Commentary: Indiana’s shortfalls and windfalls

By Abdul Hakim-Shabazz
IndyPoltics.Org

Abdul Hakim-Shabazz is an attorney and the editor and publisher of IndyPoltics.Org.

Let me start this by saying this: The state’s discovery of more than $200 million in undistributed local option income taxes last week is a little embarrassing.

But it is not the end of the world

In fact, if you look at it from a bigger picture, it’s actually a positive. Allow me to explain.

Although I write about Indiana government and politics, I also spend a lot of time paying attention to other state governments. I’m kind of a dork that way.

And when I look at the current financial situations in other states, I am willing to bet the $529 million in total revenue the state “misplaced” over the past six months and tell you there are a lot of other places that wish they had Indiana’s problems.

In other words, in Indiana, the problem may be missing money. In more than two dozen other states, money isn’t missing – it’s just not there.

According to the Center on Budget Policy and Priorities, 30 states have projected shortfalls for next fiscal year and have had to engage in drastic spending cuts or raise taxes over the 2011-2013 budget years.  I’ve listed a sample just below…

  • Illinois – $1.1 billion
  • California –  $8.4 billion
  • New York – $2 billion
  • Ohio – $3 billion
  • Kentucky – $371 million

If you picked up the L.A. Times, you probably saw a headline that read Standard and Poors rated California’s finances as dysfunctional.

If you grabbed a recent copy of the Chicago Tribune, you just found out the state’s long term finances are so bad that it may be time to call Dr. Jack Kervokian.

Compare that to Indiana’s money problems – which are basically some careless accounting errors that still leave the state with a nearly $2 billion budget surplus and plans for taxpayer refunds.

Wouldn’t a resident of another state wish he had these problems? Instead, all he gets is tax increases, neglected infrastructure, service cuts and more inefficiencies.

And here’s another added benefit of this entire situation: If local governments have gone without this money for the past couple of years, doesn’t that raise the question of whether it’s really needed in the first place? Just a thought, which I will expound on in another column.

But here’s a thought for this column: I went back and did some checking from 2003-2004 when the state delayed hundreds of millions of dollars in payments to local governments,  schools and universities and no one stood on the Capitol steps holding “Accounting for Dummies,” as Democrat gubernatorial hopeful John Gregg did last week.

There is nothing more beautiful than fiscal outrage coming from the same political party whose ideas to shore up budget shortfalls usually involve taking funds from one-time sources of revenue and using them for operating expenses, while providing no answer for how these same programs will be funded next year.

So is this embarrassing for the Daniels administration? Yes, especially since finances are supposed to be its area of specialty. And this problem is easily fixed by doing a top to bottom audit to make sure dollars collected are put in the proper funds for distribution.

But when I look at this from a broader context and more global perspective, if Indiana’s biggest problem is misplacing money and still maintaining a surplus and giving back taxpayer refunds in the worst economy since the Great Depression, I’ll take that any day over the alternative.

Like I said, if your problem is that you are finding money in a day and age when usually there is no money, that is not a bad universe to inhabit.

Abdul is an attorney and the editor and publisher of IndyPoltics.Org. He is also a frequent contributor to numerous Indiana media outlets. He can be reached at abdul@indypolitics.org.

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