Final Takeaways on New State Budget

Great, we have a state budget for the next two years, but what’s to make of it?

Foremost, the budget sticks to Gov. Daniels’ request to maintain a $1 billion surplus in the state’s reserve funds.   According to Indiana Chamber tax lobbyist Bill Waltz, this prudent amount is significant and important for the state to stay on track financially.

“With the revenue stream being so incredibly uncertain in the coming months and the federal stimulus dollars that are built into the two-year budget going away in 2012, it is critical that we not just cross our fingers and simply hope for the revenue stream to return.  Because if the economy fails to rebound or falters only slightly longer than the revenue projections, we will be in a hole at the end of the budget cycle.

“And then the only way to avoid a tax increase of some kind would be to utilize the surplus balance as that final bridge out of the troubled economy. In other words, it is at that time – not now or next year – that we (the state of Indiana) may want to use those funds,” he explains.

Waltz also believes the budget strikes a good balance between “spending desires and reasonable fiscal constraint on many issues (not just in the education area).”

A number of positive provisions that fell by the wayside via the regular session budget collapse had better fortune this time around.  Among them, the bulk of what was House Bill 1447, an all-inclusive piece of tax legislation, and a multi-million-dollar financial rescue for Indianapolis’ Capital Improvement Board (CIB).

The CIB situation simply had to be dealt with, Waltz says.

“Many from outside the Central Indiana area are reluctant to acknowledge the economic contribution that the CIB facilities (the convention center, Lucas Oil Stadium, Conseco Fieldhouse and Victory Field) make to the state’s economic vitality and coffers. Indiana, not Indianapolis, could not afford to see these operations and the tax revenue that their attractions bring be put in jeopardy,” he asserts.

Indiana Chamber education lobbyist Derek Redelman believes the budget bill also produced one of the best sets of education reform in the state’s history.

Heading that list of accomplishments is the new K-12 school funding formula that gives greater focus to students, rather than school districts, than any previous budget of the last couple decades. 

“The bill also included a scholarship tax credit that will generate private donations to help low- and moderate-income families to attend the schools of their choice – while also saving money for the state.  It also eliminated a longstanding statute that had prohibited schools from using the results of state tests to evaluate teachers,” Redelman notes.

“This budget avoided caps and other controls on charter schools, despite a session-long full-court press by Indianapolis Public Schools, House Democrats, teacher unions, school administrators and other charter school opponents.  Plus, it will allow virtual charter schools to finally get started, after a two-year moratorium created by the 2007 state budget.” 

Correction: The budget passed the Republican-controlled Senate 34-16.  A total of 30 of the 33 Republicans voted for the bill and were joined by four Democrats (Hume, Young, Arnold and Mrvan). Republican no votes were from Leising, Delph and Becker.

Indy Mayor Makes Case for CIB Funds

Indianapolis Mayor Greg Ballard made his plea today before members of the budget conference committee for over $45 million in funding to rescue the city’s Capital Improvement Board (CIB).

According to Ballard, the CIB has a “three to four-year hump to get over.  We’re at risk until that point.”

At risk are major sports events such as the Big Ten basketball tournaments, the men’s NCAA Final Four, the 2012 Super Bowl and the convention center expansion.

Representative Terry Goodin (D-Austin) asked the mayor if his “proposal would take care of the board’s deficit or is it just another Band-Aid” – with more dollars needed down the road.  Ballard replied, “I feel pretty comfortable with this going forward…I don’t want to come back (for more money) – nobody wants us to come back.”

Ballard pointed out several times the connection of CIB activities to the entire state, referencing that the majority (60%) of traffic to the downtown sports facilities, Circle Centre mall, etc. is from out of town.

Though overall sympathetic to the mayor’s predicament, some registered displeasure that one area of the state would receive such significant financial attention.

Representative Bill Crawford (D-Indianapolis): “One of the caveats I’ve stated all along is that I support this, but by my own calculations, I can count only 21 legislators representing Marion County – and that’s a problem.  Other areas of the state have problems too.”

Crawford also encouraged his fellow legislators to keep the Indianapolis Indians baseball team in mind when looking at the mayor’s proposed increase in the admission tax, which he said could adversely affect the most affordable sports option for families,

Representatives Dennis Avery (D-Evansville) and Eric Turner (R-Marion) raised questions over Ballard’s proposed $2 million increase in the Professional Sports Development Area (PSDA) from $8 million to $10 million.  These additional funds would come to the CIB via the retention of more funds – as opposed to going into the state coffers.  These two legislators were concerned with how this would look to other cities like Fort Wayne and Evansville with professional sports teams but already receiving significantly less funding. 

