Daniels gives state workers year-end pay raises

Indiana Gov. Mitch Daniels is sending a slice of the state's expected $1.8 billion in savings back to state workers.

Daniels on Wednesday announced pay raises of up to 6 percent depending on state employees' performance. About 75 percent will see a 2 percent increase under the plan.

The raises will take effect in February and will cost the state $39 million.

The raises are possible in part because of improved tax collections and $320 million Indiana recently discovered had gone untouched in a state account for more than four years.

The money has spurred lawmakers to consider restoring some of the cuts made during the recession to education and other services. It could also trigger Daniels' automatic tax refunds, which kick in if the state accrues enough in savings.