Legislators struggling with economic imperatives

As you read this, lawmakers will be home gearing up for a grueling second half of the 2009 legislative session —
two months
in which the real heavy lifting will be done.

You also need to take a deep breath, because we face some huge uncertainties over the remainder of the session. Pay attention,
too, because these two months will also pass quite quickly. The reality is that not every day is a working day, and time will
be taken in the final two weeks of the session to allow conference committees to meet and resolve assorted differences among
versions of bills that have passed both chambers.

The overarching concern is the economy. Regardless of the confidence or pessimism with which Hoosiers received the Feb. 24
presidential address on the economy, we won’t know for several months just how the Hoosier economy will be able to withstand
the regional, national and international woes.

Indiana is faced with a unique set of advantages and disadvantages due to our heavy reliance on manufacturing. We continue
to be dependent upon the auto industry, although we now are home to major manufacturing facilities for three foreign automakers
who have proven less vulnerable (although not impervious) to the industry downturn. Our geographic location continues to help
us lead in transportation, distribution and logistics, but as the economy slows, this sector also takes a hit. And while we
have not seen the huge job losses that confront areas strong in the financial services industry, we will not benefit as much
from their recovery.

While Gov. Mitch Daniels and lawmakers finally have an understanding of the four corners of the federal stimulus package,
they still seem uncertain about the details. Many of the incentive dollars seem to carry strings or implications that were
either not anticipated or were overlooked in our fiscal enthusiasm (such as funding for extended unemployment insurance benefits
that would make it difficult for lawmakers to cut back down the road). Apportionment of the dollars to real projects and the
timing of their release also is a moving target.

This means the budget will continue to be a work in progress for many more weeks. Lawmakers expected to be guided by the April
revenue forecast as finishing touches were placed on budget work, but they had hoped the major priorities and portions would
be agreed upon by then, and that the forecast would allow them to simply plug in final numbers.

The budget package that passed the House now effectively becomes simply a policy statement by House Democrats about their
priorities. The Senate Committee on Appropriations will have to sort through the federal stimulus package, the usual complement
of state programs and the road-building-projects measure that overwhelmingly passed the House as it crafts a new budget bill.

The first indication of how parsimonious they will be should come in a few days when February revenue collection numbers are
released. If the numbers continue to lag the December forecast in significant proportions, the job of budget drafters becomes
more difficult. They will likely assume a different mind-set than if the revenue shows some improvement, which could invoke
some "irrational exuberance" when combined with optimism over the impact of the national economic recovery package.

But, as the work on the budget proceeds, other work continues. Lawmakers must also arrive at a solution to the Unemployment
Insurance Trust Fund shortfalls, and, despite pledges of cooperation from all sides, the first half of the session produced
nothing tangible. This will likely be wrapped into the budget.

The immigration issue also heads to the House, with backers citing how it would become one of the strongest such laws in the
nation (yet affords employers a break by allowing use of the E-Verify system to serve as a safe harbor of sorts).

Whether the measure will even receive a hearing in the House is questionable, as House Speaker Pat Bauer, D-South Bend, continues
to perceive this as a federal issue in which the state need not become involved. Many House members are also uncomfortable
about having to vote on such a measure, but the economic arguments advanced this year may convince some to bring it to the
floor, perhaps as an amendment to a related issue.

That economic imperative is also likely to be invoked in a number of ways on a number of bills in the House in the next few
weeks. Some will try to characterize an issue as important to the economy, while others will seek to avoid debate on an item
because it might detract from the opportunity to deal with pocketbook issues.

So enjoy the brief respite this week, because you won’t have an opportunity to exhale again until the end of April.


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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