Indiana state budget
Energy policy • Public education • School choice • Public pensions • State budget • Ballot measures
|Indiana state budget|
|State Credit Rating:||AAA (as of May 2012)|
|Current Governor:||Mike Pence|
|GF expenses:||14.2 billion (estimated for FY 2013)|
|All funds expenses:||27.8 billion (estimated for FY 2013)|
|Spending % Change:||5.55%|
|% from Federal Funding:||32.96%|
|Per Capita State Debt:||$7,094|
|Other state budgets|
|Alabama • Alaska • Arizona • Arkansas • California • Colorado • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Illinois • Indiana • Iowa • Kansas • Kentucky • Louisiana • Maine • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Montana • Nebraska • Nevada • New Hampshire • New Jersey • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon • Pennsylvania • Rhode Island • South Carolina • South Dakota • Tennessee • Texas • Utah • Vermont • Virginia • Washington • West Virginia • Wisconsin • Wyoming|
- 1 Budget process
- 2 Expenditures
- 3 Revenues
- 4 State budgets by year
- 5 Historical spending
- 6 State debt
- 7 Federal aid to state budget
- 8 Budget transparency
- 9 Accounting principles
- 10 See also
- 11 External links
- 12 References
- A summary of the budget drafting process
- Trends in expenditures and revenues
- Current and past fiscal year budget developments
- Financial transparency measures
Between fiscal year 2009 and fiscal year 2013, Indiana's total expenditures increased by approximately $2.05 billion, from $25.719 billion in 2009 to $27.766 billion in 2013. This represents a 7.96 percent increase, below the cumulative rate of inflation during the same period (9.06 percent, calculated using the Consumer Price Indices for January 2009 and January 2013).
- In May of the year preceding the beginning of the new biennium, budget instructions and guidelines are sent to state agencies.
- In August, agencies submit their budget requests to the governor
- Hearings are held with state agencies from September to November.
- Public hearings on the budget are held from September to March.
- The governor submits his or her budget to the state legislature in February.
- 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.
The governor cannot exercise line item veto power over the budget passed by the legislature.
Indiana maintains seven major governmental funds: the General, Motor Vehicle Highway, Medicaid Assistance, Major Moves Construction, State Highway Department, Property Tax Replacement and Tobacco Settlement Funds. The state budgets all seven major funds in addition to more than fourteen other non-major funds.
Although each state executes its budget process differently, the National Association of State Budget Officers (NASBO) breaks down state expenditures into four general categories. This allows for comparisons among the 50 states. NASBO's categories are as follows:
- General fund: "The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state."
- Other funds: "Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds."
- Federal funds: "Funds received directly from the federal government."
- Bonds: "Expenditures from the sale of bonds, generally for capital projects."
The table below breaks down expenditures for fiscal year 2013 (comparable figures from surrounding states are provided to give additional context). Figures for all columns except "Per capita expenditures" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita expenditures" have not been abbreviated.
|Total state expenditures, FY 2013 ($ in millions)|
|State||General fund||Federal funds||Other funds||Bonds||Total||Per capita expenditures|
| Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.|align="left" colspan="8" | Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.|
Source: National Association of State Budget Officers |}
Source: National Association of State Budget Officers
Expenditures by function
State expenditures in Indiana can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2012 data 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.
|Expenditures by function, FY 2012 (as percents)|
|State||Elementary and secondary ed.||Higher ed.||Public assistance||Medicaid||Corrections||Transportation||Other|
|Source: National Association of State Budget Officers|
Between 2008 and 2012, state expenditures for elementary and second education rose by over nine percentage points, or 40 percent, as a share of the budget. Likewise, Medicaid spending rose by more than five percentage points, or 25.8 percent, as a share of the budget. Meanwhile, higher education expenditures fell by 1.4 percentage points, or 17.7 percent, as a share of the budget. The table below details changes in expenditures from 2008 to 2012. Fiscal year 2012 data is included in the table below. Figures are rendered as percents, indicating the share of the total budget spent per category.
|Expenditures from 2008 to 2012 (as percents)|
|Year||Elementary and secondary ed.||Higher ed.||Public assistance||Medicaid||Corrections||Transportation||Other|
|Change in %||9.4%||-1.4%||0.1%||5.6%||-0.1%||-1%||-12.5%|
|Source: National Association of State Budget Officers|
The table below breaks down general fund revenues by source in fiscal year 2013 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.
