EDITORIAL: Indiana should prepare for more spending cuts

2013-12-13T00:00:00Z EDITORIAL: Indiana should prepare for more spending cuts nwitimes.com
December 13, 2013 12:00 am  • 

Because Indiana state government revenues aren't hitting the state targets, Gov. Mike Pence has ordered spending cuts, including selling the state's airplane and cutting funding for universities. It's a necessary move.

In November, the state raked in $908.1 million from all revenue sources but had expected $984.9 million. That's a 7.8 percent shortfall.

In the first five months of Indiana's fiscal year, revenue is running about 2.5 percent below the revenue forecast, which called for 2.5 percent growth. Actual revenue is down about 1.8 percent from the previous year.

Personal income tax revenue is the main problem, falling about 5.7 percent below expectations, but corporate income taxes, casino taxes, inheritance taxes and alcohol taxes are also down.

So Pence directed state agencies and to cut spending by another 1.5 percent, or $25 million. He cut spending 3 percent, or $50 million, earlier this year.

Universities are losing 2 percent of their funding, a total of $26.5 million. Another $2.5 million in savings comes from postponing planned spending on the Indiana Biosciences Institute.

All told, Pence's budget cuts have reduced state spending by $172 million.

This is after the Daniels administration had already cut a lot of fat from state spending.

Keeping in mind we're only a few months into the two-year budget, this doesn't look promising.

Indiana is sitting on a $2 billion surplus, but we have seen the state squander a rainy day fund before. That must not happen again.

As rainy days go, this is a drizzle and not a full downpour.

In anticipation of continued revenue shortfalls, Pence should order department heads to identify additional potential spending cuts, based on priorities in each department.

Ask key legislative leaders, too, for their advice.

And don't neglect the rewards program former Gov. Mitch Daniels set up for state employees who identify ways the state could cut costs without sacrificing the quality of services delivered.

Get ahead of this financial situation, rather than being chased by it.

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