As Indiana closes previous fiscal year, how did the state budget get so dire?

The state of Indiana will close the books on its previous state budget Tuesday. Two years ago, the state finished its budget cycle with $3 billion in one-time spending and nearly $3 billion in reserve.

Several members of our audience wanted to know how the state went from that to cutting $2 billion from the new state budget.

Indiana Fiscal Policy Institute President Stephanie Wells said one of the biggest reasons Indiana's budget picture was so good two years ago is that the state received a lot of federal money via COVID-19 relief funding. She said that's an anomaly.

"That money went away," Wells said. "And we were spending a fair amount of dollars that we weren't used to getting."

And Wells said as lawmakers built the new budget, the economic picture was far less rosy, driven by uncertainty about federal policies.

"It is still more money than in the last budget, but it is less new money than what we thought prior to the end of last year," Wells said.

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Almost all of the increased revenue in the new budget compared to the last budget went to K-12 education and Medicaid.

Lawmakers did spend down some of the budget reserves to slightly lessen the amount of money they had to cut out of the budget.

Brandon is our Statehouse bureau chief. Contact him at bsmith@ipbs.org or follow him on Twitter at @brandonjsmith5.