How he – and we – see process, policy at “geographic” mid-point
Governor Mike Braun (R) offered his take Tuesday on the first half of the session and where he intends to direct his efforts over the next two months – and beyond. “Everyone’s listening to what I ran on. The ‘Freedom and Opportunity’ agenda is ringing well across the board,” he declares on a holistic basis.
Beyond his general proclamation, there are some interesting strategic takeaways from his comments and related intelligence that we’ve been able to garner that will help guide you through the end of April.
The Governor is majoring in health care cost reform and property tax relief . . . with minors in education and what we’ll dub “general studies” (that would be “the field” in betting parlance).
He’s trying to frame legislation in terms of “kitchen table issues,” with “historic” property tax relief and lowering health care prices coupled with “putting parents in charge of their kids’ education, cracking down on drug dealers and repeat violent criminals, and making government more efficient,” the Governor says.
On the healthcare front, he reminds Hoosiers that “I was the loudest voice on that in DC, along with another gentleman you know well on the Democratic side,” referring to U.S. Sen. Bernie Sanders (I-VT), noting that the odd couple offered “two different approaches.”
“The [healthcare space] needs to be reformed from top to bottom, and we’ve got a lot of action in that arena,” Gov. Braun asserts. “My executive orders will bring historic reforms to our health care system, ensuring transparency, competition and lower prices for Hoosiers in the General Assembly of freedom and opportunity. Health care reforms are moving quickly” on the Third Floor as well.
The Governor highlights passage of HB 1003, the biggest package of reforms, which contains site-neutral pricing and prior authorization reform; stricter enforcement for Medicaid fraud; data ownership and sharing reforms; and more. “I’m a believer that health care should be available to everyone in a country like ours, and the problem – the reason it isn’t – is that it costs twice as much, almost, as what it does for other countries. So the way that we make Medicaid easier and more broadly available is make sure there’s no fraud in it, and then all the people that are supposed to be on it are on it, not others.”
But he also points a finger at providers, saying “we’ve got to lower health care costs, mostly from hospitals, because they are now 50% of the health care budget. And even in a state like Indiana, IU Health, our largest provider, is now paid by the federal government, through Medicaid and Medicare, where it’s 56% of their revenues. So we’re slowly going that way, and then you’ve got the private side that’s been financing an unhealthy healthcare system. We get it right. In the long run, insurance companies and hospitals are going to have to be entrepreneurial, and there’s gonna be many governors like me. I fixed it in my own business,” he adds.
He is also pleased to see HB 1004 cross the Rotunda, a measure which he believes “will make sure non-profit hospitals actually act like non-profits.” He is also high on HB 1666, which establishes an approval board for health care mergers and acquisitions and makes ownership information more transparent; SB 118, a bill that will bring transparency to the 340B program and reveal prescription markups; and SB 140, which takes on prescription benefit managers “that are driving up prescription drug prices for Hoosiers,” as he sees it.
Hoosier Hope, the nonprofit think tank that acted as the de facto policy arm of the Braun general election campaign, and which then extended its reach by largely overseeing transition operations. commissioned Mark it Red, a polling firm run by Mike Gentry – who not only has close ties to House Republicans but one GOP mayor in particular – to survey Hoosiers on key Braun agenda items (02/05-07; 908 likely voters; margin of error ± 3.25 percentage points). There is strong support (61%) for legislation (HB 1004) that would require non-profit hospitals to charge fair prices or lose their non-profit status. Additionally, 92% of respondents agreed that healthcare pricing transparency is essential, signaling strong opposition to surprise billing.
The Governor is particularly excited about the education provisions in the House-passed budget bill, HB 1001, which will fully fund universal school choice; increase funding for school safety; expand Career Scholarship Accounts for students with special needs; and increase funding for the Education Savings Account program. Almost two-thirds (65%) of the respondents to Mark it Red polling for Hoosier Hope support state-funded school vouchers that would allow any family to choose any school for their children.
Parents “should have full flexibility to decide how they want their kids educated. And when it comes to sharing resources, that should be available to anyone that is providing that option to parents,” the Governor believes. And as for public school referenda largesse, “I think those resources ought to be shared, and we’ll find the resources to do it. And we’ve not taken anything away from public education,” he contends. “We’ve committed that it’s the most important thing we do in our budget. So I’m going to be interested in making sure that everyone gets resourced. That’s how you get to a better place.”
