Indiana Democrats want investigation into misplaced tax money

2011-12-08T12:45:00Z 2011-12-09T06:40:31Z Indiana Democrats want investigation into misplaced tax moneyBy Dan Carden dan.carden@nwi.com, (317) 637-9078 nwitimes.com
December 08, 2011 12:45 pm  • 

INDIANAPOLIS | Democratic state lawmakers called for an investigation Thursday into how Indiana misplaced $320 million in tax revenue for four years.

State Rep. Scott Pelath, D-Michigan City, and state Sen. John Broden, D-South Bend, want the State Budget Committee to look into why corporate income taxes paid by electronic check were not transferred promptly into the state's General Fund, which pays for schools, roads and most state services.

They also want to know when the administration of Republican Gov. Mitch Daniels found out about the problem.

"We absolutely need to understand more than just sort of a laughing-off suggestion that this is a pleasant surprise," Pelath said. "It's a very serious mistake."

Daniels said Tuesday a computer programming error, combined with few initial users of eChecks and the downturn in the state's economy, was to blame for why no one noticed the business tax revenue piling up in the state's collections fund.

A November Department of Revenue audit discovered the money, which was earning interest the entire time.

Pelath said only an independent review can show if that's really what transpired and prevent similar money mismanagement in the future, especially since Hoosiers have been hurt by recent declines in state revenue.

"Over the past three years, people and institutions across the state have been asked to sacrifice, and now it appears that many of those sacrifices were in vain," Pelath said. "The public's confidence has to be restored."

The State Budget Committee meets Wednesday and could consider the Democrats' request for an investigation at that session.

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