2019 2019-21 B 21 Biennial al Budget Governor’s Proposed Budget Fiscal Year 2020 and 2021 January 10, 2019 State Budget Committee Governor Eric J. Holcomb
Strong Fiscal Discipline and Balanced Budget • Honestly balanced budget • On-going annual revenues meet or exceed on-going annual operating expenses • Maintain AAA credit rating from the big three rating agencies • Maintain at least 11 percent in reserves • End the 2019-21 biennium with approximately $1.8 billion in reserves 2
Historic and Projected General Fund Forecasted Revenue $18,000.0 $16,969.2 $16,583.2 $16,140.4 $15,571.3 $16,000.0 $15,274.1 $14,898.4 $14,819.9 $14,462.1 $14,402.2 $14,125.1 $14,000.0 $13,274.2 $12,000.0 $10,000.0 $8,000.0 $6,000.0 $4,000.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 (Est) 2020 (Proj) 2021 (Proj) Source: Indiana State Budget Agency Revenue Reports 3
General Fund Revenue Forecast 2019 - 2021 $18,000.0 $1,455.7 $16,000.0 $1,428.1 $1,408.2 $792.7 $1,432.2 $790.4 $773.4 $14,000.0 $660.4 $12,000.0 $6,468.1 $6,249.0 $6,037.0 $5,816.1 $10,000.0 $8,000.0 $8,252.7 $8,115.7 $6,000.0 $7,921.8 $7,662.6 $4,000.0 2018 (Act) 2019 (Est) 2020 (Proj) 2021 (Proj) Sales and Use Individual Corporate Other Source: Indiana State Budget Agency Dec. 2018 Revenue Forecast 4
2019-21 General Fund Revenue Summary Percentage of General Fund Biennial Budget 4.7% Sales and Use Individual Income Corporate Riverboat Wagering (1.8%) 48.6% Insurance (1.5%) 38.1% Cigarette (1.3%) Motor & Comm. Vehicle Excise (1.7%) Other (2.3%) Source: Indiana State Budget Agency Dec. 2018 Revenue Forecast 5
2019-21 General Fund Expenditure Summary Percentage of General Fund Biennial Budget Medicaid Higher Education Operating 15.2% K-12 Education/Teacher Retirement/Other Education Other Health & Human Services 9.3% Public Safety (6.2%) 11.8% General Government (3.6%) Construction (2.0%) Economic Development (0.8%) 50.1% Conservation and Environment (0.5%) Transportation (0.3%) Distributions (0.4%) 6
INPRS Historical &Proposed Appropriations $’s in millions $1,200.0 $1,107.7 $1,079.5 $1,071.3 $1,057.1 $1,032.6 $1,012.3 $1,003.2 $963.1 $1,000.0 $948.9 $870.1 $835.7 $800.0 $600.0 $400.0 $200.0 $0.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 (Est) 2020 (Proj) 2021 (Proj) 7
State of Indiana - Debt Outstanding Since June of 2005, Indiana has reduced its state debt by 69% through June of 2019 Source: Indiana Finance Authority 8
AAA Credit Rating – Strong Position • Indiana continues to have strong standing in the rating agency community • AAA credit rating from all three major rating agencies • Fitch Ratings • Moody’s • Standard and Poor’s • One of 13 states with all three at AAA rating status • High ratings saves the state and school corporations money, serves as a recruitment tool to business and talent that know our financial future is secure 9
Source: Indiana Finance Authority and Citi Group Global Markets 10
Surplus and Reserve Balances General Fund Governor’s Proposed 2019-21 Budget ($’s in millions) • Annual Operating Surplus • Annual Reserve Balance $120.0 $2,200.0 $2,188.7 $2,180.0 $95.8 $100.0 $2,160.0 $80.0 $2,140.0 $60.0 $45.6 $2,120.0 $2,111.3 $40.0 $2,100.0 $20.0 $2,080.0 $0.0 $2,060.0 2020 2021 2020 2021 11
Investing in Indiana’s Economy • Update the Industrial Recovery Tax Credit (DINO), limit to $5M in state funds and create a loan program for support above $5M • Move Indiana to a Market-based sourcing state • Make the Venture Capital Investment Tax Credit transferable • Update the Hoosier Business Investment Tax Credit by changing “qualified investments” and to address more modern purchases • $1.5M per year for innovation grants to small business to purchase research expertise at Indiana’s public higher education research institutions • Update the Headquarter Relocation Tax Credit for smaller businesses with high growth potential • Exempt military retirement and pension income from Indiana individual income tax, phase in over four years 12
Capital Improvements • Continue to support the West Lake Corridor and South Shore Double Track projects, $12M per year in state funding • $150M of one-time funding from the general fund for major repair and renovation work on state-owned facilities to get ahead of the curve on building condition • $12M for a third State Police lab/post • $3.5M in FY21 for state support debt financing of a new Swine Barn at the State Fairgrounds • $2.5M in FY20 for design and engineering support for new barn • $16.7M for updated and new fish hatchery facilities operated by DNR 13
Workforce, Education and Career Training • Increase K-12 Tuition Support by 2% each year • $143M in FY20 and $146M in FY21, total $432M over biennium • Shift $20M per year to Tuition Support from Teacher Appreciation Grants • Increase the number of children served by On My Way Pre-K by 500 children • Increase the state school supplies tax credit from $100 to $500 • Directly impacts teachers and funded through shifting current resources • $3M per year for Next Level Computer Science training • Increased funding for Workforce Ready Grants, $2M per year • $2M each year for High School Career Counseling, supporting by the IN Workforce Cabinet • $1.8M over the biennium for the Office of Work-based Learning and Apprenticeship • Move HIRE program from DWD to DoC 14
Historical Funding of K-12 Tuition Support $’s in millions $8,000.0 $7,469.3 $7,500.0 $7,323.2 $7,160.0 $7,059.3 $6,980.5 $7,000.0 $6,820.3 $6,691.6 $6,622.8 $6,500.0 $6,308.7 $6,262.8 $6,000.0 $5,500.0 $5,000.0 $4,500.0 $4,000.0 2012 2013 2014 2015 2016 2017 2018 2019 Est 2020 Proj 2021 Proj 15
Public Health & Attacking the Drug Epidemic • Continue to fund Secured School Safety Grants at $14M per year and implement the August 2018 School Safety Report • Support DCS by budgeted at FY18 spending levels, $286M more to DCS versus FY19 appropriation. • $3.3M per year for OB Navigator Program to address infant mortality • $1.1M per year for Youth Based Risk Behavior studies across all Indiana schools • Continued support or Safety PIN and Nurse Family Partnership • Medicaid forecast fully funded with new funding: • $84M increase in FY20 and an additional $123.1M in FY21 • Funds the CHIP plan based on new state matching rates set by the federal government 16
Good Government • 3.3% adjustment to base budgets to account for pay for performance and health insurance change in personnel costs • $3.25M for DLGF to modernize technology to provide more efficient services, accurate report and online personal property tax system • $41.7M for DOR to continue to implement the new Integrated Tax System • Fully funds county felon costs at the county level for Level 6 offenders, $6.1M more per year • $10M of capital funding to support voter system upgrades by the Secretary of State • $1M per year for Lt. Governor’s Next Level Veterans initiative • Funds required state contributions to pension and OPEB plans • Eliminates the Build Indiana Fund program and adjusts revenues and appropriations to flow through the General Fund 17
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