INDIANAPOLIS – The state closed its books June 30 with the most money it has ever had in reserves – $2.27 billion. That is equal to about 14% of expenditures.
The amount was buoyed by an unexpectedly good last quarter of tax collections, and Gov. Eric Holcomb is already planning on how to spend about $300 million of that surplus. But it won't be on teacher pay, the hot-button issue that has stirred Democrats in Indiana and nationwide.
Cris Johnston, director of the Indiana Office of Management and Budget, said the state can't spend one-time revenue on an ongoing expenditure like teacher salaries.
But paying cash for building projects – instead of borrowing money – would free up capacity in the future for ongoing needs, he said.
“We will work over the next six months to demonstrate how the ongoing savings can be best used for tackling our priorities in the next budget, such as providing meaningful increases in teacher compensation so Indiana is competitive with neighboring Midwestern states,” Holcomb said in a release.
Indiana State Teachers Association President Teresa Meredith said the surplus has “come on the backs of public schools' children and educators” and encouraged him to make teacher compensation a priority now.
House Democrat Greg Porter, of Indianapolis, said that back in April, Republicans talked about a risk of shortfalls in revenue and how that would prevent some programs from getting funding.
“Now we find that things aren't so bad after all ... like usual,” he said. “These closeouts are supposed to be occasions for celebration. I think that they should be ashamed and embarrassed that they prize hoarding money over improving human infrastructure.”
Holcomb wants to use $300 million on projects that have already been approved by the legislature. The projected expenses include:
• $50 million for the Indiana State Fairgrounds swine barn
• $73 million for the Purdue College of Veterinary Medicine teaching hospital
• $60 million for the Ball State University STEM and Health Professions facilities
• $30 million for the Ivy Tech Columbus main building replacement
• Finishing work to create free-flowing traffic on U.S. 31, which runs from South Bend to Louisville, Kentucky.
Lawmakers will have to approve of the change in financing. Even after that, though, reserves would be nearly $2 billion, or 12.2% of expenditures.
Earlier this year, House Speaker Brian Bosma said holding more than 12% in reserves isn't responsible – “I think that's holding taxpayer money that should be expended.”
Porter also noted the administration redirected about $180 million in Medicaid funds to the state's bottom line when lawmakers were told in the spring the state was in a crisis situation.
Johnston said this is excess money that built up over the last five or six years and now is going back to the general fund.
Overall, revenue grew 5.4% over last year, which hasn't occurred since 2012.
“Once again, we finished strong,” said State Auditor Tera Klutz, adding that reserves are important to have in case of a downturn.