General Fund Revenue Forecast - IN. · PDF fileTotal General Fund Revenue Forecast ... e tle Fiscal Year ... Slide 1 Author: Karen Firestone Created Date:

General Fund Revenue Forecast

Fiscal Years 2015-2017Revenue Forecast Technical Committee

Indiana Revenue Forecast

IHS Global Insight

Revenue Forecast Technical Committee

Members Advisors

Eric Bussis

David Dukes John Grew

Erik Gonzalez William Sheldrake

Dr. John Mikesell

Susan Preble

David Reynolds

Legislative Services Agency

Jim Landers

Randhir Jha

Heath Holloway

Budget Agency

Matthew Hutchinson

Vanessa DeVeau-BachleMegan Mcdermott

2

1.4% Above Dec 13 Forecast Target

5.9% Above Same Period in FY 2014

4.8% Below Dec 13 Forecast Target

9.3% Above Same Period in FY 2014

3.2% Above Dec 13 Forecast Target

8.0% Below Same Period in FY 2014

16.3% Below Dec 13 Forecast Target

16.1% Below Same Period in FY 2014

Performance of Major Revenue SourcesYear-To-Date Through November 30th

SalesTax

IncomeTax

CorporateTax

GamingTaxes

3

Forecast Overview

4

• Revised downward somewhat• Remains stable and still showing slow

recoveryEconomic Forecast

• Sales and Income Tax Models modified• Corporate, Gaming, Cigarette, and Alcohol

Tax Models unchanged Revenue Forecast

• Ongoing FIT rate reduction• 8.0% in CY 2014 to 6.5% in CY 2017

• Ongoing Corporate Tax rate reduction• 7.0% in FY 2015 to 6.25% in FY 2017

• Individual Income Tax rate reduction • 3.4% in CY 2014 to 3.23% in CY 2017

• Free Play Deduction for casino/racinoWagering Taxes

• Lower casino Wagering Tax rate for smaller casinos

Incorporation of Impacts of Recent

Legislative Changes

5

Components of Individual Income Tax

Data Source: Indiana Department of State Revenue

-50

0

50

100

150

200

250

FY1997

FY1998

FY1999

FY2000

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

(Do

lla

r V

alu

e In

dex

ed (

199

7 =

10

0)

Withholding Tax Estimated Payments Reconciliations

6

Changes in the Individual Income Tax Model

December 2014

Total Income Tax Estimators

Proprietors Income

Extra Pay Period in Quarter

Withholdings and Reconciliations

S&P 500 Index Personal Income

Estimated Tax Payments

S&P 500 Index GDP

Withholdings

Wages & Salaries

Gross State Product

Reconciliations

Fiscal Year Average

Estimated Tax Payments

1-Year Lag of Estimated Payments

7

Proprietors Income vs Estimated Payments


0

50

100

150

200

250

300

FY1997

FY1998

FY1999

FY2000

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

(Do

lla

r V

alu

e In

dex

ed (

199

7 =

10

0)

Proprietors Income Estimated Payments

8

Indiana Withholdings vs. Wages and Salaries/Gross State Product


100

110

120

130

140

150

160

170

180

190

200

FY1997

FY1998

FY1999

FY2000

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

(Do

lla

r V

alu

e In

dex

ed (

199

7 =

10

0)

Wages & Salary Gross State Product Withholding Tax

9

Changes in the Sales Tax Model

Personal Income Net of Transfer Payments

Indiana Labor Force Participation Rate

Pct. Adult Population Employed

December 2014

Sales Tax Revenue Estimators

Personal Income Net of Transfer Payments

10Data Source: IHS Global Insight; State Budget Agency

Sales Tax Base vs. Personal Income Net of Transfer Payments

54%

56%

58%

60%

62%

64%

100

120

140

160

180

200

220

240

260

% A

du

lt P

op

ula

tio

n E

mp

loy

ed

Do

lla

r V

alu

e In

dex

ed (

199

7 =

100

)

Pct. Adult Population Employed Sales Tax Base Personal Income Net of Transfer Payments

