Gov. Mitch Daniels and Indiana lawmakers preparing to craft the state's next two-year budget are eyeing an obscure bank insurance fund as a possible revenue source to close anticipated budget gaps.
The Indianapolis Business Journal reports that Indiana's public deposit insurance fund, or PDIF, was created after during the 1930s to replenish money invested by schools, cities and other public entities if a bank holding those funds failed and the Federal Deposit Insurance Corp. didn't cover the full losses.
But now that new state regulations provide another form of backup insurance, Daniels has said that tapping the fund for other state expenses is "a perfectly appropriate suggestion."
"That fund has outlived its usefulness, and we do have needs in other areas," Daniels said recently. "It would be perfectly legitimate to consider applying that money to other uses such as education or something else more current."
Lawmakers who begin their legislative session Jan. 5 and Daniels expect about a $1 billion gap between the state's revenue and expenses in the state's next budget. They say that figure includes the need to build up reserves by $500 million.
But any attempt to dip into the fund will face resistance from the state's banking industry. Indiana financial institutions contend that the money — which accumulated from fees paid by banks, plus interest — belongs to them, not the state.