Indiana governor redirects budget surplus amid COVID-19 economic fallout
Indiana Gov. Eric Holcomb is redirecting $300 million in state reserves previously earmarked for capital projects.
Holcomb said the plan is to utilize the funds as needed for relief efforts related to the COVID-19 pandemic and to maintain current services. He said the state will consider using bonding authority to move forward with the just-approved capital projects.
Six colleges and universities were in line to get money for building projects.
The decision to redirect the funds is among measures Holcomb announced late last week as new cases of COVID-19 were reported across the state.
As of Sunday, Indiana had recorded 259 cases of COVID-19, killing seven people, according to the State Department of Health.
Holcomb on Monday issued a “stay at home” order for the state. The order will be effective from Wednesdaythrough April 7.
Holcomb asked lawmakers for the money to pay cash up front after the state closed the last fiscal year in June with $300 million more than expected. Paying cash would have saved the state $5 million a year in interest for 20 years. The cash would have funded buildings at Indiana University, Purdue, Ball State, the University of Southern Indiana, Indiana State, and the Columbus campus of Ivy Tech.
The latest revenue forecast forecasted the state will collect $250 million more over the next two years than was anticipated in April when lawmakers adopted the latest two-year state budget.
The forecast projected Indiana would end its current budget year on June 30, 2020, with $2.37 billion in reserves and $2.55 billion in the savings account by the end of the 2021 budget year.
Holcomb’s plan also includes prohibiting evictions or foreclosures during the public health emergency; extending deadlines to file and pay state income taxes; and interpreting unemployment law broadly to cover those out of work because of the pandemic.
The governor said that at this point he did not think it necessary to call legislators back for a special session to deal with the issues brought on by the outbreak.
“It will have a strain on the budget, but we are living in a state that’s on sound fiscal footing,” Holcomb said at a press conference late last week.
Rep. Tim Brown, the Republican chairman of the budget-writing House Ways and Means Committee, acknowledged the pandemic will have “a very dramatic impact” on revenue in the state's $34 billion, two-year budget.
“Wise budgeting gives the state flexibility to deal with the fiscal tolls, and we will continue taking this step by step, and making adjustments to combat this emergency," he said.
Indiana House Democrats had asked that Holcomb consider redirecting the rainy day funds to provide economic relief for Hoosiers. Rep. Gregory Porter, D-Indianapolis was among those to request that the governor free up the dollars.
“I think it would be cruel to spend the state budget surplus on school buildings rather than our people, especially during this time,” Porter said in a statement. “That’s why I’m urging the Governor to use available state funding to support the economic, food and health security of people across Indiana during a time of great need.”
State regulators have closed Indiana’s casinos and horse tracks for two weeks, with an extension likely. In February, the last month for which data is available, those gambling operations generated $60 million in revenue for the state and local governments.