State Will Have More Revenue, But Greater Demands On Budget In 2019

By Erica Irish
TheStatehouseFile.com 

INDIANAPOLIS — Indiana’s revenue for the next two years is expected to fall short of the money needed to fund everything from the Department of Child Services to teacher pay raises. 

David Reynolds, a senior fiscal analyst for Senate Republicans, presented a revenue forecast to the State Budget Agency early Monday that better defined this reality for lawmakers and state budget advisers. 

The report showed legislators will have nearly $16.6 billion to work within the general fund in the fiscal year 2020, a 2.7 percent gain in the fiscal year 2019. Combined with the estimate for the fiscal year 2021, lawmakers have approximately $33.6 billion to use through the next biennium overall. 

However, if the state keeps its promise to revitalize the DCS, this funding won’t last long. Officials for the agency have asked for approximately $300 million in additional money each year. In the last two-year budget, the department received about $600 million a year from the state’s $32.3 billion spending dollars. 

Additionally, the SBA learned today from state Medicaid Director Allison Taylor that the federally mandated program might soon need the state to step in to further supplement federal funding and to assist in providing treatment to a rising number of Hepatitis C patients. 

An estimated 9,000 members currently have Hepatitis C, up from 1,200 in the fiscal year 2018. Analysts said it costs about $48,000 to treat each patient. 

The agency is requesting around $121 million in 2020 and $123 million in 2021.  

These commitments don’t include promises by state leaders, including Gov. Eric Holcomb, to provide extra funds to K-12 education, teacher pay and school safety, all areas that will have to make do — if the current plan persists — with $321 million in new revenue acquired in 2020 and $263 million the following year. 

Sen. Ryan Mishler, R-Bremen, said the data provided today might trigger renegotiations with the DCS. He is also SBA chair.

“We need to meet with DCS and find out a way to lower that number and be a little more efficient,” Mishler said. “That’s probably the first thing we need to do.”  

The senator later issued a written statement noting that while the revenue forecast was “positive,” the DCS will put significant pressure on those writing the budget without a solution. 

“My colleagues and I will be taking a very careful approach this year, as we do every year, to be sure to fund our priorities — including protecting our state’s most vulnerable youth and supporting education — while living within our means,” Mishler said in the statement. 

Though concern remains for securing teacher pay raises, long-time budget leader Rep. Tim Brown, R-Crawfordsville, said the decision should be left to school boards. 

“We keep hearing all the time about what are the responsibilities of the local board and the local board is very much over the hiring of the staff and the paying of their staff, so it’s their responsibility,” Brown said. 

Rep. Todd Huston, R-Fishers, co-chair of the House Ways and Means Committee, added that while the reported revenue might not cover all of the state’s top initiatives, its growth indicates a better situation for the economy overall.  

“The good news out of this budget forecast today is that the economy is going strong,” Huston said.  “We’re increasing the forecast for this year because of better than expected revenue, so that’s very, very encouraging”

But Tom Jackson, a principal economist for IHS Markit, a global information provider that compiled the state’s latest economic forecast, offered a different perspective. 

For example, the Market report shows international trade decisions like tariffs and downfalls in the auto and manufacturing sectors are some of the factors that could harm Indiana down the road.

Indiana Office of Management and Budget Director Micah Vincent said in a statement, too, the state’s current plan will pose a challenge to his department and the governor. 

“With this information, we will work to introduce a budget that continues Indiana’s strong fiscal position and maintains the reserves needed to withstand a downturn in the economy,” read the statement. “There is a lot to consider as we prepare the governor’s budget submission in January.”

The state’s two-year budget will be written in the 2019 legislative session, which opens Jan. 3.  

FOOTNOTE:  Erica Irish is a reporter for TheStatehouseFile.com, a news website powered by Franklin College journalism students.