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The historical Indiana budget and finance information below applies to years prior to the most current fiscal year. With the exception of the tab labeled "Prior fiscal year budgets," the tabs below display information, from several different fiscal years, as it was presented on Ballotpedia in prior calendar years. For more current information regarding Indiana's budget and finances, click here.

As published 2016

	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

Indiana budget and finances

General information
Budget calendar: Biennial
Fiscal year: 2017
State credit rating: AAA (as of 2014)
Current governor: Mike Pence
Financial figures
Total spending (state and federal funds): $29.3 billion (estimated for 2015)
Per capita spending: $4,432.54 (estimated for 2015)
Total state tax collections: $16.8 billion (2014)
Per capita tax collections: $2,553.39 (2014)
State debt: $46.4 billion
Per capita state debt: $7,094

State budget and finance pages • Total state expenditures • State debt • Tax policy in Indiana

In Indiana, as in other states, lawmakers and public officials are elected in part to manage the state's finances. This includes generating revenues (money coming into the state from various sources) and approving expenditures (the money spent on governmental functions and servicing state debt). State budgets are complex and fluid, as they depend on anticipated revenues and planned expenditures, which may alter over the course of a fiscal year. If revenues do not keep pace with expenditures, states generally have to raise taxes, cut services, borrow money, or a combination of the three. State budget decisions are also influenced by policy decisions at the national level, such as the Affordable Care Act or energy and environmental regulations, and issues at the local level, such as crime and the quality of education.

HIGHLIGHTS

Between fiscal years 2014 and 2015, total government spending in Indiana increased by approximately $2.1 billion—from $27.3 billion in fiscal year 2014 to an estimated $29.3 billion in 2015. This represents a 7.10-percent increase.^[1]^[2]^[3]

In Indiana in fiscal year 2014, 61.7 percent of total tax revenues came from sales taxes and gross receipts. Income taxes accounted for 34.2 percent of total state tax collections.

Education accounted for 38.6 percent of state expenditures in fiscal year 2015, while 32.0 percent went to Medicaid.

The Indiana state budget and financial data presented here come from different years because the states and the federal government report and publish the information at different times.

Definitions

The following terms are used to describe a state's finances:

Revenues come mainly from tax collections, licensing fees, federal aid, and returns on investments.
Expenditures generally include spending on government salaries, infrastructure, education, public pensions, public assistance, corrections, Medicaid, and transportation.
State debt refers to the money borrowed to make up for a deficit when revenues do not cover spending.
The state credit rating is the grade given by a credit rating agency based on the general financial health of the state's government and economy.
State funds include general and other state-based funds. A general fund is "the predominant fund for financing a state's operations." Other state funds are "restricted by law for particular governmental functions or activities."^[4]
Federal funds are "funds received directly from the federal government."^[4]
Total spending is calculated by adding together the totals for state and federal funds used for expenditures.

Note: In comparing dollar amounts across the states, it is important to note that the cost of living can from state to state and within a state. The amounts given on this page have not been adjusted to reflect these differences. For more information on "regional price disparities" and the Consumer Price Index, see the U.S. Department of Commerce, Bureau of Economic Analysis.

Revenues

2014 revenues

See also: State government tax collections by source

The table below breaks down state government tax collections by source in 2014 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "2013 population" and "Per capita collections" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "2013 population" and "Per capita collections" have not been abbreviated.^[5]

Compared to neighboring states, Indiana had the third highest state tax collections per capita, at $2,553.

State tax collections by source ($ in thousands), 2014
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes	Total	2013 population	Per capita collections
Indiana	$8,052	$10,395,150	$590,483	$5,763,064	$90,212	$16,846,961	6,597,880	$2,553
Illinois	$54,710	$15,758,509	$2,675,943	$20,343,042	$350,690	$39,182,894	12,882,189	$3,042
Michigan	$1,919,910	$12,309,564	$1,511,695	$8,755,723	$307,081	$24,803,973	9,916,306	$2,501
Ohio	N/A	$15,617,920	$2,928,276	$8,424,843	$49,586	$27,020,625	11,596,998	$2,330
Wisconsin	$159,069	$7,359,539	$1,040,619	$7,779,733	$71,965	$16,410,925	5,759,432	$2,849
United States	$14,232,835	$411,414,175	$51,120,024	$357,104,785	$31,880,270	$865,752,089	318,907,401	$2,715
Source: U.S. Census Bureau, "2014 annual survey of state government tax collections by category," accessed April 4, 2016

