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Indiana state budget and finances

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Indiana budget and finances
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General information
Budget calendar:
Biennial
Fiscal year:
2015
State credit rating:
AAA (as of 2014)
Current governor:
Mike Pence
Financial figures
Total spending (state and federal funds):
$27.3 billion
Per capita spending:
$4,132.27
Total state tax collections:
$16.9 billion
Per capita tax collections:
$2,576.70
State debt:
$46.4 billion
Per capita state debt:
$7,094
State budgets and finances
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Total state expendituresState debtTax policy in Indiana
Note: This page utilizes information from a variety of sources. As such, the currency of the information varies somewhat. The information presented on this page reflects the most recent data available as of February 2015.
Between fiscal years 2013 and 2014, total spending in Indiana decreased by approximately $911 million, from $28.2 billion in fiscal year 2013 to an estimated $27.3 billion in 2014. This represents a 3.23 percent decrease. The cumulative rate of inflation during the same period was 1.58 percent, calculated using the Consumer Price Indices for January 2013 and January 2014. As of 2014, financial services firm Standard and Poor's had assigned Indiana a AAA credit rating, the highest available.[1][2][3]
In fiscal year 2014, Indiana's estimated per capita spending ranked seventh-lowest in the nation at $4,132.27. Over 60 percent of Indiana's tax collections in 2013 came from sales taxes and gross receipts.

Spending

Definitions

The information below comes from the National Association of State Budget Officers (NASBO). These spending figures are broken into three broad categories in order to facilitate comparison between the states.[3]

  • State funds: State funds include general and other state-based funds. General funds are "the predominant fund for financing a state's operations." Other state funds are "restricted by law for particular governmental functions or activities."
  • Federal funds: Federal funds are "funds received directly from the federal government."
  • Total spending: Total spending is calculated by adding together the totals for state and federal funds.

These figures exclude spending from the sale of bonds.

2014 expenditures

See also: Total state expenditures

The table below breaks down estimated spending totals for fiscal year 2014 (comparable figures from surrounding states are included to provide additional context). Figures for all columns except "Per capita spending" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita spending" have not been abbreviated.[3]

Total estimated state spending, FY 2014 ($ in millions)
State State funds Federal funds Total spending Population Per capita spending
Indiana $17,282 $9,978 $27,260 6,596,855 $4,132.27
Illinois $50,392 $19,964 $70,356 12,880,580 $5,462.18
Michigan $30,605 $20,632 $51,237 9,909,877 $5,170.30
Ohio $46,043 $13,046 $59,089 11,594,163 $5,096.44
Wisconsin $33,887 $11,006 $44,893 5,757,564 $7,797.22
Per capita figures are calculated by taking the state's total spending and dividing by the number of state residents according to United States Census estimates.[4]
Source: National Association of State Budget Officers

Spending by function

See also: State spending by function as a percent of total expenditures
Breakdown of spending by function in FY 2013.
Source: National Association of State Budget Officers

State spending in Indiana can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2013 information is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percents, indicating the share of the total budget spent per category.[3]

State spending by function as a percent of total expenditures, FY 2013
State K-12 education Higher ed. Public assist. Medicaid Corrections Transp. Other
Indiana 30.8% 6.1% 1.4% 31.2% 2.7% 8.3% 19.6%
Illinois 13.3% 3.7% 0.3% 23.8% 2.1% 8.4% 48.4%
Michigan 27.2% 4.2% 0.7% 26.4% 4.6% 7.8% 29%
Ohio 17% 4.3% 1.5% 29.2% 3.2% 5.1% 39.8%
Wisconsin 16.2% 14.3% 0.3% 17.2% 2.9% 6.9% 42.1%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[3]

Spending trends

In Indiana in fiscal year 2013, Medicaid expenditures accounted for 31.2 percent of all state spending. Elementary and secondary education expenditures accounted for 30.8 percent of all state spending. See the table below for further details (figures are rendered as percents, indicating the share of the total budget spent per category).[3][5][6][7][8]

Spending by function from 2009 to 2013 (as percents)
Year Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other**
2013 30.8% 6.1% 1.4% 31.2% 2.7% 8.3% 19.6%
2012 32.9% 6.5% 1.5% 27.3% 2.9% 9.3% 19.7%
2011 32.2% 7.1% 1.4% 25.0% 2.9% 10.9% 20.4%
2010 32.4% 7.1% 1.4% 23.1% 2.9% 10.6% 22.4%
2009 28.1% 7.3% 1.3% 21.8% 2.9% 9.2% 29.4%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[3]

Revenues

2013 revenues

See also: State government tax collections by source

The table below breaks down state government tax collections by source in 2013 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "population" and "per capita revenue" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "population" and "per capita revenue" have not been abbreviated).[9]

In 2013, Indiana collected $10.3 billion in sales taxes and general receipts. Individual income taxes accounted for approximately $5 billion.

