Wednesday, March 16, 2016 1:37 am
State ends year with $2 billion in reserve
Niki Kelly | The Journal Gazette
INDIANAPOLIS – The state of Indiana ended the fiscal year in June with $2.141 billion in reserves – thanks in part to some state agency cuts.
Gov. Mike Pence and State Auditor Suzanne Crouch trumpeted the news as the state’s second-highest reserve level ever.
"We’ve closed the books on our fiscal year, and the results are encouraging," Pence said. "Over the last two years, we invested in Hoosier priorities while living within our means. From increases in funding for infrastructure, child protection, and education to enacting the largest state tax cut in Indiana history, we put Hoosiers and their families first. In the coming years, we remain optimistic and will work tirelessly to ensure both that the needs of Hoosiers are met and Indiana remains the fiscal envy of the nation."
State agencies sent back about $133 million to the General Fund, but even without that, the state would have had an annual operating surplus of $77 million.
Several key agencies were largely exempt from the cuts, including the Department of Child Services. That agency – recently sued over high caseloads – sent back $200,000 out of $551 million.
But the Family and Social Services Administration reverted nearly $38 million; the Department of Education $40 million; and the troubled Bureau of Motor Vehicles $6 million.
Democrats have long criticized the administration for building a large surplus at the expense of services for Hoosiers.
"For those who control our state treasury, the year-end closeout serves only one clear function: an opportunity to pat themselves on the back for their fiscal wizardry. We must gaze in awe at our ability to hoard billions of dollars," said Rep. Greg Porter, D-Indianapolis, ranking minority member of the House Ways and Means Committee. "While we are thankful for a robust surplus, we are saving way too much money at the expense of funding tangible needs for our state."
Pence gave $26.4 million back to Indiana colleges and universities that had been asked to make cuts. That amounted to about $780,000 for IPFW.
But he didn’t do that for state agencies.
"We believe our agencies are funded at appropriate levels," Pence said, noting that the newest budget increased some agencies’ funding. "We’re very confident that our agencies have the resources they need."
The administration also pointed out that reversions in recent years have been much higher.
Despite having a massive surplus of $2.141 billion – or 14.1 percent of operating revenue – the state’s automatic tax refund was not triggered. That’s because lawmakers tweaked the formula in 2013 to exclude a tuition reserve fund from the calculation. Taking that $300 million out means the level is not high enough.
Pence also said he is considering whether the state might be able to pay off an unemployment loan to the federal government early, which would end a cumbersome federal business tax penalty that all Indiana companies are paying.
If tax revenues remain robust, the state could pay the expected $250 million balance before Nov. 9. If even a dollar in loans remains after that, businesses will see the tax penalty rise from $105 per employee to $126 per employee next year.
Paying off the loan early would save Indiana businesses $327 million statewide in 2016.