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Indiana state budget (2010-2011)

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Indiana had $28.8 billion budget for FY2010-2011.[1] It was passed in 2009. On July 14, 2010, State Auditor Tim Berry announced the state's FY2010 revenues were $957 million less than lawmakers budgeted.[2] To make ends meet, state officials cut $669 million in spending. Lawmakers also reduced the state's reserves from $1.3 billion to $830 million, which Gov. Mitch Daniels and state lawmakers projected would last through the end of the budget cycle which ended June 30, 2011.[3]

Going into the fiscal year Indiana had a total state debt of $27,563,948,872 when calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap as of July 2010.[4]

2011 State spending & deficit in billions[5]
Total spending Health and human services Education Government Protection Transport Environment Econ dev
$26.5 $9.3 $10.3 $1 $1.4 $2 $0.3 $1.5
2011 Local spending & deficit in billions[6]
Total spending Pension Healthcare Education Welfare Protection Transport Deficit
$32.8 $0.1 $3.4 $10.4 $1.2 $2.6 $1.7 $32.3

Fiscal Years 2010 and FY2011 State Budget

Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government online.[7]

The state ended FY2011 with a $1.2 billion surplus. The surplus was the result of the state collecting $204 million more than it had projected and cuts to services and schools. Gov. Daniels said he planned to keep that money in savings rather than restore cuts made in recent years.[8] The $1.2 billion surplus was just shy of the amount needed to trigger automatic tax refunds for Hoosiers. The automatic tax refunds kick in when the state had a surplus equal to 10 percent or more of general spending. The $1.2 billion figure amounted to 9.1 percent of spending.[8]

The state collected $938 million in August 2010, an 8.4% increase compared to the year prior according to the state Budget Agency.[9] Overall, state revenue was still $2 million less than projected in the budget lawmakers passed in early 2009, and Budget Director Adam Horst predicted that by June 2011, that state's reserves would be $797 million below what was assumed in the budget as it was passed.[9] In FY2010, Indiana collected $957 million less than budgeted. The state tapped into its rainy day fund of surplus money for nearly $500 million and reduced state spending by $785 million.[10]

FY2011 General Fund Appropriations[11]

Category % of General Fund Appropriations
K-12 Education 49
Higher Education 12
Medicaid 11
Teacher Pensions 5
Corrections 5
Human Services 5
Child Services 4
Other 9


Another fiscal issue facing the state was the impact of the federal health care legislation. In a memo to state legislators on the budget committee dated March 26, 2010, Ryan Kitchell, director of Indiana's Office of Management and Budget, warned that the legislation would have an immediate $25 million impact on the state's budget.[12]

Despite the state's looming deficit and failing revenues, Gov. Daniels said, "we would not make this recession worse by adding one cent to the tax burden of our fellow citizens." The General Assembly approved a ballot measure for the statewide 2010 ballot, widely supported by Gov. Daniels, which would let voters decide whether to amend limits on property tax bills into the state constitution.[13]

In early July 2009 the Indiana General Assembly passed a two-year state budget narrowly avoiding a state government shutdown.[14]

Budget Cuts

In FY2011, lawmakers cut state spending by approximately $600 million.[15]

State agencies were instructed in April 2010 to cut their spending by another 5 percent during the fiscal year that began July 1 after already chopping 10 percent a few months prior.[16]

Some cuts included:

  • The Department of Transportation said reduced payroll through attrition and without laying off any workers. The fiscal year 2010 budget allowed for more than 4,300 workers, but the department was running with about 3,900 workers. The Department also reduced the motor pool fleet by nearly 300 vehicles over the last 3 years.[17]
  • The Department of Correction said among other changes that reorganized its facilities, decreased the amount of adult education school days and substituted vegetarian enriched meals instead of kosher meals for inmates.[17]
  • The Indiana War Memorials and White River State Park began using inmate labor to reduce costs of park maintenance.[17]
  • Indiana State Fair Commission lost $1.5 million of its $2.1 million state appropriation[10], but derived the bulk of its $23 million budget from other sources. The fair increased the price of barn leases and charging for some parking. The fair also used more volunteers at events[17]
  • The Indiana Office of Tourism Development's budget was cut by nearly 60%, from $4.4 million down to $2.6 million[10]
  • The Indiana Innovation Alliance, a partnership between Indiana University and Purdue University, lost its entire $10 million budget.[10]

