State revenue falls $6.1 million below projections for July

The state kicked off a new fiscal year with revenue falling $6.1 million short of projections, according to data released Monday showing tax collections for July.

Revenue also was down compared with last year, with tax collections $1.1 million under what the state received in July 2014.

The health of the state’s tax collections in the coming months likely will be a factor as Gov. Mike Pence weighs paying off an approximate $250 million federal unemployment loan.

If Pence decides to pay off the loan by Nov. 9, Indiana employers would no longer face a projected $327 million in penalties in 2016. The loan dates to 2008 when the state had to begin borrowing from the federal government to meet unemployment demands as the recession took hold.

Indiana employers will pay a $126 per employee penalty next year if the loan isn’t paid off, an increase from the current $105 penalty.

One option Pence could exercise is dipping into the state’s surplus to pay off the loan. Then the unemployment insurance trust fund, filled by employer taxes, would pay back the state.

Administration officials say they’re watching the state’s revenues to determine whether that’s possible.

In July, sales tax collections came in $31.2 million below projections for the month. But individual income tax collections came in $35.2 million above estimates.

Corporate tax collections came in $16.7 million below estimates. Also in July, racino collections outpaced those the state receives from its riverboats. Riverboat wagering collections were $500,000 below estimates, while racino wagering collections were $1.4 million above estimates.

Estimates are based on the most recent forecast of state revenues, which occurred in April as lawmakers created a new, two-year state budget.

Call Star reporter Chelsea Schneider at (317) 444-6077. Follow her on Twitter: @indystarchelsea.