He also promotes SB 146, which increases minimum teacher salaries by $5,000, and a series of bills ensuring age-appropriate curriculum for students, reinstating A through F grades, and a suite of solutions to improve academic achievement in math.
In the public safety silo, Governor Braun singles out SB 324, which he labels as “landmark legislation” for keeping Hoosiers safe by increasing penalties for drug dealers and repeat violent offenders, and establishing mandatory minimum bail for repeat violent offenders. Also drawing his praise: HB 1006, which would open an avenue for the State to address “non-compliant prosecutors” – to “make sure that prosecutors have failed to apply the law are held accountable” – as well as increase funding for county prosecutors across the state.
As for economic development initiatives he’s behind, the Guv cites the budget bill’s inclusion of the Hoosier Workforce Upskill Tax Credit to provide employers with a financial incentive to upskill their employees. He also notes that SB 346 includes the Rural Hoosier Business Growth Program, which would help spread economic development throughout the state.
Obviously, however, the big-ticket item for the Governor is comprehensive property tax relief, as we’ve detailed for you in our past few issues. Gov. Braun is seeking an immediate restoration of residential property tax bills to 2021 levels; a reduction in the amount of a home’s assessed value that would be subject to taxation; meaningful caps on future property tax increases; and more administrative hoops through which taxing units must jump to temporarily increase property tax revenue through referenda.
He’s indicated his willingness to go to the proverbial wall on this plan to save taxpayers some $4 billion over three years – such that we’re hearing a Republican governor freely talking about exercising his veto power and calling a special session if he doesn’t find acceptable a much more nuanced and targeted property tax relief measure passed by the Republican supermajority – expressing his intransigence even before the first half of session was in the books and reiterating it before lawmakers returned from parts unknown to resume their deliberations.
“I’m not going to be afraid to use any of the tools that I have here as the governor of Indiana,” he repeated Tuesday.
When we last left you, we broke the news about the targeted digital ads peppering the internet individually castigating loyal Republican senators for their support for SB 1, the Senate Majority Caucus property tax reform bill that he didn’t believe offered enough relief to homeowners, while effectively propping up business spending as usual by local units of government and school districts.
The six-figure run of ads was funded by Hoosier Hope.
While the question may have been framed in a less balanced manner than others in the survey (agree or disagree that “property tax bills in Indiana are too high”) Hoosier Hope polling by Mark it Red finds 78% agreeing in varying degrees to 17% disagreeing. The polling memo we saw that was sent to donors notes that “an even greater number of respondents, 79%, support a proposal to reset property tax bills to 2021 levels. When it comes to property tax reform, the results show a preference for comprehensive reforms with 76% of those surveyed supporting measures such as annual caps on property taxes or eliminating property taxes altogether, only a small percentage, 13%, support the property tax system as it currently exists.”
We told you that Senate GOP leadership did not take kindly to the ad effort, and made their feelings clear to 206. While we reported that leaders were told the campaign would be dropped, it took a couple of days for that to happen . . . but by late Saturday, a flight of new Hoosier Hope digital ads were running praising some of the same senators for their support of the Governor’s (broader) “agenda.”
The Governor was unapologetic about the ad effort, which was not directed from 206, but for which his team was given a courtesy heads-up. He believes that he went out of his way to negotiate with members of the Senate Committee on Tax and Fiscal Policy before the Senate voted against him on the key aspects of property tax relief.
At his Tuesday mid-session availability, Governor Braun was asked whether those ads may have harmed his relationships with senators. “I would say when you look at … groups that want to make a point of view, especially when you’re trying to work it out with folks – that would take umbrage at that – that’s called ‘running a campaign.’ You know, I did that under that microscope for about two years, in becoming your next governor. So you’re going to have to be careful there. You got a lot of ads out there, and even the other side, they come at you, you know, with stuff that you’d probably rather not hear.” He labels it part of “A healthy conversation, even when it pushes you the wrong direction, or might push the folks that you’re wanting engaged in the conversation in a way. I’d say, ‘Don’t go overboard with it.’ But if it’s information that needs to be out there, hopefully it’s uncomfortable only because it’s addressing something that needs to be changed in a positive way. So, part of the process, to me. It’s like many things – do it in moderation. It could be helpful. If that’s your only approach, it’ll probably be unproductive,” he concludes.
