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How Gov. Holcomb wants to spend Indiana’s $410M budget surplus

Auditor of State Tera Klutz talks about the budget surplus on July 12, 2019. (WISH Photo/David Williams)

INDIANAPOLIS (WISH) — Indiana has a budget surplus of $410 million, a number the Auditor of State called “a surprise” and “a good thing” on Friday.

Auditor of State Tera Klutz talked Friday about the source of that surplus and what it could be used to fund.

“When we look at some detail, we’re going to see that a majority of it came from individual income tax sales being almost $100 million more than we forecasted,” Klutz explained. “Also, corporate income taxes, also much higher than we thought.”

Gov. Eric Holcomb wants to use nearly $300 million in cash to pay down debts and upgrade U.S. 31 from Indianapolis to South Bend.

Holcomb also proposed spending $50 million to upgrade the swine barn at the Indiana State Fairgrounds.

He’s proposed other portions of the surplus be used on the following planned construction projects:

  • $60 million for Ball State University’s STEM and Health Professions facilities,
  • $30 million to replace the main building at the Ivy Tech Columbus campus and
  • $73 million for Purdue College of Veterinary Medicine’s teaching hospital.

“Our reserve is a little over $2 billion when you add this surplus into it,” Klutz said. “The governor is well within his means to take $300 million and pay for those projects over long-term. That puts our reserve at 12.2%,” Klutz said.

Klutz explained how the surplus will help Hoosiers: “By using it to pay some of these one-time projects, we’ll free up interest costs over the next 25 years, and that interest cost will be added to our operating budget. That is ongoing revenue, which can be used for ongoing expenses, such as K-12 funding, prekindergarten funding. All of that is ongoing and can be awarded. That is how it will help everybody.”

“I want to tell you, there was no way for the leaders in the legislature or the forecast committee or the governor’s office to know that we would’ve ended up with a $410 million surplus. Because it all happened after the session ended,” Klutz said.

State Rep. Gregory Porter, a Democrat from Indianapolis, wants to see some of the funds for toward increasing teacher pay: “Let’s make it real money: $190 million going toward teacher pay, 5% this year and move forward, so our teachers can have good pay for all their hard work.”

According to Klutz, sustainability is key.

“You would never want to say to a teacher, ‘Here’s a 5% raise this year. We’re going to take it away next year.’ It doesn’t work like that. What this does is, it frees up several million dollars every single year that could be put toward that. I know the governor’s working to find more money to give to schools so they can provide teachers more money.”

State Sen. Karen Tallian, a Democrat from Ogden Dunes, responded Thursday to Holcomb’s proposal.

“I’m extremely frustrated that the governor has decided to use $300 million of the budget reserves to pay down projects already appropriated in the budget, especially when there are so many programs that have been completely ignored that desperately need funding. Raising teacher pay, addressing beach erosion issues, funding the mortgage foreclosure program – these are all things that we could have done with our $2.3 billion surplus,” Tallian said.

“Instead of paying for those things in the first place, the governor chose to store money away and deprive our state of much-needed improvements. Now he’s using the excess revenue to fund projects that have already been funded! I wish I could say I’m surprised, but I’m not,” Tallian said.

Holcomb released this statement Thursday:

“Earlier this week, I discussed these recommendations with House Speaker Bosma and Senate President Pro Tem Bray, including my desire that the state maintain fiscally responsible reserves of nearly $2 billion or 12.2 percent of expenditures after putting aside money for the following capital projects:

In 2018, I made the commitment to improve access and safety on U.S. Hwy. 31 from Indianapolis to South Bend by eliminating all traffic signals and rail crossings. Our fiscal position allows us to provide approximately $78 million so the Indiana Department of Transportation can complete this transformational project.

I asked the legislative leaders to strongly consider my proposal when the Indiana General Assembly returns in January 2020. We will work over the next six months to demonstrate how the ongoing savings can be best used for tackling our priorities in the next budget, such as providing meaningful increases in teacher compensation so Indiana is competitive with neighboring Midwestern states.

I am grateful to state agency leaders and employees, legislative leadership and Auditor Klutz who all help maintain our position as the fiscal envy of the nation.”