FEIGENBAUM: Problems pile up as legislators get back to work

June 15, 2009

With aiding the Indianapolis downtown hospitality industry one major item on the legislative special session agenda, legislators may make their own contributions to the food-and-lodging category.

All indications are that lawmakers are preparing to hunker down for a longer session than all had hoped for, good news only for downtown restaurants and hotels.

Problems were myriad as the special session convened June 11:

-- Revenue forecast. House Democrats place little faith in the latest revenu-collection forecast legislative leaders and Gov. Mitch Daniels agreed would guide budget negotiations. Despite the strong legislative involvement in the forecast, key House Democrats simply believe the governor had a low target he wanted met, and the forecast would provide that figure, limiting legislative options.

Regardless of what numbers are used, both parties understand considerable cuts are necessary from the April budget that appeared ready to head to the governor for signature--probably $1 billion worth of cuts.

-- Length of budget. State budgets have been assembled on a biennial basis for generations, but House Democrats sought a one-year budget during the regular session, noting the unique circumstances facing the economy over the biennium, and the large month-to-month economic deterioration in 2009.

While they were prepared to accede to a biennial budget plan during the last week of April, once that was derailed by bickering between the branches, House Democrats again returned to their preference for a one-year budget.

How long they may stick with a change from standard budget procedure is uncertain, but expect them to send a one-year budget to the Senate.

-- Budget hearings. House Democrats on the special legislative budget committee walked out of bipartisan budget hearings, contending Republicans had turned the hearings into a charade when the Daniels campaign committee recruited gubernatorial supporters to testify in favor of the governor's version of the budget (the only proposal then on the table).

While Sen. Luke Kenley, R-Noblesville, who was running the hearings, remained calm and conciliatory throughout, the walkout contributed to a sense of tension and uncertainty as the rank-and-file returned to Indianapolis, and Republicans were not happy that new Committee on Ways and Means hearings were largely a forum for aggrieved school officials.

-- Education funding. Perhaps the biggest sticking point is education funding.

The governor's K-12 proposal would increase overall funding, but urban Democrats and rural Republicans are not pleased with how he proposes to distribute the dollars. While per-pupil funding jumps, that benefits growing districts, and slights those with student attrition.

House Democrats seek an average 2-percent increase, and would guarantee all districts would receive at least as much total fiscal year 2010 funding as in 2009. Some Republicans see it as unfair that districts such as Indianapolis Public Schools take home $2,000-plus per student more than their own districts.

Democrats are suspicious of charter schools' siphoning students from urban districts and further decreasing their funding, and they seek caps on charters. That could cost the state major federal dollars, state and federal officials caution. They also are frustrated that Daniels seems to be taking credit for boosting K-12 funding, when it was courtesy of federal stimulus dollars.

Under the governor's plan, institutions of higher education would see some capital projects (creating construction jobs Democrats have sought), though overall operating dollars would decrease. Meanwhile, Ivy Tech Community College--positioned as the affordable alternative in tough times--could be forced to cap admissions.

-- Capital Improvement Board. The governor served up a Capital Improvement Board restructuring plan, but details came in small increments, and specifics of the touted cost savings remained elusive.

Legislators from around the state remained largely unhappy about redirection of tax dollars from state coffers to Indianapolis, and wondered about an exigency for Indianapolis projects--and not for those of, for example, Lake County.

A CIB solution was proving a tough sell.

While the governor offered flexibility within his bottom line, Democrats were displeased with the budget process, structure and lack of dollars for stimulus projects.

They also declined to provide detail on how they would fund most spending increases before June 12 hearings.

Democrats were willing to forgo tax increases, maintain the Rainy Day Fund at a minimum of $1 billion (but the parties differ on whether that comes at the end of fiscal year 2010 or 2011), offer dollar-for-dollar expenditure reductions for increases in spending, and restrict federal stimulus dollars to one-time purposes.

Daniels wanted lawmakers to return, quickly pass something resembling his budget, and go home. Now, it appears a Ways and Means vote will not even take place until June 15, and the longer lawmakers linger, the greater the temptation and opportunity to complicate things.

The budget atmosphere is proving more problematic than it was six weeks ago.

Feigenbaum publishes Indiana Legislative Insight. His column appears weekly while the Indiana General Assembly is in session. He can be reached at edf@ ingrouponline.

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