Indiana exceeded its general fund tax revenue target by nearly 5% in March.
Data released Thursday by the Indiana State Budget Agency show Indiana tax collections totaled $1.5 billion last month.
That was $66.2 million, or 4.6% more than predicted by the state revenue forecast issued in mid-December by the finance leaders of the legislative and executive branches.
Every major revenue category came in last month higher than anticipated, including sales tax, personal income tax and corporate income tax, according to the March revenue report.
Personal income tax receipts were 3.5% above expectations, totaling $527.3 million, or $17.8 million more than predicted.
Similarly, the $787.5 million in March sales tax revenue was $24.9 million, or 3.3%, greater than forecast.
The state's total haul for March bested its take from the same month last year by $36.8 million, or 2.5%, records show.
The revenue results likely will assuage the concerns of some state lawmakers that Indiana can't afford the spending increases and tax cuts included in House Bill 1001, the two-year state budget proposal approved in February by the Republican-controlled House.
The Republican-controlled Senate is expected over the next two weeks to unveil and approve its plan for the approximately $43 billion state budget.
Lawmakers then will get an updated revenue forecast based in part on the national and state economic conditions.
Ultimately, House and Senate leaders will work with Republican Gov. Eric Holcomb to craft and adopt a compromise spending plan on or before April 29 — the final day, by law, for the 2023 Indiana General Assembly to meet in regular session.
Under the House plan, about half the state's general fund spending during the budget period beginning July 1 would continue going toward education at the elementary, middle and high school levels, with $1.6 billion in additional money for distribution through the student funding formula, an 11% increase compared to the current K-12 appropriation.
At the same time, the spending plan makes nearly all Indiana families eligible for a voucher to pay private school tuition and nearly doubles, to $600 million, potential state spending on vouchers.
The House-approved budget also eliminates the various revenue triggers from the 2022 income tax cut statute and simply reduces the state income tax rate to 3% from 3.15% on Jan. 1, 2024. The rate would fall to 2.9% on Jan. 1, 2026, enabling Hoosiers to keep a total of $470 million during the two-year budget period.
Notwithstanding the revenue reduction, the budget still spends less money than the state is expected to take in, maintains about $2.7 billion in reserves, and manages to fully fund Indiana's Medicaid program and pension obligations.
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