By Whitney Downard
Indiana Capital Chronicle
Indiana’s top elected officials will all see a significant pay bump in the next year just as lawmakers convene to craft a budget with little leeway for extra spending. At the very top, Gov. Eric Holcomb’s successor will become one of the highest paid governors in the nation while other offices will see raises between 44% and 66%.
Holcomb is term-limited and has three candidates vying to succeed him: Republican Mike Braun, Democrat Jennifer McCormick and Libertarian Donald Rainwater. Any new officeholder will seek to implement their own priorities after inauguration, but may find they have fewer resources to do so than previous administrations.
One other office getting a pay raise will be on the November ballot: the race for attorney general. Incumbent Republican Todd Rokita is running for reelection and faces a challenge from Democrat Destiny Wells.
The raises, drafted in the last few days of the 2023 budget process with no public discussion, were passed before two significant budget hits: a Medicaid shortfall of nearly $1 billion and shrinking reserves. Lawmakers are scheduled to convene in January to draft Indiana’s two-year budget.
About those pay raises
The final version of the budget included a pay raise for six of Indiana’s executive leaders: the governor, the lieutenant governor, the secretary of state, the attorney general, the state treasurer and the state comptroller.
The pay for those offices — along with legislators’ salaries — are statutorily defined as a percentage of the salary of an Indiana Supreme Court justice. Chief Justice Loretta Rush determines whether a pay raise is necessary and the Office of Management and Budget calculates the increase.
In this case, former State Budget Director Zac Jackson then analyzed the average salary increases over a comparable amount of time for state employees in the same income bracket, which excludes quasi-public agencies such as the Indiana Economic Development Corp.
Based on that determination, justices, judges and prosecutors in the state’s judicial system saw a 3% increase between the 2023 fiscal year and the 2024 fiscal year, the latter of which started on July 1.
By law, the governor’s salary will be equal to that of a justice at $221,024, a 65% increase from Holcomb’s salary of $133,684. Previously, lawmakers set the office’s salary at $95,000 in 2007, with raises every four years tied to increases for other state employees within that salary bracket.
That puts the governor’s salary among the highest in the nation. Indiana’s next governor will make more than all of its peers in neighboring states — Illinois’ executive leader, the next closest, will make $205,700 — and be within striking distance of much larger and wealthier states.
Raises across five other elected offices were calculated the same way as the governor’s after setting a base rate in 2007. For the lieutenant governor, the officeholder takes home $116,987 currently, a number that will jump 66% to $194,501 — or 88% of a justice’s salary — in the new year.
The state attorney general’s salary will be 83% of a justice’s salary, or $183,450. That is a 50% increase from the current salary of $122,184.
The offices of the treasurer, secretary of state and comptroller are all currently paid $101,594. Though called the auditor in the state constitution, the office changed its name to comptroller in 2023.
Those three offices will take home $145,876 in 2025, or 66% of a judge’s salary — a 44% increase.
Lastly, lawmakers have a base salary that is 18% of a judges salary, or $33,032. That pay will take effect in 2025 — though legislators earn more than the base salary, roughly $70,000 annually. The bulk of that extra pay comes from the $196 per diem paid to each legislator for each day in session. Lawmakers are also eligible for mileage reimbursements.
Lawmakers passed the increases on the last day of session, inserting the language in one of the last versions of the budget bill drafted after public hearings. In 2007, the last time the General Assembly weighed in on salaries, salaries for elected officials was passed in a separate, independently vetted bill.
Budgeting for the year ahead
Those pay bumps will go into effect in a different Indiana, however.
The week before it passed the budget bill and raises, legislators got a rosy forecast with an unexpected $1.5 billion in revenue. During the pandemic, the influx of federal funds and high sales tax revenues boosted state reserves to unprecedented levels, high enough to trigger two rounds of taxpayer refunds.
By December, the state’s economic fortunes had shifted.
Medicaid officials told lawmakers that the state program was short $984 million, largely due to high growth in demand for services for aging and disabled Hoosiers. Cost-saving measures enacted by leaders saved an estimated $300 million by barring parents of severely disabled children from working as attendant caregivers and by pausing Medicaid increases, among other actions.
Combined with a recent whistleblower lawsuit alleging that the agency overpaid insurers and hospitals by $700 million, Medicaid is sure to be a target of much debate in 2025.
Outside of those considerations, the pandemic era of explosive revenue growth has cooled to pre-pandemic norms. Typically, the state aims to keep reserve levels between 10-12.5% of expenditures and will hit a post-pandemic low of 10.4% in the 2025 fiscal year.
Top Republicans on key budget drafting committees have warned that maintaining current funding levels into the next two years “could well be a challenge,” in the words of House Ways and Means Chairman Rep. Jeff Thompson.
“… for K-12 and for Medicaid and all the programs to be able to do that — if you look at some of the projections and where we might land, that may not be easy,” Thompson said at a recent panel event. “I guess time will tell, based upon our revenue.”
