The U.S. Gets a Cold, Indiana Gets Pneumonia: Our Economy is Struggling

Our estimates show a loss of $2.4 billion in revenue from 2025 to 2027.

Dear neighbor,

While crafting the state budget, legislators receive two revenue forecasts— the first in December and the second in April. Both forecasts give lawmakers an estimate of how much money Indiana will collect from state income taxes, corporate taxes and more. These estimates are vital since Indiana’s revenue directly correlates to what we can spend in our two-year state budget.

On April 16, we discussed the revenue forecast. The forecast showed extreme economic uncertainty. Our revenue collections for the next two years have dropped by $2.4 billion from what we previously expected. Indiana will be down $403 million this year, $963.9 million in 2026 and over $1 billion in 2027. This is an unprecedented negative change in four months. These numbers are worse than the 2009 recession.

We knew Trump’s tariffs would affect our state, but this is a reality shock. When the U.S. gets a cold, Indiana gets pneumonia. Now we’re $2.4 billion short for our state budget.

Our state budget was estimated to cost $46 billion. By losing these dollars, we’ll need to cut our budget by 4.35%, down to $44 billion. We still don’t know if there will be additional federal cuts that affect our state budget.

Republicans have said everything is on the table for cuts, but our goal as House Democrats is to preserve essential services. We’re interested in finding additional revenue sources, such as increasing the cigarette tax, before we make drastic cuts. Absolutely no cuts should be made to K-12 public education, health care and public safety.

During this time of uncertainty, House Democrats are committed to lowering costs, protecting jobs and preserving essential services. As always, please reach out to my office with any questions, comments or concerns at h1@iga.in.gov.

To view the full revenue forecast, click here.