Just a year ago the state of Indiana gutted  its budget and cut spending to offset decreases in revenues brought on by the struggling economy. Pressures still exist but the state’s sacrifices are now shoring up its bottom line. On Thursday, State Auditor Tim Berry laid out the evidence, announcing Indiana ended its 2010-2011 fiscal year in June with a $1.2 billion surplus.

“Last year, the questions that each of you had were, are you sure you can maintain a reserve balance of a $188 million,” Berry said at a press conference at the Indiana State House in Indianapolis. “It was the governor’s intention and others’ in state government to go out and find a way to reach a reserve balance by becoming more efficient.”

Berry said the state brought in 5 percent less revenue — about $1.3 billion — than was anticipated in the state budget, which was adopted two years ago. Because it spent 5.5 percent less ($1.52 billion) than it budgeted, the state ended with the surplus. Indiana operates on a two-year budget cycle.

“Without raising taxes and by carefully watching spending, Indiana state government has continued to live within its means,” Berry said. “For those who believe that raising taxes is the only way out of a fiscal crisis, I say take a look at the Hoosier State.”

But just because the state has extra cash doesn’t mean it will restore some of the cuts it made, such as in higher education and children’s health care, as Indiana House Minority Leader Pat Bauer, D–South Bend, believes should happen.

Indiana Gov. Mitch Daniels says the weak national economy still threatens every Hoosier.

“More money in Hoosiers’ incomes and a terrific job of cost control by state employees working together combined to produced an even stronger result than we expected at budget time,” Daniels said in a written statement. “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.”