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Surplus scrutiny

The tax credit Indiana taxpayers will receive next year as a result of the state’s $2 billion surplus will be welcome relief for some, but all taxpayers should consider where it came from. The need for some families would be less if painful cuts in services hadn’t been made to create the surplus.

In announcing the budget news this week, Gov. Mitch Daniels couldn’t say how much of the money came from cuts in state agency spending versus growing state revenues. While it’s true that Indiana is seeing economic growth, it’s also a fact that agencies were directed to cut millions in spending.

For example:

•Almost 40 percent of the Indiana Department of Veterans Affairs budget was cut, to revert $293,000 to the state’s general fund.

•Reductions in K-12 education spending totaled $325.5 million, or 4.7 percent of the Department of Education’s general fund appropriation.

•At the Department of Labor, $2.7 million was cut, or 52 percent of the agency’s general fund appropriation.

•The Department of Child Services slashed nearly $104 million in spending, for 16.5 percent of its budget.

•The State Fair Commission gave back more than $1 million last year, or nearly 63 percent of the appropriation approved by the General Assembly.

•Almost 8.5 percent of the appropriation for Family and Social Services Administration was cut – a total of $63.5 million.

Among those cuts were some programs vital to low-income Hoosiers. The $1 million general fund appropriation for the Housing and Community Development Authority was eliminated. Those were dollars that would have helped families, seniors, veterans and people with disabilities find affordable housing. Also eliminated was a $300,000 allocation to buy Indiana-produced food for food banks.

Cutting spending during a recession and its aftermath is good policy as long as the cuts don’t create more harm. In Illinois, Gov. Pat Quinn last week announced additional cuts for a total reduction of $1.4 billion in spending, but noted his objection to the legislature’s cuts to education and the Illinois Department of Children and Family Services. He pledged to reallocate money this fall toward child protection.

“Our priority should always be the safety and well-being of our children,” Quinn said in a news release.

By contrast, Indiana officials announced last week that child protection services will be cut by $16 million this fiscal year – a much kinder cut than the 2011 reduction, but a reduction nonetheless.

The state’s surplus also overlooks a $1.7 billion debt Indiana owes to the federal government for unemployment insurance loans it began taking out in December of 2008. Nor does it acknowledge a pending independent audit of the state’s tax collection system, following disclosure of errors by the Department of Revenue that cost local governments about $200 million.

In addition to triggering a tax credit, the legislation the General Assembly put in place in the event of a surplus should trigger study and debate over the long-term effects of the cuts that contributed to it.