Indiana state budget
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Indiana is in the middle of its biennial budget cycle, with the budget for FY2010-2011 passed in 2009. On July 14, 2010, State Auditor Tim Berry announced the state's FY2010 revenues were $957 million than lawmakers budgeted.[1] To make ends meet, state officials cut $669 million in spending. Lawmakers also reduced the state's reserves from $1.3 billion to $830 million, which Gov. Mitch Daniels and state lawmakers projected would last through the end of the current budget cycle which ends June 30, 2011.[2]
Indiana will receive approximately $445 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[3] Officials expect $200 million of the funds to be for Medicaid.[4] The state will accept the money even though Republican Gov. Mitch Daniels had previously said it was unnecessary.[5]
[edit] Fiscal Years 2010 and FY2011
Gov. Daniels said that he believed that Indiana schools will not see deeper budget cuts in 2011. After cutting $300 million in FY2010 as discussed below, he had warned that additional cuts could be likely, but changed his assessment in August 2010 and said he did not anticipate further reductions.[6] Daniels said the cuts could be avoided with or without the $200 million for education from the newly passed federal stimulus bill.[6]
FY2011 General Fund Appropriations[7]
| Category | % of General Fund Appropriations |
|---|---|
| K-12 Education | 49 |
| Higher Education | 12 |
| Medicaid | 11 |
| Teacher Pensions | 5 |
| Corrections | 5 |
| Human Services | 5 |
| Child Services | 4 |
| Other | 9 |
The projected state reserves for FY2011 is $188 million.[7]
In FY2010, Indiana collected $957 million less than budgeted. The state tapped into its rainy day fund of surplus money for nearly $500 million and reduced state spending by $785 million. State Auditor Tim Berry predicts that the surplus will be reduced to $188 million by the start of FY2012, and that prediction presumes state tax revenue growth of 5.3 percent, a presumption some see as overly optimistic.[8]
In the 1st Quarter FY 2010 state revenues drop $254 million, 8%, below forecast as announced by Gov. Mitch Daniels on October 8, 2009. At the time state budget officials projected an estimated FY 2010 budget deficit of $1 billion if revenue continued to fall. "Thank goodness we have built up reserves. And thank goodness we didn't spend them, or lots of them, as some people wanted to do," said Gov. Daniels. The state ended the last fiscal year with $1.3 billion in reserves. About $300 million of those reserves are slated to be used in the current budget.[9] However, the fall in revenues forced Daniels to make hundreds of millions of dollars in budget cuts, including: $150 million from higher education and $300 million from public schools. In the "2010 State of the State Address" Daniels emphasized the need to "streamline state government."[10]
Another fiscal issue facing the state is the impact of the federal health care legislation. In a memo to state legislators on the budget committee dated March 26, 2010, Ryan Kitchell, director of Indiana's Office of Management and Budget, warned that the legislation would have an immediate $25 million impact on the state's budget.[11]
The state budget committee is also exploring the possible cost savings that would result from schools and public university employees joining the state's public employee health insurance plan.[12]
The FY2010-2011 budget included an education funding trigger that would give schools additional funds if the state collected more money than was expected in a May 2009 revenue forecast. Revenues for FY2010, however, fell $957 million short of previous expectations, meaning schools received no extra money.[1]
Despite the state's looming deficit and failing revenues, Gov. Daniels said, "we will not make this recession worse by adding one cent to the tax burden of our fellow citizens." The General Assembly recently approved a ballot measure for the statewide 2010 ballot, widely supported by Gov. Daniels, which will let voters decide whether to amend limits on property tax bills into the state constitution.[10]
In early July 2009 the Indiana General Assembly passed a two-year state budget narrowly avoiding a state government shutdown.[13] The last time that the government had to shut down the government because officials were unable to pass the state budget was during the Civil War.[14]
[edit] Budget Cuts
