Final Special Session Budget 2009-2011

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The 2009-2011 state budget in House Bill 1001 SS, which was passed by the Indiana General Assembly during its special session on June 30, 2009, is sufficiently Taxpayer Friendly because it (1) provides enough resources for good government AND (2) satisfactorily protects Hoosier working families from state and local tax increases. The vote of each General Assembly member is listed next.

Taxpayer Friendly State Representative YES votes: John F. Barnes, Robert W. Behning, Matt Bell, Robert J. Bischoff, Bruce A. Borders, Randy Borror, Brian C. Bosma, Tim Brown, Woody Burton, Mara Candelaria Reardon, David Cheatham, Robert W. (Bob) Cherry, Jacqueline "Jacque" R. Clements, Edward D. (Ed) Clere, Suzanne Crouch, Wes Culver, Bill J. Davis, Nancy Dembowski, Tom Dermody, Richard "Dick" Dodge, Cleo Duncan, Sean R. Eberhart, Jeffrey K. Espich, Ralph M. Foley, William C. Friend, David N. Frizzell, Phil GiaQuinta, F. Dale Grubb, Douglas L. Gutwein, Phillip D. (Phil) Hinkle, Sheila J. Klinker, Tom Knollman, Eric Allan Koch, Don Lehe, Matthew S. Lehman, Daniel J. (Dan) Leonard, L. Jack Lutz, Richard W. McClain, Mark B. Messmer, Win Moses, Jr., Michael B. Murphy, Timothy Neese, David L. Niezgodski,  Cindy Noe, Phyllis J. Pond, Kathy K. Richardson, Paul J. Robertson, William J. (Bill) Ruppel, Thomas E. (Tom) Saunders, Milo Smith, Ed Soliday, Steven R. Stemler, Greg Steuerwald, Mary Ann Sullivan, Jeff Thompson, Gerald R. (Jerry) Torr, Randy Truitt, P. Eric Turner, Jackie Walorski, Peggy Welch, David A. Wolkins, David Yarde II.

Taxpayer UNfriendly State Representative NO votes: Terri Jo Austin, Dennis T. Avery, Jeb Bardon, John Bartlett, Kreg Battles, Sandra Blanton, Charlie Brown, William A. Crawford, John J. Day, Edward O. Delaney, Chester F. Dobis, Ryan M. Dvorak, Craig R. Fry, Terry Goodin, Earl L. Harris, Ron Herrell, Clyde Kersey, Linda C. Lawson, Nancy A. Michael, Charles "Chuck" Moseley, Dennie Oxley, Joe Pearson, Scott D. Pelath, Phillip Pflum, Matt Pierce, Gregory W. Porter, Cherrish S. Pryor, Scott Reske, Gail Riecken, Vernon G. Smith, Dan Stevenson, Sr., Russ Stilwell, Vanessa J. Summers, Vern Tincher, Dennis Tyler, Shelli VanDenburgh, Trent VanHaaften.

State Representative who DID NOT VOTE: B. Patrick Bauer (told the media that he would have voted NO).

Taxpayer Friendly State Senator YES votes: Ron Alting, Jim Arnold, Phillip L. (Phil) Boots, Richard D. Bray, Jim Buck, Ed Charbonneau, Gary P. Dillon, Beverly J. Gard, Randall Head, Brandt Hershman, Travis Holdman, Lindel O. Hume, Luke Kenley, Dennis K. Kruse, Sue Landske, Connie Lawson, David C. Long, Teresa S. Lubbers, James W. Merritt, Jr., Patricia L. Miller, Ryan D. Mishler, Frank Mrvan, Jr., Johnny Nugent, Allen E. Paul, Brent E. Steele, Marlin A. Stutzman, Greg Walker, Brent Waltz, John M. Waterman, Thomas J. Wyss, Carlin J. Yoder, R. Michael Young, Richard D. Young, Joseph C. Zakas.

