Opinion and Statehouse Dispatch

FEIGENBAUM: Let the state budget bickering begin again

June 8, 2009

Lawmakers return to Indianapolis June 11 tanned, rested and presumably ready to agree upon a budget that, via gubernatorial assent or a veto override vote, will guide Indiana through fiscal 2010-2011.

That's what we'd like to believe, but agreeing upon the fine print of a budget before July 1 will not be a simple chore.

When we last left you, lawmakers punted on a budget even after the ruling parties, Senate Republicans and House Democrats, had effectively agreed upon the details as April ended. However, continued concerns over the bottom line led Republican Gov. Mitch Daniels to demur on approval, and led lawmakers to grumble over--and chase--moving targets.

What had been a $200 million difference between lawmakers and the governor only six weeks ago will be far more difficult to close now.

A special revenue forecast to guide the special-session deliberations finds us starting fiscal 2010 with revenue down $444 million from the April forecast just eight weeks ago. The panel sees revenue continuing to drop through the biennium, meaning overall revenue will likely be $1 billion less than projected April 17.

Legislative leaders and the governors agreed on commissioning the new "realistic" forecast as part of a broader special budget process preceding the special session. Part of the agreement called for the governor to deliver his detailed requested budget as June opened, along with a proposed school-funding formula.

Daniels began on June 1 what will be an aggressive sales job this month with a five-minute statewide broadcast outlining his budget blueprint and priorities.

He seeks a general reduction of state spending totaling 2.5 percent, with impacts varying by agency.

In fact, as proposed by the governor, most school districts would see an average 2-percent increase over the biennium, and all would receive more money per child than they do today. Should state revenue exceed the amounts forecasted, Daniels also proposes an "education trigger," automatically investing $1 in education for every $2 of excess revenue received.

The other dollar would be directed into the Rainy Day Fund, which the governor has reluctantly come to accept that he must tap in part to obtain legislative acquiescence for the budget. He is willing to use up to 25 percent of the $1.3 billion surplus for biennial budget needs, which makes Democrats a bit happier.

While Daniels had earlier pushed for prison construction, he backed off from that position with his new proffer, and tried to appease higher-education and job-creation advocates with $450 million in capital projects for state universities, even as higher ed funding takes a cash hit.

The budget proposal will not be met with open arms, however.

The school-funding formula will certainly be tweaked, with both Democrats representing urban districts and Republicans from large rural areas concerned about the loss of overall funding to districts with declining enrollments but larger expenses. You can also look for lawmakers to seek to boost higher-ed funding.

While he had promised a solution to the controversial Capital Improvement Board operating shortfalls, the governor delayed details until after this column's deadline.

Individual programs will also be tinkered with to suit legislative tastes, and that doesn't bother the governor, as long as solons stay within his bottom line.

That is where sparks will fly.

While Daniels views his budget bottom line as the ceiling, lawmakers of both parties are proceeding as if it is a floor and are finding a "middle ground" of sorts.

Another key is keeping peripheral issues out of the picture and the budget.

Senate President Pro Tem David Long, R-Fort Wayne, says the Senate will not consider any other bills, and the Senate version of the budget won't include any gambling issues, which he says hijacked the budget at the end of April. But gambling issues are close to the hearts of some House Democrats, who see gambling as a budget resolution and local economic development tool.

And does this mean no more tinkering with the Unemployment Insurance Trust Fund will be countenanced, or a reassessment delay will not find its way into the budget?

As lawmakers return, the games begin--and the outcome is uncertain.

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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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