Indiana has taken in too much in taxes, requiring the state to return money to Indiana income taxpayers. Under a law passed in 2011, if the revenue surplus at the end of the fiscal year (June 30) exceeds 12.5% of annual expenditures, half the overage is diverted to pension stabilization and the other half returned. The combined balances are over the allowed surplus by more than $1 billion dollars, so $545 million will go to the pension fund and the other $545 million will be returned.
It won’t be distributed immediately, however. Instead, it will be provided as a credit to taxpayers when they file next year’s return. The only other time the law has been triggered was in 2012 when the returns were $111 per taxpayer. Because the surplus is greater this time, the credits will probably be closer to $150.
The General Assembly did its best to avoid this happening by appropriating surpluses in the budget they passed in April. They put $549 million in the tuition reserve (a fund not included in the surplus calculation), devoted $600 million to pensions (before this additional $545 million that will now also go to pensions) and made several other substantial investments.
But the allocations were not enough. The last three months since the budget was passed have seen unexpectedly high collections, kicking in the refund provisions. None of this is directly affected by the boatloads of federal money the state is receiving, but those funds certainly add heavily to the overall picture. And as these circumstances evidence, that picture is a good one: At this point in time, Indiana is in very strong fiscal condition.
Resource: Bill Waltz at (317) 264-6887 or email: bwaltz@indianachamber.com
