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How Low are Indiana’s Taxes?

Thursday, October 24th, 2019

We’d like our taxes to be low. Sure, we value the schools, police and fire protection, roads and parks and libraries that our taxes support. But we all like a bargain. We’d like to have all those things at a low, low price.  How low are taxes in Indiana? The Census Bureau provides a great…

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Money for Schools

Tuesday, September 17th, 2019

Spending on K-12 education is by far the largest piece of Indiana government. Appropriations for schools make up half of the state’s general fund budget. School budgets are 55 percent of all local government budgets. Total local school appropriations are $11 billion in 2019. About $7 billion of this comes from state support, and $3…

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Is the Long Expansion Over?

Wednesday, August 21st, 2019

July 2019 marked the 121st month of the economic expansion that began after the Great Recession. That makes it the longest expansion in American history, surpassing the 10-year expansion of 1991-2001. But wait. The yield curve has inverted. Recreational vehicle sales are down. The “R-word,” recession, is trending on Twitter. Are we in recession already?…

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Why Does Indiana Keep Balances, and How Much is Enough?

Friday, July 26th, 2019

The Indiana State Budget Agency wrapped up the fiscal 2019 budget on July 11, with its annual closeout statement. There was good news. Revenues came in $267 million above forecast, and that meant that Indiana ended the year with more money in the bank than expected. State balances were almost $2.3 billion, which was 13.6…

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The Yield Curve Inverted. Is There a Recession in Our Near Future?

Tuesday, June 18th, 2019

It happened. The yield curve inverted. The big one. The 10-year Treasury bond rate dropped below the 3-month Treasury bill rate. That’s the inversion that economists think is the most reliable indicator of a coming recession. Yield curve inversions have happened before each of the last seven recessions. Over the past 50 years, every time…

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Paging Professor Phillips

Monday, May 20th, 2019

Inflation should be increasing.  But it’s not. Economist A.W. “Bill” Phillips was born in New Zealand but moved to Australia as a young man to continue his education.  He traveled to China, but had to flee the Japanese invasion in 1937, via the trans-Siberian railroad.  He arrived in England, but the war followed.  He joined…

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Revenue and Medicaid Forecasts Squeeze the State Budget

Wednesday, April 24th, 2019

Every two years the Indiana General Assembly writes a new state budget. This year the legislature set spending for fiscal year 2020, which starts in a couple of months on July 1, and for fiscal year 2021, which starts in mid-2020. Of course, to budget for the future legislators need a reasonable guess about how…

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How Fast Can Our Economy Grow?

Thursday, March 21st, 2019

How fast can our economy grow? We often answer this question by talking about spending. Will people buy more consumer goods? Will businesses buy more equipment? What about spending by government and the rest of the world? Those questions imply that more spending means more production. If consumers want to buy more cars, companies will…

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What Has Happened to Indiana Local Income Tax Rates in 2019?

Wednesday, February 20th, 2019

Indiana reformed its local income taxes during the 2015 legislative session, and the new set-up took effect in 2017.  The old income tax acronyms, CAGIT, COIT, EDIT, and LOIT, were no more. Now we have LIT, for local income tax, with a single rate and a collection of revenue buckets for various uses. Three years…

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Assessed Value of Farmland Will Fall a Little in 2020

Friday, January 25th, 2019

The base rate of farmland will fall 3 percent from $1,610 per acre for taxes this year to $1,560 in for taxes in 2020. Indiana’s Department of Local Government Finance made the announcement on December 28. What does this mean? The base rate is the starting point for the assessed value of farmland, used to…

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Why the Alarm about Yield Curve Inversions?

Tuesday, December 18th, 2018

Are you sitting down? I’ll pause typing for a moment so you can find a chair. Good. On Monday, Dec. 10, for the first time in 12 years, the yield (or interest rate) on the five-year U.S. Treasury bond fell below the yield on the three-year U.S. Treasury bond. Alarm bells rang on Wall Street….

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Trends in Indiana School Referenda Results

Tuesday, November 27th, 2018

Indiana school districts can propose referenda to ask their voters for added property tax revenue. Twelve referenda were proposed on election day, and eight passed. That’s 67 percent, just a bit more than the 63 percent pass rate since 2008. Move along, folks, nothing to see here. But there’s been an upward trend toward passing…

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The Proposed Balanced Budget Amendment for the Indiana Constitution

Monday, October 22nd, 2018

Early voting has started in Indiana, and voters will see a constitutional amendment question on their ballot. The question asks whether the Indiana Constitution should be amended to require the General Assembly to adopt a balanced budget, unless two-thirds of the House and Senate vote otherwise. The amendment would add to Article 10, Section 5…

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Why is GDP Growth Higher than the Unemployment Rate?

Friday, September 21st, 2018

The growth rate of gross domestic product was higher than the unemployment rate last quarter. GDP adjusted for inflation increased 4.2 percent. The unemployment rate averaged 3.9 percent during April, May and June. That hasn’t happened in a while. The president said GDP growth was higher than the unemployment rate for the first time in…

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Why Did the Unemployment Rate Increase in June?

Thursday, August 23rd, 2018

The economy is growing. The expansion is nine years old and counting. The labor market is tight. There are more job openings than there are people looking for work. But in June the unemployment rate went up to 4.0 percent, from 3.8 percent in May. Is that just a random blip? Or is it the…

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Another Slow, Steady Year for the Indiana State Budget

Friday, July 27th, 2018

July is closeout month for the Indiana state budget. The state auditor releases the final revenue, spending and balance numbers for the fiscal year just ended. If it’s good news, the powers that be cry “huzzah!” and the loyal opposition looks for something to criticize. Fiscal year 2018 ran from July 2017 to this past…

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Shedding Light on LIT

Friday, June 22nd, 2018

Indiana has used local income taxes since 1974, but in 2017 we made big changes in how they work. There used to be three, or seven, or maybe 13 different kinds of local income taxes, depending on how you counted. We called them by their acronyms: CAGIT, COIT, CEDIT, and LOIT. It got really complicated….

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Why Are School Tax Referenda Passing More Frequently?

Wednesday, May 30th, 2018

Every May and November some Indiana school districts ask their voters to approve property tax increases. There are construction project referenda to pay for school buildings and tax levy referenda for general operating costs. This May, schools proposed 12 referenda. All 12 passed. It was the first sweep since referenda became common in November 2008….

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Taxes and Tariffs

Tuesday, April 24th, 2018

The Congressional Budget Office came out with their ten-year economic and budget projections earlier this month. The CBO is nonpartisan, which means they don’t have a political axe to grind. They’re just trying to get the right answer. The report is usually issued in January, but it was delayed this year because of the big…

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