Indiana Gov. Mitch Daniels wants a new state revenue forecast before he calls lawmakers back for a special session to write a budget, saying that a revised forecast issued last month was so far off in April that a new starting point is in order.
That and other comments he made yesterday drew mixed reactions from leading lawmakers, suggesting that a quick resolution to a budget is unlikely. The General Assembly did not pass a budget plan by last Wednesday’s regular session deadline, which will force Daniels to call lawmakers back for a special session.
State tax collections were $255 million below the revised forecast for April and Daniels said there are no signs revenues will meet the projections for May and June.
He said the budget bill that passed the Republican-controlled Senate but was defeated by the Democrat-led House last week would have wiped out the state’s reserves and left about a $1 billion shortfall at the end of the next two-year budget cycle in June 2011.
Relying on the forecast issued in April to draft a new spending plan would be like “playing with pretend money,” Daniels said.
He said he did not dispute basic economic assumptions that predicted the nation and Indiana would start to pull out of the recession later this year and grow the next. But he said a technical committee, which includes legislative fiscal analysts and a member of the State Budget Agency, were not realistic about revenues for April, May and June.
That, Daniels said, skewed revenue forecasts for the upcoming budget cycle that begins on July 1.
“I think they should take a new look,” Daniels said. “The world has changed, reality has changed and we simply have to start with reality and write a budget to that, and not to the pretense that the Legislature was using up through Wednesday night.”
Daniels said the state Budget Committee, comprised of fiscal leaders for each of the four legislative caucuses and the state budget director, should ask the technical committee to redo its forecast for the upcoming biennium so lawmakers have a more realistic starting point going into a special session.
Daniels has not specifically said when he plans to call lawmakers back, saying only that he would do so when they are ready to deal with fiscal realities.
Senate Appropriations Chairman Luke Kenley (R-Noblesville) acknowledged that April’s tax collection figures were bad, but he questioned the value of more fiscal forecasts because of the volatility of the economy. He said the budget bill voted on last week gave Daniels plenty of authority to make spending cuts on his own.
Daniels said it would not have given him as much power to cut as previous budget bills have.
“We are never going to crystal ball this enough to give him a comfort level,” Kenley said.
He said Daniels either needed to begin a special session by presenting a complete budget plan of his own, or take the bill voted on last week and say precisely what he could or could not accept.
“We need to hear more from him about what solution needs to be done,” Kenley said.
House Speaker Patrick Bauer (D-South Bend) said a new forecast was not needed and the April figures only backed up a position his caucus had taken through most of the session: that the economy was so volatile now, lawmakers should only pass a one-year budget.
Regardless, any new plan should start from the governor’s office, he said.
“He needs to come out and with a budget – not just vague references, but numbers, numbers, numbers,” Bauer said. “What he needs to do is write his own budget so we know what his target is.”
Rep. Jeff Espich of Uniondale, the fiscal leader for House Republicans and chairman of the Budget Committee, said he had to talk to other lawmakers and get their thoughts on whether to seek a new fiscal forecast.
“But to me, we are in fact writing a new budget yet and things are obviously in a dramatic free fall right now,” Espich said. “So it’s appropriate we get all the information we can.”
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