Indiana Gov. Mike Pence speaks during a news conference at the Republican Governors Association annual conference Nov. 18 in Las Vegas.AP Photo/Chase Stevens

This article is from the archive of our partner National Journal

Indiana is set to engage in a second round of debate over religious freedom and LGBT nondiscrimination early next year, and the issue’s reemergence could once again put Gov. Mike Pence in a tough spot as he enters an election year.

The state’s leftward shift on gay rights has forced the longtime social conservative into an awkward political position with different portions of his base. While Pence has more recently invited controversy by calling for a halt to Syrian-refugee resettlement in Indiana, his popularity initially took a hit this spring when he signed the Religious Freedom Restoration Act, a bill opponents feared would legalize some forms of discrimination against gays and lesbians.

Democrats looking to unseat the former congressman next year hope to capitalize on the 2016 legislative session’s consideration of competing Republican and Democratic bills seeking to ban LGBT discrimination statewide, believing the "fix" Pence signed after RFRA to quell discrimination fears was inadequate. But a prominent Republican-sponsored bill is already generating controversy for including exemptions for religious businesses and organizations, and the fallout is likely to spill into the race for governor.

While Pence remains favored to win a second term, former state Speaker John Gregg, who narrowly lost to Pence in 2012, is challenging the governor again next year and has panned his handling of the issue.

“As I have said throughout this campaign, I believe Indiana must adopt a zero-tolerance policy toward discrimination,” Gregg said. “Anything short of extending full civil-rights protection to LGBT Hoosiers is a nonstarter in my view. I appreciate the Senate Republicans joining this conversation and wish Mike Pence would finally do the same."

Pence is staying quiet so far. In a statement, spokesman Matt Lloyd said only that the governor will “give careful consideration to this and any other legislative proposal put forth by the Indiana General Assembly."

An Indiana-based GOP operative unaffiliated with the Pence campaign said, “Democrats’ goal in the end is they want to force Mike Pence into a compromise that alienates social conservatives in the hopes that social conservatives will stay home in November.”

Since RFRA, most of the action has only taken place at the local level—more than a dozen towns and counties have adopted nondiscrimination ordinances. But a Ball State University/WISH-TV poll from November showed that a majority of Indiana voters would support amending state civil-rights laws to include sexual orientation and gender identity.

The bills won’t be fully debated until the new year, but a Republican-sponsored bill has gay-rights advocates and a handful of business coalitions gearing up for another fight. The Republican proposal bans discrimination based on sexual orientation and gender identity in employment, housing, and public accommodations, but it includes a number of carve-outs for religious businesses and organizations—causing some Democrats to dub it “RFRA 2.0.”

Among several exemptions, the bill would allow businesses with four employees or less to refuse to offer same-sex couples marriage or wedding-related services, as well as permit religiously affiliated adoption agencies to refuse to place children with same-sex couples. It would also require transgender individuals to live as their preferred gender for 12 months or prove their identity with a medical opinion before filing a discrimination complaint, and allow businesses and organizations to set their own policies for transgender bathroom use.

Some religious conservatives are unhappy with the bill and think it goes too far, and some on the Left are pushing for a clear-cut measure that includes no special exemptions. Democrats describe their proposal as merely “four words and a comma,” referring to their desire to add “sexual orientation, gender identity” as protected classes to existing civil-rights laws.

State House Minority Leader Scott Pelath, a Democrat, believes Pence has three options next year: Do nothing, forge some sort of compromise that balances calls for religious freedom, or pass full civil-rights protections.

“For the governor, each set comes with its own set of difficulties,” said Pelath, who believes the GOP-written compromise could be equally as bad as doing nothing. “If you try to do a half-measure or partial civil-rights protections, the questions then become very furious — why are you doing one thing and not another. He risks alienating his evangelical base in the process of really pleasing nobody else.”

Republicans control both chambers of the legislature, so if a bill reaches Pence’s desk, it will almost certainly be GOP-sponsored. State Speaker Brian Bosma told Howey Politics that forging some kind of compromise would be the “heaviest lift” of his career because of the passions present on either side among those advocating for religious liberty and LGBT rights.

“My suspicion is they’re setting up conditions to do nothing,” Pelath said.

If a compromise alienates Pence’s socially conservative base, doing nothing could alienate members of the business community, which has shown overwhelming support for adopting statewide LGBT civil-rights protections. Three business coalitions have endorsed adding full-scale LGBT protections to state law.

One newly formed business coalition, Indiana Competes, announced this month that its alliance now includes more than 150 Indiana businesses, including Anthem, AT&T, PNC Bank, and Indianapolis-based pharmaceutical company Eli Lilly. Former Angie’s List CEO Bill Oesterle formed another coalition, Tech for Equality, which represents local tech companies with the same mission. The Indiana Chamber of Commerce also stated their support for full LGBT civil-rights protections in November.

There was buzz earlier this year about moderate Republican donors from the business community withholding financial support from Pence’s reelection campaign because of RFRA and potentially recruiting a primary challenger. None have surfaced, but Indiana Chamber President Kevin Brinegar said it’s still not a given the business community will rally behind Pence’s reelection.

“It died down into a wait and see,” Brinegar said. “There are certain businesses and business leaders that want action taken and are waiting to see what the governor does, and then they’ll make their decisions. All eyes are watching.”

This article is from the archive of our partner National Journal.

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