Luke Kenley

March revenue report

Apr 5, 2013

Indiana posted a stronger third quarter of tax revenues than expected this fiscal year, which could have an impact on budget negotiations.

Indiana sales tax revenues actually struggled during the most recent four months of the fiscal year, falling more than $40 million behind the most recent forecast.  But overall revenues were boosted by a surge in individual income tax collections, which came in more than $70 million ahead during that same period.

The budget plan unveiled by Indiana Senate Republicans creates a new Major Moves Trust Fund aimed at helping pay for significant transportation projects in the future. It contains more than $200 million in road funding to both state and local governments in each of the next two years.  It also puts away $400 million to begin saving for projects such as the completion of I-69 and making I-65 and I-70 six lanes wide across the entire state.

Senate Appropriations Chair Luke Kenley (R-Noblesville) says the trust fund is about getting the process started.

The Indiana Senate’s fiscal leader says legislation expanding the state’s school voucher system would approach what he calls a “cataclysmic change” to the program and possibly create questions about its constitutionality.

The school voucher expansion bill would allow families to receive state dollars for their children to attend private school beginning in kindergarten, essentially removing the requirement that students spend at least one year in public school before receiving a voucher. 

Governor Mike Pence wants a one percent increase for K through 12 school funding in each of the next two years, but schools would have to earn the extra money in the second year. 

The governor’s budget includes around $190 million in additional funding for K-12 schools.  Some, like Representative Terry Goodin (D-Crothersville) says that’s not enough.

“Our public schools are the number one economic development tool in our state.  So if that’s the case, we need to fund those economic development tools properly.  One percent’s probably not going to do that.”

State revenues are expected to grow at a modest pace in the next few years.  That’s based on new forecasts unveiled Monday. 

State fiscal analysts predict revenues will grow by 2.2% in the next fiscal year and 2.9% the year after that.  That would mean lawmakers have a little more than an additional $1 billion in the next state budget than they did in the last one.

Senate Appropriations Committee chair Luke Kenley (R-Noblesville) says after suffering through an economic crisis the last four years, he’s still in “hope for the best, plan for the worst” mode.

Uncertainty surrounding implementation of the Affordable Care Act looms over the upcoming session of the General Assembly, and fiscal leaders say that uncertainty will necessitate caution when writing the state’s next budget.

Milliman, the actuary hired by the state, predicts Indiana will see its Medicaid costs expand by more than $600 million over seven years once the Affordable Care Act goes into effect. That's the low-end estimate if the state chooses not to expand its Medicaid eligibility rules.

Through the first quarter of the fiscal year, state revenues remain well ahead of the most recent forecast.  And Governor Mitch Daniels says Indiana could be headed for another surplus.

The state collected $23 million more than anticipated last month, nearly 2% ahead of projections.  And through September, total revenue collected this fiscal year has increased more than 5%.  The last fiscal year ended with a surplus in excess of $700 million, triggering the state’s automatic taxpayer refund.

Daniels says the state is ahead of where it needs to be for another big year.

A state senator wants to raise the level of surplus needed before triggering a tax refund. The refund mechanism was put in place last year.

If the state’s budget surplus surpasses 10% of the total budget, the taxpayer refund kicks in.  When the surplus is calculated at the end of the fiscal year in June, projections say it will be at least $300 million more than the 10% level, disbursing a refund of about $50 per taxpayer.

State Senator Luke Kenley (R-Noblesville) says he wants to raise the threshold to be on the safe side.