Indiana finishes fiscal year with more than $6 billion in reserves

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Office of Management and Budget Director Cris Johnston (Peter Blanchard/IBJ)

Indiana closed the fiscal year with $6.1 billion in state reserves, another sign the state’s economy bounced back from the COVID-19 pandemic faster than economists had expected.

In the fiscal year 2022, which ended June 30, the state collected $1.24 billion more than state officials anticipated in their December 2021 forecast, state auditor Tera Klutz announced Friday.

“We have closed the books, and it’s no surprise that Indiana took in significantly more revenue than we anticipated,” Klutz said.

The news comes as Indiana lawmakers prepare to convene July 25 to consider Gov. Eric Holcomb’s proposal to send $1 billion back to Hoosiers in the form of $225 refund checks. That’s in addition to the $125 automatic taxpayer fund that was triggered last summer after the state ended fiscal year 2021 with nearly $4 billion reserves, which was $1.2 billion more than forecasted. The automatic tax refund is still being distributed.

Indiana collected more than $8.1 billion in income taxes and nearly $10 billion in sales tax for the fiscal year. Overall, state revenues exceeded the December 2021 forecast by 9.2 percent.

Of the $6.1 billion in cash reserves, $2.5 billion will be distributed to the pre-1996 state teachers’ pension fund.

Indiana is expected to finish fiscal year 2023 with nearly $5.1 billion reserves, a figure that was also developed during the modest December 2021 forecast and does not account for Gov. Holcomb’s tax-refund proposal.

The state budget committee will release a new revenue forecast in December that will include updated numbers for the fiscal year 2023.

Republican leaders were quick to praise the state’s historic reserve balance.

“Indiana’s economy is growing at an unprecedented rate due to the lowest unemployment rate in state history, higher-than-expected income tax revenues and growing our state’s GDP at a faster rate than the national average while meeting the essential needs of Hoosiers,” Holcomb said in a written statement. “I have called a special session to return $1 billion to taxpayers because it can’t wait until next year as we all face rising inflation costs.”

Holcomb said he plans to present a two-year budget that will address more support for the state’s public health system, salary increases for state employees, additional funding for K-12 education and another round of funds dedicated to the Regional Economic Acceleration and Development Initiative, or READI, program.

Senate President Pro Tem Rodric Bray, R-Martinsville, said he and his colleagues remain open to taking action to help Hoosiers with inflation relief, though he did not specifically mention the governor’s tax refund proposal.

“Senate Republicans are considering a package that can provide relief to Hoosiers in multiple ways while continuing to pay down our outstanding debt,” Bray said in a statement.

House Speaker Todd Huston, R-Fishers, said the state’s strong fiscal closeout is “nothing short of impressive” and expressed his support for Gov. Holcomb’s plan.

“We intend to provide relief by approving an automatic taxpayer refund, which will put $225 back into the pockets of all taxpayers,” Rep. Huston said in a statement.

Democrats in the General Assembly have criticized Republican lawmakers for failing to invest the state’s historic reserves in public health, education and student debt relief.

Rep. Gregory Porter, D-Indianapolis, a member of the state budget committee and a ranking Democrat on the Indiana House Ways and Means Committee, said the state’s surplus is “much too large.”

“It’s bloated by about 20 percent more than it should be,” Rep. Porter said in a statement. “It’s losing value sitting in the bank when it could be investing in Hoosiers.”

It’s unclear whether Republican lawmakers will consider Democrats’ call to expand the governor’s tax refund proposal to Hoosiers who don’t file taxes, including those who rely on Supplemental Security Income⁠—which goes toward people who are on limited incomes, disabled, blind, or 65 and older.

Office of Management and Budget Director Cris Johnston said including more vulnerable residents in the proposal presents obstacles from a logistical perspective.

“We don’t know who those people are and how many that might be, so that’s something we would have to explore,” Johnston said.

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18 thoughts on “Indiana finishes fiscal year with more than $6 billion in reserves

  1. Our taxes could be spent in so many ways to make this state prepared for the next decade and century, yet we don’t have elected officials who can see past the next election.

  2. Well done….Indiana continues to be a well run fiscal player in the USA. I’d much rather see surpluses that we figure out where to reinvest, than the reckless abandonment and out of control debt in other states.

