News From Terre Haute, Indiana

November 7, 2011

MAUREEN HAYDEN: Much has changed financially for the state in 12 months

Maureen Hayden
Tribune-Star Statehouse Bureau

INDIANAPOLIS — Man, what a difference a year makes.

Last November, I was on the receiving end of dire warnings from state budget makers facing the worst fiscal outlook in 30 years.

Worried about a projected $1 billion deficit, they were bracing themselves and the media for the body blows that would come just weeks later when the biennial budget-making session got under way.

They faced growing demands for more money to cover costs that couldn’t be put off — Medicaid and pension payments among them — and less dollars from revenue sources — sales and income taxes among them — that Hoosiers come to rely on to pay for public services.

The state wasn’t going to fall off a financial cliff if legislators didn’t come up with a balanced budget. Unlike most other states, Indiana’s governor has the power to pull back the money the legislature appropriates.

Mitch Daniels had done just that: Late into 2009, as the state’s revenues plunged, the man nicknamed “The Blade” sliced deep into state spending. He cut about $800 million from a budget that the Indiana General Assembly had OK’d just six months earlier.

Now, as this November gets under way, the revenue reports are reading rosier, though still delivered with words of caution.

Here’s what came out earlier this week from State Budget Director Adam Horst:

By the end of October, total revenue collections for the month were $1,089 million. That’s $41 million more than was projected earlier this year. And October 2011’s revenue collections were $130 million more than what came in for October 2010.

Sales tax collections totaled $542 million for the month, almost 10 percent above collections for the same period last year.

Individual income tax collections, meanwhile, were up to $396 million for the month. That’s 25 percent above collections for the same period last year. Meanwhile, payroll withholdings increased nearly 20 percent compared to the same period last year.

Those are hopeful signs — worth breaking out the beer but not the champagne.

Sales tax collections, even though they were up by double digits, experienced the lowest growth rate of any month in fiscal year 2011. And the boost in payroll taxes may be related to a timing issue. As Horst noted in his monthly revenue report, it may less to do with more people working and having their state income taxes withheld than the fact that October was a quirky calendar month for payrolls; for a lot of people paid biweekly, October produced three paychecks instead of the usual two.

So that means November payroll collection numbers will look like they’re down. Here’s one way every good Hoosier could help: As the holiday shopping season gets under way, resist the online-only retailers — including Amazon.com — that aren’t collecting the 7 percent sales tax that bricks-and-mortar retailers are required to collect and remit to the state. Patronizing the non-collectors means a loss of dollars — the estimates run from $50 million to $400 million a year — in sales tax revenues for the state.

That’s not just amorphous money. Since we Hoosiers voted to cap the property taxes that once paid for local schools and public safety, we’re more reliant on sales taxes to fund those basic services. The price of online shopping convenience has a real cost.

Maureen Hayden is the Statehouse bureau chief for the Tribune-Star. She can be reached at maureen.hayden@indianamediagroup.com