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Indiana sitting on $3.9 billion in reserves, promising refundable income tax credit

The state had reserves of about $2.2 billion in April.

INDIANAPOLIS — Indiana closed the 2021 fiscal year with reserves of $3.9 billion.

The state had reserves of about $2.2 billion in April and was forecasting to add almost $463 million to it.

Instead, Indiana added $1.222 billion in just the final 75 days of the fiscal year. That allowed the state's general fund reserve to increase by nearly $1.7 billion. The extra money is thanks to Indiana recovering sooner than expected and federal relief money during the pandemic.

"Indiana's economic future and fiscal responsibility are directly linked. Maintaining sustainable finances creates a better, stronger, more prosperous Hoosier state for the next generation," said Tera Klutz, auditor.

As a result of the increase in funds, Indiana will make an excess reserve transfer of $1.1 billion, which will be split between retirement funding and a refundable income tax credit for Hoosier taxpayers. The last time the taxpayers saw a credit like that was in 2012. How much Hoosiers will get and when won't be determined until sometime in November.

Gov. Eric Holcomb issued a response to the auditor's report. It reads in part:

We quickly pivoted from managing through a once anticipated recession due to the ramifications of the COVID-19 pandemic to closing the state fiscal year with $3.9 billion in combined reserves. Now, with our 19th straight balanced budget, we are working on everything from mental health programs and health care supports to record increases in K-12 tuition support. We’re investing in state public facilities and infrastructure projects statewide on a level never seen before all the while doing everything we can to create a highly skilled workforce to fill the open jobs of today and tomorrow.

House Speaker Todd Huston (R-Fishers) also issued a statement, reading in part:

The automatic taxpayer refund ensures that reserves beyond what's needed go back to where they belong – in the pockets of hardworking Hoosiers. Indiana's already provided record funding for our K-12 schools and a fully funded infrastructure improvement plan on top of paying down debt, so this taxpayer refund is well-deserved.

Click here to view the full report from the auditor.

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