State tax collections by source ($ in thousands)
State Property taxes Sales and gross receipts Licenses Individual income taxes Corporation net income taxes Other taxes Total 2013 population Per capita collections
Indiana $7,008 $10,298,491 $699,373 $4,976,375 $781,585 $167,899 $16,930,731 6,570,713 $2,576.70
Illinois $61,806 $14,705,739 $2,583,108 $16,538,662 $4,462,627 $363,378 $38,715,320 12,890,552 $3,003.39
Michigan $1,954,898 $12,268,026 $1,454,634 $8,239,086 $900,667 $265,343 $25,082,654 9,898,193 $2,534.06
Ohio N/A $13,636,046 $3,445,620 $9,869,545 $262,226 $117,511 $27,330,948 11,572,005 $2,361.82
Wisconsin $148,600 $7,088,411 $1,035,743 $7,227,690 $955,752 $66,416 $16,522,612 5,742,953 $2,877.02
Source: Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014
Indiana tax collections by source in 2013.
Tax Policy Center

The table below lists 2013 tax collections by source as percentages of total collections. In Indiana in 2013, sales taxes and gross receipts accounted for nearly 61 percent of total tax collections.[9]

State tax collections by source (as percentages)
State Property taxes Sales and gross receipts Licenses Individual income taxes Corporation net income taxes Other taxes
Indiana 0.04% 60.83% 4.13% 29.39% 4.62% 0.99%
Illinois 0.16% 37.98% 6.67% 42.72% 11.53% 0.94%
Michigan 7.79% 48.91% 5.80% 32.85% 3.59% 1.06%
Ohio N/A 49.89% 12.61% 36.11% 0.96% 0.43%
Wisconsin 0.90% 42.90% 6.27% 43.74% 5.78% 0.40%
Source: Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014

State budgets by year

See also: Historic Indiana budget and finance information
Indiana state budget -- 2014 and 2015
Indiana State Legislature
Text:HEA 1001
Legislative history
Introduced:January 15, 2013
House:February 25, 2013
Vote (lower house):68-28
Senate:April 9, 2013
Vote (upper house):38-12
Conference:April 27, 2013
Conference vote (upper house):70-30
Conference vote (lower house):39-11
Governor:Mike Pence
Signed:May 8, 2013

Fiscal years 2014 and 2015

DocumentIcon.jpg See budget bill: HEA 1001

On January 15, 2013, Governor Mike Pence introduced his proposed $29 billion biennial general fund appropriations budget.[10] The proposal included $14.4 billion in spending in fiscal year 2014 and $14.6 billion in spending in fiscal year 2015.[11] It increased state funding by about $200 million in each year of the biennium, or roughly 1.4 percent per year.[10]

On May 8, 2013, Pence signed a $30 billion general fund appropriations budget into law. Passed by the Republican-controlled state legislature, the budget increased elementary and secondary education funding by 2 percent in 2014 and 1 percent more in 2015. The enacted budget also included a personal income tax cut (from 3.4 percent to 3.3 percent), a corporate income tax cut, and eliminated the inheritance tax.[12]

State debt

See also: State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, Indiana had a state debt of over $46 billion. Its state debt per capita was $7,094. The report revealed that state governments faced a combined $5.1 trillion in debt. The obligation amounts to $16,178 per capita in the nation.[13]

Total state debt, 2014
State Total state debt State debt per capita Per capita debt ranking
Indiana $46,377,635,000 $7,094 48
Illinois $321,354,115,000 $24,959 5
Michigan $142,668,026,000 $14,435 25
Ohio $321,340,764,000 $27,836 4
Wisconsin $45,026,643,000 $7,863 47
Sources: State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014.

Public pensions

See also: Indiana public pensions and Indiana public employee salaries

The funding ratio for Indiana's pension system decreased from 70.29 percent in fiscal year 2007 to 60.80 percent in fiscal year 2012, a decrease of 9.49 percentage points, or 13.5 percent. Likewise, unfunded liabilities increased from over $10 billion in fiscal year 2007 to more than $16 billion in fiscal year 2012.[14]

A 2012 report from the Pew Center on the States noted that Indiana's pension system was funded at 65 percent at the close of fiscal year 2010, well below the 80 precent funding level experts recommend. Consequently, Pew designated the state's pension system as cause for "serious concern."[15]

Credit ratings

See also: State credit ratings

Credit rating agencies, such as Standard and Poor's, assign grades to states that take into account a state's ability to pay debts and the general health of the state's economy. Generally speaking, a higher credit rating indicates lower interest costs on the general obligation bonds states sometimes sell to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). This is turn results in lower interest costs, thereby lowering the cost to taxpayers.[16][17]

The table below lists the Standard and Poor's credit ratings for Indiana and surrounding states from 2004 to 2014. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest.[18]

State credit ratings, 2004 to 2014
State 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Indiana AAA AAA AAA AAA AAA AAA AAA AA+ AA+ AA AA
Illinois A- A- A A+ A+ A+ AA AA AA AA AA
Michigan AA- AA- AA- AA- AA- AA- AA- AA- AA AA AA+
Ohio AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+
Wisconsin AA AA AA AA AA AA AA AA- AA- AA- AA-
Source: Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014.

