BY PATRICK GUINANE, Times of Northwest Indiana
pguinane@nwitimes.com
INDIANAPOLIS | State revenues slid short of projections for the fourth consecutive month in January, an ominous sign not seen since the months following the terrorist attacks of September 2001.
The bad news comes amid Gov. Mitch Daniels' push to shift $1.1 billion in school and welfare costs to the state and while region legislators seek to tap state coffers to help cover South Shore commuter rail expansion.
State tax collections missed their mark by $28.7 million last month, the Indiana State Budget Agency reported last week. Overall, state revenues -- fueled primarily by income, sales and gambling taxes -- are down $42.8 million for the fiscal year that began in July.
The situation was much more bleak six years ago, when collections fell short for seven straight months and Indiana closed its budget year with $297 million less than anticipated. Still, the latest spate of dour news reverberated through the Statehouse this past week.
"I'm not an economist," said House Ways and Means Chairman Bill Crawford, D-Indianapolis. "I don't know if we're in a recession or near a recession."
A key fiscal leader on the other side of aisle, Senate Tax Chairman Luke Kenley, R-Noblesville, said he is hopeful the dark cloud won't interfere with legislative attempts to ease property taxes.
"We're facing a hurdle, not a barrier," Kenley said.
Sales tax collections took the steepest slide in January, falling $19.1 million, or about 3.4 percent, below expectations. But Daniels is not backing down from his plan to use a penny sales tax hike, from 6 percent to 7 percent, to lift local school and welfare costs off the backs of property owners.
"The slower than expected revenue growth is reason for great caution in state spending, which the state is already doing," the Republican governor said in a statement. "It's not a reason to give property tax payers less relief than we have proposed."
Daniels ordered state agencies to hold off spending 5 percent of their budgets in December after analysts lowered by $230 million the revenue forecast for the two-year, $26 billion budget that runs through June 2009.
Indiana still is expected to take in at least $48 million more than it spends this budget cycle -- but not if lawmakers move ahead with the school and welfare funding swaps. Taking those big-ticket items off local property taxes would force the state to dip into its reserves for at least $80 million a year.
Meanwhile, region lawmakers want to steer 12.5 percent of the state sales tax collected in Lake and Porter counties toward a $1 billion plan to extend South Shore rail lines to Lowell and Valparaiso. The move would cost the state more than $30 million a year, beginning in July 2009.
Daniels conceded that "now is not the best time to carve out (state) money," but he is resigned to letting legislators decide the fate of the commuter rail funding bill. Senate President David Long, R-Fort Wayne, predicted the South Shore proposal, as well as the governor's tax plan, will be the subject of negotiations up until the final hours of the legislative session.
"Issues like that will go down to the wire," Long said. "We'll see what the result is, but I couldn't tell you a complete answer until March 14."