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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA new report scores Indiana’s state budget process as the second worst in the nation largely because the governor doesn’t have a line-item veto and there’s no requirement for a balanced budget.
Indiana scored just 45 points out of a possible 100 and ranked ahead of only New Hampshire in the 2009 Index of State Budget Process Quality published by the Federal Funds Information for States, a Washington, D.C.-based group that tracks how federal budget and policy decisions affect states.
The report was broken down into four main areas: balanced-budget requirements, gubernatorial power to reduce spending, stabilization funds, and understandable finances.
Indiana received no points in the balanced budget and gubernatorial power sections.
The report said most state have a legal requirement to balance the state budget, but not Indiana, either in law or its constitution. Instead, Indiana has a constitutional ban on assuming debt.
The low ranking surprised some legislators, who pointed to Indiana’s healthy cash reserves and a lack of drastic budget cuts as proof that the process worked well in this state.
“We certainly have openness and integrity in our practices,” said Rep. Jeff Espich (R-Uniondale), a longtime member of the House Ways and Means Committee. “Our system appears to lead us to positive results.”
Other states have constitutional rules that specifically require a governor to submit a balanced budget, a legislature to enact a balanced budget and a governor to sign a balanced budget. Twenty-two states have all three mandates, while other states have statutory requirements.
“Indiana’s marks would improve by an explicit constitutional requirement for a balanced budget,” State Budget Director Chris Ruhl said.
Because Gov. Mitch Daniels does not have a line-item veto, Indiana also did not score any points in the gubernatorial power section. In Indiana, the governor can veto an entire bill but not specific sections. Lawmakers can override the veto with a simple majority. Indiana is one of just six states not to allow a line-item veto, the report said.
Sen. Luke Kenley (R-Noblesville) and chairman of the Senate Appropriations Committee, said the governor can reduce budget spending without legislative authority, which is akin to a line-item veto. For instance, Daniels has ordered cuts and revisions to maintain a balanced budget.
The one area in which Indiana excelled was stabilization funds. The state was awarded points for having a Rainy Day Fund and for having healthy reserves proportional to spending. Indiana and 32 other states received a perfect score in this category.
The state also received points for having a multiyear forecasting process open to the public. But Indiana does not use Generally Accepted Accounting Principles as 17 states do.
Indiana also lost points on the comprehensiveness of the budget document. It does not include program descriptions or results expected from spending money.
Last-place New Hampshire had 34 points. Georgia was highest at 88.
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