Indiana General Assembly approves use of AI for state agency budget projections

The Indiana Senate introduced Senate Bill 5 on April 23, 2025, aiming to modernize state administrative processes through the integration of artificial intelligence (AI) and streamline federal funding requests. The bill proposes two significant amendments to the Indiana Code, set to take effect on July 1, 2025.

The first key provision allows state agencies to utilize AI software for preparing required budget statements and projections. This move is seen as a step towards enhancing efficiency and accuracy in state financial management, potentially reducing the time and resources spent on these tasks. Proponents argue that AI can help agencies better analyze data and forecast budgetary needs, ultimately leading to more informed decision-making.

The second major component of the bill establishes a new chapter concerning federal funds requests. It defines "new federal funds" as assistance from the federal government that the state is not currently receiving or participating in. Notably, the chapter includes a provision exempting requests subject to nondisclosure agreements, which could protect sensitive business information from public disclosure.

Debate surrounding Senate Bill 5 has focused on the implications of using AI in government operations. Supporters emphasize the potential for improved efficiency and transparency, while critics raise concerns about data privacy, the reliability of AI-generated outputs, and the need for oversight to prevent misuse. Some lawmakers have called for amendments to ensure that the use of AI adheres to ethical standards and safeguards against bias.

The bill's passage could have significant economic and administrative implications for Indiana. By adopting AI technologies, the state may enhance its operational capabilities, potentially attracting more federal funding and improving service delivery to residents. However, the successful implementation of these provisions will depend on the establishment of clear guidelines and training for state employees on the use of AI tools.

As the legislative session progresses, stakeholders will be closely monitoring the bill's developments, particularly regarding any proposed amendments and the broader impact on state governance. The outcome of Senate Bill 5 could set a precedent for how Indiana approaches technology in public administration moving forward.