[r20] Dermody: Latest Revenue Forecast Should Alert Taxpayers to How Their Money is Spent (4/9/2009)

Thursday, April 9, 2009

Start Date: 4/9/2009 All Day
End Date: 4/9/2009

The State Budget Agency this week released its monthly revenue report of March 2009 state tax collections. Unfortunately, the results were worse than we even expected. Total revenue collections were down 15-percent from last year, to $821 million. At a time when we are trying to assemble the state's budget, this is discouraging news.

The shocking thing about these numbers is that only one other time in the past 214 monthly reports did a decline of this magnitude occur. Especially troubling is the large decline in income tax collections, which came in a staggering 21-percent below last year's figures. On its current pace, the state is headed for its largest decline in income tax collections compared to the prior year in state history.

So what does all this mean? Let's take a look. 

During these especially difficult economic times, government needs to mirror what Hoosier families across the state are doing. It must tighten its belt and live within its means.

However, the majority party in the House of Representatives seems uninterested in this. The budget the House passed was full of holes.

First, it spends way too much - draining important reserve funds and spending almost $800 million more than the state expects to take in. History shows us that red ink in the general fund usually leads to tax increases.

Second, it unwisely includes federal stimulus money.  The federal stimulus package is a one-time payment and should be carefully spent. If the current budget contains stimulus money, how will those items be funded when that money is gone?

What's worse, the State Budget Agency is currently tracking more than 100 bills that spend about $150 million in "outside money" - money not included in the budget. Much of this spending is simply pork, and it's unaccounted for. Ignoring overspending is a big problem in government, and it often goes unchecked.

The other major issue that seems to go unaddressed is the inequality in education funding. Some schools in our state are receiving nearly $10,000 in per student funding, while we have schools here in LaPorte County that are slated to receive about half of that.

Given the especially tough financial environment we are in, how can we continue to fund education this way? If LaPorte schools can survive on $5,500 per student, shouldn't we expect the same from others? We need to balance this funding and meet somewhere in the middle.  Our local schools deserve equal support.

As we near the end of session, these and other issues will be on my mind. And I need to hear from you about them  -  your questions, your concerns and your ideas. You may reach me by e-mail at h20@in.gov, by phone at 1-800-382-9841 or by writing me at the Statehouse at 200 W. Washington St., Indianapolis, IN 46204.

 

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