FEIGENBAUM: Daniels experiences pushback even from Republicans

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With the gloss worn off the governor’s State of the State address and committee hearings beginning in earnest, one phenomenon we cautioned you about is starting to play out: Assorted issues advanced by Republican Gov. Mitch Daniels are confronting political pushback—from his Republican legislative majority.

While he never expected the new GOP majority in the General Assembly to advance his legislative agenda without question or modification, Gov. Daniels may be surprised to see some of the more vociferous opposition come from both legislative veterans and the freshman bloc.

Perhaps the biggest surprise is the reaction of some veteran lawmakers, such as Rep. Jeff Espich, R-Uniondale, chairman of the House Committee on Ways and Means, to the Daniels administration’s proposed cuts of just some $20 million in Medicaid services that the federal government doesn’t require states to underwrite: some dental, podiatric, optical and chiropractic care.

While 20 years ago, even Bayh administration Democrats trimmed some of the so-called “Cadillac” options from Medicaid, the latest proposed cuts trouble fiscally conservative Republicans such as Espich.

Some Republicans, such as Sens. Vaneta Becker, R-Evansville, and Randy Head, R-Logansport, also fight the ramp-down of state psychiatric facilities in their districts.

Perhaps the governor can target other programs or shift revenue to cover costs, some in the governor’s party suggest. But shifting of revenue also has proven problematic already this month.

As reporter Francesca Jarosz recently tipped IBJ readers, the Daniels administration wants to tap some $200 million in revenue from a dedicated fund protecting money held by financial institutions for Hoosier government units. In the event of bank failures, the Public Deposit Insurance Fund would, in theory, help cover at least some losses, but the administration proposes instead to use authority under recent legislation to revamp the “insurance” system, and redirect $200 million to the state’s general fund.

A bloc of lawmakers with strong banking ties labels this a tax on financial institutions, and believes taking money from the fund and replacing it with a new framework amounts to double taxation of business. Some local government officials also quietly question the safety of their deposits under any change. Democrats grumble that this is the type of budget-balancing “gimmick” that Daniels pledged to avoid.

Expect some major modifications to this concept, assuming it even remains alive. But $200 million in “free” money—10 times the proposed Medicaid option funding cuts—is a lot to pass up.

But other funds are also facing “raids,” and lawmakers are decidedly not happy.

The General Assembly’s newest member, Sen. Sue Glick, R-LaGrange, selected in late November by a party caucus to fill a vacancy, authored SB 379—an effort to bar money in the Lake and River Enhancement Fund from being “transferred, assigned, reassigned, expended or otherwise removed” by the governor, State Board of Finance, State Budget Agency, or other state agency for any purpose other than specified in the statute establishing the fund. Boaters fill LREF coffers with annual fees, and the Daniels administration already moved almost $2.5 million last year from that dedicated user fee pot to the general fund. Expect similar legislation for other funds.

Non-fiscal proposals also face pushback. Beyond some tinkering at the margins on advisory boards and ethical issues related to township government, lawmakers remain largely intransigent on structural local government reform, with the new cadre of House members leading the charge for the status quo.

The governor’s call for legislators to largely shun partisan or incumbent-protection dimensions in redistricting is falling flat with the rank and file in the House and Senate chambers even before substantive mapmaking begins.

While the governor seemed to have broad legislative support for sentencing reform on a conceptual level last month, some of the first bills to pass committee muster would add new crimes to state statutes, and there is little public consensus over changes that reduce penalties or free offenders faster.

Of course, education reform is the centerpiece of Daniels’ legislative agenda, and he even advocates vouchers to facilitate parental choice. He leaves the details to lawmakers, and they are hearing an earful from their local school superintendents about how this further emasculates school budgets—which already have suffered historic hits from gubernatorial cuts.

At least one Republican House member also possesses the temerity to publicly question whether the intent behind the governor’s push for vouchers is to break public education.

The 3.0-percent additional cuts Daniels seeks from higher education isn’t resonating well among legislators representing districts with significant college presences—and given Ivy Tech Community College’s growth, this means many more districts (and Republican lawmakers).

Sheer numbers suggest Daniels will achieve much of what he seeks, but many lawmakers require much more convincing to make it happen.•


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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