Economics is called the dismal science. I risk my reputation for dismal analysis by writing this, but Indiana’s state budget is in pretty good shape. For the first time in years, the General Assembly will have money to work with in next year’s budget session.
Here’s why. We’ve filled in the budget hole created by the recession. Revenue fell short of planned spending by $4.6 billion from 2009 to 2011. We covered that with about $2.2 billion in federal stimulus aid, $2 billion in budget cuts, $200 million in fund transfers and $200 million in reduced balances.
We froze appropriations at 2009 levels through 2013. That’s five years with no increase in planned spending, not even to cover inflation or population growth. Revenues started growing in fiscal year 2011 as the economy began its tentative recovery. We ran a budget surplus in fiscal year 2012 (which ended in June), and we’re expecting to run another surplus in fiscal 2013. The surpluses restored state balances, with enough left over to offer taxpayers a rebate in 2013 and add some to our underfunded pensions.
Revenues continue to grow. In 2012 they grew by 6.4 percent over 2011. Revenues are up 4.1 percent so far in fiscal 2013.
We back-filled the budget hole, balanced the current budget and expect revenues to keep growing. A budget in pretty good shape means that the General Assembly will have some choices to make for the next biennium. Let’s do some calculations to put some numbers on these choices.
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