The Indiana Budget Agency today released its report on the close out report for the 2019-20 fiscal year ending June 30, 2020. This statement is released every year and can be thought of as the year-end balancing of the books for the state’s general and reserve funds. Think of the general fund as the state’s checking account and the three reserve funds as savings accounts.
There are a few points that I will mention.
NOTE: amounts approximate and rounded off
The extension of the income tax deadline to July 15 produced a large hit to what would have been expected revenue in the 2019-20 fiscal year. The shortfall from the projected amount was $930M on individual income tax receipts and $184M on corporate tax receipts.
Fortunately, Indiana had funds that it was able to transfer into the general fund to cover a big portion of that shortfall, including:
$250M in additional new federal Medicaid dollars;
$577M in money that had been sitting in the Medicaid reserve fund for the past five years, now transferred to the general fund;
$291M that had been earmarked for cash funding of certain University projects has been transferred back to the general fund; and
$123M in reversions from agency budgets.
The big unanswered question going forward is the extent to which the deferred tax revenue that should’ve been received in April will be collected in July, and whether sales tax revenue (our biggest revenue source) continues to come in below what was expected.
We are glad to see that the agency reversions (cuts) have not been as drastic as they were in the Great Recession.
Senate Democrats pushed back hard when the governor initially came up with the plan to spend nearly $300M on cash-funding University building projects.
Good thing that didn’t happen.
Another big issue will be to see the effect of the economic downturn – and job cuts – on the number of people who are relying on Medicaid/HIP 2.0 for insurance. We know that from February to May, 79,000 Hoosiers no longer have insurance due to job losses. We expect that the number of people who lost employer-provided medical insurance will grow. Medicaid enrollment may significantly increase, which will require more state funds in the future.
Both the revenue and Medicaid forecasts are being revised and will be presented to the State Budget Committee at its September meeting. I will report back then.