CHAPTER 21. BUSINESS CYCLE STATE SPENDING CONTROLS
IC 4-10-21
Chapter 21. Business Cycle State Spending Controls
IC 4-10-21-1
"State spending cap" defined
Sec. 1. As used in this chapter, "state spending cap" refers to the
state spending cap determined under section 2 of this chapter.
As added by P.L.192-2002(ss), SEC.4.
IC 4-10-21-2
State spending cap formula
Sec. 2. (a) For the state fiscal year beginning July 1, 2003, and
ending June 30, 2004, the state spending cap is equal to the result
determined under STEP THREE of the following formula:
STEP ONE: Determine the sum of the total of the
appropriations made from the state general fund and the
property tax replacement fund (including continuing
appropriations) for the state fiscal year beginning July 1, 2002,
and ending June 30, 2003.
STEP TWO: Subtract from the STEP ONE result two hundred
forty-three million dollars ($243,000,000), which is the amount
of certain reversions made by state agencies.
STEP THREE: Multiply the STEP TWO result by one and
thirty-five thousandths (1.035).
(b) For the state fiscal year beginning July 1, 2004, and ending
June 30, 2005, the state spending cap is equal to the product of the
result determined under subsection (a) multiplied by one and
thirty-five thousandths (1.035).
(c) The state spending cap for a state fiscal year beginning after
June 30, 2005, is equal to the product of the state spending growth
quotient for the state fiscal year determined under section 3 of this
chapter multiplied by the state spending cap for the immediately
preceding state fiscal year.
(d) The state spending cap imposed under this section is increased
in the initial state fiscal year in which the state receives additional
revenue for deposit in the state general fund as a result of the
enactment of a law that:
(1) establishes a new tax or fee after June 30, 2002;
(2) increases the rate of a previously enacted tax or fee after
June 30, 2002; or
(3) reduces or eliminates an exemption, a deduction, or a credit
against a previously enacted tax or fee after June 30, 2002.
The amount of the increase is equal to the average revenue that the
budget agency estimates will be raised by the legislative action in the
initial two (2) full state fiscal years in which the legislative change
is in effect.
(e) The state spending cap imposed under this section is decreased
in the initial state fiscal year in which the state is affected by a
decrease in revenue deposited in the state general fund as the result
of the enactment of a law that:
(1) eliminates a tax or fee after June 30, 2002;
(2) eliminates any part of a tax rate or fee after June 30, 2002;
or
(3) establishes or increases an exemption, a deduction, or a
credit against a tax or fee after June 30, 2002.
The amount of the decrease is equal to the average revenue that the
budget agency estimates will be lost as a result of the legislative
action in the initial two (2) full state fiscal years in which the
legislative change is in effect.
As added by P.L.192-2002(ss), SEC.4. Amended by P.L.146-2008,
SEC.10.
IC 4-10-21-3
State spending growth quotient; calculation by budget agency
Sec. 3. The budget agency shall compute a new state spending
growth quotient under this section before December 31 in 2004 and
each even-numbered year thereafter. The state spending growth
quotient determined under this section applies to each of the state
fiscal years in the immediately following biennial budget period. The
state spending growth quotient to be used in the biennial budget
period is the amount determined under STEP FOUR of the following
formula:
STEP ONE: For each of the six (6) calendar years immediately
preceding the beginning of the first state fiscal year in a
biennial budget period, divide the Indiana nonfarm personal
income for the calendar year by the Indiana nonfarm personal
income for the calendar year immediately preceding that
calendar year.
STEP TWO: Determine the sum of the STEP ONE results.
STEP THREE: Divide the STEP TWO result by six (6).
STEP FOUR: Determine the lesser of the following:
(A) The STEP THREE quotient.
(B) One and six-hundredths (1.06).
As added by P.L.192-2002(ss), SEC.4.
IC 4-10-21-4
Determination of Indiana nonfarm personal income
Sec. 4. For purposes of section 3 of this chapter, Indiana nonfarm
personal income is the estimate of total nonfarm personal income for
Indiana in a calendar year as computed by the federal Bureau of
Economic Analysis before December 31 immediately preceding the
beginning of the first state fiscal year in a biennial budget period,
using any:
(1) actual data available for the calendar year; and
(2) estimated data for the calendar year whenever actual data is
not available.
As added by P.L.192-2002(ss), SEC.4.
