Indiana Gov. Eric Holcomb said Wednesday he now believes the state’s individual income tax rate could be cut while maintaining enough state revenue for additional spending needs in the next state budget to be adopted in 2023.
The State Budget Committee on Thursday projected booming growth in Indiana’s budget surplus, setting up a debate during the upcoming legislative session over possible tax cuts.
The Crawfordsville Republican spent the past eight legislative sessions as chairman of the House Ways and Means Committee and suggests he will propose a tax cut for Hoosiers as he departs the legislature in 2022.
The new state budget adopted in April by the Republican-controlled General Assembly is awash in federal coronavirus relief money, allowing the state to give sizeable funding to projects that had for years been shelved and left out of spending plans.
On My Way Pre-K has also been slow to grow in the six years since its start, and enrollment plummeted during the pandemic by 40%. But the state is expecting increased demand.
Several Democratic legislators called it the best state spending plan in years. Republicans described the plan as focused on helping the state’s economy grow in the coming years and helping to give long-deserved raises to teachers.
Indiana educators on Thursday called for a bigger school funding boost to help improve the state’s lagging teacher pay, as new projections showed state tax collections are expected to bounce back stronger than expected from the pandemic recession.
We must enact a plan not just around how to build and encourage industry to adapt and change, but also to maximize Indiana’s ability to compete over the next decade.
The funding would instead go to courses in areas that are typically higher paying, such as nursing, biomedical science and welding. But critics say eliminating popular programs would narrow students’ options.
The $36.3 billion two-year budget proposed by the House GOP on Thursday would make a handful of one-time investments in small businesses, regional projects, student learning loss, health initiatives, broadband and police training.
The $35.2 billion budget, which Office of Management Director Cris Johnston and Budget Director Zac Jackson presented to the State Budget Committee on Wednesday morning, also restores the state’s reserve balance to $2.3 billion each year.
According to a revenue forecast presented to the State Budget Committee on Wednesday morning, tax receipts for the state’s general fund—essentially its main checking account—will total $34.95 billion for the next two-year budget, which will start in July.
Leaders promise K-12 education will be the top priority, but they also acknowledge that every line item in the spending plan is at risk of cuts.
Indiana Office of Management and Budget Director Cris Johnston told the State Budget Committee on Tuesday that the state has been waiting for clearer guidance from the federal government on how the dollars can be spent.
Indiana’s monthly revenue report, released Friday, shows that the state is still falling short of the funds that were expected when the forecast was made last December.
Lower than expected revenues created a budget deficit of nearly $900 million, but the state still managed to end the year in the black by cutting costs in some areas, tapping into reserves and receiving additional federal dollars for Medicaid.
Wednesday’s report by Moody’s Analytics warns that doing nothing to address the economic perils of state cutbacks could cost millions of jobs. But it also says that significantly less federal aid is needed than what’s being called for by House Democrats.
Tax revenues for fiscal year 2020 were already off by $1.2 billion by the end of May, an amount that is expected to grow to $1.7 billion to $1.8 billion before the fiscal year ends June 30.
Indiana Gov. Eric Holcomb’s administration continues to make budget cuts as the state prepares for revenue collections possibly being $2 billion lower than expected by the end of the fiscal year.
Gov. Eric Holcomb said the budget agency is estimating that Indiana could take in $3 billion less than expected during the last two months of fiscal year 2020—which ends June 30—and fiscal year 2021.
