Indiana's overall fiscal picture in the next budget cycle looks positive, according to a revenue forecast released Thursday.
State leaders say they're cautiously optimistic about Indiana's fiscal future after the new revenue forecast predicted a 2 percent to 3 percent growth in the next budget cycle.
Two percent to 3 percent revenue growth in the next budget would mean more than $800 million over the next two years.
But Senate Appropriations Chair Luke Kenley, R-Noblesville, says even that kind of increase shouldn't start a spending frenzy. He notes that even before the forecast he's been receiving budget requests that total almost double that amount.
"I think it's going to test the legislature's ability to be disciplined and keep Indiana financially strong to come up with the right answers and still meet the priorities that we all want to serve if we can," Kenley says.
Gov. Mike Pence says Hoosiers should be encouraged by the revenue forecast's projections.
"But I still believe that it's prudent for us to exercise caution as we craft our state's two year budget," Pence says.
Democrats say Republican leadership's single-minded adherence to maintaining a $2 billion surplus will continue to cast doubt on its funding priorities, even with a positive revenue projection.
The specific areas of gaming and cigarette tax revenues won't be as rosy, however .
Indiana's gaming revenue has been in free fall for a few years, and it's predicted to continue its drop in the upcoming two-year budget cycle.
That's in large part because of increased competition from neighboring states.
A legislative study committee is proposing changes to the industry that include moving riverboats on land, allowing live dealers rather than electronic table games at racinos and tax incentives.
But Kenley says the gloomy outlook doesn't mean more pressure on the legislature to enact those proposed changes.
"It's just the competitive posture has changed that marketplace so much that I don't think you can recover the whole thing," he says.
Cigarette taxes are expected to drop around 2 percent in the next biennium, but Kenley says he's not concerned.
"I think we want people to smoke less, so I'm willing to deal with that issue. If they smoke less and we collect less cigarette taxes, that indicates a success on that front and we'll have to figure out how to solve our fiscal problems in another way."
Gov. Pence's proposed healthcare expansion relies in part on cigarette tax revenues to pay for his plan.