by Curt Kovener
So did you see the forecasts? No, I’m not talking about the rain or the weather. The state revenue forecast.
They are lower than expected. Again.
The state’s revenue is based predominately on income, sales and excise tax and all of those are related to the economy. So as a result the state’s money source is less than what money experts crystal ball predicted. One bright spot income from gambling at the state casinos and horse tracks were up.
For those who like numbers— BIG numbers— the total tax revenue collections for July (the first month of the fiscal year) were $76.5 million below the forecast. State revenue was $867 million less than the same period last year, a drop of 16%. Sales tax collections were down 11% for the same period and individual income tax collections were down 35% over July 2008.
Note that the state gets no revenue from property taxes. Those taxes you pay at your county seat get distributed right within your county confines; they never leave your county’s borders.
You will remember back in April when the legislature couldn’t come to a compromise on a budget, a lot of folks were lambasting the elected officials. Then after they adjourned with no budget and a special session would be needed, it was revealed that the state revenue projections were lower than first projected. So had a budget been passed in the regular session, there would not have been the money available to fund it.
Governor Mitch Daniels response to not passing a budget was to offer a list of those state services which would remain (law enforcement and those other necessary security related services) but non-essential state parks would close as would the state’s casinos.
Hmmmm, the governor would close the only revenue source which increased in the past few months? Oops!
Now a little over a month after a lower budget was passed, the state learns that even less money will be available because those folks earning incomes aren’t making as much and there are fewer income earners due to the economy. And since there is less income, fewer goods are being purchased which decreases the sales and excise taxes.
In short, the state of Indiana is finding the same reality as many of hits Hoosier households: having to pay for expenses on a decreasing income.
Of course, the rest of us quietly debate if the water & gas bill gets paid this week and the electric & car payment will wait until next week. The state can threaten dire straits to push our buttons: early release of prisoners, state recreation facilities closed, highway & bridge projects delayed.
You never hear any talk about closing state police posts and furloughing troopers. You don’t hear a suggestion to cut back on the Indiana Department of Revenue or laying off judges (though elected locally their salaries are paid for by the state).
So hearing all of the talk about revenue projects for income, sales & excise taxes not meeting the experts(?) expectations, we ought to wonder about what would happen in our respective counties and communities to police, fire, & ambulance service if the lame brain idea of doing away with property taxes and increasing sales & income taxes to make up for it had been approved?
In the words of Charles A. Bard, my high school math teacher, a higher percentage of nothing is still nothing.
When weather forecasters are off at worst we might get a little wet. When the crackerjack budget forecasters are off we all get soaked.