INDIANAPOLIS (AP) -- State tax collections for March were $157 million less than what legislators had expected when they wrote the state budget, putting total revenues $755 million behind for the first nine months of the fiscal year.
Revenues have fallen short of original targets lawmakers used for the current budget in eight of the nine months of this fiscal year, according to figures released Monday. They were $4.1 million ahead in July, the first month of the fiscal year, but have been below projections every month since.
The miss of $157 million, or 16 percent, in March was second only to a $218 million shortfall in January.
A revised fiscal forecast in December predicted the state would take in about $763 million less this fiscal year than lawmakers approved for spending in the budget adopted in 2007. But collections based on that forecast have fallen short of target in the four months since it came out.
Even if revenues hit the downward-revised December forecast in the last three months of the fiscal year, the state would be off an additional $325 million from the budget approved by lawmakers -- close to $1 billion less in total.
A new fiscal forecast is due out later this month, and State Budget Director Chris Ruhl said it was "100 percent clear" that the update will result in less money to work with than December's forecast. That would make matching spending to available resources difficult, he said.
"Meanwhile, we are seeing numerous costly bills outside of the budget (bill) advance in the General Assembly," Ruhl said in a memo accompanying the March revenue update. "Every one of these bills standing alone is a veto candidate. The proper approach to funding worthy programs is to incorporate them into a budget that protects Hoosier taxpayers."
The Democratic-led House already has approved its version of a new one-year budget, while leaders in the Republican-controlled Senate will roll out their version of a two-year spending plan this week.
After the December forecast came out, Republican Gov. Mitch Daniels ordered that spending this fiscal year be cut by $767 million.
The steps already being taken include not giving state employees pay raises this year; a strategic hiring freeze; cutting higher education operating costs by 1 percent; and postponing spending on several planned capital projects. Agencies were told to make additional cuts of 3 percent on top of 7 percent reductions they already were supposed to make.
Those steps were being taken to help ensure that the state took in more than it spent this fiscal year.
Daniels does not want to tap into the state's $1.3 billion surplus, which includes money in its main checking account and some reserve funds. He said the money might be needed if the recession gets deeper and drags on indefinitely.
Ruhl said revenue collections are unlikely to immediately recover for two reasons:
* Income tax generated from investment income and capital gains will be offset by the substantial capital losses that have occurred in equity markets, and
* Sales tax growth will be diminished because of dramatic declines in retirement portfolios and available equity in primary residences will likely result in a higher saving rate. A recent study concluded that "new, normal" spending levels for consumers will only reach 86 percent of their pre-recession levels.