels’ watch.
"We have schools not able to meet basic programming needs to keep up with the testing demands,” he said. “We have roads that are still crumbling and in bad shape."
Even some Republican lawmakers aren’t sure they want to keep the rebate plan. At the start of this year’s legislative session in January, Rep. Eric Turner proposed replacing the tax rebate with a 10 percent reduction in income tax, a measure that featured prominently last fall in current Gov. Mike Pence’s campaign. Pence said during his first weeks in office he would like to keep the rebate but add his income tax reduction to give taxpayers extra relief.
Daniels’ critics aren’t confined to the state house. Public school teachers see his policies on education reform as an attack on public schools and a sign of cronyism within Indiana’s Department of Education.
Outside the classroom, union workers who resent Daniels’ right-to-work policies, affix “NOT My Man Mitch” bumper stickers on their pickup truck tailgates.
Despite their opposition to his policies, it’s unlikely any of Daniels’ critics will be grumbling when they file their tax returns later this spring.