Governor’s Budget Comes Close to Being Painless

June 8, 2009

For release noon June 10 and thereafter (655 words)

Note: Graf 4 refers to start of special session Thursday.
 
If they couldn’t agree on spending priorities in the regular session, it’s hard to imagine state legislators coming together to pass a budget by June 30, the end of the fiscal year — especially considering the histrionics we’ve seen from House Democrats.

Their latest stunt was to walk out of bipartisan subcommittee hearings because they didn’t like the way Gov. Daniels was handling the whole process. The Democrats say they will prepare their own budget to present as an alternative. Isn’t this what caused a special session in the first place?

In difficult times like these, not everyone will be satisfied with the governor’s ideas. But he’s come up with a way to use some of our reserves, maintain K-12 spending at current levels, spend federal stimulus funds responsibly, satisfy the higher education community and balance the budget, all without a tax hike. This is no easy feat in a state whose revenue base is heavily dependent on sales taxes, which fall quickly when money’s tight.
   
The Democrats who control the House are in a tough spot because they want to appear to have as much influence as Senate Republicans when the special session starts Thursday. They lost that chance when the regular session ended with nothing to show for it. By failing to enact a budget when they were supposed to, lawmakers punted to Daniels.
   
That doesn’t mean they should swallow his budget without any debate. It’s reasonable for lawmakers to argue, as they have, over the school funding formula, which essentially freezes per pupil spending at current levels and would thus mean cuts for schools with shrinking enrollment.
But lawmakers are deluding themselves if they think that can pass a budget that will cause no pain. Around the country, headlines tell a story of steep cuts with far worse consequences than ours.
   
Thirty-five states have cut or plan to cut school spending. This very week, the North Carolina House is debating a plan that would reduce spending there by more than $4 billion, bringing that state’s budget down to 2006 levels. As described by the the Charlotte Observer, “Education would be cut 12 percent next year. Thousands of teachers would be laid off and so would many teacher aides. Classrooms would get more crowded. University tuition would go up by $200 for most students. Community colleges would eliminate the tuition waiver for senior citizens, chop library budgets and increase tuition by $8 per credit hour.” Predictably, critics are pushing instead for a tax hike.
   
Things are worse in California, facing a $24 billion shortfall, where Gov. Arnold Schwarzenegger has proposed cutting $3 billion from the state education budget. When citizens there were asked if they’d be willing to pay more taxes to avoid such suffering, they said no. Among the possible consequences: teacher layoffs, bigger classes, even a shortened school year.
   
The way some state lawmakers are talking, you’d think Gov. Daniels had proposed something similar. He has not. His budget puts Indiana on strong footing should revenue collections improve in the fourth quarter as some economists predict. It also protects Hoosier taxpayers from future tax hikes by maintaining a reserve fund balance of more than $1 billion.
   
Indiana’s relative fiscal health is due to two things: We started the recession with a hefty cash balance and, when things turned sour, Gov Daniels took prompt action to cut state agency spending.
   
“It would not be a catastrophe if the special session failed; tax money would continue to fill the state coffers, and Governor Daniels can exercise his executive authority to properly spend the tax money . . . ,” says Watchdog Indiana, a taxpayer advocacy group that became disgusted with the 2009 legislature’s failure to vote on property tax cap amendment language initiated in the previous session.
   
That’s not how the budget process is supposed to work, of course, but it might happen if Democrats in the House continue to act more like spoiled children than responsible policymakers.

Andrea Neal is a teacher at St. Richard’s School in Indianapolis and adjunct scholar with the Indiana Policy Review Foundation. Contact her at aneal@inpolicy.org.



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