State agencies were instructed in April 2010 to cut their spending by another 5 percent during the fiscal year that begins July 1 after already chopping 10 percent a few months prior.[15]
Some cuts included:
- The Department of Transportation said it has reduced payroll through attrition and without laying off any workers. The fiscal year 2010 budget allows for more than 4,300 workers, but the department is running with about 3,900 workers now. The Department has also reduced the motor pool fleet by nearly 300 vehicles over the last 3 years.[16]
- The Department of Correction said among other changes that it has reorganized its facilities, decreased the amount of adult education school days and substituted vegetarian enriched meals instead of kosher meals for inmates.[16]
- The Indiana War Memorials and White River State Park are using inmate labor to reduce costs of park maintenance.[16]
- Indiana State Fair Commission lost $1.5 million of its $2.1 million state appropriation[8], but fortunately derives the bulk of its $23 million budget from other sources. The fair increased the price of barn leases and charging for some parking. The fair is also using more volunteers at events[16]
- The Indiana Office of Tourism Development's budget was cut by nearly 60%, from $4.4 million down to $2.6 million[8]
- The Indiana Innovation Alliance, a partnership between Indiana University and Purdue University, lost its entire $10 million budget.[8]
[edit] Budget Background
The Indiana General Assembly meets annually and has a biennial budget. The governor submits the budget to the legislature in accordance with IC 4-12-1-9(a): Before the second Monday of January, in the year immediately after preparation, the budget report and the budget bill shall be submitted to the Governor by the budget committee. The Governor shall deliver to the house members of the budget committee such bill or bills for introduction into the House of Representatives.[17]
Indiana is required to pass a balanced budget by statue stating that "no law shall authorize any debt to be contracted", except for "casual deficits" which must be covered by loans "as may be necessary to meet the demands of the state." Indiana law prohibits the state from carrying a deficit from one year to the next. State law creates a spending cap under Section 4-10-21-2, but an exemption from the State spending cap for appropriation exists under Section 4-10-21-7.[18]
Indiana maintains seven major governmental funds: the General, Motor Vehicle Highway, Medicaid Assistance, Major Moves Construction, State Highway Department, Property Tax Replacement and Tobacco Settlement Funds. The State budgets all seven major funds in addition to more than fourteen other non-major funds.[18]
[edit] Budget figures
The 2009-2011 state budget passed June 30, 2009 by the Indiana General Assembly during the 2009 regular and special sessions provides:[19]
Total Funds
- $26.2 billion FY 2009 (listed as a comparison)
- $26.9 billion FY 2010
- $26.9 billion FY 2011
General Funds
- $14.4 billion FY 2009 (listed as a comparison)
- $13.6 billion FY 2010
- $14.1 billion FY 2011
General Fund 2009-10[20]
| Category | FY2009 Amount in millions Actual | FY 2010 Amount in millions Estimated |
|---|---|---|
| Beginning Balance | 1,050 | 964 |
| Revenues | 13,063 | 12,191 |
| Adjustments | 0 | 0 |
| Total Resources | 14,113 | 13,155 |
| Expenditures | 13,019 | 12,836 |
| Adjustments | 130 | 0 |
| Ending Balance | 964 | 319 |
| Budget Stabilization Fund | 365 | 369 |
Fiscal 2010 Tax Collections Compared With Projections Used in Adopting Fiscal 2010 Budgets (Millions)[20]
| Category | Amount |
|---|---|
| Sales Tax Original Estimate | 6,132 |
| Sales Tax Current Estimate | 5,932 |
| Personal Income Tax Original Estimate | 4,289 |
| Personal Income Tax Current Estimate | 3,776 |
| Corporate Income Tax Estimate | 800 |
| Corporate Income Tax Estimate | 547 |
The following table provides a history of Indiana's expenditures and gross domestic product (GDP).
| Fiscal Year | Expenditures (billions) | GDP (billions) |
|---|---|---|
| 2000 | $31.2 [21] | $194.4 [21] |
| 2001 | $33.8 [21] | $195.2 [21] |
| 2002 | $36.3 [21] | $205.0 [21] |
| 2003 | $37.8 [21] | $215.4 [21] |
| 2004 | $39.3 [21] | $228.3 [21] |
| 2005 | $42.0 [21] | $232.8 [21] |
| 2006 | $44.0 [21] | $238.7 [21] |
| 2007 | $46.1 [21] | $246.4 [21] |
| 2008 | $48.2 [21] | $254.4 [21] |
| 2009 | $50.5* [21] | $262.7* [21] |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
See Indiana state budget (2008-2009) for more details.
