CHICAGO -- Indiana is on track to enjoy a “stable but slow” recovery, with revenues seeing a steady uptick through 2015, state fiscal officials said in a revenue forecast report released Tuesday.
The revenue forecast marks the final round of budget negotiations among legislators, who hope to craft a final 2014-2015, $30 billion spending plan by the end of April.
The new revenue figures are important this year as legislative leaders and Gov. Mike Pence debate whether to incorporate Pence’s proposed 10% income tax cut into the final budget. House and Senate GOP leaders are pushing for a more modest tax cut.
The latest forecast predicts lawmakers will have $290 million more through 2015 than originally projected in December 2012. That includes a $33.2 million increase this year, $73 million in 2014, and $184.3 million in 2015.
Income taxes are driving the increase, while sales and gambling tax revenues are projected to fall.
The governor’s office said the additional money strengthens his case for a large tax cut.
“The April revenue forecast is great news for Hoosiers and good news for the budget process,” Pence said in a statement. “With greater economic growth and resources for our state, I am more confident than ever that we can craft a balanced budget that funds our priorities like roads and schools and provides Hoosiers with the kind of tax relief they need and deserve.”
The House left Pence’s income tax cut out of its final budget. The Senate budget included a 3% income tax cut as well as other cuts, for a total of about $500 million in tax cuts.
“There’s going to be tax cuts in any budget that comes out of the General Assembly this year,” Ways and Means Chairman Rep. Tim Brown, R-Crawfordsville, was quoted as saying in local media reports. “Everybody’s still crawling out of the recession, so we want to give money back to Hoosiers.”
Total general fund revenues are projected expected to rise $33.2 million above the most recent December forecast to $14.37 billion in fiscal 2013. Actual general fund revenues in 2012 totaled $14.12 billion.
Revenues are expected to rise nearly $73 million in 2014 to $14.72 billion, and another $184.3 million in 2015, to $15.27 billion.
Forecasters trimmed expectations for sales tax revenue in 2013 and 2014, and adjusted upward their expectations on income-tax revenue, which they said would rise by 1.4% in 2013, and 3%, or $151 million in 2014 and 4%, or $2016 million in 2015 over original December projections. Corporate taxes are expected to remain relatively flat.
Gambling tax revenue was adjusted sharply downward from December, down 4.4% in 2014 and 5.4% in 2015. That’s due to what forecasters called “Ohio competition adjustments” from four new casinos that opened last year in the Buckeye State.
The state’s unemployment rate, which was at 9% in 2011, is expected to fall to 8.3% in 2013 and 7.7% in 2014, officials said.
The revenue projections are crafted by the Revenue Forecast Technical Committee, which includes members of IHS Global Insight and members of the Legislative Services Agency and the Budget Agency.