Indiana tax collections by source in 2014.
Source: U.S. Census Bureau

The table below lists 2014 tax collections by source as percentages of total collections. About 61.7 percent of Indiana's total state tax collections came from sales taxes and gross receipts.^[5]

State tax collections by source (as percentages), 2014
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes
Indiana	0.0%	61.7%	3.5%	34.2%	0.5%
Illinois	0.1%	40.2%	6.8%	51.9%	0.9%
Michigan	7.7%	49.6%	6.1%	35.3%	1.2%
Ohio	N/A	57.8%	10.8%	31.2%	0.2%
Wisconsin	1.0%	44.8%	6.3%	47.4%	0.4%
Source: U.S. Census Bureau, "2014 annual survey of state government tax collections by category," accessed April 4, 2016

Federal aid to the state budget

See also: Federal aid to state budgets

State governments receive aid from the federal government to fund a variety of joint programs, mainly in the form of grants for such things as Medicaid, education, and transportation. In 2013 federal aid to the states accounted for roughly 30 percent of all state general revenues. Federal aid varies from state to state. For example, Mississippi received approximately $7.5 billion in federal aid in 2013, accounting for about 43 percent of the state's general revenues, the highest percentage of all of the states. By contrast, North Dakota received about $1.5 billion in federal aid in 2013, or just 19 percent of the state's general revenues, the lowest percentage in the nation.^[6]

The table below notes what share of Indiana’s general revenues came from the federal government in 2013. That year, Indiana received approximately $11.2 billion in federal aid, 33.4 percent of the state's general revenues. Taking into consideration the state's 2013 population, this came out to about $1,703 in federal aid per capita. Figures from surrounding states are provided for additional context.^[6]

Federal aid to state budgets, 2013
State	Total federal aid ($ in thousands)	Federal aid as a % of general revenues	Ranking (by % of general revenues)	Est. 2013 population	Aid per capita
Indiana	$11,192,452	33.4%	20	6,570,902	$1,703
Illinois	$16,973,577	25.9%	40	12,882,135	$1,318
Michigan	$17,829,882	32.8%	23	9,895,622	$1,802
Ohio	$20,482,575	33.6%	19	11,570,808	$1,770
Wisconsin	$8,952,020	27.7%	36	5,742,713	$1,559
Sources: United States Census Bureau, "State Government Finances: 2013," accessed April 4, 2016 United States Census Bureau, "State totals: Vintage 2013," accessed April 8, 2016 Note: Per-capita figures were generated by Ballotpedia by dividing total federal aid for the state by the estimated population of that state in 2013.

Spending

Estimated 2015 expenditures

See also: Total state expenditures

The table below breaks down estimated spending totals for fiscal year 2015 (comparable figures from surrounding states are included to provide additional context). Figures for all columns except "Population” and “Per capita spending" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the columns labeled "Population” and “Per capita spending" have not been abbreviated.^[2]

Indiana's total estimated government spending in fiscal year 2015 was $29.3 billion, which was the second lowest amount when compared to surrounding states.

Total estimated state spending, FY 2015 ($ in millions)
State	State funds	Federal funds	Total spending	Population	Per capita spending
Indiana	$19,037	$10,305	$29,342	6,619,680	$4,432.54
Illinois	$51,506	$17,904	$69,410	12,859,995	$5,397.36
Michigan	$31,232	$22,633	$53,865	9,922,576	$5,428.53
Ohio	$48,593	$13,994	$62,587	11,613,423	$5,389.19
Wisconsin	$34,275	$11,122	$45,397	5,771,337	$7,865.94
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 Bureau estimates.^[7] Source: National Association of State Budget Officers, "Examining fiscal 2013-2015 state spending," accessed April 4, 2016

Spending by function

Breakdown of spending by function in FY 2014.
Source: National Association of State Budget Officers

See also: State spending by function as a percent of total expenditures

State spending in Indiana can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2014 information is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percentages, indicating the share of the total budget spent per category.^[2]

In fiscal year 2014, K-12 education accounted for 32 percent of Indiana's total expenditures.

