STATEHOUSE (June 4, 2010) – Indiana budget officials reported this week that May revenue collections were within $1.1 million of the most recent forecast for May and exceeded collections for the same period last year. However, revenue remained far below the revenue forecast used to build the budget passed by lawmakers last June.

Last December, in response to lagging revenues caused by the national recession, the state’s Revenue Forecast Committee lowered the biennial revenue forecast by $1.835 billion. While it is encouraging that actual collections are now tracking with estimates, the measurement that matters most – actual revenue versus revenue forecasted when the budget was passed  – remains a concern. Total collections in May were $83 million below the budgeted amount, continuing a year-long trend.

Through 11 months of the current fiscal year, revenue collections are $1.032 billion, or 9 percent, below the original forecast used to build the budget. Collections have been below the budget forecast for 10 of the first 11 months of the fiscal year, with the average monthly miss nearing $100 million.

According to the agency’s monthly revenue report, total May tax collections were $982 million, 1 percent above total collections for the same period last year, but 8 percent below the original budget forecast. Sales tax and individual income tax collections for the month totaled $494 million and $386 million respectively. Both were an improvement over last May, but year-to-date collections in these categories remain well below 2009 numbers.

Because Senate Republicans insisted on protecting reserves in the budget last year, Indiana’s fiscal crunch isn’t as bad as many other states. Still, with the slow economy continuing to plague revenue figures, total shortfalls have already consumed more than half of the state’s $1.3 billion in reserves and are on pace to completely consume them by the end of the budget cycle.

Much has already been done to reduce state spending and find efficiencies in order to protect Hoosier taxpayers and keep Indiana in the black. Gov. Mitch Daniels has ordered more than $800 million in state spending reductions, including a 10 percent across-the-board budget cut at state agencies this fiscal year and an additional 5 percent reduction next year.

State leaders must continue this frugal approach in the weeks and months ahead, so that we can avoid a tax hike on hardworking Hoosier families and position Indiana to emerge from the recession quicker and in better shape than others.