Daniels touts tax credit from $2B Indiana surplus

Back to TopCommentsE-mailPrintBookmark and Share

Indiana residents are set to get an additional $100 or so back in taxes next year, as the state closes out a budget marked by continued spending cuts and a tax error that helped pad the state's bottom line.

Gov. Mitch Daniels said Tuesday he expects the state to wrap up its most recent budget with roughly $2 billion in cash reserves. Of that money, $300 million would be credited to taxpayers next year, and the other $300 million would go to cover unfunded pension costs for teachers hired before 1996.

The money will come off of what Hoosiers owe the state in taxes in the next year, which Daniels said typically amounts to about $819 for each taxpayer.

"What we can say today is there will be a double-digit discount for the typical Indiana taxpayer sharing in the economy dividend that comes from a strong state fiscal picture," he said.

The estimated cash reserves accrued because of three major factors: improved tax collections by the state as it continues to crawl out of the recession, a series of cuts to state agencies made over the last few years and a tax error resulting in the state discovering $320 million in a tax collection account.

Democratic House Minority Leader Patrick Bauer called the cash reserves a "magic trick" that glosses over troubles that have grown throughout the state on Daniels' watch.

"We know that the Daniels administration made money disappear from public schools as well as from programs for at-risk children and the poor. Then, 'abracadabra,' there is the reappearance of millions of dollars from the magician's hat, money that seems to be part of the surplus," he said in a statement.

Daniels and his budget leader, Adam Horst, could not say Tuesday how much was cut from agency budgets over the last year. Final numbers are expected in the coming weeks as the state formally closes its books on the 2012 fiscal year.

Most state agencies suffered deep cuts through the last few years, although their funding has brightened some in the last year. The Department of Child Services, which is the subject of a legislative study committee and multiple newspaper investigations over a series of child deaths, was cut by $16 million in the most recent budget, compared to $100 million in cuts in 2011.

State budget leaders are also in the process of hiring an outside auditor to review the state's tax collection system, following the corporate tax collection error and another error which kept $206 million from Indiana counties.

Daniels' automatic tax credit kicks in when the state saves an amount equal to 10 percent of its planned spending for the year. In the most recent budget, that target was $1.4 billion. But state lawmakers made it tougher earlier this year for the Daniels credit to kick in when they raised that trigger from 10 percent to 12.5 percent of state spending.


