State lawmakers eye budget talks, contingency plan-WEB ONLY

The two words frame the biggest question of the special legislative session Indiana Gov. Mitch Daniels is expected to call next month: What if lawmakers don’t pass a budget by June 30, when the current two-year spending plan expires?

The Daniels administration is taking a “don’t even go there” approach. But Sen. Luke Kenley (R-Noblesville) has already begun checking out contingency plans, even though he says he’s “100 percent hopeful” that it won’t be necessary.

“I’m just doing this as a kind of contingency type of thinking,” said Kenley, who asked for answers from the Legislative Services Agency, the General Assembly’s nonpartisan research arm. “I just want to know what’s at the end of the trail for me.”

Crafting a budget that passes Daniels’ muster at a time when revenues have plummeted – tax collections from December to April were $386 million below estimates – has already vexed lawmakers once.

During the regular session that ended April 29, Republicans trying to appease Daniels fought for less spending, while many Democrats seeking to jump-start the economy looked for more. A budget bill passed the Republican-ruled Senate but was defeated in the Democrat-led House.

The revenue picture isn’t expected to improve anytime soon, so it’s no surprise that Kenley and some others want to know what happens to the state’s checkbook if the clock runs out on the fiscal year with no new budget in place.

The Legislative Services Agency says that except for a few institutions such as the Indiana School for the Deaf, most of state government would grind to a halt unless lawmakers passed legislation to keep current spending going.

“There has to be an appropriation to pay state money,” said Jack Ross, LSA’s executive director. “For the most part, money cannot be spent unless it is appropriated by the General Assembly.”

Ross has served in various capacities in state government since 1974 and said he could not recall a time when a budget was not enacted in time.

But Kenley’s question has come up during previous special sessions to enact budgets. LSA came to the same conclusion during a special session in 1991, when now U.S. Sen. Evan Bayh was governor.

Indiana Supreme Court Justice Frank Sullivan, Bayh’s budget director, said then that Bayh – even without legal authority – would ensure that state prisons and state police continued to operate absent a new budget. Lawmakers ultimately passed a spending plan that Bayh signed in time to avoid such steps.

The concern was raised again in 1993, when a special session ended on the last day of the fiscal year with lawmakers approving a budget by overriding a veto from Bayh.

A stalemate that June over the budget and taxes lasted so long that Sen. Patricia Miller (R-Indianapolis) prepared legislation that would keep funding at the previous fiscal year’s levels in case lawmakers didn’t meet the deadline. She hopes that’s not needed next month but said it’s an alternative lawmakers and Daniels could use if they can’t reach an agreement on time.

Ryan Kitchell, director of the Office of Management and Budget, said no one in his shop is looking into the “what if” question. He said his staff is crafting a budget proposal to present to a panel of lawmakers on June 1 and is “optimistic that something resembling it will pass.”

Daniels is expected to propose a much leaner budget bill than the one voted on during the last day of the regular session, and that could create a tough sell among Democrats who control the House.

House Speaker Patrick Bauer (D-South Bend) worries that Daniels will insist on cutting $1 billion from the earlier plan. If that’s the case, Bauer said he is not optimistic it could pass his chamber because it would mean cuts in education and job creation – the two top priorities for his caucus.

“The possibilities will be judged by what he puts on the table,” Bauer said.

The outcome of the special session, expected to be called in mid-June, could hinge on a new revenue forecast due tomorrow and how well headstrong leaders in the House and governor’s office work together.

Other issues, including gambling proposals and a financial fix for the cash-strapped Indianapolis stadium agency, also could complicate matters.

Senate President Pro Tem David Long (R-Fort Wayne) considers June 30 a “day of reckoning” because of uncertainties about how state government would function after that if a spending plan isn’t approved on time.

“It’s that sort of pressure that hopefully brings everyone to their senses and we come up with an agreement on the budget,” he said.