State Budgets

Indiana State of the State Address

The state of Indiana is strong under Governor Holcomb's leadership -- the biggest current risk is complacency.

The Hoosier State has implemented commendable changes regarding tax and fiscal policy in the past several years, with strong leaders at the helm including Governor Eric Holcomb, and former Governors Mike Pence and Mitch Daniels. Governor Holcomb’s 2018 State of the State address echoed many of the themes he promoted in his 2017 address, which my colleague Joel Griffith analyzed last year.

To give some relevant background, Indiana recently skyrocketed to #2 in the nation in terms of economic outlook, according to the 10th edition of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index. Just a few years ago, the state was ranked a mediocre #24. Some of the most notable factors in this improvement include a decrease in the corporate tax rate and property tax burden, a repeal of the state’s inheritance tax, and the passage of right-to-work legislation. Additionally, Indiana qualified for ALEC’s State Tax Cut Roundup publication three years in a row, from 2013-2015, with tax cut phase-ins continuing to this day. Clearly, the state has been serious about providing relief to its hardworking taxpayers.

In his address, Governor Holcomb declared “Indiana is on a roll” and the state continues “to operate within an honestly balanced budget” with “a AAA credit rating and nearly $2 billion in our state’s savings account.” He applauded the state’s low tax and sensible regulatory environment, the reasonable cost of living, and the low cost of doing business in Indiana. The governor declared this year his “focus can be summed up in three words: people, people, people.” Holcomb fixated on modernizing the state’s education system and preparing Hoosiers for the 21st-century economy. This includes apprenticeships, on-site training and education opportunities and prison programs. This is a commendable goal, as Holcomb explains that employers in the state say they cannot find appropriate skillsets for approximately 85,000 vacant positions. The governor also discussed “upping the ante” for a variety of state initiatives, including the Indiana Economic Development Corporation. This unfortunately could involve government taking a central planning role to lure businesses to Indiana with tax breaks and other incentives. A far better means for robust growth is continued cultivation of a free market environment and efficient state government.

Governor Holcomb also focused his attention on infrastructure needs, including repaving roads, maintaining and replacing bridges and building an additional water port. Considering the large increase in the gas tax and other motor vehicle fees passed last year, additional tax hikes to cover these costs would be especially disappointing.

Indiana’s rapid and extensive improvement in tax and fiscal policy is nearly without rival. Complacency after such success along with interference in the free market pose the biggest risks to continued economic growth. Governor Holcomb and state lawmakers can avoid these potential pitfalls by building on the reforms of recent years.

In Depth: State Budgets

Smart budgeting is vital to a state’s financial health. The ALEC State Budget Reform Toolkit offers more than 20 policy ideas for addressing today’s shortfalls in a forthright manner, without resorting to budget gimmicks or damaging tax increases. One way to stabilize budgets over time is to embrace…

+ State Budgets In Depth