Hoosier lawmakers heading into the quarterly State Budget Committee meeting Thursday should be in an upbeat mood as Indiana tax revenue once again exceeded expectations in November.
But those smiles might quickly turn to frowns if the outlook for the next 30 months includes revenue reductions tied to a potential economic recession, or even just a minor slowdown of Indiana's red-hot job market.
Budget Committee members are due to receive a state revenue forecast featuring tax collection predictions for the remainder of the current budget year, as well as for the next two-year budget period beginning July 1, 2023.
That forecast largely will control initial debate at the General Assembly next year over House Bill 1001, the biennial spending plan, and everything that goes into it, including state funding for education, health care, public safety, transportation, and pretty much all state government does.
The revenue prediction will be updated in April using the latest economic data and forecasts to set final revenue targets for coming years before the Republican-controlled Legislature approves a state spending plan, which the Indiana Constitution requires be a balanced budget.
Eighteen months ago, the state's economic future appeared relatively grim as the COVID-19 pandemic forced numerous businesses to close and threw hundreds of thousands of Hoosiers out of work, imperiling Indiana's two primary revenue sources — the 7% sales tax and 3.23% personal income tax.
However, massive federal aid provided to Indiana and directly to individual Hoosiers buoyed the economy and belied initial expectations for a long, slow recovery, enabling the state to routinely exceed its monthly revenue targets in the current and prior budget year.
That held true once again last month as the $1.35 billion in state tax collections for November were $79.9 million, or 6.3%, greater than anticipated by the December 2021 revenue forecast, according to data compiled by the State Budget Agency.
The November total also bested by $121.6 million, or 9.9%, the monthly revenue target used by state lawmakers in April 2021 when crafting the current two-year budget.
Altogether, records show Indiana tax collections through the first five months of the budget year ran $382.8 million, or 5.1%, above forecast, and $848.2 million, or 12%, ahead of the budget plan.
It also was $577.1 million, or 7.9%, greater than the same period last year, data show.
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