Lawmakers Face $100 Million Shortfall in Two-Year Budget

first_imgLawmakers Face $100 Million Shortfall in Two-Year BudgetApril 19, 2019By Emily KettererTheStatehouseFile.comINDIANAPOLIS—Indiana lawmakers have about one week to cut nearly $100 million from the proposed state budget.The general revenue forecast revealed Wednesday predicted the state will collect $34 million less over the next two fiscal years, and Medicaid is expected to need more than $60 million in additional funding than originally expected.  in the state budget.But lead budget writers in the House and Senate said they were confident that the cuts they will need to make to the two-year $34.6 billion spending plan won’t hurt Hoosiers.“There was nothing in the reports that gave me tremendous pause,” said Rep. Todd Huston, R-Fishers, co-chair of the House Ways and Means Committee.Huston and Sen. Ryan Mishler, R-Bremen, chair of the Senate Appropriations Committee, said even with $100 million less, their top priorities remain K-12 education, the Department of Child Services and Medicaid as they revise the budget over the next few days.“We can work it out,” Huston said.The Senate’s version of the budget left $2.2 billion in reserves, nearly a $300 million increase from the House’s $1.9 million. Mishler said he was cautious when drafting the Senate’s budget in preparation for the upcoming forecast.“When we did our budget, I padded it pretty heavy in case this happened,” Mishler said. “I don’t want to go back and say, ‘Hey, we’re going to start taking away, but say, we have extra, let’s use it.’”But the leaders said there are so many pieces within a budget, they can’t just make the single decision to cut from the reserves.“This does change things,” Mishler said. “We have to sit down and see the priorities of the caucuses and administration and see what we’re willing to cut out.”The state is expected to collect roughly $240 million less in individual state income taxes, partially due to the 34-day federal government shut down where government employees did not get paid, David Reynolds, state fiscal analyst, said. However, Hoosier wages still continue to grow every year, said Jason Dudich, state budget director.On the other side, the state is projected to take in more revenue from corporate taxes even though the tax rate continues to decline. That is because manufacturing companies and other industries continue to do well.One big change that affected revenue projections came in the forecast for Medicaid, the state-funded health care program for low-income Hoosiers. The budget was up by about $60 million because of new projects to treat 9,000 people for Hepatitis C in each of the next two years.“We’re starting to understand more about where Hepatitis C stands across the state,” said Dr. Jennifer Walthall, secretary of the Indiana Family and Social Services Administration. “And we used that information to project our treatment needs.”Mishler said he believes Indiana is “one budget away from recession.” But the economic experts expressed little concern for a recession in the near future.“We don’t forecast a recession. There’s probably more bridge in the forecast to the downside more than the upside, but that’s pretty normal in this stage of the economic cycle,” said economist Tom Jackson of IHS Markit. He presented an overview of Indiana’s economic trends through the two-year budget cycle.Jackson said a red flag sign for a recession is a drop in the manufacturing sector, which he said could have the most financial impact on Indiana because those are higher-paying job.  However, that sector continues to grow right now.The House and Senate will review and make changes to create a final budget within the next week. Leaders in both chambers hope to be finished by April 24.Emily Ketterer is a reporter for, a news website powered by Franklin College journalism students.Print Friendly, PDF & EmailFacebookTwitterCopy LinkEmailSharelast_img read more