INDIANAPOLIS | Indiana remains on track to take in more money than it spends over the next 18 months, even after state budget officials on Friday reduced their 2014-15 revenue expectations by $297.7 million.
The state's revenue forecast was adjusted by a bipartisan group of legislative and executive branch budget analysts to account for lower-than-expected growth in sales and income taxes — the state's two largest revenue sources.
The April forecast the General Assembly used to craft the state's budget projected 3.9 percent sales tax growth and 5 percent growth in income tax revenue during the 2014 budget year that runs from July 1, 2013, to June 30, 2014.
But since July, Indiana's revenue has come in $141.3 million below expectations, mostly because of lackluster income tax revenue.
That led Republican Gov. Mike Pence this month to cut $57 million in state agency and university spending, on top of a prior $115 million cut he said was necessary to preserve the state's $2 billion budget reserve.
The revised 2014 revenue forecast projects Indiana sales tax collections will grow 1.7 percent and income tax revenue 0.9 percent.
However, both are expected to rebound during the 2015 budget year, with sales tax revenue growing 4.8 percent and income tax revenue up 5.1 percent.
Assuming Indiana hits those revised targets, the state will collect $118.6 million more than it spends in 2014 and have a $176.3 million surplus in 2015.
At the same time, Indiana will take in $73.6 million less general fund revenue during the 2014 budget year compared with 2013, the first year-over-year decline since the Great Recession cratered state revenue during the 2010 budget year.
Several lawmakers, including state Sen. Luke Kenley, R-Noblesville, chairman of the State Budget Committee, said they were puzzled that Indiana's unemployment rate has dropped 1.1 percent since July, but state income and sales tax revenues don't seem to reflect more Hoosiers earning paychecks and spending that money.
House Democratic Leader Scott Pelath, D-Michigan City, said the unemployment drop likely is due to seasonal retail employment at wages so low they don't have a significant impact on state revenue.