    1. Unfortunately I think by law they have to refund. I too would like to see roads in unprivileged areas cleaned up, street lights updated, funding for schools to upgrade facilities, etc.

    2. There’s well run and then there is greedy over taxation… 6 billion in excess is clearly not the first one!

    1. Agree. Sitting on 6 billion dollars while or public education system has fallen to 48th in the nation is unbelievable. Our public education system is now ranked lower than the poorest state in the union. Mississippi.

  3. Indiana is in excellent shape, fiscally and by many other metrics. Typical liberal attitude to “throw money at societal ills” breeds corrupt spending practices and financial ruin. Just look at our neighbor to the west, Illinois, to see a glaring example of that outcome. Health and education conditions are outcomes that result from choices made by each individual. Throwing more public money to teachers that are all part-time employees is a horrific waste. The Indiana State Teachers Association (ISTA) UNION promotes this non-stop because the more teachers get paid the greater the ISTA revenue from teachers union dues. Of course the leftists, university elites and media … all leftists, support this because that is the leftist way. Take money from taxpayers and “redistribute” it to others. Send the surplus back to those that earned the money, the taxpayers. It’s their money!

    1. You can’t be serious. “Education conditions” (whatever that means) are the responsibility of an 8 year old third grader? And teachers ABSOLUTELY should be paid more than they are. And you are obviously clueless about the amount of work teaching actually entails if you think teachers are part time employees. The work for many teachers doesn’t end until well after the final bell of the school day rings. Investing in education and healthcare are critical to the continued economic success of Indiana. Yours is one of the silliest comments I’ve ever read on these threads.

    2. Have to agree with Marshall P. This might be the silliest and at the same time awful comments I have ever seen in the comments section.

    3. Lmao, what? We have some of the worst educational attainment in the US, we have severe brain drain (people don’t want to live in a socially conservative state with bad public services. Sorry, that’s just the reality of it), and household poverty has exploded in Indiana under Republican leadership. By no extent is Indiana in “excellent shape.”

  4. Two days ago CNBC released its annual report on “America’s Top States for Business.” Using seven categories, Indiana came in overall at #14. But in one the Hoosier state stood out in 48th place: workforce quality. That’s right, only two states are worse than Indiana (Missouri and Vermont). Kentucky, of all places, came in at #17.

    So when it comes to spending money to better prepare Indiana’s next generation for high-paying jobs, there’s no better place to do that in secondary and post-secondary public education. For starters, Indiana should amend the decades old law that requires students to only attend high school through age 16. Every student should be required to attend school until they graduate. No exceptions.

    Then, Indiana should offer the first year of community college at no cost to every high school graduate regardless of their graduating GPA, and the second year at no additional cost for student’s who achieved a 2.5 GPA in their first year.

    Finally, every high school and community college should revise their curriculum to include STEM and business courses.

    Using some of the billions in surplus revenue to jump-start these initiatives will go a long way to not only improving the prosperity of future generations of Hoosiers but of the state of Indiana as well.


  5. Senators Boots and Becker were quoted as saying that Indiana doesn’t really have a surplus when you owe the teacher’s retirement fund $9 billion.

    1. Then why did they just pass a tax cut in the last session as a going away present to Tim Brown, instead of paying down debt?

  6. Often heard this called the “rainy day fund”…. How about filling all the potholes holding all the rain? Oh wait, perhaps climate change will dry up all the rain, and the itsy bitsy spider will die along with the rest of the wildlife, and then my broken axle will melt itself back together. Thanks GOP. “Responsible stewardship”. What a “laugh.”

  7. I’ll continue to post again and email all legislators R or D. Stop with this refund. You want to benefit all Hoosiers, accelerate the already approved reduction of our income tax to happen now versus phased in over three years. We obviously have the income coming in to cover it. This impacts social security retirees also and helps them. — Dems stop pushing for a gas tax relief. The state is about to spend millions in visit Indiana ads to bring tourism here and one good way to get ROI on them is give us out of state income on gas taxes. It’ll also amount to one full tank of gas….Holcomb’s proposal we at least get 2 tanks. Lowering the Income Rate benefits all of us for the next three years way more than $225.

    1. Tbh, I would rather the State lift one cent of the state sales tax and allow localities to pick it up. The State is *really bad* at distributions, so allowing local governments to have that revenue stream would be huge.