STATEHOUSE DISPATCH: Governor still has lots of differences with Dems

After saluting the accomplishments of the past year, Republican Gov. Mitch Daniels reached across the aisle during his State of the State Address Jan. 16 and assured Democrats that he can’t make further progress without their cooperation.

Once again, the governor found himself competing for the TV audience of Hoosiers at home. In what seems to be a given of sorts, the Indiana University men’s basketball team was playing during the speech, taking on Hoosier hero Steve Alford’s University of Iowa squad on ESPN.

In our first column of the session, we reminded you that the governor and House Democrats have some areas of basic agreement on just what should be accomplished before the end of April.

In his speech, Daniels addressed himself to that very topic, laying out, in an almost painfully conciliatory fashion, an agenda few Democrats could disagree with in terms of results-and even crediting “the loyal opposition” for some of his ideas.

He covered full-day kindergarten, additional funding for K-12 education, new college scholarships, reversing the “brain drain,” offering more health insurance coverage to Indiana’s low-income residents, improving the health habits of Hoosiers, ensuring children’s health, improving treatment of veterans, job creation, greater home rule for local governments (matched with more accountability), and placing us at the top of the ag-industrial game in ethanol and clean-coal generation.

Of course, the differences between the governor and legislators (and not only House Democrats) do not amount to mere tinkering at the margins. There remain deep philosophical differences over priorities-not all the programs sought by the administration and lawmakers can be accommodated within current budget constraints-and how (and to what extent) to fund these respective efforts.

Some were disappointed that Daniels made no reference to criminal justice issues. A couple of days earlier, House Republicans had whittled down their pre-election 50-point legislative agenda to just four concepts. Taking aim at rising crime rates was one of the four planks.

Democrats, for their part, were concerned about the proverbial elephant in the room the governor avoided referencing in his remarks.

Over the past few weeks, lawmakers have acknowledged a major gap ahead in property tax relief for homeowners, a burden the state has chosen to share in recent decades. But with trending in property tax assessment kicking in, and local government and school needs forcing property taxes up, taxpayers are facing a big hit, even before the so-called “circuit breaker” law phases in to cover rental housing and businesses.

Legislators from both parties have pegged the new shortfall at as much as $500 million, and top Republican legislative fiscal leaders have talked about making property tax relief-and perhaps even reform-a key action item in 2007, perhaps even taking precedence over such other agreed-upon issues as full-day kindergarten.

But the money isn’t there, and the governor and his fiscal team abhor the idea of taking state tax dollars and using them to address what they see as a local issue: spending by local governments that should be subject to local accountability, and something they would prefer to address under the Hometown Matters package.

“Raising Hoosiers’ state taxes just to recycle the money back to localities is a shell game with no winner,” Daniels explains.

That mind-set doesn’t sit well with lawmakers, who are feeling the heat from constituents who must cope with double-digit tax increases this year, and rising property taxes will be an issue tackled by legislators this year. Business interests will find it difficult to fend off attempts to delay application of the circuit breaker to them as the fight drags on.

But every state dollar directed to property tax relief will mean a dollar diverted from some program favored by the administration or legislators, forcing continuing re-evaluations of priorities and programs between now and May.

And while Daniels implored legislators to “think big,” there continues to be no consensus on just how to shape a property tax relief program or how it can be incorporated into a package that gives local governments fiscal responsibility and the attendant accountability taxation ability requires.

Just as the true physical action in the paint in college basketball doesn’t kick in until the Big Ten season starts, the elbowing in the Statehouse doesn’t begin until the State of the State Address is delivered.

We’re confident that more folks watched the Hoosiers shut out the Hawkeyes for more than nine minutes during the second half of the governor’s talk than tuned in to his delivering the address. The bigger question is whether legislators were listening to the governor … or more interested in throwing some hard elbows.