|Revenue sources in the general fund, FY 2013 ($ in millions)|
|State||Sales tax||Personal income tax||Corporate income tax||Gaming tax||Other taxes and fees||Total||Per capita revenue**|
| Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates for 2013.|
Source: National Association of State Budget Officers
The table below details the change in revenue sources in the general fund from 2009 to 2013. Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.
|Revenue sources in the general fund, Indiana ($ in millions)|
|Year||Sales tax||Personal income tax||Corporate income tax||Gaming tax||Other taxes and fees||Total||Per capita revenue**|
|Change in %||10.45%||15.39%||15.38%||-8.72%||14.10%||11.81%||9.29%|
| Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates.|
Source: National Association of State Budget Officers
State budgets by year
Fiscal year 2014
|Indiana state budget -- 2014|
|Indiana State Legislature|
|Introduced:||January 15, 2013|
|State House:||February 25, 2013|
|Vote (lower house):||68-28|
|State 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|
|Signed:||May 8, 2013|
On January 15, 2013, Governor Mike Pence introduced his proposed $29 billion biennial general fund appropriations budget. The proposal included $14.4 billion in spending in fiscal year 2014 and $14.6 billion in spending in fiscal year 2015. It increased state funding by about $200 million in each year of the biennium, or roughly 1.4 percent per year.
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.
Fiscal year 2013
The fiscal year 2012 and 2013 state budget as enacted can be accessed here.
Fiscal year 2012
- See also: Indiana state budget (2011-2012)
Fiscal year 2011
- See also: Indiana state budget (2010-2011)
Fiscal year 2010
- See also: Indiana state budget (2009-2010)
State budget historical spending below was compiled by the National Association of State Budget Officers. Figures reflect the reported "Total Expenditures" in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).
|Historical state budget spending in Indiana ($ in millions)|
|Fiscal year||General Fund||Other funds||Federal funds||Bonds||Budget totals|
|Total||% of Budget||Total||% of Budget||Total||% of Budget||Total||% of Budget|
|General Fund: The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state.|
Other funds: Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds.
Federal funds: Funds received directly from the federal government.
Bonds: Expenditures from the sale of bonds, generally for capital projects.
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, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded public pensions.
|Total state debt in Indiana|
|Total state debt||$46,377,635,000||29|
|Per capita debt||$7,094||48|
|State and other fund expenditures||$17,033,000,000||41|
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.
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."
States sometimes sell general obligation bonds to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). Credit rating agencies, such as Standard and Poor's, assign grades to states, evaluating their ability to pay the principal and interest on such bonds. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest. Generally speaking, a higher credit rating indicates lower risk for an investor, which in turn lowers costs for taxpayers.
The table below lists the Standard and Poor's credit rating for Indiana from 2001 to 2012 (grades from surrounding states are provided for additional context).
|S&P credit ratings from 2001 to 2012|
Federal aid to state budget
- See also: Federal aid to budgets in the 50 states
The chart below notes how much of the state’s general revenues come from the federal government. Figures were calculated by dividing each state’s federal intergovernmental revenue into its general revenue. The number in the rightmost column indicates the state's ranking in relation to the rest of the nation (e.g., if "1," the state receives the highest percentage of federal funding in the nation). Figures from neighboring states are included to provide additional context.
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 $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.
|Federal aid to state budgets in 2012|
|State||Federal aid as % of general revenue||Total federal aid ($ in millions)||National rank|
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.
|Line item expenditures|
|Public employee salaries|
|Last evaluated in 2011.|
Article 4, Section 18 of the Indiana Constitution requires that the “title” of a bill be read on three days in each legislative chamber prior to a final vote on the bill.
Indiana operates a financial transparency website, the Indiana Transparency Portal (ITP). The website is intended to compile Indiana budget data, spending reports and other financial information that previously had been spread across multiple sites. As of August 2010, however, the website did not include updated numbers on exactly what cuts had been made since Republican Governor Mitch Daniels ordered millions of dollars in reductions after the budget was approved by lawmakers. The site was further criticized for not showing where taxpayer money went under job incentives through the Indiana Economic Development Corporation.
Indiana publishes a database of contracts, available from the Indiana Department of Administration. The state's active contract listing provides an up-to-date list of all professional services contracts in which the state is currently a participant.
The table to the right is helpful in evaluating the level of transparency provided by this database and ITP.
