Sales tax collections are down more than three percent from expected levels through nearly half of the fiscal year.
The new revenue forecast includes optimistic expectations for individual income taxes.
The new state tax revenue projection says Indiana will take in about $213 million less than a December forecast predicted.
State leaders say they’re cautiously optimistic about Indiana’s fiscal future.
State officials say even if the revenue forecast is strong, that does not mean the state will increase its next budget.
Pence Thursday signed legislation authorizing the release of $400 million for transportation projects.
Overall revenues were boosted by a surge in individual income tax collections, which came in more than $70 million ahead.
Americans for Prosperity will air TV ads in support of a tax cut even GOP lawmakers have expressed skepticism about.
Despite forecasts showing modest growth each of the next two years, the Republicans who control the state's coffers say they're staying cautious.
The governor-elect's proposal banks on 2.5-percent revenue increases in the next two years and on spending 1.5-percent more in the next state budget.