Do-nothing Session Was a Blessing
Andrea Neal column for March 10 and thereafter
INDIANAPOLIS — Lawmakers left town with few notable accomplishments. Thank goodness. Accomplishments cost money. Indiana is running a billion-dollar deficit.
A few months from now, the failure to pass all-day kindergarten will be a distant memory. Instead, we’ll be engaged in budgetary second-guessing. Should legislators have reopened the budget to cut costs? Can the governor make enough trims to keep government functioning?
Make no mistake: The do-nothing nature of the 2004 legislature was intentional. It’s best to ignore an elephant in the living room with an election coming.
"The state is even worse off than anyone is admitting," says economist Bill Styring. "One more bad revenue month and they can"t show even a fairy tale paper black number at the end of the biennium."
After revising predictions downward, Indiana is still well below its revenue targets. In February, tax collections fell $10.4 million short. In January, they were off by $21.5 million.
A new forecast written in January projected the state would take in $321 million less than lawmakers had counted on when they passed the two-year budget that goes through June 30, 2005.
If all future targets are met, and that’s a big if, Indiana will end the cycle $65 million in the black. And that’s only possible only after raiding reserve funds and delaying school reimbursement schedules.
"This is a fairy tale," says Styring. "If you close "05 with 65 million, you can"t
make the July "05 school tuition payment."
Dismal as this scenario is, it doesn’t take into account a looming Medicaid implosion. Lawmakers didn’t say much about Medicaid this session, but talk to anyone in the social service sector and you’ll hear anxiety bordering on terror.
In 2003, lawmakers froze the Medicaid budget, putting the health care program for poor, disabled and elderly on a collision course with reality. The federal-state matching program presently consumes 11 percent of the state’s $22.9 billion biennial budget. Enrollment in the program is rising rapidly, from 606,272 in 2000 to a predicted 817,370 in fiscal 2005.
"I am not an expert on the ins and outs of Medicaid," Styring notes, "but I am something of an expert on medical price inflation, now once again approaching double digits. It would take me 30 seconds to teach our cat that running Medicaid on a flat line is damn near impossible."
It’s possible alright, but only by drastically cutting services or eligibility. What shall we cut first? Nursing home payments for elderly poor? Programs for developmentally disabled youngsters? Home-care? X-rays? And which candidate for governor is going to take the first crack?
The few efforts made this session to rein in spending were doomed from the outset. The Democratic administration made clear it didn’t want a budget battle.
House Republicans tried without success to cap state spending levels at 99 percent of general revenue. If such a cap were in effect today, the 2005 budget would be $548 million less than it is. Another bill, requiring tough audits of state agencies and their expenditures, went nowhere.
Jerry L. Bowling is one Indianapolis voter who wasn’t fooled by the inactivity of the 2004 session.
"In my opinion, way too much time was wasted by the General Assembly on kindergarten, which is unaffordable presently and, although it was a spur of moment issue, the gay marriage issue. Nothing was done to trim the size of state government nor provide for future efficiencies in state government."
That puts Indiana in sharp contrast to other deficit states.
According to the Center on Budget and Policy Priorities in Washington D.C.,11 states made cuts in K-12 education spending in fiscal year 2004. In 34 states, per-pupil spending has declined since 2002; in 19 states the decline exceeds 5 percent. In contrast, Indiana increased the school funding formula by 3.3 percent in fiscal 2004 and 2.9 percent in fiscal 2005.
Thirty-four states have made cuts in health insurance to low-income families. Texas, for example, will end coverage under the Children"s Health Insurance Program (CHIP) for nearly 160,000 children. In contrast, Indiana’s CHIP enrollment has continued to grow.
Any business leader will tell you that in budgeting one should "expect the best, prepare for the worst."
Indiana has foolishly prepared for the best-case scenario while the worst is lurking around the corner.