Indiana is sitting on such a fat wallet, the state risks getting a sore back.
Gov. Mike Pence said proudly last week that Indiana ended its fiscal year on June 30 with a $2.1 billion surplus. That’s a gain of 10 percent from two years ago.
Pence said all that money gives Indiana a cushion against raising taxes if the economy slumps, and it protects our shiny AAA bond rating with creditors.
But how much cushion is too cushy?
Pence said the state’s cash reserve has grown to 14.1 percent of annual spending — topping what he called his objective of having a 12.5 percent reserve.
Could Indiana do something better with at least the money above the 12.5 percent mark?
Pence’s critics say the state should be spending some of its nest egg on any number of possibilities — highways, education or child welfare, to name a few.
One idea that no one seems to mention is giving some of the surplus back to taxpayers.
That was former Gov. Mitch Daniels’ idea. When the state ended its 2012 fiscal year with a surplus of $2.15 billion, Hoosiers got “automatic taxpayer refunds” on their income taxes of $111 per person or $222 per couple.
At Daniels’ urging, the state Legislature passed a law in 2011 setting up automatic refunds when the state’s surplus topped 10 percent.
Lawmakers seemed to be surprised when refunds actually happened, and they quickly boosted the standard to 12.5 percent.
So why doesn’t this year’s 14.1 percent surplus trigger a refund? Lawmakers also said money set aside for education can’t be counted, which leaves Indiana’s current surplus at only 8.7 percent.
A report last week in the Indianapolis Star predicted the state never again will hit the targets required for a taxpayer refund.
So what else could be done with our big bank account?
News reports say Pence has hinted that if things keep going well, he’d consider paying off Indiana’s $250 million unemployment insurance debt to the federal government. It’s left over from the depths of the recession.
Reports say that debt forces Hoosier businesses to pay a penalty of $105 per employee — set to grow to $126 next year — on their unemployment insurance premiums.
Paying off a debt seems like a fiscally conservative thing to do, and so does reducing insurance costs for Hoosier businesses.
Pence should not have to think very long or hard about spending some of Indiana’s surplus wisely to retire the unemployment service debt.