Taxpayer UNfriendly State Senator NO votes: Vaneta G. Becker, Jean Breaux, John E. Broden, Bob Deig, Mike Delph, Sue Errington, Tim Lanane, Jean Leising, James (Jim) A. Lewis, Jr., Lonnie M. Randolph, Earline S. Rogers, Vi Simpson, Connie Weigleb Sipes, Timothy O. (Tim) Skinner, Karen Tallian, Greg Taylor.

The Watchdog Indiana spreadsheet analysis of the final 2009-2011 budget follows:

2009-2011 Special Session State General Fund Budget

Watchdog Indiana Analysis

(July 1, 2009)

Source Documents:

(1) June 30, 2009, Final Surplus Statement for Budget from the State Budget Agency

(2) April 8, 2009, Combined Statement prepared by the Senate Republican Fiscal Staff

Combined Statement of Estimated Balances and Reserves (millions of dollars)

Resources, Appropriations, Expenditures, Reversions

FY 2009

FY 2010

FY 2011

(a) Working General Fund Balance on July 1




(b) Actual Forecasted Revenue May 27, 2009




(c) Disproportionate Federal Rev. Sharing Poverty Hospitals (DSH)




(d) Quality Assessment Fee




(e) Federal Stimulus General Purpose Stabilization Funds




(f) Federal Stimulus Education Stabilization Funds




(g) Federal Stimulus Medicaid Funds




(h) Outside Bills - 2009 Session




(i) State Retiree Health Plan




(j) Marion County Juvenile Arrearage




(k) Quality Assessment Fee due increased FMAP




(l) Transfer from State Tution Reserve




(m) Base Operating and Capital Appropriations




(n) Education Stabilization Spending using Federal Stimuls Funds




(o) Medicaid Spending using Federal Stimulus Funds




(p) Enrolled Acts - 2009




(q) Enrolled Acts - 2008




(r) PTRC and Homestead Credit Adjustments




(s) Accelerated Reversal of Payment Delays




(t) Adjustment for Stadium/Convention Center Appropriation




(u) Judgements and Settlements




(v) Reversions




(w) Transfer to Tuition Reserve




(x) Ending General Fund Balance on June 30




(y) Medicaid Reserve




(z) Tution Reserve




(aa) Rainy Day Fund




(bb) Total Combined Balances




June 30, 2011, Structural Deficit (millions of dollars)

DEDUCT: FY 2011 (a) less FY 2011 (x) General Fund Balance


DEDUCT: FY 11 Fed. Stimulus Education Stabilization Spending *


DEDUCT: FY 2011 Federal Stimulus Medicaid Spending *


DEDUCT: FY 2011 Outside Bills - 2009 Session *


DEDUCT: FY 11 Quality Assessment Fee due increased FMAP *


DEDUCT: FY 2011 Transfer from State Tuition Reserve*


Structural Deficit


* Non-Recurring Resources that are used for Recurring Appropriations

Providing sufficient resources for good government is difficult during these challenging economic times - the nation's longest recession since the Great Depression. To help replace declining revenues, the budget uses (or intends to use) about $2.7 billion of federal stimulus funds for various education, infrastructure, Medicaid, and transportation spending initiatives. The use of these federal stimulus dollars is acceptable in the present uncertain economic environment IF tax increases do not become necessary to support recurring expenses that will now be covered by the non-recurring federal stimulus funds.

The Watchdog Indiana rule-of-thumb in ordinary circumstances is that a tax increase in a subsequent budget can be avoided if all the state’s reserve funds on June 30 of the last budget year total at least 50 percent more than any structural deficit. A structural deficit is created when recurring budget spending is supported by non-recurring revenues - when appropriations that repeat year-after-year are not fully supported by current revenues, but rely on non-recurring revenues such as federal stimulus funds and reserve funds.