Here’s the 40,000-foot perspective as we understand it. While it may appear that Governor Braun is acting petulant and willing to sacrifice long-term relationships (for a period extending for four or eight more years) for a key short-term success, there’s a lot more to it.
Some of it is “Mike being Mike,” and the impatience of a born entrepreneur chafing at being asked to operate within a more confining environment. But he also learned from his state legislative service and his more recent six-year term (sentence?) Inside the Beltway that the legislative atmosphere lacks an inherent inertia (except when approaching a deadline), and some disruption and moving people out of their comfort zone is often a prerequisite for progress. “When Hoosiers elected me, I made it clear that this wasn’t going to be business as usual. I’m here to do one thing get results for Hoosiers,” Gov. Braun acknowledged Tuesday.
He’s showing that he’s not afraid to exercise the bully pulpit that comes with the office, and taking his appeals over the heads of lawmakers, regardless of how that might temporarily interfere with a personal relationship he might have had or is trying to forge. “Speaker Huston knows that he’s probably going to be in … the catbird seat to please Hoosiers and local governments. I’m going to be out there as an advocate again to get it in that right place. So you haven’t seen the end of it,” the Governor vows. “As a last resort, I am listening to the people. I know how to use the microphone. I think I’m going to be in a spot to size up what Hoosiers think is reasonable,” he says.
What we’re hearing in abundance, however, is that however awkward he might be on this front in a personal or political sense, the Governor intends to build relationships with lawmakers, and is not approaching things from a “my way or the highway” standpoint, even as that’s how some may be perceiving it from the outside.
What potentially complicates the relationship, however, is that on Thursday, a new political action committee quietly registered with the Indiana Election Division.
The Hoosiers for Opportunity, Prosperity, and Enterprise Victory Fund is chaired by Ryan Black, with election lawyer Jim Bopp as treasurer. Black is Hoosier Hope’s president; Bopp is it’s secretary and treasurer, and the PAC is affiliated with the nonprofit. The registration says that the PAC’s purpose is “To receive, administer, and expend funds in connection with independent expenditures regarding candidates for Indiana offices. The HOPE Victory Fund is prohibited from making contributions to any candidate.” The PAC acknowledges that it is “Connected to Hoosiers for Opportunity, Prosperity, and Enterprise, Inc.”
The filing connects the loop that we saw back in the Daniels Administration when the Aiming Higher PAC – run by a guy named Eric Holcomb – did the Daniels dirty work in races across the state, initially finding unprecedented success by sweeping out legislative Democratic incumbents along the length of the Ohio River, from Lawrenceburg to Posey County. But with Hoosier Hope running the initial flurry of digital ads against Republicans for splitting with the Guv on just one of many issues (and early in the session, with plenty of time left to “get right” on that topic), there is some quiet concern among members of the supermajority.
In a broader context, the Governor and his team seem to sense that there is no disagreement between the second and third floors in the bottom line: Achieving substantial and lasting owner-occupied property tax relief. There’s only daylight between the legislative and executive branches on how to get there, and despite the substantial disagreement between the two sides about just how much skin in the game local governments and school districts must have (as a former Senate top appropriator might phrase it), or how they can be afforded tools to retain essential funding without any shifted burden falling on homeowners.
“They need to be healthy,” the Governor says of local units, “but they need to make sure that they’ve covered their legitimate costs with a reasonable growth factor and that they’ve not gone above and beyond. That’s the wrestling match we’ll have. I know numbers well,” he continues, suggesting that the locals need to “Do a little soul searching yourselves. We’ll end up in, I think, a place that’s going to be a sweet, happy medium.”
Some might also argue that the Governor is also perhaps casting an unfair light on local governments by suggesting that many have “bought a lot of shiny objects and are sitting on a lot of cash balances,” and could stand to “do more with less” – a mantra that we thought was trademarked by then-secretary of state Joe Hogsett (D) in 1989 and renewed in 2005 by then-Gov. Mitch Daniels (R).
“They need to make sure that they’ve covered their legitimate costs with a reasonable growth factor and that they’ve not gone above and beyond,” the Governor contends. He says that over the past biennium, local government “averaged about 10% growth rates,” which he maintains in excessive and unsustainable.
