Revenue Forecast and Local Government and State Budget and State Government and Taxes and Government & Economic Development and Government

Indiana overpays localities $610M over 3 years

February 25, 2011

State budget officials are seeking to recoup much of nearly $610 million overpaid to local governments due to income tax revenue estimates thrown off by the lingering recession.

The Journal Gazette of Fort Wayne reported that the state wants to reduce payments to cities, counties and other local governments over the next few years by $408 million. That will recover about two-thirds of the overpayments that occurred in fiscal years 2009, 2010 and 2011.

Bob Lain of the State Budget Agency said the resulting impact on local governments would vary based on their individual economies.

He said the state relies on estimates to gauge income tax payments by city and county residents, and those estimates were too high over the past three years because the recession slowed down the state's economy.

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