Indiana panel set to start review of $205M tax error

A leading legislator said he expects the State Budget Committee to take some time reviewing a second computer programming mistake made by the Indiana Department of Revenue that short-changed local governments by about $205 million.

Senate Appropriations Committee Chairman Luke Kenley said he didn't anticipate immediate action during Friday's budget committing meeting and that the panel would seek more information about the error disclosed last week and another mistake found in December where the state had lost track of $320 million in corporate tax revenue.

"The question is whether this is indicative of a deeper technology problem, or a deeper audit problem. Or is it the result of a management issue?" Kenley, R-Noblesville, told The Indianapolis Star. "Until we found out the answers to those questions, I'm not sure how far we want to go."

The revenue department's commissioner and two top deputies resigned or retired following disclosure that the $205 million in local income tax money had been mishandled and not distributed over the past 14 months. The state is sending that money with interest to the 91 of Indiana's 92 counties with local income taxes.

The budget committee already had been scheduled to hear a report from the State Board of Accounts on a mistake the Department of Revenue acknowledged in December. In that case, an unrelated programming error left $320 million in corporate tax that had been collected over several years but not properly deposited in the state's general fund.

After the second mistake, Republican Gov. Mitch Daniels' administration and GOP legislative leaders said an outside audit was necessary.

But State Budget Director Adam Horst said that hiring the auditor now would be premature, before state officials had a chance to answer questions from the budget committee.

The committee, made up of four legislators and Horst, is to meet at the Ivy Tech Community College campus in Madison.