Budget in crisis: projected $2.4 billion loss in state revenue

Dear neighbor,

While crafting the state budget, legislators receive two revenue forecasts— the first in December and the second in April. Both forecasts give lawmakers an estimate of how much money Indiana will collect from state income taxes, corporate taxes and more. These estimates are vital since Indiana’s revenue directly correlates to what we can spend in our two-year state budget.

On April 16, we discussed the current revenue forecast. The forecast showed extreme economic uncertainty. Our revenue collections for the next two years are projected to drop by $2.4 billion from what we expected just four months ago. Indiana will be down $403 million this year, $963.9 million in 2026 and over $1 billion in 2027. This is an unprecedented negative change in four months.

We knew Trump’s tariffs would affect our state, but this is a reality shock. When the U.S. gets a cold, Indiana gets pneumonia. Now we’re $2.4 billion short for our state budget.

Our state budget was estimated to cost $46 billion. By losing these dollars, we’ll need to cut our budget by 4.35%, down to $44 billion. We don’t know if there will be additional federal cuts that affect our state budget.

We have two tasks before us. First, we must protect both K-12 education and Medicaid which are critical to our people. Second, we must correct the mistakes that have led to this crisis. We have delayed raising the cigarette tax for far too long. We have made enough small income tax cuts to weaken our budget. These mistakes need to be corrected.

The supermajority has offered no explanation for yet another major forecasting disaster. They are failing us when it comes to our state budget.

During this time of uncertainty, House Democrats are committed to lowering costs, protecting jobs and preserving essential services. As always, please reach out to my office with any questions, comments or concerns at h86@iga.in.gov.

To view the full revenue forecast, click here.