Considering the uncertain economic times, the budget is sufficiently Taxpayer Friendly because on June 30, 2011, there is a reserve funds balance of $1.0119 billion, which is 32 percent MORE than the structural deficit of $767 million. If revenue collections from current tax sources do not increase in line with historical levels, the state's reserves together with spending discretion by the Governor can be used to avoid a tax increase after 2011.

The K-12 education provisions in the budget are Taxpayer Friendly. The budget provides a spending increase for every student, and those school districts with increasing enrollments will get more state money while school districts with declining numbers of students will receive less state funding. Because some school expenses continue in school districts with declining enrollments, the budget phases out per student state funding for school districts with declining enrollments over a three-year period, and phases in over three years the per student funding for school districts with increasing enrollments. 

It is proper for K-12 teachers to protect their jobs by foregoing pay increases during this historic economic recession. Other government employees have had their pay frozen at a time when so many Hoosiers are experiencing income reductions and job losses. The average K-12 teacher in Indiana has a $49,569 salary with good benefits, while the median income for all the members of a Hoosier working family is $47,074. Indiana has the seventh highest teacher salaries in the nation when adjusted for cost of living. Teachers will hardly suffer if they miss one pay increase to help protect the funding of their K-12 school districts.

Some additional noteworthy Taxpayer Friendly and Taxpayer UNfriendly provisions in the budget are listed next. 

Noteworthy Taxpayer Friendly Provisions in the budget bill:

Allocation of  Excess Revenue: This bill specifies that the Budget Agency shall calculate whether tax collections for the state fiscal year ending June 30, 2010, exceed the May 27, 2009, adjusted state revenue forecast for that state fiscal year. It provides that if actual receipts for the state fiscal year ending June 30, 2010, exceed the adjusted state revenue forecast, 50% of the excess revenue is appropriated to the Department of Education (DOE) to be used as a special one-time tuition support distribution to increase the foundation amount for each school corporation eligible for a tuition support distribution.

Assessment Appeals: The bill provides that if a notice of review of a property tax assessment is filed for an assessment that increased by more than 5% over the assessed value for the preceding assessment date, the assessor making the assessment has the burden of proving that the assessment is correct.

Referenda: The bill allows the legislative body of a political subdivision to adopt a resolution withdrawing a controlled project from consideration at a referendum and specifies that if a public question on a controlled project is withdrawn, a referendum on the same controlled project or a substantially similar controlled project may not be submitted to the voters earlier than one year after the date the resolution withdrawing the referendum is adopted.

Control Boards: This bill eliminates the local government tax control board and the school property tax control board. Petitions regarding budgets for new taxing units, excessive levy appeals, debt issues, and any other items that currently come before the control boards would be made directly to the Department of Local Government Finance.

Trending Catch-Up: The bill allows the Department of Local Government Finance to specify trending values for an area if the county assessor is more than six months late in providing assessed values to the county auditor.

Cross-County Assessment Delay: With respect to property taxes first due and payable after 2009, the county treasurer may use a provisional statement if the county treasurer determines that the property tax rate of a cross-county entity has not been finally determined before the statement preparation date because the assessed valuation in the cross-county area of a neighboring county on which the property taxes are based has not been finally determined.

State Income Tax Deduction: The bill increases for certain taxpayers the maximum allowable homeowner's income tax deduction for property taxes paid in tax year 2009 only. The increase in the maximum allowable deduction would apply only to homeowners who make on-time payment of any or all of their 2007 Pay 2008 property taxes in 2009.

Income Data within City or Town: The bill provides that after December 31, 2010, the Department of Revenue in cooperation with the Department of Local Government Finance (DLGF) and the Budget Agency shall provide data annually that: (1) identifies the total number of individual taxpayers that live within a particular incorporated city or town; (2) identifies the total individual adjusted gross income of those taxpayers; and (3) includes any other information that can be abstracted from the taxpayers’ individual income tax returns, as agreed to by DOR and the Legislative Services Agency. The DOR must provide this information to the Legislative Services Agency upon written request.

