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Indiana officials on Thursday projected booming growth in the state budget surplus, setting up a debate during the upcoming legislative session over possible tax cuts.
A report presented to the State Budget Committee forecast tax collections growing nearly $1.9 billion, or 10.4%, more for this fiscal year than what was expected when the current state budget was approved in April. That would push Indiana’s budget surplus to a whopping $5.1 billion by the end of next June.
Some members of the Republican-dominated Legislature were already pushing for tax cuts before the new projections as the $3.9 billion in cash reserves the state had this past June triggered Indiana’s automatic taxpayer refund process resulting in anticipated $125 payments to all individual income tax filers next year.
House Republican leaders have said they were looking at plans to cut the state’s 3.23% individual income tax rate or expand credits to reduce what income taxes are owed, while top Senate Republicans are more cautious.
“This revenue forecast I think supports our position,” House Ways and Means Committee Chairman Tim Brown said. “We look forward to how citizens that worked hard deserve a break.”
Even with the big tax revenue jump, the Senate’s top budget writer said he was worried that consumer spending will slow in coming years and lead to drops in sales tax collections.
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For as long as I can remember Indiana has used the 3 – stool approach to fund government. Property, Sales & Income taxes. It’s a good premise. If one falters the other 2 balance it out. However, in the last 20 years states with NO income tax have jumped ahead in economic growth. The money must come from somewhere, but sales tax increases that are out of step with our neighbors are counterproductive. Property taxes are constitutionally capped. Some states generate revenue with fees and taxes outside of the “big 3”, so that is possible. Eliminating the business personal property tax is a good step. It costs Indiana some jobs.
I’m left wondering if the elimination of the sales tax is the best route ahead. Indiana needs people. No sales tax might be a big draw for middle class families.
What Indiana should do is look at which local governments are growing … and replicate what they’re doing. Look at what Carmel or Zionsville or Fishers or Greenwood are doing, do that across the state.
Yet another tax cut is just an admission that the state of a Indiana can’t complete. We’ve been cutting taxes for 20 years and we are worse off for it.
Sales and Use taxes accounted for 40%+ ($8B) of state revenue in FY20, with state and corp income taxes at 30% ($6B)
https://www.in.gov/dor/news-media-and-publications/indianas-tax-dollars-at-work/
Since prop taxes are capped – can’t imagine how that is ever voted away – income tax increase is only real option… Not an exact parallel because of deductions etc, but by napkin math would be looking at a 7%+ rate as a trade-off for no sales tax, or introduction of tiered rates, which invites easier fiddling in the future.
I think that would cause a lot of businesses/owners to reevaluate where they locate.
I didn’t advocate a reduction in total taxes.
If the legislature would first fund all infrastructure needs, then a reduction is in order. Our bridges and roads need work. Our rest stops are pathetic compared to other states. Many of our interstates are still 2 lane in many areas. Cities need to update utilities, etc. Lets fund the needs for future generations and then think about reductions. Please dont make taxes a political issue for gain of votes, there are too many needs to handle.
The federal government just gave Indiana a lot of money to take care of some of that.
I’d start with funding the rest of the READI grant program and restoring the education cuts made in 2007-2008. We need more slots for Indiana students at IU/Purdue/Ball State.
I might add that the State has allocated $250M to update ALL Indiana Welcome Centers (rest stops). This is a major investment that will span several years. The new Pigeon Creek Welcome Center on I-69 south of Auburn has recently opened. The old Wolcott rest area on I-65 has been demolished and work has begun on that Welcome Center rebuild. Plans are underway for a Clear Creek Welcome Center on I-70 just east of Terre Haute. More are on the way.
John P. — that rest area is south of Angola, not Auburn.
It would be nice if the author of the article could or would find out if all of the state’s pension and retirement liabilities are fully funded and not end up like Illinois with billions in unfunded liabilities. Pay off all unpaid long term debt so we won’t have to deal with it when the next recession starts. And what would be wrong with granting some of our larger cities some of this largess to improve their infrastructure. The longer we continue to delay infrastructure repair and improvements the more it will cost. And finally we have to start paying our teachers more to address shortages there are they will continue to leave for higher paying private sector jobs.
Totally agree on the pensions.
Indiana’s investment strategy for surplus funds has nearly always been very safe and low yield. We should look at investing a chunk in a much more aggressive manner.
This is the moment to invest…not slap ourselves on the back for a $125 check for Hoosier taxpayers. Good God.
Maternal death rate. Miserable progress in child welfare. and and and…
And, lets silence the rural guys who don’t want Indy to thrive.
Not Dem or GOP issues. People issues.