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INDIANAPOLIS — State Auditor Tera Klutz announced Wednesday that Indiana spent $42 million less than it collected in taxes during the 2017 budget year that ended June 30.

"This is good news for Indiana taxpayers," Klutz said. "Just like hardworking Hoosiers across the state of Indiana, we continue to live within our means, we pay our bills on time, we provide needed services as well as plan for the future."

The annual budget surplus was built in part through strong year-over-year growth in sales tax (3.7 percent increase) and personal income tax (4.2 percent) collections, according to Micah Vincent, director of the Indiana Office of Management and Budget.

The administration of Republican Gov. Eric Holcomb also held back $318 million in spending appropriated by the Republican-controlled General Assembly, about one-third of which was money set aside for Medicaid expenses that did not materialize.

Indiana's combined budget reserve, including the General Fund surplus ($302.7 million), Medicaid reserve ($577.6 million), tuition reserve ($348.3 million) and Rainy Day Fund ($548.5 million), now stands at $1.78 billion.

That equals 11.5 percent of planned 2018 state spending.