General Fund Revenue Forecast
Fiscal Years 2015-2017Revenue Forecast Technical Committee
Indiana Revenue Forecast
IHS Global Insight
Revenue Forecast Technical Committee
Members Advisors
Eric Bussis
David Dukes John Grew
Erik Gonzalez William Sheldrake
Dr. John Mikesell
Susan Preble
David Reynolds
Legislative Services Agency
Jim Landers
Randhir Jha
Heath Holloway
Budget Agency
Matthew Hutchinson
Vanessa DeVeau-BachleMegan Mcdermott
2
1.4% Above Dec 13 Forecast Target
5.9% Above Same Period in FY 2014
4.8% Below Dec 13 Forecast Target
9.3% Above Same Period in FY 2014
3.2% Above Dec 13 Forecast Target
8.0% Below Same Period in FY 2014
16.3% Below Dec 13 Forecast Target
16.1% Below Same Period in FY 2014
Performance of Major Revenue SourcesYear-To-Date Through November 30th
SalesTax
IncomeTax
CorporateTax
GamingTaxes
3
Forecast Overview
4
• Revised downward somewhat• Remains stable and still showing slow
recoveryEconomic Forecast
• Sales and Income Tax Models modified• Corporate, Gaming, Cigarette, and Alcohol
Tax Models unchanged Revenue Forecast
• Ongoing FIT rate reduction• 8.0% in CY 2014 to 6.5% in CY 2017
• Ongoing Corporate Tax rate reduction• 7.0% in FY 2015 to 6.25% in FY 2017
• Individual Income Tax rate reduction • 3.4% in CY 2014 to 3.23% in CY 2017
• Free Play Deduction for casino/racinoWagering Taxes
• Lower casino Wagering Tax rate for smaller casinos
Incorporation of Impacts of Recent
Legislative Changes
5
Components of Individual Income Tax
Data Source: Indiana Department of State Revenue
-50
0
50
100
150
200
250
FY1997
FY1998
FY1999
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
(Do
lla
r V
alu
e In
dex
ed (
199
7 =
10
0)
Withholding Tax Estimated Payments Reconciliations
6
Changes in the Individual Income Tax Model
December 2014
Total Income Tax Estimators
Proprietors Income
Extra Pay Period in Quarter
Withholdings and Reconciliations
S&P 500 Index Personal Income
Estimated Tax Payments
S&P 500 Index GDP
Withholdings
Wages & Salaries
Gross State Product
Reconciliations
Fiscal Year Average
Estimated Tax Payments
1-Year Lag of Estimated Payments
7
Proprietors Income vs Estimated Payments
Data Source: Indiana Department of State Revenue
0
50
100
150
200
250
300
FY1997
FY1998
FY1999
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
(Do
lla
r V
alu
e In
dex
ed (
199
7 =
10
0)
Proprietors Income Estimated Payments
8
Indiana Withholdings vs. Wages and Salaries/Gross State Product
Data Source: Indiana Department of State Revenue
100
110
120
130
140
150
160
170
180
190
200
FY1997
FY1998
FY1999
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
(Do
lla
r V
alu
e In
dex
ed (
199
7 =
10
0)
Wages & Salary Gross State Product Withholding Tax
9
Changes in the Sales Tax Model
Personal Income Net of Transfer Payments
Indiana Labor Force Participation Rate
Pct. Adult Population Employed
December 2014
Sales Tax Revenue Estimators
Personal Income Net of Transfer Payments
10Data Source: IHS Global Insight; State Budget Agency
Sales Tax Base vs. Personal Income Net of Transfer Payments
54%
56%
58%
60%
62%
64%
100
120
140
160
180
200
220
240
260
% A
du
lt P
op
ula
tio
n E
mp
loy
ed
Do
lla
r V
alu
e In
dex
ed (
199
7 =
100
)