“Robust economic growth is around three percent per year. And if you’re growing anything at any level of government by more than that, you’re growing government at the expense of the taxpayer,” the Governor believes, although we hear complaints at the local level about seemingly legitimate costs for road repairs; wastewater compliance; and public safety training, equipment, and personnel far outpacing inflation . . . and that his calculation fails to account for inflation that soared by more than 20% in the previous four years (as we were reminded during the recent presidential campaign).
A robust debate about this broke out in the form of a Wednesday evening tweetstorm between Lieutenant Governor Micah Beckwith (R) and Terre Haute Mayor Brandon Sakbun (D) (who testified before the Senate Committee on Tax and Fiscal Policy against the original iteration of SB 1 alongside Carmel Mayor Sue Finkam (R)). The LG claimed local government spending hikes were forcing property tax hikes, and tossed out some numbers about Terre Haute’s budget which the mayor contradicted and explained how “over a four year period filled with rising costs, the city’s property tax funding went up about 2% a year. That’s LESS than inflation. We do more with less in Terre Haute. We’ve been making local government more efficient my entire tenure in the Mayor’s office. Facts matter.”
There seems to be no ready solution to the larger philosophical dilemma today, but we’re also reminded of 2013, when then-Gov. Mike Pence (R) sought a significant tax cut in the face of GOP supermajority pushback . . . only for the two sides to find a sweet spot by session’s end. And there’s substantial behind-the-scenes sentiment that the two sides can get from today – where the math ain’t mathing – to an equation that works out in simple math (if not exacting differential calculus equations) by April 29.
In terms of specifics, the overarching principle would seem to be legislation treating (residential) property taxpayers in the way the Governor envisioned. He believes that he has identified savings opportunities for local units and schools, and has afforded them ample opportunity to prep for potential tough fiscal news. Drilling further down, he’s focused on helping Hoosiers with homes valued between $150,000 and $300,000 – the range in which homeowners are likely to be hurt the most by negative economic developments. While SB 1 was weaker than he had hoped for in a measure to emerge from the Senate, he believes that leadership is closer to his positions than the rank-and-file (a switch from what we typically see on fiscal matters like this, where leaders often rein in their members, playing the adults in the room).
We’re also already seeing Team Braun taking steps toward reconciliation (in different senses of the word). He and his team in 206 are talking regularly with House Speaker Todd Huston (R) and House Committee on Ways and Means Chair Jeff Thompson (R). “The House is looking at it. It will be in good shape there,” he suggests, adding that “In this administration, … there’s been more collaboration with the legislature than we’ve seen in a long, long time. They’re coming to see me at the residence. We’re having meetings with everyone in here,” he adds, pledging, “We’ll get to a point where we’ll find out that solution.”
Those new digital ads thanking senators for being partners in the gubernatorial agenda can’t hurt, either. So is the new round of ads just a make-up call of sorts? We don’t believe that’s the case. Hoosier Hope seems to have adopted the philosophy that it would call out lawmakers when the group believed they were wrong on an issue near and dear to the Governor . . . as well as thank them appropriately when they were supportive. Both circumstances could be true at any given time: A solon could wander off the gubernatorial reservation on a key issue but still be supportive of all the other key aspects of his agenda. What may have been unfortunate here was the timing: The SB 1 vote, which was critical for the Governor, hit just about midway through session, an inflection point when Hoosier Hope was likely taking stock of where lawmakers were more generally with the Guv’s plans, at least arguably leading to the confusion with seemingly contradictory ads being run within hours of each other.
We don’t think the Guv – or Hoosier Hope – would take a mulligan on this if given the opportunity. While the timing was perhaps uncomfortable, the only difference might have been leading instead with healthcare cost ads (there was more Senate consensus on this visceral issue) and then following up with property tax ads. If we’re right, you should expect to see more second-half ads that would thank GOP lawmakers on both sides of the Rotunda for standing with the Guv on healthcare and education matters.
We’re also planning to watch for further gubernatorial messaging educating the public (and some lawmakers) on substantial local government surpluses and the ability to tap into the local income tax toolkit. In targeting the education component of local government funding, school surpluses and spending (some built upon and resulting from one-time American Rescue Plan pandemic stimulus dollars ) will be likely stressed, and the public may also find itself educated about declining public school enrollments and the opportunities for schools and districts to innovate and seek referenda when all else fails.