• Racino Tax Base Change

• Free Play Deduction

• Lower Riverboat Wagering Tax Rate for Smaller Scale Riverboats

Legislative changes incorporated into Forecast

• Continuing Significant Competitive Impacts of Des Plaines (IL) Casino, Ohio Casinos, and Southwest Michigan Tribal Casinos

• Increasing competition from Illinois Video Gaming Terminals

Competition, competition, and more competition

Riverboat and Racino Taxes

11

12Data Source: IHS Global Insight; Indiana Gaming Commission

Indiana Personal Income vs. Indiana Gross Gaming Revenue

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

100

105

110

115

120

125

130

135

140

145

FY

20

03

FY

20

04

FY

20

05

FY

20

06

FY

20

07

FY

20

08

FY

20

09

FY

20

10

FY

20

11

FY

20

12

FY

20

13

FY

20

14

(Do

lla

r V

alu

e In

dex

ed (

20

03

= 1

00

)

New Facility Indiana Personal Income Indiana Gross Gaming Revenue

Fre

nch

Lic

k C

asi

no

Sta

rts

Ra

cin

os

Sta

rt

Changing energy costs

Continued poor labor market recovery

Current recovery exceeding historic

average recovery period

Loosening of credit markets/improvement in household finances

Continued uncertainty relating to federal

budget policy

Shifting Sands

13

December 2014 Forecast Results

14

Total Tax Revenue EstimatesDecember 18, 2014, Revenue Forecast

15

Sales Tax

(in millions)

Fiscal Dec-13 Dec-14 Difference ($) Difference (%)

Year Forecast Forecast Dec 2013 to Dec 2013 to

Dec-14 Dec-14

2015 $7,242.9 $7,256.7 $13.8 0.2%

2016 $7,551.4

2017 $7,904.6

Individual Income Tax

(in millions)



Dec-14 Dec-14

2015 $5,279.6 $5,121.2 -$158.4 -3.0%

2016 $5,173.2

2017 $5,314.8

Corporate Income Tax

(in millions)



Dec-14 Dec-14

2015 $920.5 $977.8 $57.3 6.2%

2016 $1,008.7

2017 $992.5

Total Tax Revenue EstimatesDecember 18, 2014, Revenue Forecast

16

Gaming Taxes

(in millions)



Dec-14 Dec-14

2015 $490.1 $440.5 -$49.6 -10.1%

2016 $421.0

2017 $417.5

Other Taxes (Includes FIT, Excise, CVET Recapture)

(in millions)



Dec-14 Dec-14

2015 $925.6 $933.5 $7.9 0.9%

2016 $935.9

2017 $943.1

Total General Fund Taxes

(in millions)



Dec-14 Dec-14

2015 $14,858.7 $14,729.7 -$129.0 -0.9%

2016 $15,090.2

2017 $15,572.5

Total General Fund Revenue ForecastFiscal Years 2015, 2016 & 2017

December 18, 2014(In Millions of Dollars)

17

Percent

Prior Updated Diff. From Diff. From Percent Percent Percent

Forecast Forecast Prior Prior Growth Forecast Growth Forecast Growth

Actual 2014 2015 2015 Forecast Forecast Over 2014 2016 Over 2015 2017 Over 2016

Major Taxes

Sales & Use 6,925.9 7,242.9 7,256.7 13.8 0.2% 4.8% 7,551.4 4.1% 7,904.6 4.7%

Individual AGI 4,898.8 5,279.6 5,121.2 -158.4 -3.0% 4.5% 5,173.2 1.0% 5,314.8 2.7%

Corporate - AGI, URT, USUT, FIT 1,054.4 920.5 977.8 57.3 6.2% -7.3% 1,008.7 3.2% 992.5 -1.6%

Riverboat Wagering 363.3 383.1 329.3 -53.8 -14.0% -9.4% 312.3 -5.2% 309.8 -0.8%

Racino Wagering 110.7 107.0 111.2 4.2 4.0% 0.4% 108.7 -2.3% 107.7 -0.9%

Subtotal Major Taxes 13,353.1 13,933.1 13,796.2 -136.9 -1.0% 3.3% 14,154.3 2.6% 14,629.4 3.4%

