Governor and Mitch Daniels and Legislature and Greg Ballard and State Budget and Capital Improvement Board and Government

Daniels strangely quiet as fiscal issues fester

April 13, 2009

This week is notable because April 15 is the passage deadline for legislation if those measures hope to remain eligible for conference committee consideration.

A few noncontroversial bills may emerge unamended from their opposite chamber, but given the general dearth of bills floating around this session compared with some sessions past, chances are tweaks will be made simply to move a subject matter into conference for keeping the topic alive.

As we head into a two-week period for conference committee deliberation, two items stand out.

The session will end with a focus on what has dominated discussion since Organization Day back in November: fiscal issues.

While the economy has been the overarching force, what has also been noticeable is the reluctance of Gov. Mitch Daniels to capitalize upon the reservoir of chits and political good will he built up with his overwhelming electoral win. He's not used his influence to get in front of issues such as the Unemployment Insurance Trust Fund solvency and the fiscal stress surrounding the Capital Improvement Board.

But regardless of the governor's involvement, dollar discussion dominates.

The bipartisan Revenue Forecast Technical Committee's dismal December fiscal forecast formally confirmed that the Hoosier economy was in a free fall.

As we learned that revenue would be constricted through much of the 2010 fiscal year, we also heard there would be additional strains on spending, as Medicaid, public assistance and unemployment insurance funds would be heavily tapped.

Since then, however, things have only gotten worse, even after Daniels ordered almost $700 million in spending cuts. Revenue has significantly lagged December's forecast in each subsequent month, and the magnitude of the over-the-year declines has dramatically increased.

March revenue numbers released last week show total revenue for fiscal year 2009 is running $755 million below budget, and current trends suggest it will likely come in some $1 billion below estimates, forcing another $500 million in cuts.

Of course, the spending pressures are only increasing, given those Hoosiers out of work, unable to afford health insurance, and buy groceries.

The real work on the budget begins after Friday.

The April 17 revenue forecast will afford lawmakers a better understanding of the budget, and they will work within the constraint of those figures. Given Daniels' admonitions for honest budgeting and general public and political pessimism over the long recovery ahead, it is unlikely lawmakers will attempt any fancy fiscal footwork.

The budget will truly present some difficult choices, and they all involve cuts.

Legislators are also meeting privately to remedy the Unemployment Insurance Trust Fund solvency situation as the Capital Improvement Board dilemma gets kicked around publicly.

As with the budget, without new sources of money, not much can be done, and squeezing out bucks for hapless Hoosiers or showcase stadiums is not proving simple. No one wants new or increased taxes, and seeking savings from affected constituencies has become a tough sell.

On the trust-fund front, the Daniels administration didn't do much more than try to facilitate talks last year between business and labor. He has offered no direction on the issue, even as House Democrats implored him to offer a proposal. When he wouldn't, and Republicans wouldn't stick their necks out first on a business tax hike, Democrats killed the bill and left the work to Senate Republicans.

Sen. Brandt Hershman, R-Wheatfield, stepped up with a plan the Department of Workforce Development labeled acceptable, but Daniels still failed to forcefully advocate approval.

Indianapolis Mayor Greg Ballard, a Republican, demurred on leading a CIB-solvency-plan push, and Daniels didn't fill the void, labeling it a local issue. That left Sen. Luke Kenley, R-Noblesville, to fashion a plan that has generated more opposition than support.

As the session heads toward conclusion, Daniels sanctions radio spots targeting individual Democrats on making property tax cuts permanent, but on seemingly imperative issues, both sides still seek his input.
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Feigenbaum publishes Indiana Legislative Insight. His column appears weekly while the Indiana General Assembly is in session. He can be reached at edf@ingrouponline.com.

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