Lagging State Tax Revenue Sets Up Budget Debate

Indiana Senate Appropriations Chair Luke Kenley says Hoosiers shouldn’t be concerned about lagging tax revenues, but he says lawmakers should proceed with caution as they prepare to write a new budget in the coming months.

Indiana tax revenues came in under projections for the first two months of the fiscal year that began in July.  That follows the last fiscal year in which the state only outperformed its targets by one-tenth of one percent, and with less revenue than the previous year.  Noblesville Republican Sen. Luke Kenley says after cutting taxes in the last several sessions, the revenue picture makes it harder to continue cutting.

“I do think though that with our ability, even having cut the taxes, to retain our $2 billion surplus shows that we have enough revenues for the state," Kinley said. "So on the other side of the coin, I don’t see any incentive to raise any taxes.”

But Portage Democratic Sen. Karen Tallian says holding back spending, or requiring state agencies and universities to cut their budgets as Gov. Pence has done, is unnecessary when the state has $2 billion in reserve.

“We’re shooting ourselves in the foot by doing that.  And why are we doing this?  We’re doing in the name of, sort of, economic development," Tallian said. "But if we can’t spend our money on roads or higher ed or K through 12 education, that is not economic development.”

Kenley says the reserve level allows the state to be more flexible and ensures it can weather a future economic downturn.