House Republicans seeking to bolster their case for enacting a tax cut during this year's legislative session got the numbers they were looking for Friday.
Data released by the Indiana State Budget Agency show Indiana tax collections in December exceeded even the revised monthly revenue target and far surpassed the revenue prediction Hoosier lawmakers used last spring to craft the state's two-year spending plan.
In total, the state's general fund took in $1.66 billion last month. That was $19 million, or 1.2%, more than anticipated by the revised revenue forecast issued Dec. 16.
But compared to the April 2021 budget plan, state revenue crushed the December estimate by $178.2 million, or 12%, pushing Indiana's surplus tax collections through the first six months of its budget year to $825.1 million, or 10.1%.
House Speaker Todd Huston, R-Fishers, already announced his plan to permanently cut business and personal taxes by more than $1 billion even before the December revenue figures showed Indiana probably can afford it.
He's now likely to redouble his efforts to advance House Bill 1002 in the weeks ahead, and may even be able to persuade skeptical Senate Republicans and Republican Gov. Eric Holcomb to get on board.
"Hoosiers made it clear that they don’t want more government in their lives and they don't want more spending from us," Huston said Thursday.
"We're likely facing $5 billion in reserves and a $2 billion structural surplus. It would be irresponsible to grow government. Under our tax cut plan, we would put about $1.3 billion back in Hoosiers' pockets while continuing to protect Indiana's financial future."
The House GOP tax cut proposal calls for gradually reducing the state's personal income tax rate to 3% by 2026 from the current 3.23%.
Under the plan, the rate would drop to 3.15% in 2023, 3.10% in 2024, 3.05% in 2025, and ultimately to 3%.
That means a Hoosier earning $50,000 a year would see their current annual state income tax burden of $1,615 drop to $1,575 in 2023, $1,550 in 2024, $1,525 in 2025, and $1,500 in 2026.
The measure also eliminates the utility receipts tax from Hoosier electric bills and encourages businesses to invest in new equipment by exempting more production inputs from the 7% sales tax and eliminating the 30% minimum valuation on equipment subject to the business personal property tax.
"This isn't just about 2022. This is about preparing for the long term," Huston said. "We want to be responsible in those tax cuts ... but we can be thoughtful and responsible and get money back in the hands of Hoosiers."
"As we deal with inflation, you know, giving people back some of their money helps them as they pay for higher-priced groceries, higher-priced gas, and those basic needs and services."
In contrast, the governor generally has favored using any extra revenue to pay down state debt to free up additional resources in future years, along with investing in major new building projects, including $500 million to improve quality of place in different regions of the state and $400 million to reconstruct the Westville Correctional Facility in LaPorte County, among other initiatives.
State Sen. Ryan Mishler, R-Bremen, chairman of the Senate Appropriations Committee, has said he's inclined to follow the same approach by postponing any significant state financial actions until the Legislature's 2023 budget session.
"Even amid this positive economic picture, we have the obligation to continue making sustainable spending decisions as we plan for Indiana's future, and I believe those types of discussions will be most appropriate in the context of the next state budget," Mishler said in December.
House Republicans have until Jan. 31 to advance their tax cut plan to the Senate. The Senate must then decide by March 1 whether to endorse it as-is, revise it, or kill the proposal altogether.
The General Assembly is due to adjourn its annual session on or before March 14.
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