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July 18, 2008

State auditor touts Indiana’s budget surplus

Long-Thompson says excess should be returned to people

By Howard Greninger

TERRE HAUTE — State Auditor Tim Berry calls Indiana an island, surrounded by states with fiscal budget deficits.

During a stopover Thursday at the Vigo County Annex as part of a statewide announcement, Berry said Indiana’s revenue exceeded expenses by $321.4 million for the fiscal year that ended June 30.

Illinois has a projected 2008-2009 budget shortfall of $2.5 billion, while Ohio has a $1.3 billion deficit, Kentucky at $1 billion and Michigan at $472 million, he said.

“For those of you here on the western border of the state of Indiana, a border with the state of Illinois, it is a sharp contrast — that imaginary line that differentiates Indiana from Illinois — to the fiscal condition of our two states,” he said

“… Last week [Illinois] Gov. [Rod] Blagojevich cut $1.4 billion from their state budget: $100 million in education, $210 million for vital social services and $600 million for health care,” Berry said.

“The [Illinois] House is in session … possibly voting to increase taxes to restore some of those cuts,” he said.

Berry cited statistics from the Washington-D.C.-based Center for Budget and Policy Priorities, which show 18 states have a budget surplus.

Indiana’s government spent about $133 million less over the past year after Gov. Mitch Daniels ordered spending restraints after revenue projects were lower because of a sagging economy, Berry said.

The savings, in part, came from leaving some agency staff positions vacant and postponing some projects such as the construction of two State Police posts and new flooring in state office buildings.

“Over the last three years, we have managed revenue growth at a 2.8 percent rate, which is less than half the 5.9 percent rate that we had in the eight previous years to Governor Daniels,” Berry said.

“That compares favorably to the national average expenditure growth for all states in 2008 of about 5.1 percent, as reported by National Association of Governors,” Berry said.

Adding previous state reserves to the $321 million remaining as of June 30 in the state’s general and property tax replacement funds, Indiana now has a $1.4 billion reserve, “which is a prudent reserve level within that range of 10 to 12 percent,” Berry said.

Berry said the state, because of new property tax cuts, will absorb more than $1 billion of services to schools, county welfare and police and fire pensions, “so it is important that we have those reserves that are there to maintain our commitment to maintain those vital services,” he said.

Democratic gubernatorial nominee Jill Long Thompson, in a statement released Thursday, said the state’s projected $1.4 billion budget surplus “was created on the backs of working people – through the increases in property, sales, cigarette and local taxes that [Gov.] Mitch Daniels forced through – and he should give it back.

“All across Indiana, Hoosiers are struggling to cope with the skyrocketing costs of health care, food, fuel, taxes and even their mortgage payments while state government is sitting on this windfall,” Long Thompson said.

She called for Daniels to suspend the state’s 7 percent sales tax on gasoline, saying the state is one of only seven states to charge a sales tax on gasoline. “We have the money to do it and it would go a long way in helping Hoosiers families get back on higher economic ground. It’s the least he can do,” Long Thompson said.

While a sluggish economy dropped revenues from corporate and gaming taxes, revenue from individual income taxes offset that, Berry said. “Indiana is on sound fiscal ground,” Berry said. “We anticipate we will not only end next year with another balanced budget, but we will have another surplus of $24 million.”

Indiana lawmakers in January will begin drafting a new two-year state budget.

Howard Greninger can be reached at (812) 231-4204 or howard.greninger@tribstar.com.

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