Officials on Thursday projected booming growth in the state budget surplus, setting up a debate during the upcoming legislative session over possible tax cuts.
A report presented to the State Budget Committee forecast tax collections growing nearly $1.9 billion, or 10.4%, more for this fiscal year than what was expected when the current state budget was approved in April. That would push Indiana’s budget surplus to a whopping $5.1 billion by the end of next June.
Some members of the Republican-dominated Legislature were already pushing for tax cuts before the new projections as the $3.9 billion in cash reserves the state had this past June triggered Indiana’s automatic taxpayer refund process resulting in anticipated $125 payments to all individual income tax filers next year.
House Republican leaders have said they were looking at plans to cut the state’s 3.23% individual income tax rate or expand credits to reduce what income taxes are owed, while top Senate Republicans are more cautious.
“This revenue forecast I think supports our position,” House Ways and Means Committee Chairman Tim Brown said. “We look forward to how citizens that worked hard deserve a break.”
Even with the big tax revenue jump, the Senate’s top budget writer said he was worried about consumer spending will slow in coming years and lead to drops in sales tax collections.