Virus downturn knocks Indiana surplus down $850 million

Plunging tax collections caused by the coronavirus pandemic have delivered a $850 million hit to Indiana’s state budget reserves, and a top state official said Thursday he anticipates possibly steep spending cuts in the coming years.

Posted: Jul 16, 2020 9:25 PM

INDIANAPOLIS (AP) — Plunging tax collections caused by the coronavirus pandemic have delivered a $850 million hit to Indiana’s state budget reserves, and a top state official said Thursday he anticipates possibly steep spending cuts in the coming years.

Indiana closed the 2020 fiscal year June 30 with about $1.4 billion in reserves — a drop of 37% from the state’s nearly $2.3 billion a year ago, state budget officials announced.

That stems from a $1.5 billion, or 23%, drop in tax revenue for the four months since widespread business closures and other restrictions prompted by the coronavirus outbreak started in March.

Officials have not ordered any layoffs of state employees, but have over the past few months implemented a widespread hiring freeze, directed most state agencies to cut spending by 15% for the coming year and told state universities to expect a 7% reduction in state funding.

Cristopher Johnston, director of the state’s Office of Management and Budget, said no quick turnaround was expected.

“We will most likely need more austere budgets,” Johnston said. “We will mostly likely need greater (spending cuts) to manage the uncertainties ahead.”

Indiana’s budget figures largely do not incorporate the $2.4 billion designated to the state from the federal coronavirus relief package, said Johnston, who is Republican Gov. Eric Holcomb’s top budget adviser.

Congress has restricted that money for coronavirus-related spending and is not allowing states to use it to replace lost tax revenue, but Johnston said the state was holding back on decisions in case that changed.

The top Democrat on the budget-writing House Ways and Means Committee sent a letter this week to Holcomb urging more public discussion about spending the federal funding.

Rep. Greg Porter of Indianapolis said the state needed to direct money toward actions such as buying personal protective equipment for schools, local government and home health care workers, covering the expenses of expanded mail-in voting and assisting minority communities disproportionately hit by COVID-19 illnesses.

“As the state continues to develop new plans, policies and programs to prepare for the current and foreseeable impacts of COVID-19, I encourage you to rely on fellow lawmakers and community leaders to establish an equitable and sustainable funding framework for Indiana,” Porter wrote to Holcomb.

State government could see some financial improvement as it tallies income tax payments coming in since the federal and state tax returns deadline was pushed back from April 15 until July 15.

Nearly 60% of Indiana’s tax revenue shortfall came from lower-than-anticipated personal and corporate income taxes, although Johnston did not want to estimate how much of that could eventually be collected.

“I think I would be foolish to speculate that we’re going to get 100% collections,” he said. “We are certainly hoping for the best.”

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Indiana Coronavirus Cases

Data is updated nightly.

Cases: 617176

Reported Deaths: 9845
CountyCasesDeaths
Marion852151342
Lake45894695
Allen33238562
Hamilton29842320
St. Joseph27623385
Elkhart24546347
Vanderburgh19795256
Tippecanoe18242146
Johnson15284296
Porter15024173
Hendricks14615252
Madison11124224
Clark10889145
Vigo10856185
Monroe9540115
Delaware9224136
LaPorte9188165
Howard8381151
Kosciusko814085
Warrick6866102
Hancock6832106
Bartholomew6684100
Floyd6545114
Wayne6214164
Grant6063119
Dubois560282
Boone559968
Morgan554596
Henry513266
Marshall509684
Dearborn490645
Cass490364
Noble477459
Jackson429748
Shelby425582
Lawrence396180
Gibson378360
Clinton376745
Harrison354747
DeKalb353665
Montgomery351154
Knox338139
Miami326845
Steuben316546
Whitley316226
Wabash308951
Adams305337
Ripley303047
Putnam300652
Huntington298461
Jasper293735
White276243
Daviess272076
Jefferson268338
Fayette250449
Decatur250283
Greene243464
Posey242828
Wells237952
LaGrange230963
Scott228340
Clay225732
Randolph216448
Jennings201437
Spencer194624
Sullivan194033
Washington190223
Fountain185427
Starke178344
Jay169423
Owen168738
Fulton165630
Orange162035
Carroll161116
Rush157218
Perry156930
Franklin151633
Vermillion150934
Tipton135033
Parke13158
Pike119526
Blackford112523
Pulaski98037
Newton92921
Brown89434
Benton87210
Crawford8099
Martin75213
Warren6947
Switzerland6815
Union6327
Ohio4977
Unassigned0375

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