Indiana Projects $5.3 Billion in Reserves by June 2027
Indiana closed fiscal year 2026 with nearly $4 billion in reserves and projects $5.3 billion in reserves by June 30, 2027 — 22% of revenues — as monthly collections have exceeded forecasts for ten consecutive months. Not all reserves are available for new spending: the total includes dedicated funds for Medicaid contingency ($274.7 million), state tuition ($739.6 million), and the Rainy Day Fund ($1.12 billion), and over $1.1 billion may be needed to reimburse the highway fund for the summer gas tax holiday. If reserves exceed 12.5% of appropriations in 2027, state law triggers an automatic taxpayer refund. The state's FY 2026-2027 budget cut real spending by 7% after April 2025 revenue forecasts fell short; legislators may revisit those cuts if the December 2026 forecast shows continued growth.
Indiana's Medicaid contingency fund holds $274.7 million that state leaders cannot redirect without jeopardizing federal match or program stability, constraining how much of the projected $5.3 billion reserve total is available for budget restorations or new Medicaid investments in 2027.
Finance
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