Indiana House Speaker Todd Huston, R-Fishers, speaks during a news conference at the Indiana Statehouse in Indianapolis, Thursday, April 15, 2021, with Indiana Senate Appropriations Committee Chairman Ryan Mishler, R-Bremen, center, and Senate President Pro Tem Rodric Bray, R-Martinsville. A new state revenue report given Thursday to legislators projects tax collections will bounce back stronger than expected from the pandemic recession. (AP Photo/Tom Davies)

INDIANAPOLIS (AP) — A new Indiana state budget awash in federal coronavirus relief money will give a sizeable funding boost to public schools while also paying for numerous economic grant programs and construction projects.

The state budget deal announced Tuesday by Republican Gov. Eric Holcomb and GOP legislative leaders will increase school funding by about 4.5% each of the next two years. That is more than double what budget writers proposed earlier this month before new projections showed state tax collections should bounce back stronger than expected from the pandemic recession.

Legislative leaders said the budget plan will cover the $600 million a year in additional money the governor’s teacher compensation commission found was needed to significantly boost Indiana’s lagging teacher pay in comparison to nearby states. The bill directs school districts to submit explanations to the state if they aren’t able to set a minimum teacher pay of $40,000 a year.

“We’re making a significant investment,” Republican House Speaker Todd Huston said. “We expect it to be in teacher pay and we’ll be watching closely. It feels like a lot of the pressure on teacher pay has been directed to this building. We’ve stepped up, now it’s time for locals to step up.”

The deal includes a contentious expansion of the state’s private school voucher program by raising income eligibility for a family of four from the current roughly $96,000 a year to about $145,000 for the coming school year, potentially boosting participation by one-third to about 48,000 students.

Public schools officials and teachers unions have opposed that expansion, arguing that its projected cost of at least $125 million over two years would consume too much of the K-12 education funding increase.

But the $3 billion infusion of federal relief funding and a projected $2 billion more than previously expected in state tax collections over the next two years seems to have let Republican leaders go ahead with the voucher expansion and giving $13 million toward a new program allowing parents to directly spend state money on their child’s education expenses.

“We’re able to get where we needed to be with the public education dollars and that helped to open up this conversation for the vouchers,” Senate President Pro Tem Rodric Bray said. “We think we feel like we’ve found ourselves in a pretty good place.”

The Republican-dominated House and Senate could vote as soon as Wednesday on approving the budget deal and wrapping up this year’s regular legislative session.

Legislative Democrats said they were encouraged by the boost in education funding but emphasized the amount of money coming to the state from the federal relief plan backed by President Joe Biden and pushed by Democrats through Congress without Republican support.

“There’s still some trepidation and some hesitation because we have concerns with the expansion of vouchers,” said Democratic Sen. Eddie Melton of Gary. “This is still siphoning funds away from our traditional K through 12 public schools.”

The projected school funding increases of 4.6% in the budget’s first year and 4.3% in the second — for a total additional $1 billion — follows a decade of Republican-written state budgets that raised school funding by an average of 1.5%, drawing criticism about school spending not even keeping up with inflation.

The Republican plan spends about $1 billion in paying off state debts early, while anticipating that the state's cash reserves will grow some $500 million to about $2.75 billion by July 2023.

Other provisions in the budget partially direct the spending of federal relief funding. That includes $500 million toward a regional economic development grants program, $250 million for broadband internet expansion grants and $500 million into the state’s unemployment insurance trust fund that was drained by the explosion in jobless benefit payments during the past year.

Federal funding is also being used for a $550 million fund for possible state construction projects, including a new state archives building, a new campus for the state’s blind and deaf schools, new inns at the Potato Creek and Prophetstown state parks and a new state police post and laboratory in Evansville.

The plan sets aside $900 million of federal money for future state construction projects, along with $60 million for the state’s recreational trails construction program.

Other big-ticket items include $400 million for reconstruction of the Westville prison in northwestern Indiana and $50 million to replace the swine barn at the Indiana State Fairgrounds with an enclosed building for year-round events.