The state budget committee was also exploring the possible cost savings that would result from schools and public university employees joining the state's public employee health insurance plan.[18]

Education

Education accounted for 54% of the state budget.[1]

Gov. Daniels said that he believed that Indiana schools would not see deeper budget cuts in 2011.[19] The Indiana Department of Education had notified school corporations they can expect the same funding for 2011 that they received in FY2010.[20]

The FY2010-2011 budget included an education funding trigger that would give schools additional funds if the state collected more money than was expected in a May 2009 revenue forecast. Revenues for FY2010, however, fell $957 million short of previous expectations, meaning schools received no extra money.[2]

Budget background

The Indiana General Assembly meets annually and had a biennial budget. The governor submits the budget to the legislature in accordance with IC 4-12-1-9(a): Before the second Monday of January, in the year immediately after preparation, the budget report and the budget bill shall be submitted to the Governor by the budget committee. The Governor shall deliver to the house members of the budget committee such bill or bills for introduction into the House of Representatives.[21]

Indiana was required to pass a balanced budget by statute stating that "no law shall authorize any debt to be contracted," except for "casual deficits" which must be covered by loans "as may be necessary to meet the demands of the state." Indiana law prohibits the state from carrying a deficit from one year to the next. State law creates a spending cap under Section 4-10-21-2, but an exemption from the State spending cap for appropriation exists under Section 4-10-21-7.[22]

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.[22]

Budget figures

The 2009-2011 state budget passed June 30, 2009 by the Indiana General Assembly during the 2009 regular and special sessions provides:[23][24]

Total Funds

  • $26.2 billion FY 2009 (listed as a comparison)
  • $26.9 billion FY 2010
  • $26.9 billion FY 2011

General Funds

  • $14.4 billion FY 2009 (listed as a comparison)
  • $13.6 billion FY 2010
  • $14.1 billion FY 2011

General Fund 2009-10[25]

Category FY2009 Amount in millions Actual FY 2010 Amount in millions Estimated
Beginning Balance 1,050 964
Revenues 13,063 12,191
Adjustments 0 0
Total Resources 14,113 13,155
Expenditures 13,019 12,836
Adjustments 130 0
Ending Balance 964 319
Budget Stabilization Fund 365 369


Fiscal 2010 Tax Collections Compared With Projections Used in Adopting Fiscal 2010 Budgets (Millions)[25]

Category Amount
Sales Tax Original Estimate 6,132
Sales Tax Current Estimate 5,932
Personal Income Tax Original Estimate 4,289
Personal Income Tax Current Estimate 3,776
Corporate Income Tax Estimate 800
Corporate Income Tax Estimate 547


The following table provides a history of Indiana's expenditures and gross domestic product (GDP).

Fiscal Year Expenditures (billions) GDP (billions)
2000 $31.2[26] $194.4[26]
2001 $33.8[26] $195.2[26]
2002 $36.3[26] $205.0[26]
2003 $37.8[26] $215.4[26]
2004 $39.3[26] $228.3[26]
2005 $42.0[26] $232.8[26]
2006 $44.0[26] $238.7[26]
2007 $46.1[26] $246.4[26]
2008 $48.2[26] $254.4[26]
2009 $50.5*[26] $262.7*[26]
  • NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.


See Indiana state budget (2008-2009) for more details.

