Latest state revenue report predicts end of the year surplus

Dec 15, 2011

State revenues are expected to grow, though at a slow rate the next two years, according to forecasts unveiled Wednesday.  And with the addition of recently discovered tax revenue that had been misplaced, the state budget surplus could reach more than $1.7 billion next year. 

 

Growth in the next two years is expected to be around the 1-2% range.  Though that’s better than recession levels, it’s still not the kind of robust growth the state came to expect prior to the economic downturn.  But the good news is in the state budget surplus.  The outlook for the next two years puts the surplus at roughly $1.76 billion.  And House Republican fiscal analyst David Dukes says that could direct  the conversation away from tightening the budget.

“There might be some room for some additional spending, though it may have to be one time.”

That one time spending could include a taxpayer refund.  State statute triggers an automatic refund if the surplus exceeds 10% of the total budget.  Come July of 2012, if the surplus is at the level predicted, it would be more than $300 million over that 10% mark.  The average taxpayer would receive about $50.  State Representative Jeff Espich (R-Uniondale) says the refund is one of several options.

“I think taxpayer refunds are on the table, I think some money maybe for K-12 is on the table, I think saving some more money in the state’s pocketbook for a rainy day is on the table.”

State Senator Luke Kenley (R-Noblesville) says he’s concerned about the idea of an automatic taxpayer refund.

“I do think that at some level it is a legitimate relief valve but I’m not sure we’ve found that level today with the bill that we have in place.”

That goes along with a concern expressed by State Representative Peggy Welch (D-Bloomington).  She worries the refund would not have much impact.

“Unless you give a significant refund, something back to the public, they don’t really understand that they’ve received some type of refund.”

State Senator John Broden (D-South Bend) says there are simply wiser things that can be done with a strong surplus.

“Things that can grow our economy, things that can better invest in our people, things that can get people back to work…and I’m not sure that, you know, a refund in the $38-61 range is going to do that.”

State Representative Bill Crawford (D-Indianapolis) says he wants to see some of the cuts made during the recession at least partially restored.  That includes cuts to higher education, K-12 education and the child services division.  He says if the surplus reaches forecasted levels, the state can afford to spend some money without worrying about jeopardizing the state’s reserves.

“Spending $300 million still leaves caution, more than caution because the governor wanted a billion, so we’ve got some flexibility.”

Governor Mitch Daniels has said he’d like to see budget surpluses of at least $1 billion.  And though they can’t agree on what exactly to do with the surplus, each legislator predicts the issue will be one that generates some of the most significant discussion in the upcoming session.