CHICAGO - Indiana Gov. Mitch Daniels yesterday announced a proposal for taxpayers to receive an automatic tax refund if the state's reserve funds hit a certain level.
The Republican governor, who is up for re-election this year, said the state's fiscal position has steadily improved over the years and that providing a refund - even if it's not that much money - is a "matter of principle."
"The point is that the state would collect only what it needs to provide essential services and protect itself against a downturn and keep an adequate reserve," Daniels said in a speech yesterday to the Rotary Club of Indianapolis.
Under Daniels' proposal, taxpayers would get an automatic tax refund if the state's reserves hit a predetermined limit - for example, 10% of the annual budget.
"We can debate what the point of fiscal sufficiency is, maybe it's 10%, maybe it's more," he said. "But anything above that ought to be refunded automatically to taxpayers on their next tax return."
The state currently has about $1.3 billion in reserves and a $13 billion 2009 budget.
"It would not tie the hands of future state governments in any year in which reserves dip below certain levels, and my guess is we'd have a new set of incentives for legislators that lead them in the direction of caution," the governor said.
Daniels is seeking his second term as governor. He faces a challenge from Democratic candidate and former U.S. Rep. Jill Long Thompson in November.
