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Daniels announces more cuts as state revenue falls again

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Indiana Gov. Mitch Daniels on Friday morning announced a series of spending cuts and other steps designed to offset a continuing multimillion-dollar decline in state revenues.

Daniels said that Indiana tax collections for October were $46 million below forecast, and are $309 million behind for the first four months of the fiscal year.

The state ended the 2009 fiscal year in June with $1.3 billion in reserves. If the trend continues without spending cuts, he said, Indiana's reserves would be wiped out by next August.

“We have seen enough to know that new actions are necessary if we are going to protect Indiana taxpayers against the tax increases that are happening in most of the rest of America,” Daniels said in a prepared statement.

The governor ordered state agencies to cut spending by 10 percent—in addition to the 5 percent cut made in July—and reduced reimbursements to some Medicaid providers.

Among other reductions:

• The lieutenant governor, auditor, treasurer, secretary of state and superintendent of public instruction have committed to cutting their office budgets by 10 percent.

• State employees, who did not receive pay increases this year, also will forgo raises in 2010. Agencies also will offer employees the chance to take unpaid leave.

• Daniels will not accept his full salary in 2010. This year, he turned down a 13-percent raise.

The reductions are expected to save the state $300 million to $400 million over two years.

Daniels says those and other steps should offset the shortfall in revenue to date, but more action might be needed if tax collections continue to miss their target.

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Read the October revenue report.

Listen to audio from Friday's news conference.

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  • No Raise for Governor?
    While I appreciate the fact that the Governor has declined his 13% RAISE this year, I have to wonder if this size of raise is standard for government officials and is that part of the reason we're in the mess we're in right now? After two consecutive years of no raises myself (NOT by choice) I would be thrilled if someday I could see our agency standard of 2.5% - 3%...which seems much more reasonable in these times!!

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  1. You are correct that Obamacare requires health insurance policies to include richer benefits and protects patients who get sick. That's what I was getting at when I wrote above, "That’s because Obamacare required insurers to take all customers, regardless of their health status, and also established a floor on how skimpy the benefits paid for by health plans could be." I think it's vital to know exactly how much the essential health benefits are costing over previous policies. Unless we know the cost of the law, we can't do a cost-benefit analysis. Taxes were raised in order to offset a 31% rise in health insurance premiums, an increase that paid for richer benefits. Are those richer benefits worth that much or not? That's the question we need to answer. This study at least gets us started on doing so.

  2. *5 employees per floor. Either way its ridiculous.

  3. Jim, thanks for always ready my stuff and providing thoughtful comments. I am sure that someone more familiar with research design and methods could take issue with Kowalski's study. I thought it was of considerable value, however, because so far we have been crediting Obamacare for all the gains in coverage and all price increases, neither of which is entirely fair. This is at least a rigorous attempt to sort things out. Maybe a quixotic attempt, but it's one of the first ones I've seen try to do it in a sophisticated way.

  4. In addition to rewriting history, the paper (or at least your summary of it) ignores that Obamacare policies now must provide "essential health benefits". Maybe Mr Wall has always been insured in a group plan but even group plans had holes you could drive a truck through, like the Colts defensive line last night. Individual plans were even worse. So, when you come up with a study that factors that in, let me know, otherwise the numbers are garbage.

  5. You guys are absolutely right: Cummins should build a massive 80-story high rise, and give each employee 5 floors. Or, I suppose they could always rent out the top floors if they wanted, since downtown office space is bursting at the seams (http://www.ibj.com/article?articleId=49481).

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