A state senator wants to raise the level of surplus needed before triggering a tax refund. The refund mechanism was put in place last year.
If the state’s budget surplus surpasses 10% of the total budget, the taxpayer refund kicks in. When the surplus is calculated at the end of the fiscal year in June, projections say it will be at least $300 million more than the 10% level, disbursing a refund of about $50 per taxpayer.
State Senator Luke Kenley (R-Noblesville) says he wants to raise the threshold to be on the safe side.
“I think the reserve, based on our experience in the recession where we took $3 billion to solve that problem…I think that the 10% just looks too tight to me.”
Kenley’s bill is currently in a Senate committee. It would keep the base level for the refund at 10%, but add an additional reserve requirement of 10% of the K-12 school budget. Based on the current budget, that would require another $650 million in reserve, meaning the taxpayer refund wouldn’t kick in until the surplus reached about $2 billion.
If signed into law, those changes wouldn’t go into effect until after 2012, so this year’s potential refund would remain in place.