Indiana closed the books on fiscal year 2014 on June 30, ending the year with a $106-million surplus and more than $2 billion in reserves.
The $2 billion in reserves is allocated to Indiana’s emergency funds, medical and state tuition funds and the rainy day fund. According to a press release, the state government could operate for 49 days using this reserve money if a state emergency or economic disaster were to occur.
“At the end of the fiscal year, we do not want to have to go back to Hoosier taxpayers and raise taxes because we need more money,” State Auditor Suzanne Crouch said in a press release. “By living within our means, keeping prudent reserves and identifying areas of potential growth, we can continue to make Indiana the fiscal envy of the nation.”
Indiana’s thriftiness has also allowed the state to maintain its coveted AAA credit rating, making Indiana one of only a handful of states in the country to accomplish this feat.
“These numbers show that the Indiana economy is in a good place,” Crouch said. “The $2-billion reserve will help Indiana keep our AAA credit rating, indicating to businesses and employers that Indiana has a stable economic environment and is a wise place to make investments, start new businesses and hire Hoosiers.”
While republicans commend Governor Pence and his administration for its fiscal conservatism, democrats have said the surplus results from cuts in higher education and social programs.
Mike Claytor, who is running for state auditor as a democrat, is one of these critics. He said he believes the state needs to be more transparent about its spending and should adjust its financial priorities to better suit the needs of citizens.
“The state isn’t really forthcoming about the things it does and doesn’t do,” Claytor said. “The state’s priority seems to be reducing taxes for corporations instead of improving our educational systems. Several years ago, the state reduced education funding by $300 million, and they never restored that funding.”
Claytor, who has worked as an accountant and attorney for more than 40 years, cited several instances where he believes the state is lacking in transparency.
“For example, there was a law passed several years ago that said the state had to pay a stipend to parents who adopted special needs children. The stipend was never paid, and the state owes these families $100 million in stipends,” Claytor said. “It’s sort of a slap in the face to parents of special needs children when, under contract, the state has rescinded the stipend money to make the fund balance appear higher.”
Claytor also said the $2 billion in reserves does not account for contingent liabilities, which are financial obligations of an unknown amount that the state will have to pay in the future. According to Claytor, the recent lawsuits, such as one concerning the Bureau of Motor Vehicles, are not accounted for in the budget.
“If you really looked at all the money that the state should be paying, the fund balance would be around $1 billion,” he said. “Ultimately, we don’t need $2 billion stuck in the bank when there are more important items we should be addressing.”