State spending by function as a percent of total expenditures, FY 2014
State	K-12 education	Higher education	Public assistance	Medicaid	Corrections	Trans- portation	Other
Indiana	32.0%	6.6%	1.5%	32.0%	2.8%	5.9%	19.2%
Illinois	14.6%	4.1%	0.3%	26.1%	2.4%	9.3%	43.1%
Michigan	26.9%	4.3%	0.5%	27.6%	4.4%	7.5%	28.7%
Ohio	16.8%	4.2%	1.3%	35.8%	3.0%	6.3%	32.5%
Wisconsin	16.1%	14.2%	0.4%	18.4%	2.8%	6.6%	41.5%
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."^[2]

Spending trends

Between 2010 and 2014, the share of the Indiana state budget spent on Medicaid increased from 23.1 percent in 2010 to 32.0 percent in 2014. See the table below for further details (figures are rendered as percentages, indicating the share of the total budget spent per category).^[2]^[8]^[9]

Spending by function from 2010 to 2014 (as percentages)
Year	K-12 education	Higher education	Public assistance	Medicaid	Corrections	Transportation	Other
2014	32.0%	6.6%	1.5%	32.0%	2.8%	5.9%	19.2%
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%
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."^[2]

Fiscal year budgets

Fiscal years 2016 and 2017

See budget bill: HEA 1001

On January 8, 2015, Governor Mike Pence proposed his biennial budget for fiscal years 2016 and 2017. This budget called for general fund spending to equal about $15.14 billion in 2016 and $15.31 billion in 2017, which is a two-year average increase of 1.34 percent. The governor insisted that some of the state's funding priorities should include education, citizens in need, economic development and job creation and preparations to commemorate the state's bicentennial anniversary.^[10]

Governor Pence signed the state's official budget on May 7, 2015. General fund appropriations totaled about $15.4 billion in fiscal year 2016 and $15.8 billion in fiscal year 2017, which was higher than the governor's proposed budget. The budget appropriated spending increases in education and pensions, but most other executive branch agencies received spending reductions of about 3 percent.^[10]

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.^[11]

Total 2012 state debt
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

Taxpayer burden

TIA Methodology: To figure a state’s taxpayer burden or surplus, TIA looked at a state’s total reported assets minus capital assets and assets restricted by law (buildings, roads, land, etc.) to calculate “available assets,” which were then compared to the amount of money the state owes in bills, including retirement obligations such as pension plans and healthcare benefits for retirees.

If the difference between available assets and total bills was positive, TIA called this a surplus; if it was negative, this was a burden. This amount was then divided by the number of individual tax returns with a positive tax liability, thus expressing the total state surplus or burden on a per-taxpayer basis.

According to a report released in September 2015 by the nonprofit Truth in Accounting (TIA), Indiana ranked 17th best in the country in “taxpayer burden.” Rather than using per capita state debt, TIA ranked states based on what it called a “taxpayer burden,” a term that reflects “the amount each taxpayer would have to send to their state’s treasury in order for the state to be debt-free.” On the other hand, states that had sufficient resources to pay their bills were said to have a “taxpayer surplus,” which represents the amount that each taxpayer would receive if the state were to disburse its excess funds.

Based on analysis of Indiana’s Comprehensive Annual Financial Report from June 30, 2014 and actuarial reports for the state’s retirement plans, TIA concluded that $12.9 billion in promised retirement benefits were unfunded, but only $1.2 billion of these liabilities were reported on Indiana’s balance sheet. With all of the unfunded retirement benefits included in the total debt, the state had a shortfall of $5 billion, or a taxpayer burden of $2,500. ^[12]

Public pensions

See also: Indiana public pensions and Indiana public employee salaries

Between fiscal years 2008 and 2012, the funded ratio of Indiana's state-administered pension plans decreased from 68.7 percent to 58.4 percent. The state paid 88 percent of its annual required contribution, and for fiscal year 2012 the pension system's unfunded accrued liability totaled $15.4 billion. This amounted to $2,415 in unfunded liabilities per capita.^[13]^[14]

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 in turn results in lower interest costs, thereby lowering the cost to taxpayers.^[15]^[16]

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.^[17]

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

Economic indicators

See also: Economic indicators by state

Indiana's GDP increased by 0.4 percent in 2014. Click the image to view a larger version.