IC 4-10-21-5
Prohibition on spending exceeding state spending cap
Sec. 5. (a) The maximum total amount that may be expended in
a state fiscal year from the state general fund and the counter-cyclical
revenue and economic stabilization fund is the least of the following:
(1) Subject to sections 6 and 7 of this chapter, the state
spending cap for the state fiscal year.
(2) The amount appropriated by the general assembly from the
state general fund and the counter-cyclical revenue and
economic stabilization fund.
(3) The amount of money available in the state general fund and
the counter-cyclical revenue and economic stabilization fund to
pay expenditures.
(b) Subject to sections 6 and 7 of this chapter, if the state
spending cap for the state fiscal year is less than the amount
appropriated by the general assembly in the state fiscal year from the
state general fund and the counter-cyclical revenue and economic
stabilization fund, the budget agency shall reduce the amounts
available for expenditure from the state general fund and the
counter-cyclical revenue and economic stabilization fund in the state
fiscal year by using the procedures in IC 4-13-2-18.
As added by P.L.192-2002(ss), SEC.4. Amended by P.L.146-2008,
SEC.11.
IC 4-10-21-6
Exclusions from state spending cap
Sec. 6. The following expenditures that would otherwise be
subject to this chapter shall be excluded from all computations and
determinations related to a state spending cap:
(1) Expenditures derived from money deposited in the state
general fund and the counter-cyclical revenue and economic
stabilization fund from any of the following:
(A) Gifts.
(B) Federal funds.
(C) Dedicated funds.
(D) Intergovernmental transfers.
(E) Damage awards.
(F) Property sales.
(2) Expenditures for any of the following:
(A) Transfers of money among the state general fund and the
counter-cyclical revenue and economic stabilization fund.
(B) Reserve fund deposits.
(C) Refunds of intergovernmental transfers.
(D) Payment of judgments against the state and settlement
payments made to avoid a judgment against the state, other
than a judgment or settlement payment for failure to pay a
contractual obligation or a personnel expenditure.
(E) Distributions or allocations of state tax revenues to a unit
of local government under IC 36-7-13, IC 36-7-26,
IC 36-7-27, IC 36-7-31, or IC 36-7-31.3.
(F) Motor vehicle excise tax replacement payments that are
derived from amounts transferred to the state general fund
from the lottery and gaming surplus account of the build
Indiana fund.
(G) Distributions of state tax revenues collected under IC 7.1
that are payable to cities and towns.
As added by P.L.192-2002(ss), SEC.4. Amended by P.L.146-2008,
SEC.12.
IC 4-10-21-7
Exemptions by action of general assembly
Sec. 7. (a) An appropriation otherwise subject to the state
spending cap limitation imposed by section 5 of this chapter shall be
treated as exempt from the state spending cap limitation only if the
general assembly specifically exempts the appropriation from the
state spending cap in clear and unambiguous language contained in
the bill making the appropriation.
(b) The following language shall be treated as meeting the
requirements of subsection (a):
"The general assembly waives the state spending cap limitation
imposed by IC 4-10-21-5 for the state fiscal year beginning July
1, (insert the applicable year), and ending June 30, (insert the
applicable year), for the following appropriation: (insert the
language of the appropriation). Notwithstanding
IC 4-10-21-5(a)(1), the budget agency may allot appropriations
for the appropriation without making any reduction under
IC 4-10-21-5(b).".
(c) Language in a bill such as "Notwithstanding IC 4-10-21" or
"IC 4-10-21 does not apply to this appropriation" shall not be treated
as meeting the requirements of subsection (a). The budget agency
may consider the language described in this subsection or other
language that does not meet the requirements of subsection (a) only
in determining which appropriations to make available for
expenditure under section 5(b) of this chapter.
As added by P.L.192-2002(ss), SEC.4.
IC 4-10-21-8
Annual report; budget agency
Sec. 8. Not earlier than December 1 and not later than the first
session day of the general assembly after December 31 of each
even-numbered year, the budget agency shall submit a report in an
electronic format under IC 5-14-6 to the executive director of the
legislative services agency that includes at least the following
information:
(1) The state spending cap for each of the state fiscal years in
the immediately following biennial budget period.
(2) The supporting data and calculations necessary for a person
to independently verify the manner in which the state spending
caps described in subdivision (1) were determined.
As added by P.L.192-2002(ss), SEC.4. Amended by P.L.28-2004,
SEC.34.