Voters overwhelmingly approve Indiana balanced budget amendment
Besides the Republican victories in the Senate, House and Allen County races in Indiana in last week’s election, another encouraging result was the overwhelming vote to approve “Indiana Public Question 1,” an amendment to the Indiana Constitution to require a balanced budget.
We wrote in favor of the amendment last month to encourage voters to support the proposal, which was introduced in 2015 by former Republican Gov. Mike Pence, now the Vice President of the United States. More than 70 percent of the ballots cast in last week’s election said “yes” to the amendment.
Moody’s Investors Service, a national credit rating agency, praised the ratification of the constitutional amendment that obligates the General Assembly to pass balanced budgets. In its Weekly Credit Outlook, reviewing policy decisions that impact state and national government finance, the credit rating agency called Indiana’s new mandate “credit positive.”
The (Northwest Indiana) Times reported that the measure was the only state finance-related ballot measure to earn a “positive” indication in Moody’s post-election roundup.
Passing the mandate means Indiana has separated from Arizona, Vermont and Virginia as the only states lacking an explicit balanced budget requirement.
“I think it is one of the more enduring things that we’ve done to ensure that Indiana is positioned, as a government and as an economy, to succeed for generations to come, because we will ensure that we don’t fall into some of the fiscal problems that other states had,” said former Republican Sen. Brandt Hershman, one of the bill’s authors.
Hershman said the amendment will go into effect for the next two-year budget cycle, July 1, 2019, to June 30, 2021.
The amendment will require the state Legislature to enact a balanced budget for each biennial budget period. Expenditures approved for the budget would not be allowed to exceed the estimated state revenue for the same budget period. The measure also requires that public pension funds be actuarially funded during each budget period.
It would take a two-thirds vote in each chamber of the Legislature to suspend the balanced budget and funding pensions for a budget period, according to the amendment, which was also designed to forbid court-ordered tax increases without the Legislature’s approval.
Some say the amendment is not necessary because the Indiana Constitution already largely bans the state from incurring debt, except in times of war, and because the leaders of both political parties in the Statehouse have enacted balanced budgets through the years in accordance with the Constitution’s general prohibition on most debt.
But there has been no explicit requirement for Indiana to adopt a balanced budget, and we believe the amendment will help curb the Legislature’s tendency toward higher and higher spending. It’s a policy that ought to be enacted by the federal government as well.