FOR IMMEDIATE RELEASE
May 18, 2010
CREATIVITY AIDS STATE BUDGETING
20 special funds diverted in crisis
NIKI KELLY
The Journal Gazette
When state budget officials close the book on the fiscal year next month, they will have to dip into various special accounts to help balance the budget.
Because Indiana’s receipts from sales, income and other taxes have dropped substantially, the General Fund will bring in $13 billion while the state is scheduled to spend $14 billion.
The state is leaning on rainy day funds – similar to a savings account – but also will have to transfer money from several funds dedicated to other specific purposes, similar to when a cash-strapped family decides to pull money from a retirement or college fund.
State Budget Director Chris Ruhl has a list of about 20 funds that are up for consideration. But he doesn’t know how much in total will be transferred in June or from what funds.
He said the transfers will depend on final revenue collections, the amounts realized from other budget cuts and the level of reserves needed to cover the second year of the biennial budget.
The fund with the largest balance is the Personal Services Contingency Fund at about $90 million. It is slightly different from the others because it contains general tax dollars as opposed to money derived from separate or special fees.
The fund covers costs for state employee salary increases, bonuses and health care.
But Gov. Mitch Daniels froze salaries, which will allow the state to use that money toward the budget.
Ruhl acknowledges that the other funds in question were set up by lawmakers for a specific reason and are generally financed by an outside fee of some kind. But he said in severe recessionary times, nothing is sacred.
“The fact that the funds were purportedly raised for a specific purpose doesn’t condone wasting money or not capturing those funds for a higher priority, such as education or public safety,” he said.
“Our ability to cast the net wider than only general fund spending has greatly enhanced our ability to protect taxpayers and deliver critical government services.”
Still, that means a boater who paid an extra fee for lake and river improvements probably won’t get them.
Landfill tipping fees meant to aid recycling could be diverted. And even court fees paying for DNA testing are up for grabs.
Donald Scearce, president of the Dewart Lake Protective Association in Kosciusko County, isn’t happy about his lake not receiving any lake enhancement grants this year, but he understands.
In the past, Dewart Lake has received grants to help with soil erosion and to eradicate a foreign weed taking over the waterway.
This year, Department of Natural Resources officials have decided to limit the grants. They have earmarked only $400,000 for a March distribution that is on hold. There is more than $5.8 million in the fund.
“It’s too bad, but it’s all about the economy. We are hoping next year will be better,” Scearce said. “What can you do? You can’t get angry. You just gotta pull your bootstraps up and make do with what you got.”
Money from the DNA sample fee is also in question. Anyone convicted of a felony or misdemeanor in Indiana pays the $2 court fee, which is then used to process samples from offenders in prison for the state’s DNA database as well as process DNA in police investigations.
Steve Johnson, executive director of the Indiana Prosecuting Attorneys Council, said he feels this fund should be left alone since it is highly important in solving crime and making Indiana safe.
“I hope they find (money) someplace else because I think DNA is the gold standard in terms of identifying people and also exonerating people,” he said. “If they are taking this money it creates backlogs or takes longer to solve crimes or cold cases and that’s bad for Indiana citizens.”
The Indiana State Police lab is currently caught up on DNA cases.
Two funds that are likely to take large hits because their programs are currently suspended are the Recycling Promotion and Assistance Fund and the Waste Tire Fund. Each one has more than $8 million built up in balances.
The recycling fund is financed through a 50-cent-per-ton surcharge that landfill operators collect from waste haulers. It is sent to the Indiana Department of Environmental Management.
IDEM then gives grants to promote and educate Hoosiers about recycling. An example is a university that uses the money to provide students with recycling bins.
The Waste Tire Fund is financed through a 25-cent-per tire-fee that every person in the state pays when purchasing new tires. The money is then used by IDEM to address the challenges of improperly disposed tires, such as cleaning up waste tire sites before they catch fire or become a haven for mosquitoes.
Jeffrey Miller, a board member for the Indiana Recycling Coalition, said Indiana’s recycling programs are already underfinanced when compared with those of neighboring states.
“It’s very frustrating because the environment then suffers, and we take steps backward,” he said. “We are sacrificing the original reason for the funds. It’s not easy. I don’t have all the answers. I wish I knew more of all of the finances so I could say we should be doing something else.”
There is one fund that Ruhl can raid without affecting anything – the Indiana Gaming Fund, which has almost $18 million in it.
Ernest Yelton, executive director of the Indiana Gaming Commission, said any fines assessed to casinos, as well as relicense fees, go into the fund.
Interestingly, no money has ever been taken out of it. That’s because lawmakers have never authorized the money to be spent on anything, so it has just built up over the years.
“It’s not funny. We could use the money,” Yelton said. “But it’s a good source to balance the budget that no one is going to suffer from.”
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