State expecting to bring in more revenue than previously estimated

The state is expecting an additional $531 million in revenue over the next biennium, according to a forecast released Friday.

The revenue forecast shared with the State Budget Committee predicted an increase of $239 million and $292 million in 2020 and 2021, respectively, from the previous forecast released in April.

That represents year-over-year growth of 2.3% and 2.8% in 2020 and 2021, respectively.

The additional dollars would bring the state’s reserves up to $2.4 billion in 2020 and $2.6 billion in 2021.

But state fiscal leaders cautioned that the actual amount of new dollars is lower than $531 million, because while the April forecast did not factor in legislative changes that impacted tax revenue, the $34.6 billion budget that lawmakers passed in April  did account for those changes.

When compared to the budget plan, the state is expecting an extra $260 million over the biennium.

And the surplus figures do not account for the $300 million that Gov. Eric Holcomb has already proposed pulling out of savings to pay for one-time capital projects. 

Indiana House Ways and Means Chairman Tim Brown, R-Crawfordsville, said the forecast “shows Indiana is healthy.”

Ben Tooley, director of fiscal policy for Indiana House Republicans, said the additional revenue can largely be attributed to what’s known as the marketplace facilitator tax. 

During the 2019 session, lawmakers closed a loophole in online sales and hotel tax collection and now require these marketplace facilitators, like Expedia or Amazon, that sell goods and services online on behalf of other entities to collect and remit sales tax to the state.

“I think the economy’s changing,” Brown said. “We have more people doing online buying, purchasing and not going to the store as much, so it’s very important to keep up with the consumer as they change their tactics.”

Brown said the additional dollars don’t change anything for the upcoming 2020 legislative session, which is not a budget-writing year.

Despite calls from educators to address teacher pay this session, leaders in the Republican-controlled Indiana General Assembly have argued that the issue will have to wait until 2021 when the next two-year budget is crafted.

“I don’t think it causes us to look at that differently,” Brown said.

Democrats say this should change things though.

Sen. Karen Tallian, D-Ogden Dunes, said if Republicans choose to use $300 million in surplus dollars next year for one-time expenses, as Holcomb wants, then it already reopens the budget.

“This non-budget session thing is not a rule; it’s just a threat,” Tallian said. “It’s always been if and when we need to adjust things in the non-budget year, we’ve done it.”

But Tallian’s not necessarily saying the extra money needs to go to teacher pay, because Senate Democrats plan to announce a proposal at the start of the 2020 session that would put $100 million annually toward teacher salaries by reallocating other dollars.

“It’s not an extra hit to the budget,” she said. “It’s going to cost us very little, almost nothing.”

Tallian said the Senate version of the budget had plenty of other priorities that were cut, including in the areas of health care and public safety, that could be funded now.

State Rep. Greg Porter, D-Indianapolis, also advocated for spending some of the extra money and would make teacher pay a priority.

“These discussions will happen in 2020,” Porter said in a statement. “The Republicans may prefer spending on physical infrastructure. I believe it’s time to pay greater attention to human infrastructure.”

The 2020 session starts Jan. 6.