Indiana's state budget reserve jumps to $2.3 billion
INDIANAPOLIS -- Indiana's state cash reserves grew faster than expected over the past year, to nearly $2.3 billion, and the governor is proposing to spend some of that money on several planned construction projects.
State budget officials announced Thursday that Indiana closed the 2019 fiscal year ending June 30 with $485 million more in reserves than a year ago - and about $200 million more than officials anticipated in April. Much of that is attributed to a jump of $835 million, or 5.4%, in state tax revenue from last year.
Republican Gov. Eric Holcomb is recommending that $300 million go toward projects, including $78 million of upgrades eliminating traffic signals and railroad crossings on U.S. 31 in northern Indiana. Others involve construction of a new veterinary hospital at Purdue University and building projects at the Indiana State Fairgrounds, Ball State University and Ivy Tech State College in Columbus.
Office of Management and Budget Director Cristopher Johnston, Holcomb's top fiscal adviser, said that would avoid possibly $100 million in interest costs from borrowing money for the projects, which legislators approved earlier this year.
Republican House and Senate leaders issued statements supporting the plan, which would need legislative approval during next year's session.
Holcomb and Republican legislators made preserving a sizable cash reserve a priority in developing the new two-year state budget adopted in April. They aimed to keep a $2 billion reserve, or about 11.5% of expected state spending. They argue that would protect the state in case of an economic recession and maintain its top-level AAA credit rating.
The 2019 budget year ended with a 13.9% reserve, which would drop to about 12.1% with Holcomb's spending proposal.
Democrats faulted Holcomb and the GOP-dominated Legislature for earlier projecting revenue drops and not directing more money toward needs such as increasing teacher pay, expanding the state-funded preschool program and making sure the troubled Department of Child Services can keep hundreds of new caseworkers.
"I think that they should be ashamed and embarrassed that they prize hoarding money over improving human infrastructure," said Rep. Greg Porter of Indianapolis, the top Democrat on the budget-writing House Ways and Means Committee.
Johnston said such spending plans would represent ongoing expenses rather than the one-time outlays in Holcomb's construction project proposal. Johnston argued it would save up millions in annual interest costs over at least the next 20 years.
"We're still spending the money, but for future years it is freeing up capacity for those other needs," Johnston said.