Broadly defined, a healthy economy is typically one that has a "stable and strong rate of economic growth" (gross state product, in this case) and low unemployment, among many other factors. The economic health of a state can significantly affect its healthcare costs, insurance coverage, access to care, and citizens' physical and mental health. For instance, during economic downturns, employers may reduce insurance coverage for employees, while those who are laid off may lose coverage altogether. Individuals also tend to spend less on non-urgent care or postpone visits to the doctor when times are hard. These changes in turn may affect the decisions made by policymakers as they react to shifts in the industry. Additionally, a person's socioeconomic status has profound effects on their access to care and the quality of care received.^[18]^[19]^[20]

In 2013, about 12 percent of Indiana residents earned incomes below the poverty level, the lowest percentage among neighboring states. Between 2011 and 2013, Indiana's median annual household income was $48,178. The state's unemployment rate in September 2014 was just below the national rate.^[21]^[22]^[23]^[24]

Note: Gross state product (GSP) on its own is not necessarily an indicator of economic health; GSP may also be influenced by state population size. Many factors must be looked at together to assess state economic health.

Various economic indicators by state
State	Distribution of population by FPL^* (2013)				Median annual income (2011-2013)	Unemployment rate		Total GSP (2013)^†
State	Under 100%	100-199%	200-399%	400%+	Median annual income (2011-2013)	Sept. 2013	Sept. 2014	Total GSP (2013)^†
Indiana	12%	23%	31%	35%	$48,178	7.3%	5.7%	$317,102
Illinois	13%	17%	31%	39%	$54,083	9.1%	6.6%	$720,692
Michigan	15%	19%	30%	37%	$49,902	8.8%	7.2%	$432,573
Ohio	14%	21%	33%	32%	$46,672	7.4%	5.6%	$565,272
United States	15%	19%	30%	36%	$52,047	7.2%	5.9%	$16,701,415
^* Federal Poverty Level. "The U.S. Census Bureau's poverty threshold for a family with two adults and one child was $18,751 in 2013. This is the official measurement of poverty used by the Federal Government." ^† Median annual household income, 2011-2013. ^‡ In millions of current dollars. "Gross State Product is a measurement of a state's output; it is the sum of value added from all industries in the state." Source: The Henry J. Kaiser Family Foundation, "State Health Facts"

Budget process

State documents and agenciesBelow are links to official Indiana budget and financial documents. The first is the state's Comprehensive Annual Financial Report (CAFR). A CAFR is a detailed presentation of a government entity's financial condition. This includes fiscal activities and balances for a fiscal year. The second link is to the state's relevant budget agency or office.

The state operates on a biennial budget cycle. The sequence of key events in the budget process is as follows:^[25]

In early Summer of the year preceding the beginning of the new biennium, budget instructions are sent to state agencies.
By September 1, agencies submit their budget requests to the governor.
Hearings are held with the public from November to April.
The governor submits his or her budget to the state legislature in January.
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 submit or sign a balanced budget. Budget deficits may be carried over to the next biennium.^[25]

Indiana is one of six states in which the governor cannot exercise line item veto authority.^[25]^[26]

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.^[27]

Fiscal duties in Indiana are split between the Indiana Office of Management and Budget (OMB), the state auditor and the state treasurer.^[28]^[29]

The Indiana State Auditor is the chief financial officer of the state and is responsible for the following:^[30]

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

Transparency

See also: "Following the Money" report, 2015

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 March 2015. The report, entitled "Following the Money," measured how transparent and accountable state websites were with regard to state government spending.^[31] According to the report, Indiana received a grade of A and a numerical score of 97, indicating that Indiana was "Leading" in terms of transparency regarding state spending.^[31]

As published 2015

State finances in the U.S.

State tax policy in the U.S.
Pension Policy

State finances on the ballot Taxes on the ballot Glossary of state budget terms Public pensions

The information on this tab contains:

Spending (fiscal years 2013 and 2014)
Revenues (fiscal year 2013)
State debt (fiscal year 2012)
Federal aid to the state budget (fiscal year 2012)
Budget process

Between fiscal years 2013 and 2014, total government 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 credit rating of AAA, the highest available.^[32]^[33]^[34]

HIGHLIGHTS

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.