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Liz Joss
School of Public and Environmental Affairs at IUPUI

Last modified: Wednesday, September 21, 2011

‘Policy Choices’ report assesses Indiana government’s fiscal outlook

Sept. 21, 2011

INDIANAPOLIS -- A new report from the Indiana University Public Policy Institute examines trends in Indiana tax and fiscal policy and looks ahead to prospects for funding services expected of local and state government.

The report, "Assessing Indiana's Tax, Fiscal and Economic Condition," comes from the Institute's Policy Choices for Indiana's Future project, which enlists leaders to analyze, prioritize and develop policy options for candidates and office holders, their staffs and opinion leaders statewide. The goal is to inform public policy that will benefit the economic health of Indiana citizens and businesses.

Author Matt Nagle, senior policy analyst at the institute, notes that while state revenues have rebounded in the past 18 months, the impact of the recent recession is still being felt.

"Spending on Medicaid, other health services and primary and higher education will likely put greater pressure on revenue to keep up," he writes. "Constrained spending in other areas has left us in a fiscal position that is better than most states, but changes to federal policy and to economic conditions locally have the potential to create real issues for the state."

The report takes stock of how fiscal reality has changed for Indiana. It focuses on the impact of policy changes since 2000, including changes in property assessments for tax purposes, reductions in local property taxes and increases in the state sales tax rate, and increased state responsibility for the funding of public schools and the administration of welfare services. It includes:

  • A timeline showing significant changes in state and local tax policy
  • Trends in government revenue and spending
  • The most recent data on state revenues and the 2011-13 Indiana state budget
  • An outlook on economic conditions, prospects for revenue generation and implications of changes to federal tax and spending policy on state government

It notes that, adjusted for inflation, Indiana governments take in and spend less now than 10 years ago. In particular, the recession caused sharp declines in state and local revenue between 2008 and 2010. Federal stimulus funds, "reversions" of unspent state appropriations and the use of Rainy Day Funds and transfers from Medicaid and Tuition Reserves helped state government through the recession.

The policy brief is available online at For more about Policy Choices for Indiana's Future, see

The IU Public Policy Institute is a collaborative, multidisciplinary research institute within the School of Public and Environmental Affairs at Indiana University-Purdue University Indianapolis. For more information, see