Commission for Higher Education officials say Indiana's universities should get no money for capital projects during the next two-year state budget, despite a claim by college officials that they need about $700 million for new buildings and other projects.

University leaders fear a "spiral into mediocrity" if they don't get any funding for new projects and projects already approved by lawmakers that have not yet been funded, The Indianapolis Star reported.

Lawmakers who are creating the state's budget will have to determine how much money the colleges will get. The Legislature consistently approves more money than recommended by the commission, but this year could be different. Gov. Mitch Daniels has called for cuts in overall higher education spending, and some key legislators say everyone needs to do more with less these days.

Rep. Jeff Espich, a Republican from Uniondale who heads the powerful House Ways and Means Committee, said legislative willpower has never been strong when universities come calling asking for new projects.

"But I think there is a little more discipline than normal this year," he said.

The Commission for Higher Education's proposal would put $522 million in new projects on hold, as well as half $169 million in projects that have been approved but not funded. Indiana University has requested $217 million for projects including science labs at IUPUI and a Wells Library renovation. Purdue University wants $184 million for projects including the renovation of Helmke Library.

Only six previously approved projects would be allowed to continue, the most expensive being a $20 million project for Ivy Tech Community College's Anderson campus.

Fast-growing Ivy Tech has a construction wish list of $145 million in new projects around the state, including Muncie, Lafayette, South Bend, Fort Wayne and Columbus.

"About half of our campuses are below our space needs," said Ivy Tech President Thomas Snyder.

Though the commission called for a funding moratorium on projects, some lawmakers said that could lower the quality of education in the state.

"Right or wrong, to get the best students and to keep the outstanding professors, you have to have facilities to accommodate their expectations," said Rep. Peggy Welch, D-Bloomington. "And they also help create jobs."

Construction groups say $700 million in projects would go a long way.

J.R. Gaylor, president of the Associated Builders and Contractors of Indiana, which represents 50,000 workers, said his industry currently has a 20 percent unemployment rate.

"If you take away the volume of contractors that would be needed for new construction projects like these, you would definitely have an impact," he said. "And we need to spur construction and economic growth in this state."