[edit] 2009-2010 budget crisis
- See also: State budget crisis, 2009-2010
Gov. Mitch Daniels, 2010 State of the State Address |
Indiana faced a budget shortfall of approximately $1.8 billion for FY 2010. [22] The fall in revenues has forced Daniels to make hundreds of millions of dollars in budget cuts, including: $150 million from higher education and $300 million from public schools. In the "2010 State of the State Address" Daniels emphasized the need to "streamline state government."[10][23]
Despite the state's looming deficit and failing revenues, Gov. Daniels said, "we will not make this recession worse by adding one cent to the tax burden of our fellow citizens." The General Assembly recently approved a ballot measure for the statewide 2010 ballot, widely supported by Gov. Daniels, which will let voters decide whether to amend limits on property tax bills into the state constitution.[10]
Among the budget cuts announced by the governor in order to reduce the state's looming budget deficit were slaugherhouse inspections, however, on February 1 the governor reversed his decision. The planned cut included cutting the inspection budget by less than 50%.[24][25]
[edit] 2008-2009 budget crisis
- See also: Indiana state budget (2008-2009)
Indiana faced a decline in state revenue that resulted in a $763 million deficit for fiscal years 2009 to 2011. The state budget committee projected that Indiana would spend $13.305 billion while taking in $12.542 billion in revenue.[26] At the time, Gov. Mitch Daniels said, “We will adjust our spending to preserve a balanced budget in the state of Indiana. These are only the first and hardly the last of the hard decisions that need to be made.”[27]
Despite the state's increasing unemployment and the urging of lawmakers to use the state's surplus, $1.2 billion, Gov. Daniel's said that the surplus must be preserved at all costs in case the recession drags on and that money is needed even more down the line. "Until someone can show us persuasively how long this is going to last and how deep this recession is going to get, we're simply not going to do that," he said.[28] The Governor has already called for pay freezes in 2009, a 3 percent cut of the executive agency budget, which already had been cut by 7 percent for FY 2009 and a ban on out-of-state agency travel.[26]
Indiana ended fiscal year 2009 in the black with the aid of federal stimulus funds and after Gov. Daniels cut $530 million from the 2009 budget passed in 2007.[29] Gov. Daniels described the final budget bill a "compromise that has its defects" but added that he is pleased that the bill includes limited spending.[30]
In early July 2009 the Indiana General Assembly passed a two-year state budget narrowly avoiding a state government shutdown.[13] The last time that the government had to shut down the government because officials were unable to pass the state budget was during the Civil War.[14]
[edit] Accounting Principles
Indiana does not have a state controller, rather fiscal duties are split among the Office of Management & Budget (OMB), State Auditor and State Treasurer.[31]
Ryan Kitchell has been Indiana’s OMB Director since 2007.[32] The Legislature, at the Governor's request, created a new organization within state government called the Office of Management and Budget ("OMB"). The OMB brings together the financial and auditing functions of Indiana. The Director of the OMB is the state's CFO.[33]
Tim Berry has been Indiana State Auditor since 2007. The Indiana State Auditor is responsible for:[34]
- Accounting for all of the State's funds
- Overseeing and disburse county, city, town, and school tax distributions
- Paying the State's bills
- Paying the State's employees
- Administrating Indiana’s Deferred Compensation Plan.
[edit] Budget transparency
Indiana has a new transparency website, the Indiana Transparency Portal (ITP). The state has promised side-by-side comparison of budgeted numbers and actual expenditures during the second quarter of 2011.[35] Lawmakers said that the website will compile Indiana budget data, spending reports and other financial information that previously had been spread across multiple sites.[36] The website, however, does not include updated numbers on exactly what cuts have been made since Republican Gov. Mitch Daniels ordered millions of dollars in reductions after the budget was approved by lawmakers and has been criticized for not showing where taxpayer money goes under job incentives through the Indiana Economic Development Corporation.[36]
- See also: Evaluation of Indiana state website
[edit] Economic Stimulus Transparency
- Indiana will receive approximately $445 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[37]
- It is estimated that Indiana will receive at least $3 billion in federal funding.[38]
- The economic recovery website for Indiana is available here.
One Indiana project was noted in Senator Coburn and Senator McCain's "Summertime Blues, 100 stimulus projects that give taxpayers the blues" report. The Purdue University Airport replace its entire current eight-foot perimeter fence with an eleven-foot fence to keep out wildlife using a Federal Aviation Administration grant worth over $665,000.365, despite the fact that the airport has only had 14 reported incidents of an aircraft striking wildlife since 1990, of which thirteen were birds.[39]
[edit] Error in ARRP
On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.[40][41]
Indiana gained five fictitious Congressional Districts through the ARRP website. The 18th District, for example, was given $2.2 million. Indiana’s population would have to double, in order to have 18 districts.[42]
[edit] Government tools
Indiana has a database of contracts, available from the Indiana Department of Administration. The State's Active Contracts listing provides an up-to-date list of all professional services contracts in which the state is currently a party.
The following table is helpful in evaluating the level of transparency provided by Indiana Active Contracts:
| State Database | Searchability | Grants | Contracts | Line Item Expenditures | Dept/Agency Budgets | Public Employee Salary |
|---|---|---|---|---|---|---|
| Indiana Active Contracts |
[edit] Support for creation of the database
Governor Mitch Daniels created the contracts website with an Executive Order in 2005.
[edit] Budget Cut Transparency
[Ballotpedia:Vi Simpson|Senate Minority Leader Vi Simpson]] requested that the Daniels administration make public what state programs are being cut to make ends meet. She said Senate Democrats will seek legislation in the session that begins in January to force more transparency in state government. For one thing, she wants Indiana to follow the lead of 32 other states that post information online about state budgets and expenditures.[43]
[edit] Public employee salary information
Thanks to www.indystar.com, citizens have a public employee salary database available to them, found at this link.
Salaries of Purdue University employees are updated annually at High Ed Salaries.
