State Budget Practice Report Cards and Budget Resource Guide
Indiana earned an average of B in transparency for 2017 through 2019, up from a C in the previous assessment. The improvement stemmed from its resumption in 2018 of disclosure of its tax expenditures, such as credits, exemptions, and other types of breaks. The state’s comprehensive report describes specific tax expenditures, gives their legislative basis, and estimates their use in fiscal 2018–21. Indiana’s one remaining shortcoming in transparency was an absence of deferred infrastructure maintenance costs.
Its avoidance of budget maneuvers—one-time actions—to achieve balance earned Indiana an A average in the category, though the state averaged only a C in budget forecasting. It does not develop multiyear revenue forecasts of at least three years in its budget documents but releases estimates covering only the remainder of the current fiscal year and the upcoming biennium. Indiana also fails to provide multiyear expenditure estimates.
The state’s A average in reserve funds reflects its use of volatility measures in setting rainy day fund targets. Contributions are tied to personal income tax growth under a law that requires money to be set aside when personal income grows more than 2 percent from the previous year. This and other Indiana rainy day fund policies follow best practices cited in the recent Volcker Alliance working paper, Rainy Day Fund Strategies: A Call to Action.
To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.
The report cards found here contain grades of the state's budgetary practices during the fiscal years of 2017 through 2019. Each state received marks in five critical categories, based on their adherence to best practices in several key budgeting indicators. The five categories covered methods used to achieve budgetary balance as well as how budgets and other financial information are disclosed to the public.
States received grades of A to D-minus (there are no “failed states”) for their procedures in estimating revenues and expenditures; their use of one-time actions to balance budgets; how they oversee and use rainy day funds and other fiscal reserves; the adequacy of their funding of public worker retirement and other postemployment benefits; and the quality of transparency of budget and related financial information. The grades are based on research conducted by public finance and budgeting professors and students at eight US schools of public administration or policy. The universities’ research efforts were augmented by Volcker Alliance staff, data consultants at Municipal Market Analytics, and special project consultants Katherine Barrett and Richard Greene.
State Budget Sources
State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses is a resource published by the Volcker Alliance designed to help public officials, policy advocates, journalists, academics, and concerned citizens fully understand the critical fiscal decisions that governors and legislators must make. The guide includes the links below to budgets for this state as well as legislative analyses of budget bills and treasurers’ or comptrollers’ monthly state cash-flow statements; capital spending plans; reports on public-worker pension funding and returns; and reports by local and national fiscal research organizations, bond rating firms, and associations of state fiscal and finance officials.