Support for creation of the database
Governor Mitch Daniels created the contracts website with an Executive Order in 2005.
Multi-measure budget transparency profile
The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for Indiana, which measured state transparency as of September 2011 using indicators from a range of organizations. These indicators measured both website transparency and other recognized facets of governmental transparency. In addition, IGPA presented four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.
IGPA devised a budget transparency index based on information available from the National Association of State Budget Officers. Indiana tied for 33rd in the nation with 12 other states, earning four out of eight possible points.
|Indiana - IGPA score for budget process, contents and disclosure|
|Budget transparency indicator||Yes or no?|
|"Generally Accepted Accounting Principles" budget|
|Binding revenue forecast|
|Legislative revenue forecast|
|Constitution or statutory tax/spend limitations|
In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.
U.S. PIRG "Following the Money" report
- See also: Following the Money 2014 Report
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. 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.
- See also: Indiana government accounting principles
The Indiana State Auditor is the chief financial office of the state and is responsible for:
- Accounting for all of the state's funds
- Overseeing and disburse county, city, town, and school tax distributions
- Paying the state's bills
- Paying the state's employees
- Administrating Indiana’s Deferred Compensation Plan
The State Auditor as of March 2014 was Suzanne Crouch.
- Indiana government sector lobbying
- Indiana public pensions
- Governor of Indiana
- Indiana State Senate
- Indiana House of Representatives
- Indiana State Legislature
- U.S. PIRG, "Report: Transparent & Accountable Budgets," April 8, 2014
- The New York Times, "Battles loom in many states over what to do with budget surpluses," February 3, 2014
- Center on Budget and Policy Priorities, "Policy Basics: The ABCs of State Budgets," February 7, 2013
- Governor Mitch Daniels, "2010 State of the State Address," January 19, 2010
- Indiana's News Center, "State Budget Problems Over?" January 1, 2010
- South Bend Tribune, "State budget passes, is signed," June 30, 2009
- Governor Mitch Daniels, "2009 State of the State Address," January 13, 2009
- Refers to General Fund spending. Typically in state budgets the General Fund is spending that is most directly controlled by state legislators.
- This figure is derived by calculating the percent difference between the prior two years' spending levels according to the National Association of State Budget Officers.
- Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
- InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
- National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting," updated April 2011
- National Association of State Budget Officers "Budget Processes in the States, Summer 2008," accessed February 21, 2014
- Indiana Budget Analysis
- National Association of State Budget Officers "State Expenditure Report, 2011-2013," accessed February 21, 2014
- United States Census Bureau, "Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2013," accessed February 26, 2014
- National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
- National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
- National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
- National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
- United States Census Bureau, "Vintage 2009: Annual Population Estimates," accessed February 26, 2014
- The South Bend Tribune, "Pence submits lean state budget with new tax cut," accessed January 16, 2013
- The Indianapolis Star, "Indiana Gov. Mike Pence budget raises education, Medicaid, transportation spending," January 15, 2013
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- The Times of Northwest Indiana, "Pence signs two-year Indiana budget," May 8, 2014
- State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
- Washington Examiner, "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014
- State Budget Solutions "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
- Indiana Public Retirement System, "Comprehensive Annual Financial Report for the Fiscal year Ended June 30, 2012," accessed November 8, 2013
- Pew Center on the States, "Widening Gap Update: Indiana," June 18, 2012
- Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
- United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
- Recovery.gov, "Stimulus Spending by State," accessed February 21, 2014
- IN.gov, "Indiana Transparency Portal," accessed March 14, 2014
- Fox41.com, "New Ind. website pulls together state budget data," August 31, 2010
- Indianapolis Business Journal, "Indiana state budget website gets new features," March 14, 2011
- IN.gov, "Indiana Transparency Portal - Performance and Accountability," accessed March 14, 2014
- Institute of Government and Public Affairs at University of Illinois, "Home page," accessed February 21, 2014
- Institute of Government and Public Affairs at University of Illinois, "Indiana: Budget Transparency Profile," September 2011
- Institute of Government and Public Affairs at University of Illinois, "Budget Transparency Profiles - All 50 States," September 2011
- U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
- IN.gov, "Office of Management and Budget," accessed March 14, 2014
- IN.gov, "State Auditor," accessed March 14, 2014
- IN.gov, "Indiana Auditor Suzanne Crouch - Auditor's Info," accessed March 14, 2014