Tax

Indiana fiscal outlook strong, tax refund possible: governor

Reuters News
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Posted: Dec 06, 2011 5:43 PM
Indiana fiscal outlook strong, tax refund possible: governor

By Susan Guyett

INDIANAPOLIS (Reuters) - Indiana's fiscal outlook is stronger than expected and residents may be looking at a tax refund if the general fund surplus continues to grow, Governor Mitch Daniels said on Tuesday.

Revenue through the first five months of the fiscal year, which began in July, is running $117.5 million ahead of projections made in April, Daniels said, citing a November state budget agency report.

"We believe Indiana is in even stronger fiscal shape than we had thought," Daniels said.

Daniels also said the state had "got a Christmas bonus" after it found that some funds had not been transferred from a holding fund to the general fund over the past five years, providing an additional $288 million to Indiana's bottom line.

Daniels said the state was always aware of the money and it was collecting interest on the funds. When an internal audit showed those funds belonged to the general fund, it made the state's financial outlook rosier.

"Beyond some point of safety ... you ought to give the money back to the taxpayer or leave it with the taxpayer," Daniels said. "We have an automatic tax refund in the law of Indiana now and that would be my attitude."

If the state's budget is balanced and a surplus is more than 10 percent of the ensuing year's budget, half the money is put into the teacher pension funds and the rest is credited to taxpayers on their next tax bill.

"There is a very good possibility from everything we know that we would be in the zone triggering an automatic refund to taxpayers next year," Daniels said.

(Editing by Cynthia Johnston)