Column: Don’t play politics with state’s reserves


Commentary by House Speaker-Elect Todd Huston (R-Fishers), co-author of House Bill 1007

Indiana’s fiscal turnaround of the last decade can be attributed to the simple philosophy that state government should manage tax dollars like Hoosier families manage their households: Stick to a budget, don’t buy anything you can’t afford in the long run, avoid debt, plan for a rainy day and invest extra money wisely. 

These universal principles apply in the fortunate situation Indiana finds itself in today. Last year, Indiana’s tax revenues exceeded expectations by nearly $270 million, or about 1.7 percent. These unexpected revenues are the state government equivalent of a year-end bonus. Gov. Eric Holcomb and Republican Statehouse leaders agreed to responsibly invest these monies in one-time, higher education projects.

Under House Bill 1007, Indiana would cash-fund six state university capital improvement projects already approved last year for debt financing. This move would eliminate $21 million in annual bond payments and would save a total of $137 million in long-term interest payments and free up money for future investments and upcoming budgets.

Just as a Hoosier family would not use a cash bonus to take on a higher mortgage payment, it’s unsustainable for state government to spend one-time money on ongoing programs. Unfortunately, some lawmakers are intent on casting Indiana’s fiscal discipline in a negative light, and only want to talk about where the money didn’t go because Republicans insist that state government budget and act responsibly. They claim that Indiana can afford more government programs and spending, yet fail to consider the long-term financial consequences. These same lawmakers argue that Indiana should instead take on debt to pay for these projects simply because “it can.”

The truth is that Indiana’s fiscal discipline has allowed the state to pursue transformational opportunities and solve seemingly insurmountable problems because we have had the flexibility to do so. In recent years, Indiana has been able to immediately pay several significant, unexpected bills. When the Dept. of Child Services urgently needed a $255 million increase last year, budget reserves were available to ensure the most vulnerable Hoosiers were protected. When the federal matching grant for the South Shore rail project, a commuter rail line between South Bend and Chicago, was suddenly reduced, the state was able to cover the entire shortfall with $185 million in more cash. One of the largest, most transformative economic development efforts in our state’s history was kept alive because of responsible budgeting. Lastly, we were able to drastically reduce local school districts’ annual pension obligations through a $150 million pay down from state reserves. The ongoing annual savings of $70 million will pay for itself in less than three years. This investment and other K-12 funding increases are showing results: 99 percent of traditional public school teachers saw raises this year, according to initial data from the Education Employment Relations Board.

Very few states could address these financial bumps in the road without cutting programs or raising taxes. Not only were we able to use our reserves to fund nearly $600 million of the state’s needs, but we also provided record increases in K-12 education and student financial aid, and doubled funding for programs like First Steps, which serves infants and toddlers with developmental delays.

Hoosiers live within their means every day and expect nothing less from their state government. We refuse to let Indiana revert to the days of runaway spending, budget deficits and raided reserves. Strong, conservative leadership is critical to maintaining Indiana’s fiscal health. House Bill 1007 is not “an opportunity lost,” it’s a responsible investment with substantial returns that will pay dividends for Hoosier taxpayers.


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