The outlook for Indiana’s next two-year budget is better than legislators expected, but it’s still going to be tight.

Forecasters expect Indiana to collect about as much in taxes as they thought they’d have for the current budget, before the pandemic took a giant bite out of the economy.

What little increase there is will be eaten up by higher Medicaid costs, leaving about $125 million less over two years to spend on everything else.

Senate Appropriations Chairman Ryan Mishler (R-Bremen) says the first year of the two-year budget will be essentially flat before things loosen up a little in the second year, with a projected three-percent increase.

House Ways and Means Chairman Tim Brown (R-Crawfordsville) says there are a lot of wild cards, including whether the state will get more assistance from the federal government and how much.