Pct. Adult Population Employed Sales Tax Base Personal Income Net of Transfer Payments
• Racino Tax Base Change
• Free Play Deduction
• Lower Riverboat Wagering Tax Rate for Smaller Scale Riverboats
Legislative changes incorporated into Forecast
• Continuing Significant Competitive Impacts of Des Plaines (IL) Casino, Ohio Casinos, and Southwest Michigan Tribal Casinos
• Increasing competition from Illinois Video Gaming Terminals
Competition, competition, and more competition
Riverboat and Racino Taxes
11
12Data Source: IHS Global Insight; Indiana Gaming Commission
Indiana Personal Income vs. Indiana Gross Gaming Revenue
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
100
105
110
115
120
125
130
135
140
145
FY
20
03
FY
20
04
FY
20
05
FY
20
06
FY
20
07
FY
20
08
FY
20
09
FY
20
10
FY
20
11
FY
20
12
FY
20
13
FY
20
14
(Do
lla
r V
alu
e In
dex
ed (
20
03
= 1
00
)
New Facility Indiana Personal Income Indiana Gross Gaming Revenue
Fre
nch
Lic
k C
asi
no
Sta
rts
Ra
cin
os
Sta
rt
Changing energy costs
Continued poor labor market recovery
Current recovery exceeding historic
average recovery period
Loosening of credit markets/improvement in household finances
Continued uncertainty relating to federal
budget policy
Shifting Sands
13
December 2014 Forecast Results
14
Total Tax Revenue EstimatesDecember 18, 2014, Revenue Forecast
15
Sales Tax
(in millions)
Fiscal Dec-13 Dec-14 Difference ($) Difference (%)
Year Forecast Forecast Dec 2013 to Dec 2013 to
Dec-14 Dec-14
2015 $7,242.9 $7,256.7 $13.8 0.2%
2016 $7,551.4
2017 $7,904.6
Individual Income Tax
(in millions)
Fiscal Dec-13 Dec-14 Difference ($) Difference (%)
Year Forecast Forecast Dec 2013 to Dec 2013 to
Dec-14 Dec-14
2015 $5,279.6 $5,121.2 -$158.4 -3.0%
2016 $5,173.2
2017 $5,314.8
Corporate Income Tax
(in millions)
Fiscal Dec-13 Dec-14 Difference ($) Difference (%)
Year Forecast Forecast Dec 2013 to Dec 2013 to
Dec-14 Dec-14
2015 $920.5 $977.8 $57.3 6.2%
2016 $1,008.7
2017 $992.5
Total Tax Revenue EstimatesDecember 18, 2014, Revenue Forecast
16
Gaming Taxes
(in millions)
Fiscal Dec-13 Dec-14 Difference ($) Difference (%)
Year Forecast Forecast Dec 2013 to Dec 2013 to
Dec-14 Dec-14
2015 $490.1 $440.5 -$49.6 -10.1%
2016 $421.0
2017 $417.5
Other Taxes (Includes FIT, Excise, CVET Recapture)
(in millions)
Fiscal Dec-13 Dec-14 Difference ($) Difference (%)
Year Forecast Forecast Dec 2013 to Dec 2013 to
Dec-14 Dec-14
2015 $925.6 $933.5 $7.9 0.9%
2016 $935.9
2017 $943.1
Total General Fund Taxes
(in millions)
Fiscal Dec-13 Dec-14 Difference ($) Difference (%)
Year Forecast Forecast Dec 2013 to Dec 2013 to
Dec-14 Dec-14
2015 $14,858.7 $14,729.7 -$129.0 -0.9%
2016 $15,090.2
2017 $15,572.5
Total General Fund Revenue ForecastFiscal Years 2015, 2016 & 2017
December 18, 2014(In Millions of Dollars)
17
Percent
Prior Updated Diff. From Diff. From Percent Percent Percent
Forecast Forecast Prior Prior Growth Forecast Growth Forecast Growth
Actual 2014 2015 2015 Forecast Forecast Over 2014 2016 Over 2015 2017 Over 2016
Major Taxes
Sales & Use 6,925.9 7,242.9 7,256.7 13.8 0.2% 4.8% 7,551.4 4.1% 7,904.6 4.7%
Individual AGI 4,898.8 5,279.6 5,121.2 -158.4 -3.0% 4.5% 5,173.2 1.0% 5,314.8 2.7%
Corporate - AGI, URT, USUT, FIT 1,054.4 920.5 977.8 57.3 6.2% -7.3% 1,008.7 3.2% 992.5 -1.6%