2009-2010 budget crisis

See also: State budget crisis, 2009-2010

Gov. Mitch Daniels, 2010 State of the State Address

Indiana faced a budget shortfall of approximately $1.8 billion for FY 2010. [27] The fall in revenues had forced Daniels to make hundreds of millions of dollars in budget cuts, including: $150 million from higher education and $300 million from public schools. In the "2010 State of the State Address" Daniels emphasized the need to "streamline state government."[13][28]

Despite the state's looming deficit and failing revenues, Gov. Daniels said, "we would not make this recession worse by adding one cent to the tax burden of our fellow citizens." The General Assembly recently approved a ballot measure for the statewide 2010 ballot, widely supported by Gov. Daniels, which would let voters decide whether to amend limits on property tax bills into the state constitution.[13]

Among the budget cuts announced by the governor in order to reduce the state's looming budget deficit were slaugherhouse inspections, however, on February 1 the governor reversed his decision. The planned cut included cutting the inspection budget by less than 50%.[29][30]

2008-2009 budget crisis

See also: Indiana state budget (2008-2009)

Accounting principles

See also:Indiana government accounting principles

Indiana did not had a state controller, rather fiscal duties were split among the Office of Management & Budget (OMB), [Indiana State Auditor|State Auditor]] and State Treasurer.

Ryan Kitchell had been Indiana’s OMB Director since 2007.[31] The Legislature, at the Governor's request, created a new organization within state government called the Office of Management and Budget ("OMB"). The OMB brings together the financial and auditing functions of Indiana. The Director of the OMB was the state's CFO.[32]

Tim Berry had been Indiana State Auditor since 2007. The Indiana State Auditor was responsible for:[33]

  • 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.

Budget transparency

Indiana had a new transparency website, the Indiana Transparency Portal. The state had promised side-by-side comparison of budgeted numbers and actual expenditures during the second quarter of 2011.[34] Lawmakers said that the website would compile Indiana budget data, spending reports and other financial information that previously had been spread across multiple sites.[35] The website, however, did not include updated numbers on exactly what cuts had been made since Republican Gov. Mitch Daniels ordered millions of dollars in reductions after the budget was approved by lawmakers and had been criticized for not showing where taxpayer money goes under job incentives through the Indiana Economic Development Corporation.[35][36]

In March 2011, the state added agency performance reviews to the ITP and more reports on local government spending.[37][38]

See also: Evaluation of Indiana state website

Economic stimulus transparency

  • Indiana received approximately $445 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[39] The state accepted the money even though Republican Gov. Mitch Daniels had previously said it was unnecessary.[40]
  • It was estimated that Indiana would receive at least $3 billion in federal funding.[41]
  • Indiana established an economic recovery website.[42]

One Indiana project was noted in Senator Coburn and Senator McCain's "Summertime Blues, 100 stimulus projects that give taxpayers the blues" report. The Purdue University Airport replace its entire current eight-foot perimeter fence with an eleven-foot fence to keep out wildlife using a Federal Aviation Administration grant worth over $665,000.365, despite the fact that the airport had only had 14 reported incidents of an aircraft striking wildlife since 1990, of which thirteen were birds.[43]

Government tools

Indiana had a database of contracts, available from the Indiana Department of Administration. The State's Active Contracts listing provides an up-to-date list of all professional services contracts in which the state was currently a party.[44]

The following table was helpful in evaluating the level of transparency provided by Indiana Active Contracts:

Criteria for evaluating spending databases
State Database Searchability Grants Contracts Line Item Expenditures Dept/Agency Budgets Public Employee Salary
Indiana Active Contracts
{{{1}}}
{{{1}}}
{{{1}}}
N
600px-Red x.png
N
600px-Red x.png
N
600px-Red x.png

Support for creation of the database

Governor Mitch Daniels created the contracts website with an Executive Order in 2005.[45]

Budget Cut Transparency

Senate Minority Leader Vi Simpson requested that the Daniels administration make public what state programs were being cut to make ends meet. She said Senate Democrats would seek legislation in the session that begins in January to force more transparency in state government. For one thing, she wants Indiana to follow the lead of 32 other states that post information online about state budgets and expenditures.[46]

Public employee salary information

Citizens had a public employee salary database available to them.[47]

Salaries of Purdue University employees were updated annually.[48]

The Better Government Association offers a database of selected public payrolls.[49] The BGA database includes employee salaries for the Indiana Inspector General, the Indiana State Police, and the states of Indiana, Illinois, and Missouri.


