Signs point toward difficult special session-WEB ONLY

Indiana legislative leaders have a debate blueprint they hope will prevent a long, costly special session for a new state spending plan.

They’ve formed a special committee that will ask for a revised revenue forecast, even though lawmakers just received one last month. They want a full budget proposal from Republican Gov. Mitch Daniels, complete with a detailed formula for how hundreds of millions of dollars will be doled out to public schools.

They plan to meet in the first two weeks of June to discuss Daniels’ proposal and seek ways of reaching a compromise quickly during a special session that they hope will be called around mid-June.

But make no mistake. In many respects, they will be starting over, and getting a plan through the Democrat-led House and Republican-ruled Senate that also gains Daniels’ approval is likely to prove an extremely difficult task.

“Everything in there is negotiable. You start at ground zero,” said Senate Appropriations Chairman Luke Kenley (R-Noblesville).

The Senate passed a two-year budget bill on the final day of the regular session, but it was defeated in the narrowly divided House.

Daniels said he would have vetoed it anyway, mostly because he said it would have chewed through the state’s reserves and left a $1 billion shortfall at the end of the biennium. He noted that tax collections in April were $255 million below the target set in the fiscal forecast released earlier that month, and he thinks revenue in May and June won’t meet the forecast either.

So, he essentially said to lawmakers, go back to the drawing board and pass a budget plan that spends about $1 billion less than the one voted on April 29.

That’s a tall order.

In the bill that was voted on but did not pass last month, Kenley cut about $100 million from proposed spending increases for schools in hopes the state would end the next two-year budget cycle with a $1.4 billion surplus. He hoped that would be enough to satisfy the governor.
Many House Democrats voted against the bill because it spent $100 million less for schools, and now Daniels is talking about $1 billion less in state spending.

House Minority Leader Vi Simpson (D-Bloomington) said Daniels’ expectations are simply unrealistic.

“There is no pleasing him,” she said. “I’m not willing to decimate our public schools or higher education in order to make his temperature or heart rate go down.”

Some legislative leaders were frustrated during the final few days of the regular session, saying Daniels wasn’t clear on what he could or could not accept in a budget and projected surplus.

Kenley said that having another revenue forecast conducted was fine, but, “We are never going to crystal-ball this enough to give him a comfort level.”

Daniels proposed some budget guidelines at the beginning of the regular session in January, but the federal stimulus package was still in flux in Congress. And tax collections have missed their mark every month since December, and were way off the revised forecast in April. It’s a reality that he said budget writers didn’t take into account.

So, before going into special session, lawmakers want Daniels to present a full budget plan of his own, complete with a school-funding formula.

House Speaker Patrick Bauer (D-South Bend) said that will ensure that the Daniels administration plays a full role in forming a new budget.

“The governor will have every chance to detail his priorities in funding, tell us where he wants to see cuts and clarify the role he feels federal stimulus dollars will have in helping us write a state budget during tough economic times,” Bauer said.

Trying to please Daniels will be a tough task, but budget negotiators face another tall hurdle first: drafting a plan that can get 51 votes in the House and 26 in the Senate. House Democrats and Senate Republicans fought fiercely over cutting $100 million from spending increases for public schools, and now Daniels has upped the ante considerably.

Kenley summed up the basic challenge well.

“We need to have two houses pass it and we need to have him either sign it or we need to have two houses willing to override him,” he said.

When Kenley, a Republican, is talking about a overriding a Republican governor’s veto – which takes a simple majority vote in each chamber – it says something about the mood of lawmakers going into a special session.