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Streaming revenue

20 Sep 2016 10:52 AM | Administrator (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. 

Indiana Fiscal Policy Institute

One American Square Suite 150
Indianapolis, IN 46282

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