INDIANAPOLIS — As expected, the state closed its fiscal year with a budget surplus, due largely to spending cuts forced by Gov. Mike Pence.

As of June 30, the state had a $106 million operating surplus and reserves of $2 billion, Auditor Suzanne Crouch reported Monday.  Crouch, a Republican and former state lawmaker, praised Pence for Indiana’s strong financial state, saying his wise management decisions kept the state in the black.

“At the end of the fiscal year, we do not want to have to go back to Hoosier taxpayers and raise taxes because we need more money,” she said.

The state finished fiscal year 2014 with a surplus after agencies cut spending by about $150 million from what the Legislature allocated in the biennial budget crafted last year. Pence ordered those cuts last December, when tax collections were less than expected.

Crouch said corporate and inheritance tax cuts implemented by lawmakers were part of the reason that revenues were lower. State budget director Chris Atkins said an economy that hadn’t rebounded as quickly as projected was also partly to blame.

The surplus, which rolls into the state’s $2 billion reserve, is touted by Republicans as evidence of Indiana’s sound fiscal state. But it’s already become a political issue. Democrats have accused Pence of creating a financial picture that ignores the state’s unmet needs.

“In order to help reach this magical $2 billion dollar number, the governor continues to order cuts from already lean state programs without regard for how they will impact citizens,” Senate Democratic Leader Tim Lanane, D-Anderson, said in a statement. “Let’s not congratulate ourselves for hoarding tax dollars while so many of those taxpayers continue to struggle.”

The cuts ordered by Pence from the state’s $14 billion annual budget included $34 million from colleges and universities, as well as $12 million from the Department of Correction.

Another $27 million cut from the Family and Social Services Administration is likely to get more scrutiny in coming months. The Department of Child Services, which is part of the agency, is being sued by 1,400 families for failing to pay $100 million in subsidies promised to those who adopted children with special needs.

The department promised the subsidies “if funding becomes available,” according to the suit, but since 2009 it has returned more than $238 million to state coffers to help balance the books.

Crouch’s report shows the state collected almost $7 billion in sales and use taxes during fiscal year 2014, slightly higher than projected. But it continued to take a hit from dwindling dollars spent on gambling. Tax revenues from casinos were $29 million less than projected a year ago, continuing a five-year trend.

Maureen Hayden covers the state for the CNHI newspapers in Indiana. She can be reached at maureen.hayden@indianamediagroup.com. Follow her on Twitter @MaureenHayden.

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