Indiana ends budget year with $6.1 billion in the bank
INDIANAPOLIS (WISH) — Budget officials on Friday said the state is in an exceptionally strong financial position going into the 2023 budget year.
State Auditor Tera Klutz announced Indiana ended its 2022 budget year with a little more than $6.1 billion in reserves, roughly $1.24 billion above expectations. Strong tax revenue drove those numbers, with individual and corporate income tax collections exceeding projections by 14.6 percent each.
The new numbers come as state lawmakers prepare to convene for a special session to discuss inflation relief. Democrats have consistently called for a suspension of the state’s gas tax since March, citing the state’s budget reserves as proof Indiana’s coffers could handle the temporary loss of revenue. Gov. Eric Holcomb, a Republican, has proposed a second round of automatic taxpayer refunds amounting to $225 for each taxpayer instead. This would cost the state about $1 billion in all. Office of management and budget director Cris Johnston said Holcomb is unlikely to expand his inflation relief package despite the final numbers. He said the governor’s analysts still believe a taxpayer refund would be a better bet than suspending the gas tax.
“This is a system that if we use the automatic taxpayer refund mechanism, is probably the most efficient and effective means to get the money back into taxpayers’ pocketbooks,” Johnston said.
Rep. Greg Porter, D-Indianapolis, said the state’s surplus could be used to address needs such as teachers pay, and reducing infant mortality. He said the state’s tax collection projections show dipping into the reserve poses no threat to future budgets.
“To have this money, to hoard this money, is just despicable from my perspective,” Porter said. “We didn’t go back and address the human infrastructure that we have within our state.”
The figures also mean budget officials expect to put $2.5 billion toward funding the state’s pre-1996 teacher pension fund. Officials said this means the state likely will pay off all of its outstanding liabilities for the fund by the early 2030s, rather than later in the decade as originally anticipated. Even with this expense, budget officials estimate the state will have a little more than $5 billion in reserves at this time next year, though that figure does not include the billion-dollar inflation relief package.