INDIANAPOLIS – State budget officials reported another month of revenue freefall Monday, and sent a veto warning to legislators about bills floating around this session that spend state dollars outside the budget process.
Revenue came in $87 million less than expected in March, according to a report released Monday.
Total revenue collections for the month were $821 million – or 15 percent – below the same period last year. A decline of this magnitude last happened in May 2002.
Overall, tax receipts for the current state budget ending in June are $754 million less than projections when the budget passed in 2007.
The deficit will grow to more than $1 billion even if the state hits its revenue targets the final three months of the fiscal year.
“This will make matching spending to available revenues difficult,” State Budget Director Chris Ruhl said, adding that, despite the murky outlook, the legislature continues to consider numerous costly bills that spend money outside the state budget.
“Every one of these bills standing alone is a veto candidate,” Ruhl said in the monthly revenue report document. “The proper approach to funding worthy programs is to incorporate them into a budget that protects Hoosier taxpayers.”
For instance, a bill giving tax breaks to casinos would cost the state $36 million in tax revenue; another funding a prekindergarten grant pilot program costs $14.6 million; and a tax credit for contributing to a school scholarship organization costs $5.3 million.
There are dozens of other examples.
Gov. Mitch Daniels announced $767 million in state budget cuts in December, including a strategic hiring freeze; putting capital projects on hold; curtailing travel by state employees and nixing a planned salary increase.
But budget officials said Monday if March trends continue, the state would have to slash an additional $500 million on top of those cuts.
Ruhl said his staff is evaluating ways to save money every day.
Some of them are small – like moving the Indiana Arts Commission into free state office space.
He also said increased Medicaid help from the federal government means a savings of state money in the current budget of between $200 million and $300 million.
While Daniels and his staff are busy trying to ensure that this year’s budget is balanced, state legislators are working on a new two-year state budget running from July 2009 through June 2011.
Senate Republicans will unveil their version of the budget bill Thursday, and fiscal leaders said it will include additional cuts on top of the governor’s.
“Right now we’re running a tightrope,” said Senate Appropriations Chairman Luke Kenley, R-Noblesville.
He acknowledged he is depending on education and Medicaid dollars from the federal stimulus package to balance a new state budget and avoid otherwise painful cuts.
He also said he isn’t sure whether the state can avoid using some of its reserve funds – something Daniels has insisted on not doing.
House Ways and Means Chairman Bill Crawford, D-Indianapolis, called the revenue numbers “expected” given the worsening economic climate, but said the situation “deepens pressure on the budget.”
He also noted that as the numbers continue to decline, it makes more sense for the state to consider passing a budget for one year instead of the usual two.
Lawmakers get a revised revenue forecast for the rest of this fiscal year and the next two months on April 17, leaving them just 12 days after that to pass a state budget before the scheduled end of the session.
