Indiana Gov. Mitch Daniels on Friday morning announced a series of spending cuts and other steps designed to offset a continuing
multimillion-dollar decline in state revenues.
Daniels said that Indiana tax collections for October were $46 million below forecast, and are $309 million behind for the first four months of the fiscal year.
The state ended the 2009 fiscal year in June with $1.3 billion in reserves. If the trend continues without spending cuts, he said, Indiana's reserves would be wiped out by next August.
“We have seen enough to know that new actions are necessary if we are going to protect Indiana taxpayers against the tax increases that are happening in most of the rest of America,” Daniels said in a prepared statement.
The governor ordered state agencies to cut spending by 10 percent—in addition to the 5 percent cut made in July—and reduced reimbursements to some Medicaid providers.
Among other reductions:
• The lieutenant governor, auditor, treasurer, secretary of state and superintendent of public instruction have committed to cutting their office budgets by 10 percent.
• State employees, who did not receive pay increases this year, also will forgo raises in 2010. Agencies also will offer employees the chance to take unpaid leave.
• Daniels will not accept his full salary in 2010. This year, he turned down a 13-percent raise.
The reductions are expected to save the state $300 million to $400 million over two years.
Daniels says those and other steps should offset the shortfall in revenue to date, but more action might be needed if tax collections continue to miss their target.
Read the October revenue report.
Listen to audio from Friday's news conference.