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State budget forecast slightly sunnier with another $200M in revenue expected

April 12, 2017

Indiana lawmakers in final negotiations over the next two-year state budget got some good news Wednesday about revenue projections for 2018 and 2019, learning revenue estimates show the state could take in $200 million more than it previously forecasted.

Total general fund tax revenue for 2018 is expected to be $107.4 million, or 0.7 percent higher than previously thought in December. And revenue for 2019 is expected to be $93.8 million, or 0.6 percent higher, than the December forecast.

The forecast is important to lawmakers as they hash out final line items in the state budget. Future funding for some programs, such as the fledgling preschool pilot program, are in flux right now as lawmakers debate how much they should be expanded. Getting a strong April forecast could help bolster proponents’ arguments.

While the news is good, the increases are a small part of the overall revenue picture for the state.

The state expects to take in $15.59 billion in general fund revenue in 2018 and $16.18 billion in 2019. The former would be a 2.8 percent gain over 2017, and the latter a 3.8 percent year-over-year gain over 2018.

Sales tax, individual income tax and corporate income tax revenue projections are for the most part trending up. The exception is that sales tax revenue in 2019 is expected to be slightly lower than previously anticipated in December.

However, the state is still lagging when it comes to 2017 projected revenue. In a December forecast, it was estimated that Indiana would take in about $300 million, or 2 percent, less than it expected, creating a hole. The forecast released Wednesday revises the difference between the budget plan revenues and forecasted revenues to $254.4 million.

“Even though we increased the projections, we are still $250 million [behind] what was anticipated at the time of budget passage,” said Ben Tooley, director of fiscal policy for the Indiana House of Representatives’ Republican caucus, noting that the governor’s team was working “very hard and valiantly” to get spending in line with revenue.

It’s unclear just how impactful the forecast will be in terms of changing lawmakers’ minds about funding priorities and levels.

Senate Appropriations Chairman Luke Kenley, a key figure in budget negotiations, said recently that he would take caution on future spending no matter what the April forecast showed. He said he is somewhat skeptical of the forecasts.

"I don't see any reason why [the plan] will change" significantly, Kenley said at the time.

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