INDIANAPOLIS — Amid falling revenues caused by the coronavirus pandemic, Gov. Eric Holcomb has asked state agencies to plan for 15% budget cuts for fiscal year 2021.
“This is the first of what is likely to be a number of steps we’ll take to rein in state spending while we continue to provide critical government services to Hoosiers without interruption,” Holcomb said in a release.
During the last economic recession, Holcomb said, revenue fell nearly $3 billion short of state budget forecasts. The State Budget Agency estimates losses could be worse in the upcoming budget, according to the governor.
In April, a memo asked state agencies to limit their travel, hiring and purchases while looking for potential savings. That month, the state reported a $1 billion revenue shortfall.
Cris Johnston, director of the Office of Management & Budget, said that “everything is on the table” but that the state would scrutinize the 40% of the general fund budget that didn’t pay for K-12 education.
“There are going to be different steps that we take over time as we learn more about the revenue picture (and) the extent of federal assistance,” Johnston said. “I think the whole picture is going to be a combination of spending cuts … using our reserves and then also using federal assistance to get to the other side of this.”
In addition to budget cuts, Holcomb said, the state won’t pursue previously announced projects, including $291 million in several capital improvements at state schools. Around $65 million in Next Level Trail grants, as well as $110 million in deferred maintenance, including $70 million for parks, are also on hold.
The unemployment rate in Indiana, 16.9%, is 2.2 percentage points higher than the national average, which state officials partially attributed to the state’s high number of manufacturing jobs.
“Manufacturing was probably one of the hardest (hit) industries – that and leisure and hospitality,” Fred Payne, commissioner of the Department of Workforce Development, said. “We’re talking to employers on the manufacturing side who are ramping back up.”
Combined, those two industries have lost about 194,000 jobs during the pandemic, Payne said.
He spoke Friday of lower numbers of continued claims filed for unemployment as well as declining initial claims.
The weekend ending March 28 saw the highest number of initial claims, with 139,174 Hoosiers filing. Since then, claims had declined to 30,311 by last week, still 10 times higher than the number of average claims the department saw before the pandemic.
“Those are internal metrics that we look at to determine whether or not we’re coming out of this quicker,” Payne said. “It’s going to take some time to get (back) up.”