CHICAGO — Indiana got an unexpected $288 million budget boost after detecting a computer programming error that failed to transfer revenue to the state’s general fund, Gov. Mitch Daniels announced Tuesday.
The state’s overall revenues, meanwhile, came in higher than expected last month for the fifth month in a row, putting collections $117 million over projections so far for the fiscal year, budget officials said.
The state will hold its official twice-annual revenue forecasting conference next week.
“Christmas came early,” Daniels said at a press conference announcing the unexpected revenue boost. “For both of these reasons — stronger-than-anticipated revenues apparently reflecting greater strength in the Indiana economy and the appropriate accounting of $288 million — Indiana’s strong fiscal position looks even stronger.”
The money could push the state’s surplus past 10% of revenues, which would mean an automatic taxpayer refund.
“There’s a very good possibility that we’d be in the zone triggering an automatic refund to taxpayers next year,” Daniels said.
The $288 million came from corporate income taxes that had gone unnoticed since 2007. A Department of Revenue employee found the computer software error involving corporations that paid income taxes with an electronic check. The money has earned interest in the holding account, but was never transferred to the general fund.
It is the second time this year that Indiana has enjoyed a positive revenue surprise.
At the end of June, officials said the state ended fiscal 2011 with $1.18 billion in its reserves — $1 billion more than expected. The money did not come from rising revenues but from unspent dollars returned from state agencies.
If the surplus rises to around $1.7 billion, the governor said he would propose setting aside $150 million of it for the teachers’ pension fund and returning $150 million to the taxpayers in the form of a reduction in their state income tax of roughly $50.
The triple-A rated state’s strong surplus fund is one of its crown jewels. It drained nearly half the fund in 2009 to offset falling revenues at the height of the recession.
“Given how incredibly fragile the world economy is, and the repercussions of what is coming in Europe, I am very, very comforted to know that Indiana is even better protected against possible downturns than what we thought yesterday morning,” Daniels said Tuesday.
Despite the overall revenue uptick for the year, gaming revenues continue to lag April’s forecast, budget officials said.