(INDIANAPOLIS) – You’re getting money back on your taxes.
Indiana finished the fiscal year two weeks ago with a nearly four-billion-dollar surplus. A law championed by then-Governor Mitch Daniels caps the state surplus at one-eighth of spending. If the state ends a two-year budget with more than that, half the extra money goes back to you. Even after some legally required set-asides, that’s still a half-billion dollars that will go back to taxpayers as a credit on your tax return next year.
House Speaker Todd Huston (R-Fishers) estimates the refund will be $170. The official calculation won’t be made till November, because it depends on how many taxpayers there are, and with extensions, the final returns for 2020 aren’t due until then.
Office of Management and Budget director Cris Johnston says as late as March, while a new budget was being written, the administration was concerned the pandemic could reignite and crush the job market all over again. He says while hotels and restaurants are still struggling, the rest of the job market bounced back faster than expected, outdistancing even the state’s revised economic forecast in April. The state took in $1.2 billion more than expected in the final two months of the fiscal year, enough to trigger the refund law.
Johnston also credits the federal pandemic relief bills, which picked up much of the tab for state public health and safety costs. And he notes Indiana was one of the first states to collect taxes on Internet sales after the Supreme Court ruled they could be treated the same as other purchases. That change was always expected to bring a windfall, but Johnston says it proved especially important when pandemic restrictions sparked a surge in online retail.
You’ll get the money back as a credit when you file your income taxes for 2021. It’s just the second time the automatic refund has been triggered, and the first time in nine years.
Huston says the refund law “ensures that reserves beyond what’s needed go back to where they belong – in the pockets of hardworking Hoosiers.” Senate Appropriations Chairman Ryan Mishler (R-Bremen) notes the half of the excess reserves which don’t go to taxpayers will go to shore up unfunded teacher pension liabilities. On top of money included in the new state budget, that’ll pump a billion dollars into the pension fund, with another $700 million scheduled next year if the economy stays strong.
Legislative Democrats’ fiscal leaders contend the $2.8 billion dollars the state still holds in reserve is overdoing it. Gary Senator Eddie Melton says the state should use that money to expand preschool, and forgive incorrect unemployment payments. Indianapolis Representative Greg Porter says the state could easily outstrip projections again by a billion dollars or more in the rest of this year. He says that money should go to minority health, teacher pay, and student loan relief.