Good thing Indiana budget prognosticators weren’t in charge of weather forecasts in recent months. Hoosiers would have been caught totally off guard for hazardous weather. As it is, they’re left to cope with the effects of revenue forecasts that were too rosy.
The tax collection shortfall for February of $54 million digs the state deeper into a budget hole for the current fiscal year, which ends June 30. Collections have fallen below projections for six of the last eight months, leaving the state nearly $90 million behind where it needs to be to meet budget obligations.
Gov. Mike Pence promised the administration will conserve resources in a way that preserves Indiana’s fiscal integrity. The state’s consistently underwhelming economic performance, however, should be a warning to Pence and Indiana lawmakers that this is not the time to deliver on legislative wish lists.
Even though the General Assembly isn’t currently in a budget-year session, numerous proposals have costs attached.
The governor’s preschool pilot program, as proposed in a House bill, would have provided vouchers for 1,000 4-year-olds. The Senate eliminated the pilot in favor of a commission to study early-learning programs, but Senate President Pro Tem David Long said last week that he still hoped some small pilot program could be created this year.
There’s no need to spend money. If lawmakers want to observe an early-learning program, they can look to the successful preschool program Fort Wayne Community Schools has been providing for many years out of federal Title I funds. Unless the real intent is to spend state money on church-based programs, years of data on quality pre-K and its effectiveness already exist.
Likewise, the push to eliminate the business personal property tax is one that should wait until tax collections improve. The governor’s initial proposal would have cost schools and local units of government $1 billon a year in lost revenue.
The easiest call is to throw out legislation to require drug testing of some welfare recipients. States that have attempted such programs have spent far more than they have saved in denied benefits. The nonpartisan Legislative Services Agency estimates Indiana would spend $1.18 million to save $521,000 over two years in testing welfare recipients.
New spending and tax cuts must wait until state officials have a better handle on collections. The same forecasters who overpromised on monthly collections told lawmakers in December that the state was on track to collect roughly $298 million less than estimated through June of 2015.
Indiana’s heavy dependence on its 7 percent sales tax and competition from casinos in neighboring states could eventually threaten its capability to provide basic services.
An election year might serve incumbent legislators well in serving up tax cuts and new programs. But Hoosiers overall would be better served by on-target collections to support existing services. In the 2015 biennial budget session, lawmakers can decide if Indiana has the right mix of taxes and investment.