Meanwhile, Rep. Jeff Espich (R-Uniondale) worried that helping the CIB “would open it up for others to try to fix gaming and other issues elsewhere ….we will be doomed if that happens.”

One voice of reason in all of this was Sen. Lindel Hume (D-Princeton), who seemed to be tired of hearing that no one outside of Marion County truly cared about the CIB funding woes. 

“I live in rural Princeton and I care.  The CIB represents a significant investment in future revenue for Indiana,” he notes.  “If we don’t do something, Circle Centre (mall) will close; we will lose dollars.  If we don’t do something, the conventions will leave; we will lose dollars.  This is as important as a large manufacturer to the state.”

But perhaps Rep. Cherrish Pryor (D-Indianapolis) made the best case for providing the CIB with the requested money.  “The state receives a much greater amount in return – roughly half a billion dollars – than what CIB is asking us for.”

It would appear then that some common ground must be reached and CIB funding included in the state budget, despite the shortness of time. (Crawford noted a bill must be printed by Sunday to present to the House.)

Will Everybody End Up Giving a Little on Budget?

On the face of it, today’s series of second reading budget amendments in the Senate appeared to be another partisan exercise. Eight Republican amendments (mostly minor in nature) passed; Democrat offerings elicited strong debate before going down to party-line defeat, with 33-17 becoming the vote count of the day.

Dig a little deeper, though, and the stage may have been set somewhat for conference committee negotiations. Among the developments:

  • Senate Appropriations Committee Chairman Luke Kenley (R-Noblesville) adjusting the hastily compiled budget, making adjustments to the school funding formula to try and decrease the dollar discrepancies between growing schools and those continually seeing declining enrollments (closer to the House Democrat model).
  • An amendment from John Broden (D-South Bend), ranking minority member of the appropriations panel, that called for spending $132 million more on education. Although defeated, the debate was spirited and Kenley appeared to remain open to further consideration. House Speaker Pat Bauer (D-South Bend) undoubtedly liked some of the things he heard from Broden and his fellow senators and views some as tools for the end game.
  • A successful Mike Young (R-Indianapolis) amendment (on a voice vote) that introduced publicly a new solution to the Capitol Improvement Board (CIB) mess. It is more of a stopgap measure, allowing the CIB to borrow money from the state treasurer for up to a three-year period to meet its financial obligations. It would eliminate several of the tax increases that have been primary components of the discussion thus far.

 The Senate returns at 11 a.m. Tuesday to pass its version of the budget. The House may be back to officially dissent, and conference committee negotiations round two will begin. Senate Republicans are seemingly in the "compromise" mood; will House Democrats reciprocate?

Short Day on Budget; Senate to Revive CIB

I don’t know who wouldn’t want these work hours.  The House of Representatives is done for the day – at noon. 

Heard today were amendments to the budget bill. Among them were pet projects and technical tweaks – many of which involve additional funding requests. House Republicans did register their complaints, saying this session is about establishing the state budget and not a time to keep spending on other things.

The budget measure (SS 1001) was moved to third reading; the House could vote on it as soon as tomorrow, when it is set to reconvene in the morning.

One added bit of drama came courtesy of Rep. Jeff Espich of Uniondale and Rep. Bill Crawford of Indianapolis, chairman of the Ways and Means Committee, who exchanged barbs on the House floor. 

The topic was the way the Capital Improvement Board (CIB) bill was handled/manhandled – you can choose your own term – in committee yesterday. 

Espich wanted it known that the Republicans didn’t want the measure withdrawn as Crawford had done (due to lack of bipartisan support).  In his rebuttal, Crawford stated emphatically that “the CIB business now must be addressed in the Senate … it was my call to kill it and my call is it’s dead.”

And that, ladies and gentlemen, marked the end of today’s proceedings.

CIB Plight Heard in Ways & Means

The governor wasn’t there and neither was Indianapolis Mayor Greg Ballard. So both missed the latest round of questions this afternoon over the multi-million dollar funding proposal to assist Indianapolis’ Capital Improvement Board (CIB).

Instead, Indianapolis city controller David Reynolds and a CIB contractor from the CPA firm London Witte drew the short straws.

