Governor announces more actions to reduce state spending

Press release from Governor Mitch Daniels:

Governor announces more actions to reduce state spending

INDIANAPOLIS (November 6, 2009) – Governor Mitch Daniels today initiated state agency spending reductions following the fourth straight month of lower than forecast state revenues for Fiscal Year 2010.

For October, revenue collections were again below the May 2009 forecast. Total tax collections were $46 million below the forecast amount for the month. For the first four months of the fiscal year, general fund revenues are $309 million or 7.4 percent below forecast.

“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,” said Daniels. “Indiana has distinguished itself among the states, avoided tax increases, maintained all vital services, because we have been willing to act on time, to deal with our difficulties.”

Reductions ordered by the governor today are expected to save the state about $300 million to $400 million over the biennium.

Budget actions taken today

  • State agencies will reduce spending by at least 10 percent from the as-passed budget. The governor had already ordered a 5 percent spending reduction in July.
  • The lieutenant governor, auditor, treasurer, secretary of state, and superintendent of public instruction have committed to 10 percent spending reductions in their own office budgets.
  • Reimbursements to some Medicaid providers will be reduced.
  • State employees will not receive a pay increase in 2010, the same action as 2009. The last time there were back-to-back years with no pay raises was in 2002 and 2003.
  • Governor Daniels will not accept his full pay in 2010, the same action he took for 2009 when his salary was due to increase from $95,000 to $107,882.
  • State agencies will offer voluntary unpaid leave for the remainder of the current fiscal year.
  • State agency capital projects will be deferred. This includes new buildings or structures, infrastructure and system upgrades, and site improvements.
  • Some dedicated funds will be transferred to the general fund. Amounts will vary and will not disrupt the long-term viability of the program supported by the dedicated funds.

The state ended Fiscal Year 2009 with $1.3 billion in reserves. If the current revenue trend continues and the governor had not ordered spending cuts, state budget agency officials estimate the state’s reserves would be depleted by August 2010.”We agreed to dip into reserves $300 million over two years, and now it’s gone in four months. If we keep dipping, it will all be gone next August,” said Daniels.

A link to the October revenue report may be found here.

Audio from today can be found here.

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