Senate budget proposal may be short-lived-WEB ONLY

The Indiana Senate has approved a budget that would rely on federal economic stimulus money to boost school spending, but a top senator says the funding increase might be short lived.

A new state revenue forecast expected Friday will give lawmakers a better idea of how much the state can spend over the next two years. Senate Appropriations Chairman Luke Kenley (R-Noblesville) said the proposed increases for education could be out the door if the forecast is bad enough.

“Right now I’m pessimistic about the outlook,” Kenley said. “I don’t see evidence of a turnaround.”

The GOP-led Senate voted 32-18 today for a two-year budget that would spend about $28 billion in state money plus nearly $2 billion in stimulus cash. The budget next heads to a conference committee where Senate Republicans and Democrats who control the House will try to reach a compromise before the legislative session ends April 29.

Kenley said the Senate budget plan assumes the state will take in about $1 billion less over the next two-year period than was projected in a December revenue forecast.

“It seems like the [Friday] revenue forecast may come in even lower than that, which will create a pretty difficult dynamic,” Kenley said.

For now, however, the Senate Republican plan would largely rely on $823 million in federal stimulus money to increase spending for schools by about 2 percent in each of the next two years. Spending cuts imposed on colleges and universities this year would be restored, and they would get slight increases over the next two years.

Democrats have said they like the bottom line of the Senate budget, but think the plan doesn’t do enough for schools in low-income areas.

Several senators said the spending increases for education would not have been possible without the federal stimulus money. But Republican Gov. Mitch Daniels has said the proposal spends too much and unwisely relies on federal stimulus cash to provide base funding increases for education.

Spending stimulus money that way would mean big funding gaps once the money runs out, Daniels said.

“They admit that their draft leaves a cliff in a couple of years,” Daniels said last week.

Kenley said he wasn’t sure when the joint House-Senate conference committee would start working on a compromise budget proposal, and he said he didn’t know what Friday’s revenue forecast would show.

A revised fiscal forecast in December predicted the state would take in about $763 million less this fiscal year than lawmakers approved for spending in the two-year budget adopted in 2007. But collections based on that forecast have fallen short of targets every month since December.