INDIANAPOLIS — State Auditor Tera Klutz announced Wednesday that Indiana spent $42 million less than it collected in taxes during the 2017 budget year that ended June 30.
"This is good news for Indiana taxpayers," Klutz said. "Just like hardworking Hoosiers across the state of Indiana, we continue to live within our means, we pay our bills on time, we provide needed services as well as plan for the future."
The annual budget surplus was built in part through strong year-over-year growth in sales tax (3.7 percent increase) and personal income tax (4.2 percent) collections, according to Micah Vincent, director of the Indiana Office of Management and Budget.
The administration of Republican Gov. Eric Holcomb also held back $318 million in spending appropriated by the Republican-controlled General Assembly, about one-third of which was money set aside for Medicaid expenses that did not materialize.
Indiana's combined budget reserve, including the General Fund surplus ($302.7 million), Medicaid reserve ($577.6 million), tuition reserve ($348.3 million) and Rainy Day Fund ($548.5 million), now stands at $1.78 billion.
That equals 11.5 percent of planned 2018 state spending.
Vincent said the governor is committed to maintaining that reserve balance to protect Hoosiers against sudden tax increases or severe service cuts during an economic downturn that reduces state revenue, and to preserve Indiana's highest-possible AAA credit rating.
Klutz, a Fort Wayne Republican, said she agrees with that strategy. She is expected to run next year for the state auditor post that Holcomb appointed her to in January when former State Auditor Suzanne Crouch became lieutenant governor.
She also shrugged off the suggestion that Indiana should have spent at least part of its budget reserve before lawmakers this year hiked fuel taxes and vehicle registration fees to pay for road construction projects.
"Infrastructure is not a one-time expense that you could use a reserve to pay for," Klutz said. "I feel like the increase was responsible in order to set us up for the future."
The State Budget Agency projects Indiana will have a $119.4 million annual surplus and its reserve fund will grow to $1.84 billion during the 2018 budget year.