Budget Preserves Reserve

Indiana struggled this week passing their budget. Amazingly the state followed the lead of Governor Daniels. The state will preserve their $1 Billion reserve. The caution was that income tax revenues will falter. The state has an above average unemployment situation and low income taxes (around 3%).

Rather than spend their reserve, they are saving it, knowing that the climate is unstable and unusual. The cost of living in Indiana is low. There is much of the state that relies on the auto industry. The northern counties are home to RV production. Thousands are laid off.

Indiana is like many individuals these days. All reserve cash is tucked away. Many small businesses are not hiring or purchasing new equipment. Many 401(k) plans no longer receive matches from employers.

It's like a boat at sea with a storm appearing at the horizon. Many are all battening down. They are watching their spending and dedicating themselves to preserving reserves.

'til later