  • Greener Grass
    Just be glad you don't live over here in Illinois. Our state is completely broke and our government is completely corrupt!!!! I guess they go hand in hand. My family could save $12,000 a year in state income tax by moving to Indiana, sure makes a move to Indiana from Illinois enticing.
  • Give it to them yourself
    Why have the government do it for you?? You could give the entire $100 versus the government take their cut.
  • Surplus??
    As most Hoosier employers know, Indiana's failure to repay federal loans related to the State's depleted unemployment insurance funds has caused an increase in the federal unemployment tax (FUTA) rate that will cost Indiana employers $63 in additional tax in 2012 and ANOTHER $84 in 2013 on EVERY employee making more than $7,000 per year. If there is a surplus of funds available, it seems that taking the $100 refund directed at each individual taxpayer to help repay those loans and save employers $147 per employee over the next two years would be a better use of this money.
  • Not Fair
    Maryann-Why should you get to choose that all the money should go to the schools? I don't have kids in the school system. The only fair/equitable way to do this is to give it back to the people that paid it in the first place.
  • agree somewhat
    I agree with what you said that the situation and money should have been handled better. The surplus is based on tax "projections" and with that comes some surprises - both with such a big windfall and, later, with less taxes being collected than thought. The big issue, however, is the continued slashing of education and public assistance. Those who don't like "socialist" spending need to think about what Social Security and even a working Library really is. Both have had the red pen get them as well. Protest about this from the old Indiana Republican/ tired guard is undeniable. Their own party calls for change but won't do so if the "good old boys" don't stay in power. Again, why do people continue to vote for these guys?
  • 2 billion
    OK, Dave, I am a food snob. I cook at home because the food in most restaurants is mediocre and I cook better (sorry, I'm using all these French words). I have eaten at Cracker Barrel and it is not a favorite, but it can be convenient. I don't even eat at the steak places in town because I can cook a steak better at home; more flavor. As for you, Ricky Keil or others, I do give money to charities and I donate my time as well. If you think there is no cost to the "found money" and the "lost money" of the Daniels administration, think again. How much will it cost the state to distribute the $100 to each taxpayer? The fluctuation of having an excess one day and a deficit another day is what I think this Governor should have handled better. He now claims a $2 billion surplus; that is an enormous amount of money to suddenly be claiming. I think it should have been handled much better. The people who lose are the people who really need help, not you and me, but the people who need an education or need help because they have emotionally ill children, etc., etc., etc. There are many programs that can help people without affecting the $100 that will now be distributed.
    • eyes wide open
      As other posters have said - if you would like the money to go the education or handicapped kids, give you $100 to them. While you are at it, chip in another $100. That way, the gov does not take atleast $25 to administer the money. It would go directly to where you think it could be best used. Forget about passing it through numerous bureaucrats,
    • What are you nuts
      Did you say that with a straight face? If you did the next line out of your mouth will be, Obama is fixing the National debt! Wrong! We went from being almost a billion in the hole to this surplus and Mitch has no thanks from you.
    • Donate to Charity
      Instead giving your $100 back as you say, to help the poor, why not donate it yourself to the local organizations who do that kind of work. Why keep relying on government to do what private citizens and organizations can do much better and cheaper? Get out of the mindset that government is there to take care of all of our needs and embrace selflessness, let's take care of ourselves!
    • When there is no more money
      Faced with reality, you build up the private sector and make the public sector serve better at lower cost. Inflation of public sector salaries fuels the pension crises, and when you are in a crises, you cut costs as you do in a business. If it were a real crises, you would expect the administration to cut personal services costs, mainly salaries, by an average of 10-15%, of course graded more for high paid officials. When the economy grows, and revenue rises, you may prudently spend, but not just because tax revenue rises. As for the sickest, poorest and most needy, they deserve effective and efficient public programs. Nobody currently can say we have that.
    • Grousing too much
      Sounds like most of those dissappointed with their governor are from acadamia, the same folks that have given us a third world educational system on a champagne budget. To have a surplus of any kind should make you hoosiers sleep better, it's no wonder our country is in such a state, with such an ingrate attitude.
    • Bush deficits not from Daniels
      Your criticism of Daniels due to the deficit spending during the Bush years is out of place. Mitch was there 2001 - 2003 and recommended budgets with lots of spending cuts. Congress ignored most of them and spent way too heavily as they had done for years and continue to do. Mitch left in 2003 after not being listened to. Many in IN want the tax cuts without the spending cuts, just like Congress did. You wouldn't have the financial turnaround you have in IN without both parts of the package. IN is now well situated to move forward.
    • Huge Mistake Mitch
