State lawmakers prepare for budget challenge-WEB ONLY

Lost of late in the turbulent, political waters of the Indiana General Assembly is a necessity lawmakers face – passing a new state budget during a deep recession with a Democrat-controlled House and Republican-ruled Senate.

That task has been overshadowed recently by the partisan fight over trying to fix Indiana’s bankrupt unemployment insurance fund, one that’s been paying out hundreds of millions of dollars more in benefits than it’s been collecting in employer taxes. It’s a huge problem, but drawing up a new spending plan with billions of dollars at stake also has Democrats and Republicans at odds.

House Democrats already have passed their version of a budget and Senate Republicans are working on their own, but clear differences have emerged.

“It’s going to be a big challenge, I think, to reach an agreement on a budget bill, just like it may be on the [unemployment insurance] bill,” said Senate Appropriations Chairman Luke Kenley (R-Noblesville).

Federal stimulus money Indiana is getting could help pave the way to a resolution on the budget. When House Democrats passed their budget plan, the stimulus package was still in flux in Congress. But let’s look at where things stand now.

First, the House Democrat budget would break with tradition and only cover one year. House Democrats say uncertainty over the recession’s depth and length make projections for future revenue too unreliable to pass a two-year plan.
Senate Republicans plan to pass a traditional two-year budget, saying it would at least give those who get state dollars some idea of what to expect over a longer period.

But House Democrats haven’t budged so far.

“Right now we don’t know where we’re going to be in six months, let alone a year,” said House Speaker Patrick Bauer (D-South Bend). “That’s why we think, in these precarious times, it fits.”

The House Democrat plan would increase overall spending for public schools by 2 percent next year, in part by tapping $200 million in reserves.

Republicans don’t want to use any reserve money, saying it might be needed as a cushion for a future economic downturn.

House Democrats authorized more than $700 million in bonding authority for building projects, saying they are worthy and would create jobs now. Republicans have frowned on that because it would pile on future debt.

Republican Gov. Mitch Daniels’ proposed budget would cut most agency spending by 8 percent from the current budget. The House plan also would cut some agency spending. House Ways and Means Chairman William Crawford (D-Indianapolis) said the House plan mirrored the one proposed by Daniels by about 90 percent.

But the administration’s proposal would essentially keep funding for public schools at current levels and would cut spending for higher education. The House budget would slightly increase operating spending for public colleges and universities next year.

Daniels has asked for $40 million in bonding authority for two prison expansions for maximum security inmates – something he calls a true necessity.

The Democrats’ plan includes about $23 million in new operating spending for prisons in the next fiscal year that begins July 1, but they didn’t include bonding authority for prison expansions. Kenley plans on fully funding the Department of Correction’s spending request, including the prison expansions.

“Knowing our governor, it wasn’t easy for him to request an increase in anything,” Kenley said. “If we are at the point where it means releasing [inmates] who shouldn’t be released in order to keep your prison budget under control, I don’t think that’s a choice you want to have to deal with.”

Kenley wants to tap $683 million in federal stimulus money in hopes of increasing basic funding for schools by an average of 1 percent to 2 percent. The idea likely will appeal to House Democrats, but as with state dollars, the parties always clash on exactly how money for schools should be doled out.

Kenley plans to present the Senate Republican plan on April 9. Then, true negotiations will begin. But as with any budget, it usually takes until the last day of the session – in this case April 29 – to pass a compromise bill. Several lawmakers say that fixing the unemployment fund could complicate matters and force a special session.

That can be avoided, but it will require a lot of give-and-take between both parties to settle both issues on time.