Indiana State Revenue: 2023 Fiscal Year Ends With $2.9 Billion Reserve Accounts, Shorter Than 2022!

Indiana State revenue ended its 2023 fiscal year with reserve accounts totaling $2.9 billion, falling short of the $6.1 billion reported in 2022, according to an announcement by Tera Klutz, the State Comptroller. However, Klutz noted that the state is still within the healthy range of reserves, representing 10-15% of the budgeted appropriations for fiscal year ’24, Kokomo Tribune reported.

Indiana State Revenue: 2023 Fiscal Year Ends With $2.9 Billion Reserve Accounts, Shorter Than 2022! (PHOTO: Daily Journal)

Why Did Indiana State Revenue Fall Short?

Reserves currently account for 16.3% of the year’s expenditures, above the 12.5% threshold that triggers an automatic taxpayer refund. The recent budget cycle excluded the state’s tuition reserve account, meaning refunds would only be triggered if the state had closer to $3.5 billion in savings.

To avoid additional refunds, lawmakers allocated $3.1 billion in one-time spending, primarily for capital construction project overruns, thereby reducing the surplus.

The significant surplus in the previous year required state leaders to issue millions of dollars in refunds to taxpayers. However, Rep. Greg Porter expressed disappointment in missed opportunities to invest in areas that would benefit Hoosiers, such as K-12 education, mental health, and public health.

Regarding Indiana State revenue, Indiana’s actual revenues aligned closely with forecasts, exceeding estimates by $25 million or 0.1%. The state is gradually returning to pre-pandemic Indiana State revenue trends, but the effects of the pandemic on spending persist. Some federal funds allocated to the state must be obligated by 2024 and spent by 2026, which will impact future spending.

Indiana State revenue heavily relies on sales taxes, which experienced a surge during the pandemic due to federal stimulus checks. However, Hoosier spending appears to have slowed, falling $66 million short of the estimated $10.5 billion. Individual tax returns remained steady, surpassing expectations by $14 million for a total of $7.6 billion.

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Indiana State Revenue

The expense side of the budget shows that Medicaid continues to be a growing concern, with the federal government covering a greater portion of the expenses during the pandemic. The state’s Medicaid rolls expanded, covering approximately one-third of the population, and as the enhanced federal match phases out, state spending on Medicaid is expected to increase.

The Indiana Hospital Association criticized the state’s decision to prioritize the reversion of Medicaid dollars, citing the financial strain on hospitals. Hospitals are already facing challenges due to rising expenses and reduced reimbursement rates from government Medicare and Medicaid payments.

Moving forward, Indiana hospitals are urging the state to provide immediate Medicaid relief to address the growing shortfall and prevent further closures of healthcare facilities and services across the state.

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