Why Indiana’s revenue forecast is $2.4B less than expected for next three years

By GARRETT BERGQUIST
WISH-TV | wishtv.com

The state revenue forecast released Wednesday shows Indiana taking in $2.4 billion less over the next three years than had been forecast in December, when lawmakers prepared to create a fiscal budget for the next two years. That’s an estimated cumulative loss between now and the end of the 2027 budget year, so about 26 months total.

They say two problems are driving this.

First, employment grew more slowly than expected. That means fewer payrolls to tax. The other is drops in corporate income tax revenue due in part to the current volatility in the markets and uncertainty over trade policy.

The top budget writers from both chambers say nothing is off the table in terms of potential cuts or tax hikes. But, they say they won’t cut anything from education unless they believe they have no other choice.

State Sen. Ryan Mishler, R-Mishawaka, said, “I was very concerned. In the 21 years I’ve been here, I was here during the recession in ’08, the ’09 budget. This one scares me a lot more than that … Because the numbers are a lot higher.”

State Senator David Niezgodski, D-South Bend, said, “We need to put all the options on the table, and I’m seeking collaboration with the majority so we can truly do the right things that are going to be measurable for Indiana that we are not going to make this picture look any worse.”

The state has $2.7 billion in reserve, on paper, which isn’t enough to make up the lost revenue.

But, the top Democrat on the House Ways and Means Committee warns dipping into that reserve would leave the state with too little emergency cash if something else happens.

The legislative session still has about a week left. Lawmakers say they don’t expect to call a special session.

This story was created from a script aired on WISH-TV and was originally published by WISH-TV at wishtv.com/news/politics/indiana-revenues-drop-april-2025.