Bipartisan control will force compromises: With campaigns over, legislators get down to business on new budget, property-tax relief and other issues

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In his 2007 legislative preview for the Indiana Chamber of Commerce, State Rep. Brian Bosma, R-Indianapolis, opened with a joke:

After a politician’s death, he found himself standing before the pearly gates. St. Peter offered the politician a choice of heaven or hell, prefaced by a brief preview of each.

During his visit to hell, the politician was surprised to discover all his friends there. What’s more, it was a terrific place to be-the most fun and raucous party he’d ever seen. The visit to heaven, while pleasant, proved rather staid. So the politician chose eternal damnation.

When he returned, the raucous party had been replaced by hell’s traditional whips, sulfur and flames. Aghast, the politician asked Satan why everything had changed.

“You were here during the campaign,” Satan replied. “We’re governing now.”

The landscape of the General Assembly has seen a similarly stunning transformation. During his first two years in office, Gov. Mitch Daniels enjoyed a complete Republican majority throughout the Statehouse. But following the Nov. 7 election, Democrats took back the House of Representatives. The power shift will shape the results of every debate next year.

And there are likely to be many. Indiana’s books are, for the most part, finally balanced, so legislators have plenty of proposals for new spending. Perhaps the idea with the greatest consensus is fullday kindergarten (see story above). But lawmakers are also eager to underwrite property-tax relief for homeowners, bankroll new tools for economic development, pay for poor folks’ health insurance, give greater fiscal authority to local governments, and more.

Don’t expect partisan bickering to prevent the 2007 Indiana General Assembly from getting any major legislation done, however. Legislators have no choice. By law, they must craft Indiana’s budget for the next two years before they can go home.

“The art of legislation is compromise. The whole system is predicated on that,” said Indiana Legislative Insight Publisher Ed Feigenbaum. “So it’s really not that different than in other years.”

Money to spend?

New spending programs will receive the lion’s share of debate and media attention. But after nearly half a decade of tight belts made necessary by the recession and slow recovery, Feigenbaum said, Daniels will face significant pressure from every department to expand expenditures.

“The governor is trying to impress that the state is still in serious economic straits and we can’t willy-nilly increase the budget,” Feigenbaum said. “He wants to continue to hold the line, but he’s facing some pressure from his own agencies to be a little less frugal.”

Slim majority

The return of State Rep. Pat Bauer, DSouth Bend, to the powerful House speaker’s role means Daniels must temper his proposals. But Feigenbaum noted that the Democratic House majority is a slim 51-49 heading into a presidential election cycle.

“Neither party has the luxury of being way out there on a limb,” Feigenbaum said. “Anyone who expects that Pat Bauer will try to bring the San Francisco agenda of Nancy Pelosi to Indianapolis is in for a big surprise.”

Jobs and property taxes

Economic development will continue to be a top priority for legislators. Earlier this year, Daniels announced his “Accelerating Growth” plan to stimulate business expansion. It included 37 pages of proposals for the commercialization of university research, adult education and work force training, road and digital infrastructure improvements, and more.

It also included some pricy new incentives to help the Indiana Economic Development Corp. close deals for new jobs and to stimulate tech transfer. Taken together, their costs runs well over $100 million.

Indiana Manufacturers Association President Pat Kiely expects legislators to give strong consideration to such tools. And the business community’s worries that Democrats under Bauer will attempt to roll back previous gains are probably exaggerated.

“Jobs is still the No. 1 issue in Indiana,” Kiely said. “Any politician who goes into the water trying to hurt business at any level will find it a detriment to their electability.”

Once again, property-tax reform is likely to be a major focus for lawmakers, as the assessment system moves closer to market trending to establish home and business values.

Voters still seethe over what they consider unfair reassessments. Some even hope to eliminate property taxes entirely. But Senate President Pro Tem David Long, R-Fort Wayne, said that’s a long shot, because legislators don’t have an obvious alternative.

“There isn’t anybody when you poll ’em who doesn’t get very excited when you say, ‘Property taxes: Let’s eliminate ’em,'” Ford said. “But when you propose replacements, interest starts to wane.”

Peterson’s plan

Closely tied to the property-tax issue is the question of local government consolidation and fiscal authority.

Mayor Bart Peterson, a Democrat, plans to offer the remaining proposals from his Indianapolis Works Unigov overhaul package again.

Peterson will also press for state money to help with the city’s unfunded liability for police and firefighter pensions.

“I have not changed my desire to achieve those goals over the last couple of years,” Peterson said. “I believe we’ll get at least a better reception in the House and maybe in the Senate as well.”

Health care issues are also being framed with a business angle for 2007. Daniels has proposed a cigarette tax hike to underwrite coverage for the uninsured.

Daniels’ senior policy adviser, Neil Pickett, said the goal is to get them into the process, so hospitals aren’t stuck with the ever-escalating tab of emergency treatments.

“I don’t think anybody expects to reduce the cost of health care. That’s probably a bridge too far,” Pickett said. “But we hope to slow the growth.”

At this early stage, it’s impossible to say for certain what will actually emerge as the Legislature’s signature focus in 2007.

Senate Minority Leader Richard Young, D-Milltown, said the shape of a session emerges in the process of negotiation. But he said he’s certain of one thing: “It’s going to be a real busy session. Long sessions always are.”

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