Governor Orders Budget Cuts to Keep Up with COVID-19 Costs

The coronavirus recession could cost Indiana more than three-billion dollars over the next 14 months.

Indiana missed budget projections by nearly three-billion dollars in the 2008 recession. Governor Holcomb warns the downturn triggered by the pandemic could be even worse, and is slashing budgets to keep up.

Holcomb is ordering state agencies to deliver plans to cut spending by 15-percent. He’s also canceling plans to spend 300-million dollars on university construction projects — they’ll be paid for with bonds if they happen at all. And the governor is canceling an additional 170-million dollars in local trail grants and maintenance projects at state parks and other facilities.

Schools aren’t part of the order, but budget director Cris Johnston says they could be part of a future round of cuts. He says “everything is on the table,” though Holcomb says the state won’t make any cuts that interfere with the pandemic response. For this round, Holcomb says he’s urging agency heads to “look under the couch cushions” for any savings that can be implemented without affecting services. Johnston says it’s a matter of prioritizing essential items over those which may need to wait.

Johnston says the state will be watching to see what help may come from Washington, either in the form of more federal aid or looser restrictions on how states can spend money they’ve already received.

The state has already pulled a billion dollars from its two-point-three-billion-dollar Rainy Day Fund to make up for an April revenue shortfall. The state will recoup a big chunk of that money from tax returns delayed from April to July, but budgeters expect Indiana to continue falling short of the projections in the budget approved last year.