Voters will have a say on an amendment to the Indiana Constitution when they go to the polls this voting season.
The amendment will be presented on the ballot as Indiana Public Question 1, and deals with a balanced budget measure that, if passed, will require the state legislature to pass balanced budgets each budget cycle unless a two-thirds majority vote in both the House of Representatives and the Senate overrule the measure.
A Google search doesn’t yield much about the measure, but that hasn’t stopped a counter campaign from springing up on social media claiming the measure would allow the legislature to withdraw funds from public pensions — those that cover firefighters, teachers and police officers, for example — to cover budget deficits.
State Sen. Mark Messmer, R-Jasper, says that’s not true at all.
“We’re never going to withdraw money from those pension funds,” Messmer said.
Before pushing too far ahead, let’s take a look at the current Indiana Constitution. Right now, Article 10 Section 5 of the constitution calls for a balanced budget. It reads, “No law shall authorize any debt to be contracted, on behalf of the State, except in the following cases: to meet casual deficits in the revenue; to pay the interest on the state debt; to repel invasion, suppress insurrection or, if hostilities be threatened, provide for the public defense.”
That’s vague and hard to enforce, Messmer said. And while the legislature generally has enough discipline to pass and stick to balanced budgets, Messmer said, that hasn’t always been the case. Several years ago as the country recovered from the Great Recession, for example, the state put off paying bills at the end of a budget cycle to make it balance, making up for the late payments later. That snowballed, Messmer said, pushing some payments out several months past due.
If passed, the constitutional amendment would put a law in place against such practices and require the legislature to make up for any shortfalls in a budget cycle using funds from the next budget.
Now, for Indiana Public Question 1. On the ballot, it will say, “Shall Article 10, Section 5 of the constitution of the State of Indiana be amended to require the General Assembly to adopt balanced budgets for state government that do not exceed estimated revenues unless a supermajority of two-thirds of the members of the House of Representatives and two-thirds of the members of the Senate vote to suspend the requirement?” Voters will choose “Yes” or “No.’
The question is based off Senate Joint Resolution 7, a three-page document that was passed in 2017 and available online for those wanting to read it at iga.in.gov.
It’s broken into seven subsections, and highlights include: a repeat of what’s currently in the constitution, a requirement that the legislature pass a truly balanced budget, a requirement that any shortfalls be made up in the next budget cycle and an outline of the two-thirds majority override.
Back to the counter campaign against the amendment. Several memes have been floating around Facebook claiming that the amendment will allow the state to make up budget deficits by withdrawing from the public pension funds.
“That’s absolutely incorrect,” Messmer said.
The amendment actually requires the legislature to budget funds to put into public pensions under its subsection D, a practice Messmer said the legislature has observed for the past several budget cycles.
That’s important, Messmer said, because as of now, the public pensions are not fully funded to cover retirees of the baby boomer generation, and there is no law that requires the legislature to budget funds to make up the difference.
It works like this: public pensions are funded through contributions from the school corporations and government entities that will have retirees drawing from them. In situations where more people are drawing from the pension funds than are paying into them, the state legislature has budgeted funds to make up the difference. In the past couple of budget cycles, Messmer said, the legislature has budgeted between $800 million and $900 million to make up the shortfall, with another 10 to 12 years of equal contributions from the state needed to fully fund the pensions. But again, those contributions are not currently a requirement.
“If we don’t do anything,” Messmer said, “there’s nothing that requires the state to make up the difference.”
As an emergency measure for times of financial crisis, such as the Great Recession, the amendment does allow the state legislature to skip putting funds into the public pensions for a budget cycle, but it does not allow the withdrawal of pension funds to cover a deficit. Another emergency measure in the amendment allows the legislature to forgo budgeting shortfalls from the previous budget into the next one. To take one or both of those measures, both the House and Senate must have a two-thirds majority vote in favor of the actions, which Messmer said would be a challenge to achieve.
“As a whole,” Messmer said. “[the amendment] is good public policy.”