INDIANAPOLIS – Hoosier taxpayers will likely receive a $100 tax refund next year thanks to a higher-than-expected state surplus at the end of the fiscal year.

That refund would rise to $200 for joint filers. The money is a credit on income taxes, so some people already set to receive a refund will simply get more while others will owe less.

Gov. Mitch Daniels announced the news Tuesday when he gave preliminary numbers about the fiscal year, which ended Saturday.

He said the state surplus will be at least $2 billion.

Under Indiana’s automatic taxpayer refund law, about $300 million will go to the income tax credits and $300 million will go to aid state pension obligations. It is the first time the law will be triggered.

Projections show the surplus is expected to rise again to $2 billion in 2013.

“We thought this was a fundamental assignment of our administration – to turn over to our successors the strongest possible position,” Daniels said.

He said the next governor and General Assembly will have a wide range of choices when they start writing the new two-year budget in January. This includes cutting taxes, increasing spending in priority areas such as education or a mix of options.

Daniels scoffed at the idea that schools hurting from cuts would be upset by the surplus and refunds, noting that reductions in other states have been far worse.

“And the point is that they will have every opportunity now … to come and make the case for more. It’s there to be debated,” he said.

State budget officials would not say how exactly the surplus was built, for example, how much of the excess was due to exceeding tax collection projections as opposed to state agencies reverting money.

Reversions are when agencies don’t spend everything the legislature budgets for them, instead sending money back to the state general fund. The savings can come from efficiencies or program cuts.

A December surplus statement showed the reversion estimate for agencies this fiscal year was $30 million. In April, that rose to $143 million after the state discovered it had mistakenly held more than $200million in state coffers instead of properly distributing it to local governments.

It is unclear what the final reversion tally is. More details will be available in a week or so when the books are officially closed for the year.

“Congratulations to Gov. Daniels for hitting his magical $2 billion in surplus and giving $100 tax credits to Hoosiers,” said House Democratic Leader Patrick Bauer of South Bend. “Nevertheless, one has to ask, ‘What were the human costs paid in order to achieve this goal?’ ”

The surplus is also built in part on the discovery of $320 million in corporate taxes that unknowingly built up over several years in a holding account.

In the future it will be harder to hit the refund trigger due to legislative changes. The refund will now be given out only in odd-numbered years after legislators finalize a new budget. The trigger also jumps from 10 percent of the appropriated budget amount in reserves – currently about $1.4 billion – to 12.5 percent, or about $1.75 billion.

nkelly@jg.net