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INDIANAPOLIS – The intra-party fight over Republican Gov. Mike Pence’s controversial tax cut proposal is escalating.

At a press conference at the Statehouse Thursday, a conservative tea-party organization founded by the billionaire Koch brothers announced it was pouring money into a statewide campaign to pressure Republican lawmakers into giving Pence what he wants: a 10 percent cut in the state income tax rate.

Chase Downham, state director for Americans for Prosperity, said his organization will spend a “six figure” amount on TV, radio and online ad buys, in an attempt to get voters to turn up the heat on GOP legislators who’ve rejected the Pence plan.

“We believe this tax cut is absolutely critical,” Downham said.

The organization, founded and funded by Charles and David Koch, has spent millions of dollars trying to defeat Democrat candidates; it will now be spending its money going after the Republicans who control the Indiana General Assembly.

Republican House Speaker Brian Bosma defended the House budget bill that rejects Pence’s proposed cut, which would cost the state about $500 million in revenues each year. The House plan, crafted by GOP legislators, instead spends that money on

schools and road repairs.

Bosma, who’s been an ally of the Americans for Prosperity in the past, said he wouldn’t be pressured into backing off what he sees as critical investments for the state’s long-term economic health.

“You’re looking at a guy who’s had death threats, people camped on my front door…” Bosma said, referring to a past fight over the contentious “right to work” bill passed last year. “So my focus will be on making the right decisions for the State of Indiana.”

Bosma said he and Senate leaders are still open to considering the tax cut if the state’s revenue forecast, due in April, projects significantly more revenues. But he also took a veiled dig at Pence, who made the tax cut his signature campaign promise last year, without consulting Republican legislative leaders.

“We’ve said many times here, our goal is to do the right thing for the citizens of the state,” Bosma said. “It’s easy to bang a ‘Hey, let’s cut taxes drum.’ But you’ve got to be sure it’s a smart cut, it’s sustainable in the long run, not (just) in an election cycle. That’s our goal.”

The announcement by the Americans for Prosperity came as the Senate appropriations committee started hearings on the House budget bill. Senate leaders, like their GOP counterparts in the House, have expressed little support for the Pence tax cut.

Pence has taken a similar tactic as the AFP. Since failing to lock down the legislative support he needs for the tax cut, he’s taken his pitch on the road to urge voters to pressure their legislators to support his plan.

In a speech to the Vigo County Chamber of Commerce Thursday, Pence stuck tightly to an oft-repeated script that paints the tax cut as a job-creator and economic development tool. Pence argued the state, which has a $2 billion surplus, can afford the tax cut.

“First and foremost, I don’t think government should ever collect more money

than it needs to operate,” Pence said. “And when it is set to collect more than it needs, it ought to find ways to permanently reduce the tax burden.”

The tug-of-war between Pence and GOP legislative leaders has been escalating in recent weeks. As Pence has tried to work around them, they’ve pushed back.

Bosma recently sent a letter to GOP county chairmen, saying neither he nor Senate President David Long are convinced the tax cut is sustainable. In it, Bosma describes the property and income tax cuts enacted after Indiana built a $2 billion surplus in 1998 led to a $1.3 billion deficit six years later, resulting in  “painful and difficult” budget cuts.

 

Maureen Hayden covers the Statehouse for the CNHI newspapers in Indiana. She can be reached at maureen.hayden@indianamediagroup.com