Overheard: Governor Daniels in the News

Daniels' budget comes close to being painless

The Indianapolis Star
By: Andrea Neal
June 10, 2009

If they couldn't agree on spending priorities in the regular session, it's hard to imagine state legislators coming together to pass a budget by June 30, the end of the fiscal year -- especially considering the histrionics we've seen from House Democrats.

Their latest stunt was to walk out of bipartisan subcommittee hearings because they didn't like the way Gov. Mitch Daniels was handling the process. Democrats say they'll do their own thing and come up with a budget alternative. Isn't this what caused a special session in the first place?

In difficult times like these, not everyone will be satisfied with the governor's ideas. But he's found a way to use some reserves, maintain K-12 spending at current levels, spend federal stimulus funds responsibly, satisfy the higher education community and balance the budget, all without a tax hike. This is no easy feat in a state whose revenue base is heavily dependent on sales taxes, which fall quickly when money's tight.

The Democrats who control the House are in a tough spot because they want to appear to have as much influence as Senate Republicans when the special session starts Thursday. They lost that chance when the regular session ended with nothing to show for it. By failing to enact a budget when they were supposed to, lawmakers punted to Daniels.

That doesn't mean they should swallow his budget without debate. It's reasonable for lawmakers to argue, as they have, over the school funding formula, which essentially freezes per-pupil spending at current levels and would result in cuts for schools with shrinking enrollment.

But lawmakers are deluding themselves if they think that can pass a budget that will cause no pain. Around the country, headlines tell a story of steep cuts with far worse consequences than ours.

Thirty-five states have cut or plan to cut school spending. This week, the North Carolina House is debating a plan that would reduce spending there by more than $4 billion, bringing that state's budget down to 2006 levels. As described by The Charlotte Observer, "Education would be cut 12 percent next year. Thousands of teachers would be laid off and so would many teacher aides. Classrooms would get more crowded. University tuition would go up by $200 for most students. Community colleges would eliminate the tuition waiver for senior citizens, chop library budgets and increase tuition by $8 per credit hour." Predictably, critics are pushing instead for a tax hike.

Things are worse in California, facing a $24 billion shortfall, where Gov. Arnold Schwarzenegger has proposed cutting $3 billion from the state education budget. When Californians were asked if they'd be willing to pay more taxes to avoid such suffering, they said no. Among the possible consequences: teacher layoffs, bigger classes, even a shortened school year.

The way some state lawmakers are talking, you'd think Daniels had proposed something similar. He has not. His budget puts Indiana on strong footing should revenue collections improve in the fourth quarter as some economists predict. It also protects Hoosiers from future tax hikes by maintaining a reserve fund balance of more than $1 billion.

Indiana's relative fiscal health is due to two things: We started the recession with a hefty cash balance and, when things turned sour, Daniels took prompt action to cut state agency spending.

"It would not be a catastrophe if the special session failed; tax money would continue to fill the state coffers, and Gov. Daniels can exercise his executive authority to properly spend the tax money," says Watchdog Indiana, a taxpayer advocacy group that became disgusted with the 2009 legislature's failure to vote on property tax cap amendment language initiated in the previous session.

That's not how the budget process is supposed to work, of course, but it might happen if Democrats in the House continue to act more like spoiled children than responsible policymakers.

EDITORIAL: Daniels budget should be OK’d

Indianapolis Business Journal
June 6, 2009

Overtures Gov. Mitch Daniels has extended to the General Assembly should be sufficient to end squabbling over the budget. Legislators ought to take the offer, pass a budget, and leave the Statehouse before they throw any more sand in the gears.

Public schools would get a 2-percent increase in funding and higher education would receive $450 million for capital projects, thanks to federal stimulus cash. Education also won out over two prisons Daniels wanted to build.

It had to have pained the governor to agree to surrender $300 million of the $1.3 billion in reserves he has staunchly defended from shortsighted lawmakers. He is correct in warning hard times might linger and that the state might wish it had the money further into the future. Still, the compromise is reasonable.

Daniels, having offered little guidance on the budget in the regular session, seemed uncharacteristically detached through much of the session. Considering how few of his initiatives, particularly local government consolidation, were adopted by the General Assembly, he’s headed toward his least productive year in office.

Hoosiers nevertheless are fortunate to have a rock-ribbed fiscal conservative in office at a time when many other states have burned through reserves and are considering tax increases to plug their growing deficits. Daniels made a solid call when he demanded an updated budget forecast last month—a move resulting in projections of $1.1 billion less in taxes through June 2011 than was predicted just a month earlier.

A quick, clean conclusion to the special session, which begins June 11 in anticipation of the fiscal biennium beginning July 1, would help redeem a legislative body that did miserably little to distinguish itself this year.

Its most glaring shortcoming was opting for tradition and political pals back home instead of whittling away unwieldy layers of government. And legislators didn’t deal with the Capital Improvement Board, which faces a $47 million budget deficit due largely to higher operating costs for Lucas Oil Stadium and $15 million in operating costs it anticipates assuming from Conseco Fieldhouse next year.

Daniels and Indianapolis Mayor Greg Ballard propose chucking CIB and merging it with the Marion County Building Authority. The revamped board, the Facilities Management Board of Marion County, would oversee the big sports facilities along with other properties.

Daniels and Ballard also want to cut $27 million in expenses and raise $20 million through taxes on hotels, admissions and rental cars.

Given the importance of the sports facilities to state coffers, we would’ve welcomed a more regional solution, but at least the governor would get two appointments to the nine-member facilities board. Again, this is a reasonable proposal lawmakers should welcome.

The onus is back on legislators now that the governor has extended an olive branch.

Let’s hope they take it.