Stimulus talk creates uncertainty at Statehouse

Stimulus talk continues to dominate discussion at the Indiana Statehouse, creating indecision for lawmakers who were supposed to be devoting their full attention to assembling a two-year budget under difficult economic circumstances.

With no specifics on the federal stimulus package, uncertainty reigns. Nobody knows what will find its way into the package, what form it will come in, who will get what or what purposes it will serve.

Since politics abhors a vacuum, the lack of federal stimulus specificity has given rise to some interesting state-level maneuvering.

We’ve already explained that House and Senate Democrats have been seeking a state-funded stimulus effort separate from any federal program. They want to look beyond federal funds and leverage state funds not only to jump-start the Hoosier economy, but also to leapfrog ahead of neighboring states that are likely to direct much of any federal largesse to plug budget holes Indiana has avoided.

As February began to unfold, Democrats moved controversial legislation to the House floor that would have the effect of redirecting some of the state’s Major Moves road-building dollars to local projects, and speeding up some spending that had not been high on the priority list. The Democrats would allocate $1 billion from the Major Moves Construction Fund to counties ($400 million), cities and towns ($400 million), and the state ($200 million).

Republicans and the Indiana Department of Transportation were quick to point out major flaws in both theory and practice. While the measure stands no chance if it crosses the rotunda to the Senate, Democrats have fired a volley that could mean some construction projects might be in play.

While this move was telegraphed in January with a clumsy bill drafted in the Roads and Transportation Committee, what came as a recent surprise was a new legislative gambit by House Democrats.

Democrats in the House Ways and Means Committee advanced a novel concept for school funding, not so much in the content itself, but in its structure.

According to House Speaker Pat Bauer, D-South Bend, "The school funding plan in HB 1723 covers only one year, rather than the usual two years. This does not conform to the usual budget plans, but we are not dealing with the usual circumstances."

Legislative leaders and Gov. Mitch Daniels were adamant at the start of the session about not waiting until late June to pass a budget when they would have a better indication of the details of the federal stimulus package and the accuracy of the December 2008 state revenue forecast.

Daniels has more recently softened his stance on federal stimulus-related cash, and Bauer’s one-year funding plan for schools (and also child welfare) is further indication that the next few months will not play out as we have become accustomed.

"Unusual times demand an unusual response," is how the Speaker put it. And, though unique to the process for the General Assembly, a one-year funding plan for some key items may permit more adequate funding of some programs for fiscal 2010 while not shortchanging programs in fiscal 2011 should the economy improve or stimulus efforts gain a fiscal toehold.

Other significant issues continue to be debated, some in public, some not.

Amending property-tax caps into the Indiana Constitution continues to split business groups, while agricultural interests and Democrats remain largely opposed to moving beyond the current statutory caps.

The immigration reform debate has hit the Senate stage, with backers of a more aggressive state response to illegal immigration subtly shifting their justification for the legislation to an economic focus, noting that jobs only pursued once by those in the country illegally are now valued by Hoosiers down on their luck.

Behind-the-scenes parrying continues on resuscitation of the Unemployment Insurance Trust Fund and on another measure that appeared close to consensus as we entered the session—legislation that would begin to help resolve when employers could treat workers as independent contractors rather than waged or salaried employees.

We’re just a week or so from the final committee hearings in the first round of deliberations, but the stimulus-induced uncertainty makes forecasting of most legislation difficult.

Feigenbaum publishes Indiana Legislative Insight. His column appears weekly while the Indiana General Assembly is in session. He can be reached at edf@ingrouponline.com. >