Sen. Travis Holdman, R-Markle, talks to reporters after a tax task force meeting on Wednesday, Aug. 23, 2023. Courtesy - Indiana Capital Chronicle.
INDIANAPOLIS — Indiana’s budget chiefs offered a measured sense of optimism on the state’s finances at a potentially transformational task force’s first meeting — as Republican-aligned speakers pushed for big moves on taxes and Democrat lawmakers expressed frustration with the group’s structure.
The Interim State and Local Tax Review Task Force will examine Indiana’s corporate tax, individual income tax, property tax, sales tax, and others. Policy recommendations are due to the General Assembly ahead of the 2025 budget-writing session.
“Perhaps this will be the beginning of the discussion to overhaul, in a major way, the tax structure of the Hoosier State,” Chair Travis Holdman, R-Markle, said Wednesday. “Nothing is off the table,” he added — although, he was firm that the task force wouldn’t touch education funding.
Indiana has consistently stuck to balanced budgets, in which the state spends less than it collects in taxes, something the Office of Management and Budget Director Cris Johnston said was a priority.
Tax collections have outperformed state estimates in recent years, State Budget Director Zac Jackson said. Indeed, the state’s surpluses triggered automatic taxpayer refunds in 2021 and 2022 and prompted lawmakers to make large one-time payments toward pension liabilities and other causes.
The mismatch is expected to stabilize over the biennium, according to Jackson’s slides. But some developments may endure.
While the state typically has had between $1.8 billion and $2 billion in reserves on hand, Jackson said the “new normal” may be in the $2.7 billion to $2.9 billion range.
But Jackson also noted large increases in funding for K-12 tuition, higher education, Medicaid, the Department of Child Services, and the Department of Corrections over the last decade. Payments to a pre-1996 teacher’s pension fund have also swelled, but only through one-off supplemental checks.
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