Daniels outlines his budget priorities-WEB ONLY

Indiana Gov. Mitch Daniels is calling legislators back to the Statehouse next week to resume work on a new state budget, and legislative leaders are already meeting to lay the budget groundwork.

Daniels told a bipartisan group of lawmakers yesterday that the special legislative session would begin June 11. The Republican governor said he hopes that gives lawmakers plenty of time to agree on a spending plan before the current budget expires on June 30.

“Let’s get on with it,” Daniels said.
A special joint budget committee heard a budget pitch from Daniels yesterday and listened to administration officials detail his proposal. Democrats, who peppered Daniels with questions, said they would comb through the two-year budget and could have more questions when the group meets again tomorrow.

Daniels’ budget proposal would rely heavily on federal stimulus money to give more cash to public schools and to fund $450 million in higher education capital projects. Daniels had previously warned against tapping the state’s $1.3 billion reserves, but said he’s willing to do so now as long as $1 billion is left in the bank. And two prison expansions that Daniels wanted were dropped after Democrats who control the House said education should be a bigger priority than prisons.

Senate Appropriations Chairman Luke Kenley (R-Noblesville) said he appreciated the olive branches Daniels offered to lawmakers.

“I feel like you’ve gone more than half way to meet us,” Kenley said.

House Ways and Means Chairman William Crawford (D-Indianapolis) said the governor’s proposal still needs work.

“We’re closer in the sense that the governor has agreed we can use some of the reserve. We’re closer in the sense he’s agreed we can do some capital projects to stimulate job growth,” Crawford said. “We still have not worked out the details of exactly how that’s going to work and what projects we’re going to do in prioritizing our spending. We’re going to have to work out some things.”

Rep. Scott Pelath (D-Michigan City) asked Daniels why he changed his mind about using the state’s reserves after lawmakers struggled in the regular session to cobble together a budget that didn’t touch that cash for fear of a veto.

“It’s a little troubling to me that now it looks like we can live with a billion dollars,” Pelath said.

Daniels said a new revenue forecast that came out last month was far more accurate than April estimates, so he now feels more comfortable reaching into the piggy bank. But he said he was serious about leaving $1 billion tucked away.

“A billion means a billion,” he told the committee. “It’s not a starting point for negotiation.”

Daniels’ budget proposal would use federal stimulus money, plus a slight increase in state spending to give public schools an average 2-percent funding increase in each of the next two years.

Rep. Terry Goodin (D-Austin) said he was worried about propping up school spending with one-time stimulus money.

“In 2011, that all disappears,” he said.

Budget director Chris Ruhl said that school funding data released yesterday also shows school districts the amount they would get not counting stimulus money, giving them an idea of what they can expect in future years.

Daniels said his budget would give every Indiana school district at least the same amount as they currently get on a per-student basis.

But Democrats were quick to note that not every district will get more money. Urban districts with declining enrollments would see a drop. Ruhl said some schools could see up to a 10-percent cut, while fast-growing districts would see gains of up to 13 percent.

Under Daniels’ proposal, overall state general fund spending would be 2.5 percent below the current budget. Many state agencies would see cuts, and higher education operating costs would drop 4 percent. The budget would spend $27.5 billion from the state’s general fund over the 2010 and 2011 fiscal years, but when stimulus money is factored in, it would spend $28.5 billion.

Daniels’ budget left out one item that lawmakers and the governor himself had previously requested: a plan to fix Indianapolis’ cash-strapped Capital Improvement Board, which runs the city’s convention center and sports stadiums. Daniels administration officials say that issue will eventually be included in the budget, but it won’t be presented to lawmakers until Thursday, when Indianapolis Mayor Greg Ballard is expected to be at the Statehouse to help lobby for the plan.