INDIANAPOLIS – Fiscal leaders got a pleasant surprise Thursday - $2 billion in new tax revenue for the biennial state budget under consideration.
The updated forecast shows the economy rebounding, which means lawmakers have more money to spend than was predicted in December.
House Ways and Means Chairman Tim Brown, R-Crawfordsville, says he has never seen such a substantial change in projected tax receipts this late in the budget-writing process. Legislators plan to finish their work next week.
“It is unique and amazing and exciting,” he said, noting he is getting a lot of phone calls, text messages and emails with ideas how to spend the cash.
The new forecast added $862 million in tax revenue for fiscal year 2022 and $1.1 billion in fiscal year 2022. The new budget kicks in July 1.
But leaders cautioned they don't want to grow government and will focus on strategic investments.
“We need to make responsible, measured, prudent decisions that fund our priorities like education,” Senate President Pro Tem Rodric Bray said. “We've got a lot of work to do on this.”
The dominant issue is likely teacher pay as both the House and Senate versions of the budget so far provided just 1.2% increases to K12 schools in the first year. That doesn't even cover inflation.
Each percentage increase in funding costs about $75 million.
“Here's a golden opportunity to significantly improve K-12 public education funding in our state,” said Terry Spradlin, executive director of the Indiana School Boards Association. “Lawmakers have a real chance to improve the state's standing on per-pupil funding, which in turn would allow our local schools to make major improvements in teacher compensation.”
House Speaker Todd Huston said he is confident if more dollars are put toward K12 the dollars will get in the hands of teachers, as they did in 2019.
“We will be very focused on that issue in the coming days,” he said.
But there are other competing interests. For instance, some state agencies and programs were cut 15% last year when the pandemic hit. Some of those cuts were restored but not all of them.
Huston said lawmakers will “figure out what needs to be restored and what maybe we found out we can live without.”
Another option is providing dollars for higher education capital projects, which have been left out of the budget so far.
Bray said having proper reserves is also important – “we just can't go out and start to spend it. We have to make sure that's we're continuing to prioritize.”