INDIANAPOLIS (AP): Indiana’s budget picture is looking a little gloomier Friday after state budget officials laid out a scenario of slowed growth in tax collections.
Forecasters told members of the State Budget Committee to prepare for a roughly $298 million decline in what they had hoped to collect over the next two years.
Lagging sales tax collections and competition from new casinos in neighboring states are eating into the state’s planned revenue for fiscal year 2014 and fiscal year 2015.
The decline comes as Republican Gov. Mike Pence asks lawmakers to approve a $1 billion business tax cut at the local level and seeks new spending on education priorities, including the expansion of school vouchers to preschool-age children.
Pence announced last week that he would tighten the state’s belt, based on news that tax collections had stalled in the past month. He asked state agencies to curb spending an additional 1.5 percent, clipped higher education aid and announced he was selling the state plane. That decline came on top of news last month that Indiana was losing $63 million in tobacco settlement money, after a federal arbitrator decided the state had not done enough to collect settlement money from small tobacco manufacturers.
The new forecast accounts for a series of tax cuts and budget shifts approved by lawmakers during their 2013 session, including the elimination of the state’s inheritance tax.
Earlier Friday, an economist hired by the state told lawmakers they can count on steady economic improvements that outperform other Midwestern states and that are nearly on track with the expected national rate of growth. James Diffey, chief regional economist for HIS Global Insight, told lawmakers that Indiana maintains a business-friendly environment, and he said ties to the auto industry can boost growth.