INDIANAPOLIS (WRTV) — Braun administration officials on Wednesday said strong revenue growth and budgetary discipline have left the state with billions it can use where needed.
State Comptroller Elise Nieshalla, a Republican, said the state ended the 2026 budet year with $3.99 billion in its budget reserve. That’s in addition to a $1.86 billion budget surplus. Those figures represent increases of 60% and 174%, respectively, over last year.
“Hoosiers can count on the state of Indiana to manage fluctuating factors and still stay in the black with a surplus,” she said.
State budget officials said two things drove those numbers: stronger than expected tax revenue growth and much less growth in state government expenses. The latter grew by 1% during the 2026 budget year compared to 3.9% a year earlier. That number resulted from cost-cutting measures imposed by the Braun administration after state economists in April 2025 projected massive revenue losses due to President Donald Trump’s tariff policy. So far, those losses have not happened.
Gov. Mike Braun has said the state’s budgetary situation is what allowed him to suspend the gas tax earlier this year in response to gas price spikes stemming from the war with Iran. Braun suspended the gasoline use tax on April 6 and the excise tax a month later. Those orders have cost the state and local governments a combined total of about $533 million in revenue to date. Braun has said his administration will reimburse local governments for the lost revenue.
State Budget Director Chad Ranney said the gas tax suspensions did not affect reserves or the budget surplus because gas tax revenue goes to a separate, dedicated road maintenance fund. He said the state highway fund can cover the lost revenue, with lawmaker replenishing the fund out of the state budget reserves later.
Braun called the announcement a vindication of his policies. He said it gives Indiana the financial footing necessary to make investments he wants to see in the next budget, such as early child care.
“The one thing you never know is, when you campaign on trying to run something more efficiently, does it play out? I think the confidence that I got that that would occur eventually is because I ran a business for 37 years,” he said.
Reps. Gregory Porter and Ed DeLaney, both Indianapolis Democrats who serve on the State Budget Committee, said the reserve and surplus figures are the result of chronic underinvestment in areas such as education and child care as well as unspent money going back into the state’s general fund–about $187 million, of which roughly $98 million came from K-12 education.
“We funded K-12 education below the inflation rate, (Child Care Development Fund) dollars were cut, and a lot of other programs for human infrastructure were not funded,” Porter said. “We’ve had discussions over the years of moving dollars right now versus waiting until the budget process occurs because we can do it now. They’ve done it before.”
DeLaney said celebrations of the state’s revenue picture ring hollow to him given the property tax revenue losses local governments and school corporations face due to last year’s property tax changes. He pointed out the large number of school operating referendums on the ballot. According to the Department of Local Government Finance, 38 have been approved so far statewide for this November.
“We have squeezed them, squeezed them, squeezed them with the tax legislation we did on property taxes,” he said. “So they’re supposed to sit there today and watch this press conference and say, ‘Isn’t it nice? They’re all happy at the Statehouse.’ They got a surplus. We can’t pave our roads. We can’t pay our teachers. We’ve got to have multiple referenda. We’ve got to raise local income tax but it’s okay. Gov. Braun is happy. I don’t think they feel that way.”
The 2027 budget year began on July 1 and runs through June 30 of next year. The 2027 budget was approved as the second half of a two year budget in 2025, so state spending decisions are largely locked in for the period. State lawmakers will begin crafting the 2028-2029 budget when they convene in January.
