Indiana State Auditor Tim Berry announced the news on Thursday: the state posted a $1.2 billion surplus in the state budget. Considering that that the nation is in the middle of a nationwide recession, this may come as a surprise to many

Indiana’s fiscal year ended June 30 with the state having $400 million, or 40 percent more money in its coffers than it had at the same time last year.

“We’re showing . . . that you can manage a budget by reducing expenditures and not raising taxes,” said Berry.

According to the report, “Barry credited state agencies who slimmed their spending and Governor Mitch Daniels’ fiscal accountability.”

Hoosiers Show How Its Done: Indiana Posts a Surplus And Dems Are Unhappy“More money in Hoosiers’ incomes and a terrific job of cost control by state employees working together combined to produce an even stronger result than we expected at budget time,” Daniels said in a statement Thursday.

“With the national economy still limping badly, and downside risks still abounding, it is reassuring to have a safety margin that other states would love to have.”

Last year, Daniels and Indiana lawmakers were concerned the state was going to bankrupt by the end of the fiscal year. Now, the state has an amount in reserves that was not predicted to be reached until 2013. A happy situation for any state.

“Indiana arrived at its surplus despite receiving 5.5 percent less revenue, or $1.34 billion, that was anticipated in the 2010-2011 fiscal year from the budget passed in 2009. At the same time, the state found ways to spend 5.5 percent less, or $1.52 billion than expected,” the report continued.

However, as per their usual, Democrats decided that this was no cause for celebration.

“From even the most cursory examination, it is apparent that this budget surplus has not been built on a strong economy keyed on job creation,” said House Minority Leader Pat Bauer (D-South Bend) in response. “That’s because this administration has no such program.”

Pat Bauer, as some may remember, made headlines recently when he coaxed his fellow democrats into fleeing the state in an attempt to halt a vote on anti-union legislation.

Bauer continued: “Instead, it is obvious that this surplus owes a great deal to budget reversions and other accounting tricks that this administration frowned upon when it took office. Without the past use of federal stimulus dollars, the continual demand for trimming agency budgets, and the occasional raid on dedicated funds, our financial picture would not be as rosy as the governor and the auditor would like. At that point, it is prudent to wonder at the cost extracted by these gimmicks. What services are suffering as a result of the obsessive need to maintain a $1 billion surplus?”

Despite his overtures, Gov. Mitch Daniels plans to keep the money in savings rather than restore state programs that were cut.

At this moment, the $1.18 billion surplus does not meet the 10 percent budget surplus amount required for an automatic taxpayer refund which state lawmakers passed earlier this year. However, Indiana lawmakers are optimistic that the saving will come close to that at the end of the current two-year budget cycle.

With a fiscal hawk like Mitch Daniels at the helm, Indiana could teach Washington, D.C. a thing or too. With effective cuts and real fiscal austerity, budgets can be controlled.