State budget staff warn of Medicaid service reductions as revenue forecast shows $2.4 billion shortfall

Representative Jeff Thompson convened the State Budget Committee on April 16, 2025, in Indianapolis as staff delivered Medicaid, economic and revenue forecasts that officials said could lead to reductions in services and tighter fiscal choices.

Secretary Roob, presenting the Medicaid forecast, told members the administration is facing cuts that would reduce applied behavior analysis (ABA) services and described an earlier Holcomb administration plan for an ABA "cliff" starting April 1 that he said is not part of Governor Braun’s plan. "The State cannot afford to continue spending at current levels on each individual child while still addressing the needs of children who need the services," Secretary Roob said, adding that Family and Social Services Administration (FSSA) is beginning internal efforts to address ABA services.

Senator Fady Qaddoura pressed for details about the PathWays program waitlist; Secretary Roob said a surprisingly high percentage of people who are off the waitlist do not qualify for services and that invitations for the waitlist will be good for 180 days. On whether FSSA would seek a budget augmentation to add waitlist spots, Secretary Roob said it "comes down to funding, and FSSA will not be asking for more funding." Representative Ed DeLaney emphasized the need for accurate actuarial work; Secretary Roob said the State is working with Deloitte on potential actuarial services and that FSSA has internal actuarial staff.

Tom Jackson, who presented the economic forecast, told members his office assigned probabilities to three scenarios: 50% for the baseline, 35% for a pessimistic alternative and 15% for an optimistic alternative. "There is more uncertainty than before, largely due to federal policy," Jackson said when members asked about the degree of uncertainty compared with last year.

Revenue forecasters Ben Tooley and Hari Razafindramanana said revisions to Indiana’s gross state product relative to U.S. GDP and softness in manufacturing, trade and transportation drove a significant drop in corporate tax projections and contributed to what they characterized as a roughly $2.4 billion gap in the forecast. Mr. Tooley told members the revenue forecast does not prescribe where policymakers must find offsets. Mr. Razafindramanana noted concurrent declines in consumer sentiment but declined to speculate on effects for specific groups such as retirees.

Committee business included a motion by Representative Gregory Porter, seconded by Senator Ryan Mishler, to approve the January 2025 minutes; the motion carried unanimously. Chairman Thompson later entertained and the committee approved a motion to adopt the meeting agenda; the meeting was adjourned at 4:25 p.m.

What happens next: committee staff and agency officials identified in the forecasts may be asked for follow-up materials as members prepare for budget decisions; the committee’s June 18 agenda lists additional project requests for review.