Restraint should be mantra

Restraint should be mantra State must not undo fiscal progress

Trying to rein in spending when so many Hoosiers are hurting has put some hard choices before the General Assembly this year. But Indiana needs lawmakers to hang tough as they head toward the session’s finale April 29.

At the top of their list of priorities should be building a solid two-year budget and salvaging the state’s bankrupt unemployment insurance fund.

We hope the final budget bill tilts strongly toward the Senate version. The one-year budget passed by the House of Representatives would eat into the state’s hard-earned surplus. We’re going to need that cushion to make up for the coming revenue shortfall, projected to be $830 million to $1 billion by the end of the 2011 fiscal year.

The Senate’s bill, although better, relies on federal stimulus money. The state has dug itself into a hole before by counting on non-recurring revenue streams. Legislators should do everything possible to avoid making that mistake with this budget. Instead, they should scour the budget for any expenses that can be scrubbed.

As IBJ went to press, legislators also were hammering out a plan to repair the state’s unemployment insurance fund. The federal government has lent Indiana $560 million since 2001 to keep solvent a fund that is critically needed as the state’s jobless rate has climbed into double digits.

The unemployment fund has been the legislative hot button this year for small-business owners, said Barbara Quandt, state director of the National Federation of Independent Business.

Michael Hutson, owner of Westfield Lighting in Westfield, said he paid into the unemployment fund for 30 years before the recession forced him to let go a staff member for the first time.

“Laying off an employee was an absolute last resort for me,” Hutson said in a prepared statement. “As hard a decision as that was, I am very frustrated that a system I have been paying into for so many years is now going broke when one of my employees needs it.”

The House of Representatives’ solution would place the entire burden of rebuilding the fund on the backs of employers, who can ill afford it right now. The Senate wisely chose a compromise that calls for higher premiums for employers while making some cuts in benefits. Businesses that make frequent layoffs would be penalized, and jobless workers would receive incentives to enroll in state training programs.

As tempting as it is to boost spending in these difficult times and to dip into “free money,” the financial hangover would be long-lasting. Fiscal restraint must be our mantra.

Indiana is in a much better financial situation than it was five years ago, and our balance sheet is the envy of many a state, thanks largely to the leadership of Gov. Mitch Daniels. We’ve worked so hard to get where we are. We simply can’t afford to blow it now.

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