Indiana budget off by $1.2B for fiscal year with one month to go

Revenue for the state of Indiana is down nearly $1.2 billion from budget projections—or about 8%—for the year so far, according to the latest report from the Indiana State Budget Agency, published Friday.

Drops in sales and individual income taxes—the state’s top two revenue sources—continue to have the most significant impact on the state budget. In May, sales tax revenue was $102.2 million less than expected, and income tax collections were close to $63 million lower than expected.

But year-to-date, sales tax revenue is only 2.1% behind where it had been expected to be. Income tax has taken a bigger hit, missing the mark for the year by 14.1% so far.

The state also saw $10.4 million less in revenue for corporate taxes than previously estimated, and various other taxes were $8.5 million lower than expected.

The state received zero income from gambling taxes because the state’s riverboat casinos and horse-track racing casinos have been closed since mid-March. Projections showed the state should have collected $49.4 million from casinos in May.

Overall, revenue for May was $233.3 million lower than expected, for a difference of about 20%. The state collected a total of nearly $1.2 billion.

Office of Management and Budget Director Cris Johnston said May tax collections haven’t been this low since 2013.

“While this month’s shortfall on a percentage basis was just half of the shortfall of last month, please remember that April tax revenues reflected the tax deferral from April to July,” Johnston said.

In April, tax revenue was $1 billion less than expected, with a significant decrease in individual income taxes accounting for the largest portion of the discrepancy. Budget officials believe the delay in the income tax filing deadline from April 15 to July 15 was a major contributing factor.

Johnston said he expects June to be a tough month for revenue collection. Prior estimates show the state is expecting to receive more than $2 billion in tax revenue during the month, but that will likely not be the case.

“June is our highest forecasted month after April,” Johnston said. “So June will have similar challenges to the month of April.”

The state’s fiscal year ends June 30.

To adjust to the drop in revenue, Gov. Eric Holcomb last month announced plans to cut state agency budgets by 15% in fiscal year 2021. Holcomb is also sidelining $466 million in planned projects in an effort to balance the books.