Northern Indiana Regional Transportation District Referendum: Provides for a referendum in November 2009 in Lake, Porter, LaPorte, and St. Joseph counties for the creation of a regional transportation district in northern Indiana ("district"). Provides that the district is created January 1, 2010, if the voters in at least two of the counties vote in favor of the creation of the district. Specifies that the district consists of all the incorporated and unincorporated territory in those counties where the majority of those voting on the public question vote in favor of creating the district. Provides for a regional funding, service area, and coordination board, a regional transportation district advisory board, a commuter rail service board (which is the northern Indiana commuter rail service board (NICTD)), a rail service advisory board, a bus service board, and a bus service advisory board. Creates a rail and bus service division for the district. Provides that the bus service division serves Lake County and Porter County (if the county is a member county). If the district is established, transfers authority to fund and operate a bus system from Lake County and Porter County or municipalities within Lake County or Porter County (if the county is a member county) to the bus service division, and terminates the existing transportation authorities and corporations in Lake and Porter counties. Authorizes the bus service division to impose a property tax, including a property tax pledged before January 1, 2010, to pay for bonds, loans, other obligations, or lease rentals related to a public transportation system in Lake County or Porter County (if the county is a member county). Provides that the property tax may be imposed only in the area in which the property tax could have been imposed for property taxes first due and payable in 2010. Permits the district board to impose a regional public transportation improvement tax on the income of individuals residing in a member county. Provides that the maximum improvement tax rate in any member county is 0.25%. Requires the improvement tax rate for capital in each member county to be based on the capital improvement needs of each member county as determined by the district board. Requires the improvement tax rate for operating in each member county to be based on the number of passengers and passenger miles. Permits each division board to contract with the Indiana finance authority for issuing debt.

School Property Tax Replacement Grants: For CY 2010, the bill changes the school property tax replacement grant calculation to pay for the circuit breaker losses in excess of 2%. As an example, if a school’s total levy was $10,000 and their circuit breaker loss was $600, then the school would qualify for a $400 grant ($600-2%*$10,000), and if their loss is $200 or less, then they would not would qualify for a grant.

School Capital Projects Fund Limitation: The bill provides that a school corporation's expenditures from its capital projects fund for utility services or property or casualty insurance may not in 2010 and in 2011 exceed 3.5% of the school corporation's 2005 calendar year distribution.

Board of Pharmacy Secure Prescription Program: At the Governor’s discretion, the bill would allow the Board of Pharmacy to develop and contract for a prescription drug program that includes criteria to eliminate prescription drug fraud.

Noteworthy Taxpayer UNfriendly Provisions in the budget bill:

Rainy Day Fund Loans: The bill allows a taxing unit that experiences a property tax shortfall with respect to taxes payable in 2009 or 2010 resulting from the bankruptcy of a motor vehicle transmission manufacturer to obtain a loan from the Rainy Day Fund. 

Public Official Referenda Advocacy: An elected or appointed public official of the political subdivision may personally advocate for or against a position on a local public question so long as it is not done by using public funds.

Porter County RDA Membership: Provides that if Porter County ceases to be a member of the northwest Indiana regional development authority (RDA), the fiscal bodies of two or more municipalities located in Porter County may adopt ordinances to become members of the RDA. Provides that if two or more municipalities in Porter County become members of the RDA, the $3,500,000 annual transfers of county economic development income tax revenue to the RDA continue.

Child Welfare Surpluses: Under HEA 1001-2008, surplus balances in a county's family and children's fund and children's psychiatric residential treatment services fund must be deposited into the county levy excess fund. Money in the levy excess fund may only be used to pay property tax refunds and to reduce the following year's levy. DCS has estimated surpluses in one or both funds in 86 counties totaling $103.3 M, which will be used to reduce 2010 county general fund levies. Rather than reducing levies in 2010, this bill would allow any county to transfer the surplus into the county's rainy day fund.

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This page was last updated on 03/19/10 .