Can Indiana Avoid Tax Increases Indefinitely?
Experts Say State Leaders' Anti-Tax Promises May Be Impossible To Keep
Last Updated: 1281 days ago
Lawmakers have repeatedly said they won't raise taxes to keep the state afloat, but some are questioning whether that's a realistic promise to make.Revenue numbers have dropped consistently over the past few months, but resistance to increasing taxes is still strong among state leaders, 6News' Norman Cox reported."Indiana has distinguished itself among the states, avoided tax increases," Gov. Mitch Daniels told reporters at the beginning of the month.But even he admits that the state's revenues will be exhausted by next summer.After that, some experts said they believe education will be the first area to see cuts because it the largest part of the budget."They're going to be looking at laying off teachers," said John Ketzenberger of the Fiscal Policy Institute. "You're going to be looking at closing down some area schools or that kind of thing. You know, it's going to be a bad situation."All the cuts wouldn't come from education, but to illustrate the scope of the problem, saving $1 billion, which the state may burn through by next summer, would take laying off more than 16,000 teachers, or about 27 percent of all teachers in the state.Butler University economics professor Bill Rieber said a tax increase might have to be enacted."Everyone knows that state expenditures can be cut only so low, and we're getting to that point pretty close now," he said. "Perhaps it's temporary until the recession is over. So that's a possibility."The Census Bureau lists Indiana's per capita state and local tax burden ranks at 13th, although the Tax Foundation reports Indiana is tied for 17th when its low wages are taken into account.Indiana University Purdue University-Indianapolis political science professor William Blomquist said politicians who've dug their feet in against tax increases may be locked into that position."I think that they're stuck for this biennium. I think it would be extraordinarily difficult to go back and do a tax rate increase during the current budget biennium," he said.It is possible that the recession could come to an end and that state revenue numbers could begin to improve, but experts said that option is not likely to happen anytime soon.