Governor Eric Holcomb gives COVID-19 update on May 20, 2020.
Gov. Eric Holcomb announced today he will reduce funding to state agencies by 15% following the steep drop in revenues during the coronavirus shutdown.
It’s unclear what specifically will be cut at this point.
State income plunged 46%, or more than $1 billion, in April year over year as Hoosiers continued to stay home and many businesses were partially or completely closed due to the pandemic.
Officials expect continued declines in the months ahead.
“This is the first of what is likely to be a number of steps we’ll take to rein in state spending, while we continue to provide critical government services to Hoosiers without interruption,” Holcomb said in a prepared statement.
Indiana isn’t alone in facing a loss of revenues. Other states have been taking similar steps. Texas, for instance, announced a 5% cut to budgets earlier this week.
The House of Representatives, controlled by Democrats, passed a $3 trillion stimulus bill that would provide cash for state and local governments, but President Trump and Senate Republicans have made clear it’s dead on arrival.
In a conference call earlier this week, Indiana Sen. Mike Braun indicated there’s room for negotiation, but he hopes state and local governments recover now that they’re reopening. He said fellow Republicans want liability insurance for businesses trying to reopen and are concerned about bailing out states that are behind on pension payments for public employees. The latter has been a longstanding problem in Illinois.
“I think all of us are going to be willing to look at it,” Braun said. “If you’re expecting a bailout for pensions and for the fact you don’t have rainy day funds, have balanced budgets like we do in Indiana, I don’t think that’s going to fly.”
Indiana’s 2-year, $34 billion budget is through June 30, 2021. The reductions ordered by Holcomb would start July 1.
Holcomb said state budget officials estimate the loss during the next 14 months could be even larger than the $3 billion decline following the 2008-09 recession.
He said cost-saving measures include operations, space, travel and hiring. He’s also put on hold plans to use $291 million in reserves for several projects for higher education.
The governor also postponed $110 million for maintenance, most of which was for state parks, and $65 million for trail grants.
State lawmakers will craft a new two-year budget in the next legislative session.
“By taking immediate action to tighten our belts across state government,” Holcomb said, “we will maintain maximum flexibility to navigate a still very uncertain economic picture. All options are on the table, and as we approach tax filing deadlines and better understand all of the federal funds available to Indiana, we will make more precise adjustments ahead of crafting a budget for next biennium.”
Contact IndyStar reporter Chris Sikich at Chris.Sikich@indystar.com. Follow him on Twitter: @ChrisSikich.
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