The proposal from Rep. Ralph Foley, R-Martinsville, would allow longer prison terms for those convicted of the most serious crimes while eliminating a provision to require many of those inmates to serve at least 85 percent of the sentence ordered by a judge.
Daniels has threatened to veto the bill, partly because of cost concerns over a change approved by the Senate from current law that allows most inmates to be released after serving half their sentence if they don't get into trouble while in prison.
The original bill endorsed by Daniels and drafted by a state panel sought to lessen prison time for nonviolent drug offenders and save money by avoiding the need to build more prisons. But after county prosecutors assailed it as soft on crime, senators gutted the bill and even lengthened sentences for some offenders.
Foley, who is sponsoring the bill in the House, said he was talking with many law-enforcement groups and the Daniels administration to come up with acceptable changes.
He said he was trying to direct more money to counties for community corrections programs, probation departments and substance abuse counseling to help deal with low-level offenders and keep them out of the state prison system.
Foley also is proposing to extend by 10 years the maximum sentence that judges can impose for murder to 75 years and for other top-level felonies to 60 years.
"Mainly, I'm concentrating on two things. One is to make sure that it won't be vetoed. And the second is to get as much money to the counties as humanly possible for programming," Foley said.
Steve Johnson, executive director of the Indiana Prosecuting Attorneys Association, told the House Courts and Criminal Code Committee on Wednesday that the group pushed for the tougher sentencing rules because inmates have been given many ways to shorten their prison time, such as completing college degrees.
Johnson said after the hearing that most county prosecutors didn't think adding 10 years to the maximum sentences would do much good. He also said he didn't believe there would be as much budget impact as Daniels has suggested.
"Any increased costs by keeping the worst of the worst in longer is far down the line," Johnson said.
The committee could consider Foley's proposed amendment next week.
Department of Correction officials told the House committee that they projected the Senate-passed version would force the state into building another prison within six years at a cost of more than $200 million.
Republican Sen. Brent Steele of Bedford, chairman of the Senate Corrections Committee, said he didn't agree with that projection. He said he didn't believe a sentencing change package could clear the Senate without the 85 percent of prison time requirement, which would cover those convicted of murder, voluntary manslaughter and top-level felonies such as rape, child molesting, kidnapping and neglect of a dependent.
"They aren't serving what people think they should serve," Steele said. "With all the credit times and education times that have been enacted in the last few years, they just aren't serving enough years."