Gov. Mike Pence authorizes $31M in raises for state employees

With only a few weeks left as Indiana's governor, Vice President-elect Mike Pence on Wednesday authorized performance raises for state employees that are expected to cost more than $31 million over the next year.

In a letter to state employees, Pence said the pay increases will be based on performance evaluations to be completed in January. Workers who meet expectations will receive a 2 percent bump. Those who exceed expectations will receive 3 percent. Those rated outstanding will get 4 percent.

“Indiana would not be a state that works without the dedication and commitment of our state employees,” Pence said in a statement. “I am privileged to work alongside the Hoosiers who are the force behind the outstanding services and support the people have come to expect from their state government, and I am thankful for the opportunity to offer these raises based on performance for a job well done.”

The raises are smaller than the 3 percent to 6 percent increases Pence authorized last year. Those were expected to cost the state about $42 million.

The new raises are estimated to cost $13.1 million in the five months before the end of the fiscal year, according to Stephanie Hodgin, a spokeswoman for Pence. That equates to $2.62 million a month, or $31.4 million a year.

The more moderate pay hikes come as budget officials warn that the state will finish the fiscal year with less revenue than originally anticipated. A forecast released last week shows tax receipts falling $378 million short of what lawmakers had budgeted for the fiscal year ending June 30.

Lt. Gov. Eric Holcomb, who will replace Pence as governor on Jan. 9, said last week that the revenue drop "may require difficult decisions ahead." His transition team declined to comment on the pay raises.

But lawmakers said last week that they don’t anticipate spending cuts this year. They say a surplus of Medicaid funds and lower-than-expected K-12 enrollment will likely make up for any shortfall in tax receipts.

The outlook for the next two years is much better. Revenue is expected to climb 2.9 percent in fiscal year 2018 and 3.9 percent in fiscal year 2019, according to the forecast.

Call IndyStar reporter Tony Cook at (317) 444-6081. Follow him on Twitter: @indystartony.