INDIANAPOLIS | Indiana took in more money than it spent during the 2014 budget year, even as Republican Gov. Mike Pence's tax cuts dropped total state revenue below the prior year for the first time since the Great Recession.
Republican State Auditor Suzanne Crouch announced Monday the state ended its budget year June 30 with a $106.8 million surplus. When added to existing excess state funds, Indiana now has a total reserve balance of $2.005 billion, she said.
"Due to the strong leadership of Gov. Pence, our state's fiscal health is strong and growing stronger," Crouch said.
However, Crouch admitted the annual surplus only was achieved by Pence's requiring state agencies to "revert," that is, not spend, $151.1 million appropriated to them by the Republican-controlled General Assembly.
The Indiana Family and Social Services Administration, which has come under fire for denying promised state grants to the adoptive parents of disabled children, returned the most -- $27.8 million, or 3.5 percent of its total funding. The Department of Child Services lost $4 million (0.7 percent) to reversions.
At the same time, Crouch noted even after reversions, state spending for local schools last year increased 4 percent, colleges and universities 5 percent and the Indiana Department of Child Services 4.2 percent. The state also paid down $65 million of debt ahead of schedule.
"By living within our means, keeping prudent reserves and identifying areas for potential growth, we can ensure that Indiana remains the fiscal envy of our nation," Crouch said.
Senate Democratic Leader Tim Lanane, D-Anderson, disagreed. He said Indiana is failing to provide the prenatal care, preschool education, affordable college tuition and infrastructure needed for the state's long-term success.
"It's become abundantly clear that the state’s fiscal health has little to do with improving the well-being of the average Hoosier," Lanane said.
"At a time when we should be investing in Indiana to improve the abysmal state of Hoosiers' incomes and health, we are hoarding hard-earned taxpayer's dollars instead of returning it to them with meaningful programs and services."
State revenue for 2014 totaled $14.659 billion. That's $129.9 million, or 0.9 percent, less than 2013 revenue.
Even if revenue grew only at the inflation rate, the state should have taken in $310.6 million, or 2.1 percent, more than last year.
Instead, most of that money was returned to corporations through a 0.5 percent income tax rate cut and the state's wealthiest families via repeal of the inheritance tax, which previously brought in about $150 million a year.
Chris Atkins, director of Pence's Indiana Office of Management and Budget, said weak national economic growth reduced the bang officials expected to get from cutting those taxes, though employer hiring has shrunk the state's unemployment rate 1.9 percent since July 2013.
Indiana last failed to beat its prior year revenue total in 2010 when income and sales tax collections cratered during the nationwide economic slump.