Fiscal report shows Indiana in a ‘better position’ than anticipated amid dismal economic outlook

INDIANAPOLIS– As the state contends with a now $2 billion budget shortfall, Indiana State Comptroller Elise Nieshalla released a more optimistic update Tuesday.

She, along with State Budget Agency Director Chad Ranney and State Secretary of Management and Budget Lisa Hershman, announced Indiana ended FY 2025 with $2.5 billion in state reserves—in other words, a healthy reserve of 11% of state expenditures.

“Hoosiers can remain confident that our financial footing is stable despite a year marked by fluctuations and a lower-than-expected economic forecast,” State Comptroller Nieshalla said.

“We maintain enough cash on hand, enough money in the reserves, to continue at the state level providing the services that Hoosiers need and frankly expect,” Ranney said.

State budget leaders said Gov. Mike Braun’s directive to cut 5% across state agencies significantly contributed to keeping reserves where they are “now and in the future.”

“If we’re enterprising ourselves, we’ll find ways, even if it puts more burden on us to do it better and more efficiently,” Gov. Braun said.

According to Ranney, state agencies gave back $78 million in FY 2025, originally allocated to them, back to the state as part of Gov. Braun’s directive.

“That’s $78 million that we were effectively able to return to Hoosiers by reverting the money to the general fund,” Ranney said.

“You never want to be short-sighted that you can just cut and expect that to always be the right thing, but if there are efficiencies to be found, we’re going to find them, and that doesn’t mean necessarily that you put it back to where it was,” Gov. Braun said.

But State Sen. Fady Qaddoura (D-Indianapolis) said the latest report doesn’t show crucial parts of the state’s economic picture.

“The 2025 fiscal year ended with a breaking even almost scenario, but the story it doesn’t tell: at what expense? Who paid for it?” State Sen. Qaddoura said.

According to State Sen. Qaddoura, Indiana’s state budget continues to mirror federal policy that leaves the most vulnerable Hoosiers without many viable options or solutions.

“The question is not whether or not Indiana can afford these services with an almost $44 billion plus biennium budget,” State Sen. Qaddoura said. “The question is, what are the priorities in the budget that need to be funded?”

The state also ended FY 2025 with a $336.9 million surplus— a number that, while better than expected, is the lowest in the last three budgets according to House Democrats.

“$336.9 million, while it sounds like a lot, is certainly a far cry from the $577 million that was estimated in December 2024,” Ranney said.

In addition to state budget concerns, Indiana Senate and House Democrats alike are calling on the Braun Administration to release a report detailing the effects of the “One, Big, Beautiful Bill Act” (OBBBA) on all state agencies. According to the Congressional Budget Office, roughly 250,000 Hoosiers could lose healthcare coverage due to provisions in the GOP reconciliation bill, including 125,000 Hoosiers on Medicaid.

“Medicaid dollars may keep [Republicans] up at night, but people who need Medicaid services keep me up at night,” State Rep. Gregory W. Porter (D-Indianapolis) said. “Hoosiers are hurting. You can’t continue to turn a blind eye to that.”

While state budget leaders acknowledged that various agencies are conducting their own OBBBA analyses, several Democrats worry they won’t receive that information until it’s too late.

“They’re promising that we’ll see it in the December forecast,” State Rep. Ed DeLaney (D-Indianapolis) said. “I’m saying we can’t wait for that. We need to be preparing legislation to deal with these issues. We can’t get it crammed down our throat.”

“We need it by September or October at the latest,” State Rep. Porter said.

But Gov. Braun said he’s not concerned about the potential ramifications of the OBBBA on state finances.

“When you’re worried about stuff that’s not being financed responsibly, the federal government, you shouldn’t be wanting to have your cake and eating it too,” Gov. Braun said. “That’s all leading us down a pathway that’s not sustainable.”

The state’s annual comprehensive financial report is expected to be released in December.