Reynolds told the House Ways and Means Committee that the funding on the table will keep the CIB going through 2011; he couldn’t state with certainty, however, that enough efficiencies would be realized to sustain it going forward. 

To say the least, that troubled the committee.

“The CIB has no ability beyond what’s given to it to raise revenues. We don’t see any other options short of what’s being proposed here (in SS 1002),” Reynolds offered.  “(If that doesn’t pass), the CIB will enter into a very precarious situation with the Pacers and of notifying conventions that there may not be a facility there (for the events).”

The London Witte representative revealed that the financial cost of expanding the convention center was not factored into any analysis for the CIB. This seemed to baffle some on the committee.

Testimony has concluded on SS 1002 with amendments now being heard. One that won’t play a factor: a provision for a Gary casino; Rep. Charlie Brown announced at the start of today’s proceedings that he was not going to introduce it. That likely means gambling will not factor into this special session.

Time change: The full House is expected to convene at 5 p.m., to allow for the Ways and Means Committee to finish business.

Statehouse Progress: Not So Fast

Any illusion (or perhaps delusion is more apt) of this special session going smoothly and ending quickly are pretty much history.
Not only don’t we have a behind-the-scenes deal from House Democrats and Republicans to put forth a state budget to the Senate in a timely manner, but day one of the special session showcased partisanship and maneuverings that will likely push the proceedings right up to the June 30 deadline.
The House Democrats introduced their own one-year budget via House Bill 1001, which is in line with their approach for the regular session and in contrast to the governor’s traditional two-year plan announced last week.
From virtually the start of the proceedings on Thursday, the two parties were at odds. Minority Leader Brian Bosma appeared blindsided that two additional measures – House Bill 1002 (aiding the Capital Improvement Board) and House Bill 1003 (involving public assistance) – were coming into play instead of focusing strictly on the budget. Time was also taken up by Republican concerns that gaming provisions would find their way into the bills.
As testimony surrounding House Bill 1001 begins today in the Ways and Means Committee (9 a.m.), amendments to the measure are already in the works. And that’s before the Senate gets its hands on it. So things are shaping up nicely to mirror the back and forth that led to no budget at all in April. Will someone blink this time? You would like to think so – especially since each day of the special session means taxpayer dollars are being spent for something that should have been done right the first time!
The full House reconvenes on Monday; when the Senate comes back is anyone’s guess as they are at the mercy of the House actually moving the bill. That leaves a little over two weeks to straighten out this entire budget mess.
Wonder what the over/under is on hitting June 30? On second thought … let’s not even think about it.

Governor to Legislators: A Billion is a Billion (in Reserves)

Governor Mitch Daniels presented his revised budget proposal to a special legislative committee this afternoon. He closed with announcing that the special session will begin on June 11 (1 p.m.). Among his key earlier points:

  • The special session is "not something to be regretted, but something to be grateful for."  He made it clear that he would have vetoed the proposed budget (defeated in the House in the last minutes of the regular session) due to the unrealistic revenue forecast that was in place at the time
  • He hopes legislators give serious consideration to an education trigger. If revenues do exceed projections at some point in the next two years, half of the excess would go toward education and the other half to the state’s rainy day fund
  • He indicated flexibility within his parameters to legislative wishes with the following exceptions: no gimmicks, no dipping into pension funds and only using one-time federal stimulus money for one-time purposes. "A billion means a billion (for reserves). It’s not a starting point."

Sen. Luke Kenley (R-Noblesville) offered a preview of things to come for the committee:

  • State Budget Director Chris Ruhl answering more legislative questions on Thursday. A recommendation from the administration on the CIB funding crisis for Indianapolis sports and convention facilities is expected later that day
  • Testimony Thursday and Friday from proponents for K-12, higher education, Medicaid/social services and economic development/worker training
  • Legislative caucus presentations on Tuesday, June 9, with a focus, according to Kenley, on "major points you would like to see in the budget, not bringing in the additional bills you would like to see addessed in the special session"

Text of the governor’s address to the public on Monday and slides used in his presentation are available here

At the Statehouse: The Deadline is Near

Chamber President Kevin Brinegar discusses the key topics and what needs to happen before tonight’s legislative deadline. Here is video from Inside Indiana Business.

Also, our Twitter feed will feature a few updates throughout the day from the Statehouse, letting you know what’s happening on key bills.