      Let's try a different approach Mitch. Please keep the $2 Billion for future statewide emergencies, and lower the tax rate for Middle Income and Lower Income Taxpayers. While I understand the need to spend money because it is just sitting there, I would suggest that a portion of the money could be better spent for incentives to any company that hires and retains ten (10) or more new employees. Give the money to small and midsize business and the return on tax dollar investment will come back in the form of new income tax payments from folks who could really use a job.
    • Thanks Mitch!!!
      Thanks Mitch for the $2B surplus! Since none of these ingrates seem to want it I guess I'll just have to take the entire $300,000,000.00 off your hands.
    • $100.00
      $100.00 wont by you a dinner in a nice restaraunt? Sounds like you waste a lot of money to me. I would go to cracker barrel and fill the truck. $100.00...THANK YOU!!
    • Found money????
      I agree with Kristen...For a man who is touted as a great budget director, a man who can watch the money in government, what happened with the Bush administration? While Daniels was there the budget was far out of line. As governor he has lost money, found lost money, misappropriated money, cut budgets for education and needed programs that help the most needed portion of our society, and now he has "found" 2 billion dollars. Like Kristen, I don't want a hundred dollars. It won't even buy me and my wife a reasonable dinner at a reasonable restaurant. We need to spend it where it will count the most...for education or the one that helps emotionally ill children, etc... I can not believe this governor has built a reputation as a budget minded executive.
      • remember
        Just remember this fall that all this was taken away by the GOP legislature, not Mitch Daniels. Go ahead and vote the GOP in, but teachers don't complain that your salary is capped because of the education reform put in place under the GOP watch and Tony Bennett
      • WOW
        You talk like a Democrat.. Talk about imaginary events like they are real, and then lay blame on others because YOU lied! And people have the Nerve to ask why I vote Republican!!!
      • no one tell mike pence...
        that regulations and double checking paperwork can make money in place of blind individualism.
      • At What Expense?
        Keep my $100 please, and serve the poverty-stricken older adults and people with disabilities who languished on waiting lists for home and community-based services that would keep them out of nursing homes, and services for abused and neglected kids and their families (birth, foster and adoptive) who saw all kinds of cuts during the Daniels' administration. It's immoral to have built a surplus through neglecting the needs of the least of these.
        • beware the same ol' spin!
          To me, it's shocking to see this administration roll out the same comments from the past 7 plus years. These reserves will fall into the same pit as the previous ones - a fiscal mismanagement black hole to which Daniels and his tired (and over-the-hill) Republican friends will claim ignorance as to why the money was never there to begin with. After which education and the arts will be cut again. Why do so many of you keep trusting these guys?!?!? Purdue may want him so they can take him - good riddance. This guy is an economist? FOR SHAME!
        • school funding
          The money is gone from my pocket but my children are suffering because of lack of funding to the schools and the cuts in programs. Send the money to the schools!
          • Confused
            I just do not understand, this is my money that the state collected, and kept for me. Why not just let me keep my own money. Half of this money was found as an error. This shows how much on top of the game Mitch and the boys are: go ahead and micro manage. I hope Purdue has better luck with Mitch than our state has fared.
          • I can never keep up
            Sometimes we are so broke we cant pay schools, then we have extra for roads, then we cant fund Medicaid, then we can give $ back. I cant keep up with the roller coaster. The state is talking like they dont want to fund the Medicaid expansion... IBJ reported a cost of $2B over 7 years. That's les than $300m per year. The feds pay the first 3 years. it wasnt clear if the $2b cost was the whole program (I think) because the states only pay 10% of cost in 2020. So is the cost to the state then less than $30m a year for four years? If so, this surplus could fund it entirely. If the Repubs dont want to participate in Medicaid expansion because they dont want Obamacare to succeed or give credit to the Dems, or they have other reasons, then so be it. But dont blame it on costs. Just remember this when Indiana turns down the Medicaid expansion and 290,000 continue without health insurance.
          • A license by any other name would be a tax
            I always thought using a tax return is a bad way to save money. I'm glad the governor is taking care of this for us. And let's add a fourth way of higher revenue. Let's require working individuals to get a "license" to work as a server in a restaurant that serves alcohol. AND let's require that they take a class to get that license. Then let's offer so few free classes that in order to work people have to pay $30 for the class. Then let's require that the license be renewed every 2 years. If I'm regularly paying the state to earn a living, is that not a tax? And servers aren't the only ones paying this type of an employment tax. So Mitch, go on to Purdue and try your shenanigans on the highly educated. They'll quickly take away your license to dupe those around you.

            Post a comment to this story

            We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
            You are legally responsible for what you post and your anonymity is not guaranteed.
            Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
            No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
            We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

            Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

            Sponsored by

            facebook - twitter on Facebook & Twitter

            Follow on TwitterFollow IBJ on Facebook:
            Follow on TwitterFollow IBJ's Tweets on these topics:
            thisissue1-092914.jpg 092914

            Subscribe to IBJ