Partisan battles over drafting state budgets in Indiana always include arguments over how much taxpayer money to spend, where the dollars should go and how they should be doled out.
But, for the first time in years, the budget debate this legislative session includes a new element, and a very heated one at that: Should lawmakers break with the tradition of enacting two-year spending plans and pass a budget that covers only one year?
House Democrats put the question in play by writing a one-year budget bill that passed the chamber last week over adamant opposition of outnumbered Republicans. They opposed the bill for many reasons, but repeatedly blasted it because it was only a one-year plan.
The arguments over the period covered by the next budget are likely to linger, since Republicans who rule the Senate have yet to pass their version of a budget, and their leaders and Republican Gov. Mitch prefer a traditional two-year spending plan.
The dispute must ultimately be settled, but here’s where it stands now:
House Democrats say a one-year budget makes sense this year because the economy is in the tank, state tax collections have been coming in well below projections, and there are too many financial uncertainties to pass a multibillion-dollar budget that covers two years.
House Speaker Patrick Bauer (D-South Bend) said this recession is the worst he has seen during his 39 years in the General Assembly.
“We have had a tremendous fall off a cliff and we don’t know how far it will go or if [the economy] it will come back,” Bauer said. “We are just not prepared to do a second year because we don’t know what numbers we will have. It’s like reading in the dark.”
House Minority Leader Brian Bosma (R-Indianapolis) and Rep. Jeff Espich (R-Uniondale) say among other things that a one-year budget this year could set a new precedent for a full-time Legislature that would draft a new budget every year. That would likely lead to more spending and tax increases to pay for it, they said.
State Budget Director Chris Ruhl said the Daniels administration prefers a two-year budget because it protects taxpayers by restraining government spending and provides greater certainty to agencies and programs.
“The danger of a one-year budget is spending beyond the means of taxpayers now in the hopes of a recovery later,” Ruhl said. “If recovery doesn’t occur, only two options remain – massive budget cuts in critical programs or tax increases.”
Lawmakers say Indiana crafted a one-year budget in 1975 but quickly returned to biennial budgets. They were the norm for decades because the General Assembly used to hold regular sessions only once every two years.
The Legislature went to annual sessions in 1972 – meeting in a long session in odd-numbered years and a shorter session in even-numbered years. Many states have wrestled with questions of not only whether to meet every year, but also whether to pass annual or biennial budgets.
According to the National Conference of State Legislatures, 44 states practiced biennial budgeting in 1940. Twenty-one, including Indiana, still do so.
An analysis by the NCSL said a shift to annual budgeting tended to follow the move toward annual sessions. Only four states held annual sessions in 1940, and now 44 do.
Although Indiana has traditionally passed two-year budgets, lawmakers often make at least a few revisions to spending plans during non-budget years.
The governor can decide not to spend all the money the Legislature puts in a budget or order spending cuts during economic downturns that have started when lawmakers weren’t in session.
So who is right and who is wrong in this session’s dispute over a one-year or two-year budget? The NCSL analysis suggests that neither side has a better argument.
“There is little evidence that either annual or biennial budgets hold clear advantage over the other,” it said.
That conclusion won’t stop lawmakers this session from claiming, at least this year, that one or the other is definitely the right route to take.