What Public Question 1 Means for Indiana Small Business Owners

Date: October 31, 2018

On Election Day, Indiana voters will make a decision on Public Question 1, a ballot proposal that would prevent lawmakers from spending more than what the state expects to collect in revenues.

Here’s how it will read:

“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?”

But what does that mean for small business owners?

“This amendment helps ensure good government and a strong economy by enforcing a continuation of Indiana’s record of fiscal common sense,” says Barbara Underwood, NFIB State Director in Indiana.

Indiana is one of two states without a true balanced budget requirement in the state Constitution. Although there is some language in our Indiana Constitution prohibiting debt, the wording and subsequent court decisions have rendered it useless since 1851.

Standard and Poor’s noted Indiana’s lack of a balanced budget requirement when evaluating our credit rating just a couple of years ago.

Then Governor Pence suggested that Indiana amend its Constitution with a strong balanced budget amendment to preserve our record of fiscal discipline for future generations.

While Indiana has a recent record of passing truly balanced budgets, that wasn’t always the case. In the early 2000’s, structurally imbalanced budgets were passed which relied upon the Rainy Day fund to make ends meet. That is not good fiscal policy and could have placed many programs, including education, in serious peril in the event of an economic downturn.

The Indiana balanced budget resolution passed two separately elected sessions of the Indiana General Assembly by strong bipartisan margins. Now it goes to the voters for consideration as ballot question number 1.

The Amendment requires the General Assembly to enact balanced budgets, to quickly reconcile any imbalance which occurs due to economic downturns, and to fully fund pensions before paying for other priorities. In case of true emergency, the requirement can be waived by a 2/3 supermajority vote of the General Assembly. Currently, an imbalanced budget could be passed by a simple majority.

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