Saturday, October 11, 2008

If Indiana's State Government Is Resisting Meltdown, Why Don't Things Seem So Good Around Here

State government resisting meltdown comes from The Indianapolis Business Journal:

"The weakened national economy is taking hits on Indiana government, but officials say the state is in better shape than many others to weather the recent Wall Street meltdown and other financial doldrums.

While some states are facing deficit budgets, laying off employees and seeking loans or bonds to stay afloat, Indiana has taken steps in recent years to prepare for a rainy day, said Ryan Kitchell, director of the state Office of Management and Budget.

'And it's a good thing, because the global financial markets are in one heck of a storm,' he said.

The steps have included balancing the state's budget, making hundreds of millions of dollars in back payments owed to schools, universities and local governments and building the state's reserves."

On the other hand:
One trouble spot is the state's unemployment insurance fund, which has been paying out more in benefits than it has been taking in from unemployment taxes on businesses. That's because the Legislature several years ago increased benefit amounts while lowering how much companies have to pay in.

The fund has dwindled from $1.6 billion in 2000 to $168 million now, said Gary Abell, spokesman for the Department of Workforce Development. And the statewide average weekly number of benefit recipients has risen from 37,892 in August 2007 to 54,402 as of this August.

States can borrow money from the federal government to cover shortfalls, but if they do that between October through Dec. 31, they have to repay the money with interest. If they borrow between January and the end of September, the money would essentially be an interest-free loan.

Abell said the agency believes it can make it through the end of the year but might have to borrow early next year for cash-flow purposes.

Regardless, he and some top lawmakers say the Legislature must make major changes next session to fix flaws in the system.

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