Indiana revenue forecast exceeds projections as recession fears wane

State lawmakers have $1.5 billion more to work with than expected in the fiscal 2023-2025 budget, according to revenue figures released by the Indiana State Budget Agency on Wednesday. But it’s unclear whether that money will be used for public health, expanding Indiana’s school voucher program or some other priority of the Republican supermajority.

Despite earlier predictions of a mild recession for the first quarter of 2023, state fiscal analysts say Indiana’s economy is performing better than expected this year as inflation slowed, consumer spending remained high and home sales rebounded slightly.

Projections show that Indiana is expected to collect more than $1.5 billion in revenue over the next two years than was predicted in the December forecast, opening up more funding as state lawmakers negotiate a two-year budget in the final days of the legislative session. Fiscal years in Indiana begin on July 1 and end on June 30 of the following year.

Revenue figures released by the Indiana State Budget Agency on Wednesday show sales tax revenues were 0.6% higher than predicted in the December 2022 forecast, while income tax revenues were 2.2% above projections and corporate income tax rates exceeded estimates by 6.3%.

State general fund revenue in fiscal year 2023 is expected to be 1.9% higher than December estimates, 2.7% higher in 2024 and 2.5% higher in 2025.

The updated projections were presented to the State Budget Committee on Wednesday.