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Indiana universities face budget cuts if tax intake lags

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Indiana's public universities could see their budgets cut another 2 percent if state tax collections continue lagging behind expectations, Gov. Mike Pence's budget director said Thursday.

Budget Director Brian Bailey told members of the State Budget Committee that tax collections actually fell between 2013 and 2014. He says that unless they meet expectations for 2015, universities will have to cut roughly $27.5 million.

Bailey said the state's universities will still see a net increase in funding because of spending approved in the state's 2014-15 budget.

Cuts to the state budget made by the governor have continued as Indiana's economy slowly improves. Pence sold the state plane last year and cut various agencies after learning that tax collections were failing. The state's tax collections during the 2014 budget year, which ended in June, came in slightly less than what the state collected in 2013.

"We are concerned that fiscal year 2014 did not exceed prior-year collections," Bailey said.

Pence's staff alerted state agencies at the start of this current year to plan on withholding 3 percent of their budget again in 2015. But Bailey noted that the state's K-12 education system has been spared those cuts.

Senate Appropriations Chairman Luke Kenley, R-Noblesville, led about a half-hour of questioning of Pence's budget director Thursday. He said he was concerned that cuts in higher education would contribute to further tuition increases.

Rep. Terry Goodin, D-Crothersville, pointed out that the state's cash reserves — roughly $2 billion, or 13.7 percent of the amount the state spends each year — would be more than enough to trigger the state's automatic tax refund. Democratic lawmakers accused the previous administration of gutting services in order to trigger the politically popular tax refund.

"It sounds like we're setting up another automatic tax refund," he said.

Kenley said Goodin's question and others will be important as lawmakers work up their next two-year budget during the coming session. Lawmakers meet in January for their "long session", which will almost certainly be dominated by budget concerns.

Pence has been laying the groundwork for changes in the state's tax code, though it remains unclear how much he will push for during the 2015 session.

The budget cuts — also called "reversions" — are central to a lawsuit filed by adoptive families alleging the state shorted them payments. The families argue that roughly $240 million was cut from the Department of Child Services and used to replenish the state's cash reserves, while not paying them. However, Pence announced this week that the families would be paid the subsidies for 2015.

Kenley asked budget committee members Thursday not to discuss the issue because the lawsuit is pending.

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  • Way to g
    And again....a tax shortfall causes the bonehead leaders of this state to cut back education. apparently they do not realize that education creates high paying jobs, which pay more taxes. These fools just want a labor force of peons who will work for peanuts. I remember when IU was at the TOP of the big 10. sad...sad...sad
  • Rankings
    It's just not that there are a few Big Ten schools ranked ahead of IU, EVERY SINGLE ONE is ranked ahead of IU except for Nebraska. #13 out of 14. Purdue is #8 out of 14. It's clear that this state doesn't give a rat's a$$ about education and it shows in every metric of educational attainment of our citizens.
  • Taxes
    It seems reasonable to me that when you cut taxes you should not expect increases in tax collections. But then again, I am not an economic libertarian.
  • Average
    Indiana citizens think our state universities are better than reality. Lack of funding and sustained support by state government takes a toll. Wisconsin, Illinois, and other Big 10 schools are better ranked than IU and even Purdue. Was anyone surprised that IU Med school has a plan to "leap" to one of the top 25 medical schools? Pence is again playing politics with funding to garner national attention. His party was ready to back a soccer stadium to the tune of 90 million plus but says the universities must cut.
  • universities
    And people wonder why there are more and more and more out of state and international students at IU, Purdue and IUPUI. With the Republicans in power all about tax cuts for the rich and buisinesses and all about cutting education funding, the universities have no other choice than to admit students that will pay more.

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  1. So as I read this the one question that continues to come to me to ask is. Didn't Indiana only have a couple of exchanges for people to opt into which were very high because we really didn't want to expect the plan. So was this study done during that time and if so then I can understand these numbers. I also understand that we have now opened up for more options for hoosiers to choose from. Please correct if I'm wrong and if I'm not why was this not part of the story so that true overview could be taken away and not just parts of it to continue this negative tone against the ACA. I look forward to the clarity.

  2. It's really very simple. All forms of transportation are subsidized. All of them. Your tax money already goes toward every single form of transportation in the state. It is not a bad thing to put tax money toward mass transit. The state spends over 1,000,000,000 (yes billion) on roadway expansions and maintenance every single year. If you want to cry foul over anything cry foul over the overbuilding of highways which only serve people who can afford their own automobile.

  3. So instead of subsidizing a project with a market-driven scope, you suggest we subsidize a project that is way out of line with anything that can be economically sustainable just so we can have a better-looking skyline?

  4. Downtowner, if Cummins isn't getting expedited permitting and tax breaks to "do what they do", then I'd be happy with letting the market decide. But that isn't the case, is it?

  5. Patty, this commuter line provides a way for workers (willing to work lower wages) to get from Marion county to Hamilton county. These people are running your restaurants, hotels, hospitals, and retail stores. I don't see a lot of residents of Carmel working these jobs.

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