Indiana state government had $2.15 billion in its main checking and savings accounts as of June 30, which state Auditor Tim Berry said was the largest surplus in state history.
The cash balance equaled 15.9 percent of the state's annual spending, which triggers a taxpayer refund. That state law will send $360 million to strengthen public pension funds and designate another $360 million for the automatic taxpayer refund program.
Gov. Mitch Daniels said last week those refunds will top $100 per taxpayer.
Berry said the state's strong fiscal balance is largely due to an increase in tax revenue, which grew by 6.4 percent in 2012, an amount that was higher than projections used to write the budget in April 2011.
Berry said consumer spending helped boost sales tax revenues, which account for about 47 percent of state tax receipts.
"While other states are in dire financial condition, Indiana remains a model of fiscal responsibility," Berry said. "Under the leadership of Gov. Mitch Daniels, we have kept our pledge to Hoosiers to be careful stewards of their hard-earned tax dollars."
The state finished the year with $1.8 billion in its main checking account - called the general fund - and $352 million in the rainy day fund. The state reported no money in the state's Medicaid and tuition reserve accounts.
Indiana House Minority Leader Pat Bauer, D-South Bend, said that officials in state government should not be too quick to pat themselves on the back for this surplus. He said the state's cash balance was built on cuts to key state programs.
Bauer specifically cited the decision to cut $600 million of state support from public schools in 2010-2011 along with $225 million in unspent funds the Department of Child Services sent back to state treasury.
"The impact will be felt by families across this state, who will have to ask themselves whether a $2 billion state surplus means much when you have to pay a bunch of fees to make sure your children get a proper education or if you get put on hold when you call a hotline to report suspicions of child abuse," Bauer said in a statement. "Let us think of those implications when we examine what is being 'celebrated' today."
In all, government agencies reverted $316 million from the allocations made by the General Assembly.
Berry's office reverted $300,000 - 5.5 percent of his budget - back to the general fund.
"For the past several years, the auditor of state's office has spent less money than we were allotted by the General Assembly," Berry said. "We must lead the way when it comes to being fiscally responsible."
Berry said three major groups rating government transparency in the country have placed Indiana as best in class - something he is proud of.
"Along with reducing expenses, we've delivered incomparable financial transparency - and that's exactly what Hoosiers should expect from state government," Berry said.
Despite these numbers, the next governor and General Assembly might still face challenges when writing a two-year budget in 2013, according to the Indiana Fiscal Policy Institute.
The policy institute said the General Assembly will have to consider how new spending will affect the surplus, if the surplus funds will be used to reduce taxes and if the state should reform the budget for the Teachers Retirement Fund.
In a report released Thursday, the institute also said the legislature would have to consider the sluggish economy and increased reliance on income tax when making future fiscal decisions.
"The new governor and legislators still will certainly have a tough time balancing the budget, but this time it will be in the form of resisting temptation to spend instead of identifying ways to cut expenses," said the institute's president, John Ketzenberger "There will likely be pent-up demand among many constituents for new or additional spending, and it is harder for policymakers to say no to them when there are surplus funds."
Olivia Ober is a reporter for TheStatehouseFile.com, a news service powered by Franklin College journalism students and faculty.
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