INDIANAPOLIS – Indiana’s strong financial position will pay off for Hoosiers–eventually.
Auditor Tera Klutz said the state ended the fiscal year with $3.9 billion at the end of June, a better-than-expected result given the COVID-19 pandemic and the economic strain it placed on Hoosiers and businesses.
The extra $1.1 billion will go to bolster retirement funding and become a “refundable tax credit” for Hoosier taxpayers. The move is required by law when Indiana’s state surplus reaches a certain level, Klutz said.
“Indiana once again exceeded expectations and soared through the recession with one of the fastest recoveries on record to end with a cash reserve of $3.9 billion at the end of June,” said Klutz. “Indiana is poised to make an excess reserve transfer of $1.1 billion, which will be split between retirement funding and a refundable income tax credit for Hoosier taxpayers.”
Officials didn’t say how much the tax credit would be but noted that it was about $110 when the same thing happened in 2012. They still had to work out the details on distributing the money and anticipated that it would not be issued as a check or individual payments.
It would most likely be given as a tax credit when filing taxes, according to Cris Johnston, director of the Office of Management and Budget. The $545 million would be divided equally among all eligible Indiana taxpayers and applied when they file their 2021 taxes, Klutz said.
The amount will likely be determined by November, state officials said.
As for the report, sales tax, individual income tax and corporate tax revenue exceeded expectations. Year-to-year comparison is tough, officials noted, because the state was in the midst of the pandemic in 2020 and there were also some tax deferrals.
“Years of fiscal discipline, sound tax policy, a resilient Indiana economy, and federal pandemic financial assistance are all reflected in these impressive year-end results which have presented the opportunity to make strategic investments which will benefit Hoosiers in the years to come,” Johnston said.
“The official revenue forecast on April 15th added $463 million to our projections for FY 2021,” said Zac Jackson, state budget director. “In the last 75 days of the fiscal year, we exceeded those projections by an additional $1.222 billion. It’s unprecedented for the General Fund reserve balances to increase by nearly $1.7 billion in less than three months.”
Gov. Eric Holcomb released a statement about the state’s fiscal report:
Because of the strong position Indiana occupied going into last year’s unprecedented global pandemic and partnerships at all levels of government, we now find ourselves at a place of full employment and growing economy. State fiscal leaders deserve high praise for closely monitoring financial forecasts and then quickly adapting to the facts on Main Street, Indiana.
We quickly pivoted from managing through a once anticipated recession due to the ramifications of the COVID-19 pandemic to closing the state fiscal year with $3.9 billion in combined reserves. Now, with our 19th straight balanced budget, we are working on everything from mental health programs and health care supports to record increases in K-12 tuition support. We’re investing in state public facilities and infrastructure projects statewide on a level never seen before all the while doing everything we can to create a highly skilled workforce to fill the open jobs of today and tomorrow.
Thanks to everyone’s diligent approach, including a bullish private sector, Indiana is positioned to begin the 2022 state fiscal year in a strong financial position that will benefit Hoosiers for years to come.