Riverboat Wagering 363.3 383.1 329.3 -53.8 -14.0% -9.4% 312.3 -5.2% 309.8 -0.8%
Racino Wagering 110.7 107.0 111.2 4.2 4.0% 0.4% 108.7 -2.3% 107.7 -0.9%
Subtotal Major Taxes 13,353.1 13,933.1 13,796.2 -136.9 -1.0% 3.3% 14,154.3 2.6% 14,629.4 3.4%
Other Revenue
Cigarette 257.6 266.3 252.5 -13.8 -5.2% -2.0% 248.5 -1.6% 246.8 -0.7%
Insurance 218.5 192.2 224.8 32.6 16.9% 2.9% 231.2 2.9% 237.9 2.9%
Inheritance 87.7 0.0 0.0 0.0 n/a -100.0% 0.0 n/a 0.0 n/a
Alcoholic Beverages 17.1 18.3 17.1 -1.2 -6.6% 0.0% 17.9 4.7% 19.3 7.8%
Riverboat Admissions 12.4 13.1 11.1 -2.0 -15.3% -10.4% 10.9 -1.8% 11.0 0.9%
Interest 16.5 20.0 17.4 -2.6 -12.8% 5.8% 18.1 4.0% 18.9 4.0%
MV, CVET & FIT Recapture 250.6 229.1 230.8 1.6 0.7% -7.9% 229.3 -0.6% 229.3 0.0%
Miscellaneous Revenue 188.8 186.6 179.9 -6.7 -3.6% -4.7% 179.9 0.0% 179.9 0.0%
Subtotal Other Revenue 1,049.1 925.6 933.5 7.9 0.9% -11.0% 935.9 0.3% 943.1 0.8%
Total General Fund 14,402.2 14,858.7 14,729.7 -129.0 -0.9% 2.3% 15,090.2 2.4% 15,572.5 3.2%
Appendices for December 2014 Revenue Forecast
18
Indiana Personal Income (IPI)
Data Source: IHS Global Insight
19
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
% C
ha
ng
e a
t A
nn
ua
l R
ate
Fiscal Year
Recession Actual December 2013 Forecast December 2014 Forecast
Indiana Personal Income Net of Transfer Payments
Data Source: IHS Global Insight
20
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
% C
ha
ng
e a
t A
nn
ua
l R
ate
Fiscal Year
Recession Actual December2013 Forecast December 2014 Forecast
Indiana Wages & Salary
Data Source: IHS Global Insight
21
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
% C
ha
ng
e a
t A
nn
ua
l R
ate
Fiscal Year
Recession Actual December 2013 Forecast December 2014 Forecast
Indiana Unemployment Rate
Data Source: IHS Global Insight
22
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Ax
is T
itle
% C
ha
ng
e a
t A
nn
ua
l R
ate
Fiscal Year
Recession Actual December 2013 Forecast December 2014 Forecast
U.S. Corporate Profits
Data Source: IHS Global Insight
23
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
% C
ha
ng
e a
t A
nn
ua
l R
ate
Fiscal Year
Recession Actual December 2013 Forecast December 2014 Forecast
Economic VariablesFY 2014, FY 2015, FY 2016, FY 2017
Data Source: IHS Global Insight24
IndicatorEstimate
Year
December 2013
Forecast
December 2014
Forecast*
Difference (%) Dec
2013 to Dec 2014
Nominal Indiana Personal Income
(in millions)
2014* 262,079 254,993 actual -2.70%
2015 274,445 264,227 -3.72%
2016 286,981 275,218 -4.10%
2017 300,964 288,384 -4.18%
Nominal Indiana Personal Income
Net of Transfer Payments
(in millions)
2014* 209,452 206,332 actual -1.49%
2015 219,431 213,464 -2.72%
2016 229,383 222,450 -3.02%
2017 240,731 233,268 -3.10%
Nominal Indiana Wages & Salary
(in millions)
2014* 131,532 129,409 actual -1.61%
2015 138,230 135,497 -1.98%
2016 144,827 141,624 -2.21%
2017 151,238 148,014 -2.13%
Indiana Unemployment Rate2014* 7.6% 6.6% actual -13.16%
2015 6.8% 5.6% -17.65%
2016 6.5% 5.6% -13.85%
2017 6.2% 5.8% -6.45%
U.S. Corporate Profits (in billions)
2014* 2,169 2,083 actual -3.97%
2015 2,256 2,269 0.57%
2016 2,360 2,409 2.09%
2017 2,418 2,412 -0.23%