Indiana takes steps to reduce spending
>>Print ViewPublication Date: 11/09/2009
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State revenue collections were below forecast in October, the fourth month in a row, prompting Governor Mitch Daniels to initiate spending reductions.
According to a press release, total tax collections for October were $46 million below forecast. For the first four months of the fiscal year, general fund revenues are $309 million below forecast, or 7.4 percent.
The state’s 2009 fiscal year ended with $1.3 billion in reserves. According to the press release, without spending cuts, state budget agency officials estimate the reserves would be depleted by August of 2010.
“We have seen enough to know that new actions are necessary if we are going to protect Indiana taxpayers against the tax increases that are happening in most of the rest of America,” Daniels said in the press release.
State agencies will reduce spending by an additional 10 percent from the budget, after a 5 percent reduction in July. Also, reimbursements to some Medicaid providers will be reduced and state employees will not receive pay increases for the second year in a row.
State Sen. Brandt Hershman, R–Wheatfield, said these are tough economic times and no entity receiving state support will be immune from having to make cuts, including Purdue.
“We want to work cooperatively with the University,” he said. “Make the least impact, allowing them to preserve services in terms of research and education. Hopefully, we’ll identify areas where we can save until we get past this.”
Hershman said the state has already made cuts, but the new cuts announced Friday will have to go even further.
“Obviously it’s going to be difficult,” he said. “The state has the fewest employees it’s had since 1983 – we’re going to have to sharpen our pencil even more.”
According to Hershman, Indiana is faring better than most states during the recession because of the reserves, but there are still struggles.
“We’ve faced fewer cuts than most states in the nation,” he said. “We’re hoping to preserve state program delivery as best as possible at the lowest cost as possible. It’s simply a tough time for everybody. We’re going to have to make the same tough decisions families and businesses have to across the state.”