The State Budget Committee convened Wednesday to listen to presentations regarding Indiana’s economy and tax revenues for the next two years. First, was an overview of our economic picture, presented by an economist retained to focus on Indiana’s economic particulars.
That was followed by a presentation of the conclusions of a very respected group of fiscal analysts whose task is to gather and analyze volumes of data, including the economic forecast, and make projections on how much revenue the state will take in in taxes to support the next biennium budget.
The economic report showed the immediate impact of COVID nationwide to be more drastic than the Great Recession of 2008, but suggested recovery will likely be much quicker due to the vaccine. Indiana began recovering from the impacts a little faster than the country as a whole, and our more industry-based, less service-based economy helped. A rebound in the hospitality industry will lag and much remains uncertain in the larger economy, but gross domestic product is expected to grow in the second half of 2021.
As the revenue estimators digested this and crunched their numbers, they came up with projections that I’d say in simple terms, “could be a lot worse”. Tax collections are pretty good right now and are helping us out of the hole we fell in during March, April and May. Moreover, revenues are expected to grow slightly next fiscal year (2.2%), then again modestly (3%) in the second fiscal year of the budget.
The numbers, of course, are not what we would have expected pre-pandemic, but any growth is a good thing under these circumstances. At least the budgetmakers will have more money than they had for the last budget. That means if these projections hold and uncontrollable expenses (like Medicaid) don’t skyrocket, they should be able to manage a budget this session without too much pain.
Resource: Bill Waltz at (317) 264-6887 or email: bwaltz@indianachamber.com
