Lawmakers still wrestling with budget, job issues-WEB ONLY

Democrats and Republicans in the Indiana General Assembly carved out some wide, partisan divides on several big issues during the first two months of the 2009 legislative session, setting the stage for a second-half rumble.

Lawmakers reached the session midpoint – when bills passed by the House and Senate are taken up by the opposite chamber – with some optimistic talk of resolving differences on major matters such as a new state budget by the April 29 deadline for adjourning the regular session.

But there has also been plenty of partisan finger-pointing over this issue or that, and Senate President Pro Tem David Long (R-Fort Wayne) went so far as to say that fixing the state’s broken and drained unemployment insurance fund could force lawmakers into a special session.

It’s unusual for top lawmakers to make such statements with two months left in the regular session, but Long said he wasn’t kidding.

“These are going to be very difficult decisions for all of us to make, and we could go into overtime on this issue,” Long said. “I’m serious. If people aren’t willing to roll up their sleeves and work to find a solution, we could be here until the end of May working on this particular issue.”

Fixing the unemployment fund is seen as a must this session because it is bankrupt, having paid out millions more in benefits than it collects from taxes on employers. The state has borrowed $394 million from the federal government so far to keep the fund solvent, and that amount is projected to be $1.2 billion by the end of this year unless lawmakers fix the fund.

Democrats who narrowly control the House drafted a plan they billed as a starting point to fixing the fund. It would have raised taxes on employers to help balance the fund, but Democrats withdrew the bill because they said House Republicans were not willing to support it.

Long accused House Democrats of shirking their responsibility but said he and his fellow Republicans who control the Senate would “do the lifting” on reviving a plan that hopefully could win bipartisan support.

Republican Gov. Mitch Daniels said any solution likely would have to include adjustments in benefits for the jobless and taxes paid by employers.

Another must this session is enacting a new state budget, and House Democrats have passed their version of one. In a break from tradition, it would cover one year instead of two. They say uncertainties about the recession and how it will impact state revenues would make a two-year plan unreliable.

The Daniels administration and Republican legislative leaders disagree, saying a two-year budget protects taxpayers by restraining government spending and provides greater certainty to agencies and programs.

So without even getting into the numbers, there must be agreement on whether the budget will cover one or two years. House Speaker Patrick Bauer (D-South Bend) was asked how adamant he was about having a one-year plan.

“We can’t predict what will happen in the next year, but I’m not here to threaten or slam my fist on the table, at least not yet,” he said.

The one-year, $14.5 billion House Democrat plan would tap $200 million in reserves to prop up spending. Basic funding for schools would increase an average of 2 percent, with higher education getting a 1-percent increase for operating costs and more than $700 million in bonding authority for building projects.

The plan assumes that $540 million the state is getting as part of the federal stimulus package could be spent on Medicaid, freeing up state dollars that could be spent elsewhere.

Republicans say the plan spends far too much and would dwindle the state’s reserves to a pathetic level. Daniels said it was of “of no use at all.”

“It’s a good thing we don’t give midterm grades,” he said. “The House gets a chance to have a much better second half, and I bet they will.”

It’s now up to the Republican-controlled Senate to pass its version of a budget bill, and Senate Appropriations Chairman Luke Kenley said it would cover two years.

Indiana will receive about $4 billion from the recently passed federal stimulus plan. The Daniels administration and lawmakers are still dissecting many of the federal rules for spending Indiana’s share of the money, but Kenley said much of it should become part of the budget as one-time expenditures.

He said that would allow lawmakers to “kind of talk about a lot of these things in one cohesive package.”

Daniels had proposed a major package he said would streamline government, but many of its planks struggled in the Republican-ruled Senate.

For example, the Senate gutted a bill to eliminate township government, instead passing a more modest measure that would leave townships intact but remove their advisory boards. It defeated a proposal that could have been a first step toward making some county offices appointed rather than elected positions. And it failed to pass Daniels’ proposal to consolidate some small school districts.

The Senate did pass a bill that could lead to reorganized county governments, but any local restructuring bills could be in trouble in the House. Bauer, the Democratic House speaker, has suggested they would be a distraction from more pressing matters.