Other Revenue

Cigarette 257.6 266.3 252.5 -13.8 -5.2% -2.0% 248.5 -1.6% 246.8 -0.7%

Insurance 218.5 192.2 224.8 32.6 16.9% 2.9% 231.2 2.9% 237.9 2.9%

Inheritance 87.7 0.0 0.0 0.0 n/a -100.0% 0.0 n/a 0.0 n/a

Alcoholic Beverages 17.1 18.3 17.1 -1.2 -6.6% 0.0% 17.9 4.7% 19.3 7.8%

Riverboat Admissions 12.4 13.1 11.1 -2.0 -15.3% -10.4% 10.9 -1.8% 11.0 0.9%

Interest 16.5 20.0 17.4 -2.6 -12.8% 5.8% 18.1 4.0% 18.9 4.0%

MV, CVET & FIT Recapture 250.6 229.1 230.8 1.6 0.7% -7.9% 229.3 -0.6% 229.3 0.0%

Miscellaneous Revenue 188.8 186.6 179.9 -6.7 -3.6% -4.7% 179.9 0.0% 179.9 0.0%

Subtotal Other Revenue 1,049.1 925.6 933.5 7.9 0.9% -11.0% 935.9 0.3% 943.1 0.8%

Total General Fund 14,402.2 14,858.7 14,729.7 -129.0 -0.9% 2.3% 15,090.2 2.4% 15,572.5 3.2%

Appendices for December 2014 Revenue Forecast

18

Indiana Personal Income (IPI)

Data Source: IHS Global Insight

19

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

% C

ha

ng

e a

t A

nn

ua

l R

ate

Fiscal Year

Recession Actual December 2013 Forecast December 2014 Forecast

Indiana Personal Income Net of Transfer Payments


20

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

% C

ha

ng

e a

t A

nn

ua

l R

ate

Fiscal Year

Recession Actual December2013 Forecast December 2014 Forecast

Indiana Wages & Salary


21

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

% C

ha

ng

e a

t A

nn

ua

l R

ate

Fiscal Year


Indiana Unemployment Rate


22

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Ax

is T

itle

% C

ha

ng

e a

t A

nn

ua

l R

ate

Fiscal Year


U.S. Corporate Profits


23

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

% C

ha

ng

e a

t A

nn

ua

l R

ate

Fiscal Year


Economic VariablesFY 2014, FY 2015, FY 2016, FY 2017

Data Source: IHS Global Insight24

IndicatorEstimate

Year

December 2013

Forecast

December 2014

Forecast*

Difference (%) Dec

2013 to Dec 2014

Nominal Indiana Personal Income

(in millions)

2014* 262,079 254,993 actual -2.70%

2015 274,445 264,227 -3.72%

2016 286,981 275,218 -4.10%

2017 300,964 288,384 -4.18%

Nominal Indiana Personal Income

Net of Transfer Payments

(in millions)

2014* 209,452 206,332 actual -1.49%

2015 219,431 213,464 -2.72%

2016 229,383 222,450 -3.02%

2017 240,731 233,268 -3.10%

Nominal Indiana Wages & Salary

(in millions)

2014* 131,532 129,409 actual -1.61%

2015 138,230 135,497 -1.98%

2016 144,827 141,624 -2.21%

2017 151,238 148,014 -2.13%

Indiana Unemployment Rate2014* 7.6% 6.6% actual -13.16%

2015 6.8% 5.6% -17.65%

2016 6.5% 5.6% -13.85%

2017 6.2% 5.8% -6.45%

U.S. Corporate Profits (in billions)

2014* 2,169 2,083 actual -3.97%

2015 2,256 2,269 0.57%

2016 2,360 2,409 2.09%

2017 2,418 2,412 -0.23%

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General Fund Revenue Forecast - IN. · PDF fileTotal General Fund Revenue Forecast ... e tle Fiscal Year ... Slide 1 Author: Karen Firestone Created Date: