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home : most recent : statewide implications November 13, 2018

11/2/2018 6:16:00 PM
Public pensions not at risk if Hoosiers ratify balanced budget amendment

Dan Carden, Times of Northwest Indiana

INDIANAPOLIS — Former state Sen. Brandt Hershman, R-Buck Creek, isn't running for office this year, but lately he's been spending a lot of time knocking down misconceptions about a ballot question that he helped put before Hoosier voters.

Public Question 1 is a proposed addition to the Indiana Constitution that would mandate the General Assembly enact a balanced budget that funds the state's pension obligations and also does not spend more than the state is projected to collect in tax revenue.

That's already been the practice for many years in Indiana — regardless of which political party controlled the House, Senate or governor's office — even though it's not explicitly required by the constitution. 

But Hershman contends that putting the mandate in the constitution will "ensure Indiana's legacy of fiscal responsibility benefits future generations."

"I believe it is the strongest and most effective balanced budget language in the nation," he said.

Misconceptions countered

Nevertheless, Hershman noted various social media posts incorrectly claim the amendment will undermine the state's obligation to pay into its pension funds for retired and current public employees, when in fact the amendment language requires the exact opposite.

The amendment reads: "A state budget enacted by the General Assembly must appropriate money for the state's pre-funded pension funds in the amount necessary to actuarially fund the accrued liability of all such pension funds during the budget period."

Hershman said that means Indiana cannot skip its mathematically determined pension contributions, as Illinois repeatedly has done, to make an unbalanced budget appear balanced; the pension payment will be constitutionally required if the amendment is ratified.

Even the Indiana State Teachers Association, which recommends a "no" vote on the amendment since Indiana lawmakers have no problem enacting balanced budgets, acknowledged that the amendment "will have no impact on pre-funded public pension funds."

Hershman said another amendment misconception is rooted in the provision that allows the balanced budget requirement and pension payment obligation to be waived if two-thirds of both the House and Senate agree to do so, such as during a state financial emergency.

"Such a requirement ensures that any attempt to suspend the application of the amendment would receive intense scrutiny," Hershman said.

He also pointed out that currently — without the amendment — it only would take a majority vote in each chamber and the governor's approval to adopt an unbalanced budget that underfunds the state's pension obligations.

Unintended consequence? 

State Sen. Karen Tallian, D-Ogden Dunes, still is urging Hoosiers to oppose the amendment in part because it could prohibit the state from ever spending its nearly $2 billion reserve fund, since the amendment requires any spending in excess of state revenue be deducted from the next two-year budget.

"I do not believe that we need this as a constitutional amendment," Tallian said.

Despite her arguments, the proposed amendment overwhelmingly passed the Republican-controlled General Assembly in 2015 by an 85 to 14 margin in the House, and 43 to 6 in the Senate.

In 2017, the amendment won its mandatory second legislative approval by a 94 to 4 House margin and 43 to 4 in the Senate.

Republican former Gov. Mike Pence, now vice president of the United States, was first to call for a balanced budget amendment as a "surprise" agenda item in his 2015 State of the State address.

Pence said in that speech the requirement "will assure Hoosiers that today and tomorrow Indiana will spend wisely, protect our state from an economic downturn, and unlike Washington, D.C., we won’t bury our children and grandchildren under mountains of debt."

Related Stories:
• COMMENTARY: The proposed balanced budget amendment for the Indiana Constitution
• Constitutional amendment in hands of Indiana voters
• COMMENTARY: To amend or not to amend the Indiana constitution?

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