What to do with the budget surplus

With a great budget surplus comes many options. The state of Indiana should invest its $1.94 billion budget surplus to provide long-term benefits to the people of Indiana as opposed to waiting for the surplus to reach the $2 billion dollar trigger, activating an Automatic Tax Refund credit.

November 2012 was the first and last time in Indiana history that the state has given a tax refund, which was worth $111 per filer. Only two years later in the face of critical state needs, it seems as if we will experience another. Some suspect that Governor Mike Pence may be timing this potential tax refund with his reelection campaign.

Such a tax refund risks creating the perception that there is no important work to be done by the Indiana state government with this money. This is simply not the case.
The state of Indiana is still taking steps to heal from the recession. As anyone who studies business cycles knows, the 2009 recession will not be the last .

As homeowners should patch leaks in their roofs before it rains again, the state of Indiana should invest the surplus money to better prepare for future recessions.
This money should be wisely invested. For one, Indiana could expand its
public education system. Indiana is one of 10 states that does not offer a full day public kindergarten voucher program. About 25,000 young Hoosiers are unable to attend an early childhood program.

Currently, the state is instituting a pilot program to study the effects of kindergarten when the benefits of kindergarten have been well proven.

This money could also be used to improve Indiana’s infrastructure. It is always cheaper to perform basic maintenance on a bridge instead of having to fix it after it breaks.

Or it could be used to expand Medicaid under the Affordable Care Act to increase the access of Indiana’s poor to heavily federally subsidized health care insurance.
Researchers at Harvard Medical School say that 240 to 758 Hoosier’s lives could be saved each year through this expansion.

None of these programs would cost the entirety of the $2 billion, and each of them provides direct long-term benefits to the people of Indiana. Additionally, each one better prepares Indiana for future recessions.

Investing in education better prepares the future workforce, the Medicaid expansion increases the productivity and the economic security of the state’s poor, and investments in infrastructure reduces the risk of greater future costs in the case of accidents.

Deciding what to do with this surplus is about picking between good options. Many Hoosiers would appreciate the ATR credit. However, the credit would spread the surplus out thinly and decrease the total amount through transfer costs.

While long-term investments to Indiana’s education, infrastructure or health do not have the same short-term political gain as the ATR credit, they would better promote the general welfare of the state of Indiana.

­— Conner Shaw,
Scott Zellner