State Auditor Tim Berry said state revenues have increased over the past two years, but challenges still loom on the horizon.
During an appearance Tuesday at the Noon Rotary Club meeting at the Kokomo Country Club, Berry said revenue collections in Indiana have increased in 18 of the past 20 months as compared to the same months a year ago.
He said the increase in revenues followed 16 consecutive months of revenues decreases.
“Income tax collections are up 18.3 percent over 2010,” Berry said, “but they are still 5 percent below 2008. The collections for the period from July through October are at the highest levels since 2001.”
Revenues are distributed to local units of government based on estimates and municipalities are still seeing the effects of the economic downturn from two years ago, he said.
Berry said local government entities receive tax collections two years behind the state. He said the economic turn around would not be realized until 2013.
He said collections from corporate income taxes will not increase because earlier this year the Legislature cut the tax rate by 50 percent.
“We’re convinced businesses want to locate in states that cut taxes, have adequate reserves and pay their bills on time,” Berry said.
The biggest challenge in the future will be in the area of revenues collected from gaming, he said.
“Ohio is opening four new casinos,” Berry said. “The ones near Toledo and Cincinnati could have an impact on Indiana revenues.”
Concerning state reserves, Berry said the reserves for Indiana climbed from $100 million to $1.2 billion in recent years.
“It’s no secret that governments have had pressures as a result of the economy,” he said. “Indiana spent most of our reserves.”
Berry said the Indiana state government spending increased by 1.43 percent from 2005 through 2011.
“We increased the reserves by cutting spending ...,” he said. “Illinois increased income taxes by 66 percent and is five months late in paying bills. Michigan is returning to gravel roads to reduce expenditures. The states around us have spent their reserves.”
When asked about the revenues from the lease of the Indiana Toll Road to a private company, Berry said of the $3.8 billion there is still $1 billion remaining.
He said $500 million has been put into a reserve fund for the next generation of road projects and only the interest can be spent.
Berry said the funds from the lease of the toll road are funding improvements to U.S. 31, the Hoosier Heartland Corridor and the extension of Interstate 69 from Indianapolis to Evansville.