See also

External links

Additional reading

References

  1. 1.0 1.1 The Journal and Courier "Where would Statehouse candidates cut state budget?" Oct. 3, 2010
  2. 2.0 2.1 Businessweek "Ind. schools won't get any extra tax revenue cash" July 15, 2010
  3. "State auditor reviews fiscal year-end" July 16, 2010
  4. State Budget Solutions “States Hide Trillions in Debt” July 22, 2010
  5. Indiana State Budget Agency, Expenditure Summary
  6. USA Spending, State Guesstimated* Government Spending
  7. FY 2011 CAFR
  8. 8.0 8.1 Businessweek "Indiana ends budget year with $1.2B surplus" July 14, 2011
  9. 9.0 9.1 "Indiana revenue up 8.4 pct in August from year ago" Oct. 5, 2010
  10. 10.0 10.1 10.2 10.3 Indianapolis Business Journal "Big budget cuts would make for bitter state politics" July 24, 2010
  11. IN.gov Budget Information visited Sept. 2, 2010
  12. Kitchell Memo to State Budget Committee Members March 26, 2010
  13. Cite error: Invalid <ref> tag; no text was provided for refs named IndianaStateofState
  14. Chicago Tribune, INDIANA: State shutdown averted, July 1, 2009
  15. Cite error: Invalid <ref> tag; no text was provided for refs named trouble
  16. Indianapolis Business Journal "Indiana budget chief orders another 5 percent in cuts" April 22, 2010
  17. 17.0 17.1 17.2 17.3 ABCNews.com "New Document Outlines Some Ind. Budget Cuts" June 25, 2010
  18. "State Budget Committee meets on health insurance" July 5, 2010
  19. "Indiana schools would likely avoid more budget cuts" August 12, 2010
  20. The Evansville Courier Press "State legislators would try to slice educational pie" Dec. 8, 2010
  21. National Association of Budget Officers, "Budget Processes in the States," 2008
  22. 22.0 22.1 Indiana Budget Analysis
  23. Indiana State Budget Agency, “2009 - 2011 As-Passed Budget,” August 31, 2009
  24. 2009-2011 state budget
  25. 25.0 25.1 National Governors Association and National Association of State Budget Officers Fiscal Survey of States June 2010
  26. 26.00 26.01 26.02 26.03 26.04 26.05 26.06 26.07 26.08 26.09 26.10 26.11 26.12 26.13 26.14 26.15 26.16 26.17 26.18 26.19 US Government Spending,"Indiana State and Local spending," accessed March 10,2009
  27. Huffington Post, "Gov. Daniels Criticizes State Aid Package He Pushed Back in February," August 9, 2010
  28. MyWabashValley.com,"Governor Optimistic Despite Budget Cuts," January 19, 2010
  29. Associated Press,"APNewsBreak: Daniels Backs Away From Planned Cuts," February 1, 2010
  30. Indiana's NewsCenter,"Governor Rethinking Some Budget Cuts," February 2, 2010
  31. Indiana Finance Authority, “Indiana Finance Authority Members,” accessed October 21, 2009
  32. Indiana OMB Web site, accessed October 21, 2009
  33. Indiana State Auditor Web site, accessed October 21, 2009
  34. Business Week, New Ind. website pulls together state budget data, Sept. 1, 2010
  35. 35.0 35.1 "New Ind. website pulls together state budget data" Aug. 31, 2010
  36. Indiana Transparency Portal (ITP)
  37. Indianapolis Business Journal "Indiana state budget website gets new features" March 14, 2011
  38. performance reviews
  39. Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  40. "House OKs bill to help states keep teachers" Aug. 10, 2010
  41. Wall Street Journal, "Stimulus Spending by State"
  42. Indiana recovery website
  43. "Summertime Blues, 100 stimulus projects that give taxpayers the blues" August 2010
  44. Indiana Department of Administration Contract Database
  45. Executive Order
  46. Lawmaker wants budget cuts made public June 2, 2010
  47. IndyStar Public Employee Salary Database
  48. High Ed Salaries
  49. Better Government searchable database of selected public payrolls