The Better Government Association offers this database of selected public payrolls. The BGA database includes employee salaries for the Indiana Inspector General, the Indiana State Police, and the states of Indiana, Illinois, and Missouri.
[edit] See Also
[edit] External links
- State Budget Solutions, Indiana
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Indiana Policy Review Foundation
- Indiana State Budget Agency
- Indiana Government spending
[edit] Additional reading
[edit] References
- ↑ 1.0 1.1 Businessweek "Ind. schools won't get any extra tax revenue cash" July 15, 2010
- ↑ The Indianapolis Star "State auditor reviews fiscal year-end" July 16, 2010
- ↑ Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
- ↑ Businessweek "Indiana to get $200M from Medicaid stimulus bill" Aug. 12, 2010
- ↑ "House OKs bill to help states keep teachers" Aug. 10, 2010
- ↑ 6.0 6.1 The Chicago Tribune "Indiana schools will likely avoid more budget cuts" August 12, 2010
- ↑ 7.0 7.1 IN.gov Budget Information visited Sept. 2, 2010
- ↑ 8.0 8.1 8.2 8.3 Indianapolis Business Journal "Big budget cuts will make for bitter state politics" July 24, 2010
- ↑ Gov. Daniels Press Release, “First quarter revenues miss forecast by $254 million,” October 8, 2009
- ↑ 10.0 10.1 10.2 10.3 Associated Press,"Indiana Gov Urges Optimism During State of State," January 20, 2010
- ↑ Kitchell Memo to State Budget Committee Members March 26, 2010
- ↑ The Chicago Tribune "State Budget Committee meets on health insurance" July 5, 2010
- ↑ 13.0 13.1 Chicago Tribune, INDIANA: State shutdown averted, July 1, 2009
- ↑ 14.0 14.1 The Los Angeles Times, "States brace for shutdowns," June 30, 2009
- ↑ Indianapolis Business Journal "Indiana budget chief orders another 5 percent in cuts" April 22, 2010
- ↑ 16.0 16.1 16.2 16.3 ABCNews.com "New Document Outlines Some Ind. Budget Cuts" June 25, 2010
- ↑ National Association of Budget Officers, "Budget Processes in the States," 2008
- ↑ 18.0 18.1 Indiana Budget Analysis
- ↑ Indiana State Budget Agency, “2009 - 2011 As-Passed Budget,” August 31, 2009
- ↑ 20.0 20.1 National Governors Association and National Association of State Budget Officers Fiscal Survey of States June 2010
- ↑ 21.00 21.01 21.02 21.03 21.04 21.05 21.06 21.07 21.08 21.09 21.10 21.11 21.12 21.13 21.14 21.15 21.16 21.17 21.18 21.19 US Government Spending,"Indiana State and Local spending," retrieved March 10,2009
- ↑ Ball State Daily News,"Gov. Daniels to address budget, jobs," January 19, 2010
- ↑ MyWabashValley.com,"Governor Optimistic Despite Budget Cuts," January 19, 2010
- ↑ Associated Press,"APNewsBreak: Daniels Backs Away From Planned Cuts," February 1, 2010
- ↑ Indiana's NewsCenter,"Governor Rethinking Some Budget Cuts," February 2, 2010
- ↑ 26.0 26.1 Business First: "Hoosiers join in budget slashing," Dec 11, 2008
- ↑ JournalGazette.net,"Daniels cuts state spending," Dec 12, 2008
- ↑ The Indy Channel,"Lawmakers squabble over how to reverse state jobless rate," March 9,2009
- ↑ Courier-Journal,"Indiana finishes year in the black," July 17, 2009
- ↑ WSBT,"Not all local lawmakers happy with Indiana's new state budget," July 3, 2009
- ↑ Indiana Speaker of the House B. Patrick Bauer, “News from the Statehouse,” February 26, 2009
- ↑ Indiana Finance Authority, “Indiana Finance Authority Members,” retrieved October 21, 2009
- ↑ Indiana OMB Web site, retrieved October 21, 2009
- ↑ Indiana State Auditor Web site, retrieved October 21, 2009
- ↑ Business Week, New Ind. website pulls together state budget data, Sept. 1, 2010
- ↑ 36.0 36.1 USA Today "New Ind. website pulls together state budget data" Aug. 31, 2010
- ↑ Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
- ↑ Wall Street Journal, "Stimulus Spending by State"
- ↑ "Summertime Blues, 100 stimulus projects that give taxpayers the blues" August 2010
- ↑ $6.4 Billion Stimulus goes to Phantom Districts, Watchdog.org, November 17, 2009
- ↑ Stimulus Creates Jobs in Non-Existent Congressional Districts, Watchdog.org, November 16, 2009
- ↑ Indiana, Watchdog.org, November 17, 2009
- ↑ Lawmaker wants budget cuts made public June 2, 2010
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