By Olivia Smith

I won’t sugar coat it – Indiana’s state budget process is complicated! But if we can understand who the decision-makers are, how the system is designed, and, most importantly, what’s at stake in creating a state budget, we can add our voices to the conversation in a meaningful way.

Biennial Budgeting

Our state budget is a complex framework that allocates the spending of state dollars across all 92 counties. Indiana has a biennial budget, which means it covers two years (a biennium) of spending allocations at a time. The budget process begins during even-numbered years (right now, 2024!) and is developed, revised, and adopted in the legislative session for the odd-numbered year that follows (for us, 2025). As we learned in the last blog post about state revenue, Indiana’s finances run on a fiscal year basis, so our biennial budget covers state spending for two consecutive fiscal years.

• For example, our current state budget covers July 1^st 2023 – June 30^th 2025, so this session of the Indiana General Assembly will develop the state’s next biennial budget, covering July 1^st 2025 – June 30^th 2027.

 Indiana’s Budget Process

The budget process begins with the State Budget Agency (SBA), which has a detailed description of the budget creation cycle on their website. Each state agency, like the Department of Health or the Family and Social Services Administration, prepares and submits a budget request, and the SBA reviews the submitted budget requests and formulates recommendations. The requests are adjusted as approved by the Governor, and then presented to the Budget Committee.

The Budget Committee is composed of four legislators – one Democrat and one Republican from both the House of Representatives and the Senate – and the Director of the SBA. The Budget Committee holds public hearings with state agencies to outline their budget requests, which they did just last week. The Budget Committee uses the SBA’s budget recommendation and the information provided in the December revenue forecast to create an itemized budget report and an initial draft of the budget bill. The committee makes a single, comprehensive budget recommendation to the Governor, called a consensus budget.

The legislative side of the budget process begins in the House of Representatives, when the Speaker of the House assigns the budget bill to the House Ways and Means Committee. This committee considers the proposed legislation and holds hearings that provide an opportunity for agency representatives and the public to be heard on various aspects of the proposed budget. The bill must then flow through the regular legislative process; after the budget bill has been adopted by both chambers, it goes to the Governor for signature or veto. Once signed, the appropriation act becomes the State of Indiana budget for the next biennium, and the process of budget implementation begins. 

YOU are part of the Budget Process

One critical element that we haven’t addressed yet is that the public can and should be involved during the creation of important state policy like the budget. Here are some of the ways that taxpayers can make their voices heard:

• Providing public testimony in committee to share your story and advocate for policies that are important to you.
• Contacting your legislators to let them know what issues are most important to your family and community.
• Contacting the legislators on the Budget Committee, House Ways and Means Committee, or Senate Appropriations Committee about how their budget-building choices will impact you.

Budgets are Policy Choices

Even though much of the narrative this legislative session is likely to be focused on the limitations created by a “tight budget,” we need to remember that the size of the budget and the spending decisions in the budget are all ultimately policy choices! As we saw in the previous Tax Tuesday blog on revenue, the state has multiple options for increasing the size of its budget. Building a budget doesn’t have to be a zero-sum game if our policy-makers are willing to be innovative and prioritize creating opportunities for all Hoosiers.

Next week, we’ll dive deeper into our current FY2023- FY2025 budget to see how Indiana has been spending its money this biennium.

TL;DR: Our state budget is a complex framework that allocates the spending of state dollars for a period of two fiscal years, a biennium. This upcoming session of the Indiana General Assembly will develop the state’s next biennial budget, covering July 1^st 2025 – June 30^th 2027. The State Budget Agency kicks off the budget development process, which continues with the bipartisan Budget Committee and the Governor’s office before being introduced as a bill in the legislature. The bill must then flow through the regular legislative process, being adopted by both chambers and eventually going the Governor for signature or veto.  We just learned that spending decisions in the budget are all ultimately policy choices, and building a budget doesn’t have to be a zero-sum game if our policy-makers are willing to be innovative.