IFPI Blog

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  • 18 Dec 2016 3:32 PM | John Ketzenberger (Administrator)

    Indiana's State Budget Committee got a dose of good news despite a revenue forecast revision downward by $300 million for the current fiscal year.

    While uncertainty remains when it comes to the economy, forecasters predict 2.9 percent growth in the Indiana's gross state product during 2017 and 3.9 percent growth will produce more than $1 billion in new tax revenue available for the next two-year budget. 

    An analysis by the Indiana Fiscal Policy Institute underscores the rationale behind the forecast and what it means for legislators as they prepare to formulate a new budget beginning in January. 

  • 26 Oct 2016 10:54 AM | John Ketzenberger (Administrator)

    Logansport Mayor Dave Kitchell cited a recent Indiana Fiscal Policy Institute report about the effect of property tax circuit breakers in a recent column.


    The report by IFPI Senior Fellow John Stafford examined how the circuit breakers have reduced the amount of property tax paid by the three classifications of owners—single-family homes, multi-family homes/agriculture and commercial—and the resulting loss of revenue to local government sectors.


    Kitchell noted the savings to taxpayers, but his column contends local government officials have struggled to make budgets due to the circuit breakers. The circuit breakers have cost his city, for instance, 26 percent of its property tax revenue and will forego 30 percent next year.


    “While circuit breakers have been a win for those concerned about how much property taxes had been escalating, the other shoe dropping in this fiscal policy debate is that cities, counties and schools are doing without, scaling back budgets by almost a decade,” Kitchell wrote in the Oct. 26 Journal Gazette newspaper in Fort Wayne.

     


  • 11 Oct 2016 1:49 PM | John Ketzenberger (Administrator)

    Fort Wayne’s City Council recently defeated an ordinance to eliminate Allen County’s tax on business personal property. The vote was 5-3.


    The vote points out the confluence of two important tax streams—local property tax and the effect of property tax caps across taxing districts. These issues were among those explored in February 2014 IFPI report.


    In Fort Wayne the mayor and the councilors who voted against eliminating the business personal property tax said the lost revenue would make it difficult to balance the budget and meet the city’s needs. This is a decision that can be made locally thanks to legislation passed during the 2014 session.


    Mayor Tom Henry also called for more cooperation among those who can take a slice of the local property tax revenue since the property tax caps affect distributions. If those with taxing authority act unilaterally, it can hurt the revenue generating ability of others under the caps. 


    It’s a realization taking hold across the state and an issue for additional study as the state begins to fully understand the changes wrought in 2008.


  • 21 Sep 2016 2:37 PM | John Ketzenberger (Administrator)

    Tune in at 7 p.m. Oct. 3 for the debate between Indiana's candidates for governor, Republican Eric Holcomb, Democrat John Gregg and Libertarian Rex Bell. Indiana Fiscal Policy Institute President John Ketzenberger will moderate the hour-long debate on the economy and jobs. 


    Tickets are available for free through the website of host University of Indianapolis for the debate at the school's Christel DeHaan Center. The public is welcome to also submit questions through the Indiana Debate Commission's site, www.indianadebatecommission.com. 

  • 20 Sep 2016 4:15 PM | John Ketzenberger (Administrator)

    Today the Republican candidate for governor, Eric Holcomb, issued his economic development plan for Indiana. His Democratic opponent, John Gregg, had previously issued his plan.


    Economic development is particularly important for Indiana’s fiscal well-being since nearly 91 percent of the state’s tax revenue derives from economically sensitive taxes on the sale of goods (49 percent), personal income (35 percent) and corporate income (7 percent).


    Indiana’s economic news is mixed and has been since the recession. Employment has surpassed pre-recession levels and the state’s unemployment rate has dipped to 4.5 percent, but household income remains stagnant with real per-capita personal income up 1.5 percent over three years putting Indiana 39th among states.


    The two plans vary in scope and specificity.


    Holcomb’s is called “Eric’s Economic Development Plan” and includes four points: Retain, Retrain and Recruit the Best and Brightest, Lead the Nation with Infrastructure Investment and Innovation, Keep Energy Costs Down for All Hoosiers and Maintain Our Fiscal Discipline. Holcomb’s plan contains between two and eight bullet points to explain his positions.


    Gregg’s is called “Restoring Indiana as an Economic Leader" and includes eight points: Accountability to Ensure Indiana Moves Forward on Jobs, Build and Retain a Skilled Hoosier Workforce, Grow Indiana Small Businesses & Startups, Support for Existing Hoosier Business, Streamline the State’s Economic Development Efforts, Leverage Private-Sector Research and Funding, Restore and Rebuild Indiana’s Reputation and A More Inclusive State Bidding Process. Each section contains footnoted paragraphs to explain his positions.


    Interestingly, the only direct agreement in the plans is to extend the state’s venture capital tax credit to investors outside the state. Otherwise, each candidate has differing views of the scope of economic development activity and the state’s direct involvement in the effort.


  • 20 Sep 2016 10:52 AM | John Ketzenberger (Administrator)

    Indiana’s monthly tax collections fell short of revised expectations in August, but exceeded the previous year’s collections because sales tax revenue was up nearly 3 percent. This mixed result extends a trend that can be traced to Fiscal Year 2014 as the economic recovery has failed to beat increasingly modest expectations.


    Sales taxes, the state’s single-largest source of tax revenue, missed the August forecast by $38.6 million, or 3 percent, yet beat the previous August total by $35.2 million. Overall, tax revenue missed expectations by 1.5 percent, but exceeded the previous year’s revenue by the same 1.5 percent. While the fiscal year is just two months old, meaning there’s plenty of time to meet the annual forecast, it will take a healthy bump in economic activity to do so.


    As the election nears, it will be interesting to learn the budgeting priorities of the candidates for governor and those who stand for election to the General Assembly. Clearly there are efforts to increase spending on roads and bridges as well as primary education, but don’t expect fiscal leaders to tap the state’s reserves in a way that will reduce the total to less than 10 percent of annual appropriations. Rep. Tim Brown, R-Crawfordsville, told a session of the Governmental Affairs Society of Indiana recently that he expects relatively modest proposals from either candidate when the budget is introduced in January to the Ways and Means Committee he chairs.


    The aggressive schedule of tax cuts enacted over the last 10 years are likely to slow as fiscal leaders digest their effects on state revenue. An Indiana Fiscal Policy Institute analysis of the state’s FY2016 closeout takes an early look at the sustainability of the current tax schedule’s revenue. 


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Indiana Fiscal Policy Institute

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