Friday, June 5, 2009
Volume 09, Issue 18
SPECIAL SESSION TO BEGIN ON JUNE 11 Governor Mitch Daniels has called for a special session of the Indiana General Assembly beginning at 1 p.m. on Thursday, June 11. In the formal proclamation announcing the special session, the Governor cites the failure of the General Assembly to reach agreement on a budget during its regular session which ended on April 29; the importance of having a budget so that the state can perform its “most fundamental responsibilities to the people of the State of Indiana”; his constitutional authority to call a special session of the legislature if, in the opinion of the Governor, the public welfare shall require it; and his opinion that the public welfare does require a special session. While only the Governor can call a special session, he cannot set the agenda for the special session. In theory, there are no limits on what the General Assembly may consider once they reconvene. However, Senate President pro tempore David Long (R-Fort Wayne) has indicated that the special session should be limited to enacting a budget for the upcoming biennium.
REVENUE FORECAST DROPS BY OVER $1 BILLION FOR BIENNIUM On May 27, the state’s Revenue Forecasting Group issued an updated revenue projection that forecast that the state would have about $1.1 billon less to work with during the upcoming biennium than was reported in April. As a result, the final budget must be trimmed by about $1 billion from the level passed by the Senate in April.
SPECIAL JOINT BUDGET COMMITTEE TO CRAFT BUDGET PROPOSAL BEFORE SPECIAL SESSION Much of the more difficult work in putting a budget together for the next two years is expected to be completed by a special joint budget committee that has already begun its work. This special committee is chaired by Rep. Bill Crawford (D-Indianapolis) and Sen. Luke Kenley (R-Noblesville). Other voting members are Reps. Jeff Espich (R-Uniondale), Scott Pelath (D-Michigan City), Eric Turner (R-Marion) and Sens. John Broden (D-South Bend), Brandt Hershman (R-Wheatfield), Karen Tallian (D-Portage). Reps. Randy Borror (R-Fort Wayne) and Terry Goodin (D-Austin) along with Sens. Gary Dillon (R-Pierceton) and Lindel Hume (D-Princeton) are advisory members of the special budget committee.
GOVERNOR DANIELS PRESENTS HIS BUDGET PROPOSAL On Monday of this week, Governor Daniels announced his budget priorities in a statewide broadcast, and on Tuesday he presented a more detailed proposal to the special joint budget committee. In his Monday night address, the Governor pointed out that despite the terrible national economy, Indiana remains in vastly better shape than most states, and that includes any of our neighbors. He noted that unlike other states, Indiana has more than a billion dollars in reserves and an AAA credit rating. He said, “Everywhere else, any reserves are long gone. They are slashing education by as much as 10 to 15 percent; they’re releasing convicts from prison early; and worst of all, when families are struggling, they’re raising taxes. There’s only one reason why we are so different, because we have held government spending down to the level of our income. But if we lose our sense of discipline now, in no time we’ll look just like Michigan, Illinois, or heaven forbid, California.”
On Tuesday, the Governor and Budget Director Chris Ruhl presented more budget details to the special joint committee. Significant in the Governor’s proposal is his willingness to allow some of the state’s $1.3 billion reserve to be used to help fund the budget for the next two years. In his presentation to the committee, he made it clear that he wanted to retain a reserve of at least $1 billion and that number was not negotiable. This represents a major change from the Governor’s position during the regular session that he would tolerate absolutely no inroads into the reserves. Under Daniels' proposal, the new general fund budget would be about 2.5% less than the current budget. The Governor proposes cuts in most areas of state government with increases in K-12 education and student financial aid and no cuts in funding for state prisons or state police.
All told, the Governor recommended a budget that will spend $28.5 billion over the biennium, about $1 billion of which would come from federal stimulus money. He did indicate that the General Assembly could rearrange his recommendations subject to two major prerequisites:
- A reserve of at least $1 billion be retained; and
- No taxes be increased to fund the budget.
A quick outline of major spending areas shows the following impacts:
State Library Cut 15%
Inspector General Cut 13%
Department of Health Cut 12%
Bureau of Motor Vehicles Cut 11%
Environmental Management Cut 11%
Homeland Security Cut 10%
Office of Management & Budget Cut 10%
Faith-Based & Community Initiatives Cut 10%
State Parks Cut 8%
Department of Revenue Cut 8%
Department of Labor Cut 8%
Professional Licensing Cut 8%
Agriculture Cut 6%
State Board of Accounts Cut 4%
Higher Education Cut 4%
State Prisons No Cut
State Police No Cut
K-12 Education Increase 2%
Student Financial Aid Increase 3%
INDY CAPITOL IMPROVEMENT BOARD ADDED LATER The Governor’s presentation on Tuesday did not address the thorny issue of the deficit faced by the Indianapolis Capitol Improvement Board (CIB). On Thursday, the Governor and Indianapolis Mayor Greg Ballard unveiled a proposal that will be incorporated into the budget bill. The two Republican leaders propose combining the CIB, which operates the Lucas Oil Stadium, Conseco Fieldhouse and the Convention Center, and the Marion County Building Authority into a new organization that would be known as the Facilities Management Board of Marion County. This new agency would be responsible for the operation of a total of 13 public facilities. In addition to the savings that are expected to result from consolidation, the budget will also call for increases in hotel, admissions and rental car taxes in an expanded Professional Sports Development Area.
BUDGET PROPOSES TO DELAY SCHEDULED GENERAL REASSESSMENT The Governor does propose to delay by a year the general reassessment of real property which is scheduled to begin the first of next month. The delay is supported by Local Government Finance Commissioner Tim Rushenberg, who believes a one-year delay is necessary to allow some counties to catch up with their ongoing assessment responsibilities.
ROKITA WARNS OF CORPORATE SCAM Secretary of State Todd Rokita and Attorney General Greg Zoeller have initiated legal action against the principals of an outfit that has been issuing deceptive letters to Hoosier corporations. Using an official-looking letterhead and the name “Indiana Corporate Compliance Division,” these letters represent that they will process your company’s corporate minutes for a fee, usually $125 or $150. The letters are a hoax and should be ignored. Farm corporations could be particularly susceptible to this scam, especially if the letter came when the corporate officers were preoccupied with planting this year. If you think you have been a victim of this scam, Secretary Rokita asks that you contact the Business Services Division of his office at (317) 232-6576.
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