Federal aid to state budget

See also: Federal aid to state budgets

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[19]

The table below notes what share of Indiana's general revenues came from the federal government in 2012. That year, Indiana received approximately $10.4 billion in federal aid, 33.2 percent of the state's total general revenues. Figures from surrounding states are provided for additional context.[19]

Federal aid to state budgets, 2012
State Total federal aid ($ in thousands) Federal aid as a % of general revenue Ranking
Indiana $10,441,125 33.24% 29
Illinois $15,646,844 32.78% 43
Michigan $17,849,942 40.84% 24
Ohio $20,687,909 34.88% 17
Wisconsin $8,855,079 28.19% 38
Source: United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014

Stimulus

According to Recovery.gov, the official government website for the Recovery Accountability and Transparency Board, under the American Recovery and Reinvestment Act, Indiana received $4.1 billion in federal stimulus funding between February 2009 and June 2013.[20]

Budget process

The state operates on a biennial budget cycle. The sequence of key events in the budget process is as follows:[21][22]

  1. In May of the year preceding the beginning of the new biennium, budget instructions and guidelines are sent to state agencies.
  2. In August, agencies submit their budget requests to the governor
  3. Hearings are held with state agencies from September to November.
  4. Public hearings on the budget are held from September to March.
  5. The governor submits his or her budget to the state legislature in February.
  6. The legislature typically adopts a budget in April, effective for the fiscal biennium beginning in July. A simple majority is required to pass a budget.

There are no constitutional or statutory provisions mandating that the governor must submit or the legislature must pass a balanced budget. Budget deficits may be carried over to the next biennium.[22]

Indiana is one of only six states in which the governor cannot exercise line item veto authority.[22]

Agencies, offices and committees

There are three major standing committees in the Indiana State Legislature that deal with budget and finance matters: the House Ways and Means Committee, the Senate Appropriations Committee and the Senate Tax and Fiscal Policy Committee.[23]

Fiscal duties in Indiana are split between the Indiana Office of Management and Budget (OMB), the state auditor and the state treasurer.[24][25]

The Indiana State Auditor is the chief financial officer of the state and is responsible for the following:[26]

  • accounting for all of the state's funds
  • overseeing and disbursing county, city, town, and school tax distributions
  • paying the state's bills
  • paying the state's employees
  • administrating Indiana’s Deferred Compensation Plan

Studies and reports

U.S. PIRG "Following the Money" report

See also: "Following the Money" report, 2014

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[27] According to the report, Indiana received a grade of A- and a numerical score of 94, indicating that Indiana was "leading" in terms of transparency regarding state spending.[27]

See also

External links

Additional reading

References

  1. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  2. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  3. 3.0 3.1 3.2 3.3 3.4 3.5 3.6 National Association of State Budget Officers, "State Expenditure Report: 2012-2014," accessed February 18, 2015
  4. United States Census Bureau, "State and County QuickFacts," accessed February 23, 2014
  5. National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  6. National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  7. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  8. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  9. 9.0 9.1 Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014
  10. 10.0 10.1 The South Bend Tribune, "Pence submits lean state budget with new tax cut," accessed January 16, 2013
  11. The Indianapolis Star, "Indiana Gov. Mike Pence budget raises education, Medicaid, transportation spending," January 15, 2013
  12. The Times of Northwest Indiana, "Pence signs two-year Indiana budget," May 8, 2014
  13. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  14. Indiana Public Retirement System, "Comprehensive Annual Financial Report for the Fiscal year Ended June 30, 2012," accessed November 8, 2013
  15. Pew Center on the States, "Widening Gap Update: Indiana," June 18, 2012
  16. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  17. Bankrate, "The 6 states with the worst credit ratings," September 27, 2012
  18. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014
  19. 19.0 19.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  20. Recovery.gov, "Stimulus Spending by State," accessed February 21, 2014
  21. National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting," updated April 2011
  22. 22.0 22.1 22.2 National Association of State Budget Officers "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  23. Indiana General Assembly, "Standing Committees," accessed February 25, 2015
  24. IN.gov, "Office of Management and Budget," accessed March 14, 2014
  25. IN.gov, "State Auditor," accessed March 14, 2014
  26. IN.gov, "Indiana Auditor Suzanne Crouch - Auditor's Info," accessed March 14, 2014
  27. 27.0 27.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014