Indiana revenue up for first time in more than a year

Indiana revenue collections have shown an increase for the first time in nearly a year and a half.

Tax collections in March totaled $908 million, or $7 million above collections for the same period last year, the State Budget Agency reported Monday. Revenue was $2 million above a May 2009 budget forecast and $48 million above a December 2009 revised forecast.

March marked the first time in 17 months that monthly revenue collections exceeded the same period in the prior year. But year-to-date collections remain $867 million below a budget forecast last May. Lawmakers used that forecast as a basis for the current two-year spending plan.

Gov. Mitch Daniels has cut hundreds of millions of dollars from that budget since it was enacted last June. The state began the fiscal year last July with a $1.3 billion surplus, but even with the budget cuts, much or all of that is expected to be depleted by the time the budget expires on June 30, 2011.

A recent letter from Anne Murphy, secretary of the state's Family and Social Services Administration, indicates the recently enacted federal health care law will harm the state budget immediately by about $25 million as the federal government confiscates pharmacy rebates previously captured by the state.

"When this impact is counted, March represents another net negative month compared to the budget plan," state Budget Director Chris Ruhl said in a memo. "But at least the trend of revenues consistently missing the budget plan and prior year amounts has been interrupted for one month."