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Indiana sees big budget surplus jump as tax refund eyed

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Indiana Office of Management and Budget Director Cris Johnston speaks alongside Budget Agency Director Zac Jackson and State Auditor Tera Klutz. (Brandon Smith/IPB News)

Indiana’s surging tax collections over the past year have pushed state government’s budget surplus up more than 50% to about $6.1 billion, state officials announced Friday.

The jump from last year’s record high of $3.9 billion in cash reserves comes as the Republican-dominated Legislature is set to soon consider a proposal from Gov. Eric Holcomb for distributing $225 payments to taxpayers for what he calls “inflationary relief.”

The proposed payments could cost the state about $1 billion, but Holcomb has said they are affordable. Tax collections for the budget year that ended June 30 rose about 9% from the previous year.

If lawmakers approve Holcomb’s refund plan during the special legislative session that begins July 25, it would be the second round of state payments to taxpayers this year. The state began distributing $125 payments this spring under an automatic taxpayer refund law because of last year’s large surplus that was boosted by federal COVID-19 relief funding.

Democrats have questioned the helpfulness of the state payments because of slow distribution and have pushed for suspending Indiana’s 62 cents-per-gallon in gasoline taxes, saying that would provide more immediate relief amid the country’s high inflation.

The state Department of Revenue says it started direct deposit payments of the refunds in May and has paid out about $250 million of the estimated $545 million to be distributed.

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