A new Indiana revenue forecast projects the state will collect nearly $400 million less in tax revenue than lawmakers expected when they approved the $32.3 billion budget in April.
Officials told the State Budget Committee Monday that 70 percent of the anticipated revenue reduction is due to a sharp decline in corporate income tax collections since the budget year began in July, The Northwest Indiana Times reported.
Senior fiscal analyst for Senate Republicans, David Reynolds, said it's clear that those revenues won't increase as more businesses claim all the state tax credits they're entitled to and take them immediately as refunds, rather than applying them to future tax liabilities.
"There's a dynamic that's changing here," Reynolds said.
The forecast also eliminates more than $170 million in corporate income tax revenue from current budget year projections. It also eliminates an additional $104.1 million from 2019.
If the projections are accurate, state revenue from corporate income taxes at the end of the 2019 budget year would total 89 percent of what the state during the 2017 budget year.
State Rep. Tim Brown, R-Crawfordsville, is the chairman of the budget-writing House Ways and Means Committee. He said he's comforted that the forecast shows a 0.9 percent overall state revenue increase in 2018 and a 3.6 percent in 2019.
"The forecast means that we're growing, and year-over-year we're growing," Brown said. "Our stable reserves and structural surplus put us in a good position to be proactive instead of reactive to the recent revenue forecast."
But state Sen. Karen Tallian, D-Ogden Dunes, said the forecast shows the benefits from annual corporate income tax rate reductions that continue into 2021 won't be "trickling down" to ordinary local residents.
"It just hasn't happened in Indiana and I don't think it's going to happen at the federal level either," Tallian said. "We've had five years of it and it has not helped us."