Dem Leader Bauer: State Surplus is ‘Gimmicky’

Indiana House Democratic Leader Pat Bauer issued the following statement yesterday. I’m posting it in full here and simply asking, "Do you agree with him, or do you think Gov. Daniels’ efforts in creating — and now touting — the over $1 billion surplus are commendable?" Let us know in the comments section:

Indiana House Democratic Leader B. Patrick Bauer of South Bend today issued the following statement on the fiscal year closeout of the biennial state budget:

“For an administration obsessed with nothing more than the bottom line, the news that we have a budget surplus of more than $1 billion must be very gratifying.

“But thinking people should take the time to ponder a few points.

“From even the most cursory examination, it is apparent that this budget surplus has not been built on a strong economy keyed on job creation. That’s because this administration has no such program.

“Instead, it is obvious that this surplus owes a great deal to budget reversions and other accounting tricks that this administration frowned upon when it took office. Without the past use of federal stimulus dollars, the continual demand for trimming agency budgets, and the occasional raid on dedicated funds, our financial picture would not be as rosy as the governor and the auditor would like.

“At that point, it is prudent to wonder at the cost extracted by these gimmicks. What services are suffering as a result of the obsessive need to maintain a $1 billion surplus?

“These questions are not new. A year ago, they were asked and the administration’s response was turning over hundreds and hundreds of pages of documents that offered a recipe for dandelion wine, but nothing concrete about budget cuts. That information only came when the cuts began to have a human impact and people were hurt.

“Indiana House Democrats continue to be concerned about the toll that’s being extracted here. What kind of effect does this obsession with the bottom line have on helping Hoosier families, providing quality schools and creating jobs with decent wages?

“Our schools have paid a heavy price already: hundreds of millions of dollars in lost state support, cut at the governor’s demand. Now they will lose even more funding as this administration pursues its grand social experiment to gut public schools in favor of private programs and schools available only to a select few.

“But we aren’t taking enough time to consider the impact on families.

“Consider the fact that we have gradually moved away from a system of funding government services that relied upon a combination of personal and business taxes toward one that places the greatest burdens upon individuals and families. Business taxes get cut – something that happened again this year – while families find themselves paying more fees and charges and taxes.

“At some point, we have to think about what we can do to help them. A good place to start would be placing a greater priority on finding them jobs, rather than talking about it.

“Families are more important than a $1 billion bottom line, particularly when that bottom line crunches them the most.”

The Circus Continues: What the House Standoff Means

What a circus! And next week is shaping up to possibly be more of the same for Indiana’s House of Representatives. That’s a real shame because the House Democratic walkout jeopardizes a number of key bills that the Indiana Chamber believes would be extremely beneficial to Hoosiers. In fact, the Chamber has actively supported all 11 bills House Minority Leader Pat Bauer is demanding be defeated.

Among them, of course, is the right-to-work legislation that would give workers the choice of whether or not to join a union. There is overwhelming evidence that passing right-to-work this session would be the single biggest action to stimulate Indiana’s economy and bring more jobs to the state. Any policy that can do both of those things over the long term and has the support of seven out of every 10 voters deserves full consideration. Nonetheless, while disappointed, we respect the decision by House Speaker Brian Bosma to steer right-to-work to a study committee where legislators can continue the discussion this summer.

Right-to-work, though, was only one of the labor measures singled out by Bauer, while a collection of important education reform bills were also cited as reasons for the standoff. These education policies would: improve student outcomes and prepare students for the workforce; give parents of low-income students, in particular, more options for getting a quality education for their children; and allow more local managerial control in our schools.

These targeted bills – and nearly 50 in total – have been caught in the political crossfire and are now in limbo. On Thursday, the House Rules Committee voted to extend the deadline for bills to pass out of the House to next Friday (March 4). For the Rules Committee action to go into effect, the House must be able to vote on it – and a quorum of 67 members is needed for that.

The question is whether the House Democrats will reappear next week. It is certainly the Chamber’s hope that legislators return to work and put the best interest of all their constituents first. If they object to certain bills, they should show up, speak their mind and can vote against them. That’s how the process works. Then when election time comes, make their case to the voters. Activity coming to a screeching halt is not acceptable and is a disservice to all Hoosiers.

Need to Raise Indiana Taxes?

The Indiana Fiscal Policy Institute (IFPI) says in its September report that a combination of tax increases and spending cuts is "the politically obvious path … and likely …" but in reaction to such a suggestion, the budget makers and politicians are all saying otherwise.

Chris Ruhl, the governor’s director of the Office of Management and Budget, said, "A general tax increase on Hoosiers is a terrible and unnecessary idea and one the governor firmly opposes." Sen. Luke Kenley (R-Noblesville), chairman of the Senate Appropriations Committee, is reported as saying "… Hoosiers are already suffering … and it would not be fair to them for the state to raise their taxes, too." The leaders of both caucuses in the House were likewise dismissive. Speaker Pat Bauer (D-South Bend) simply said,  "We are not going to raise taxes" and Minority Leader Brian Bosma (R-Indianapolis), who could well be speaker if the Republicans gain a majority in the House, said, "Republicans pledge to enact a balanced state budget without a general tax increase."

So, increasing taxes doesn’t seem to be too obvious to those in charge. But do increases remain a possibility, regardless of across-the-board rejections? Well, maybe. Unfortunately, tax increases can take many forms. And what exactly is being ruled out when a politician says there will be no "general tax increase" is open for interpretation and qualification. Similarly, the constituent-friendly term "Hoosiers" rather than "taxpayers" may indicate they mean only individuals and the general taxes they collectively pay – or conversely, to exclude business entities and the taxes they pay.

Suffice it to say, these "no-new-tax" statements may not end up covering things like changes in how a business’ taxable income is defined, special application taxes, tax law changes that only impact a group of taxpayers, fees or other changes that raise revenue but do not affect broad categories of taxpayers. Yet, these actions are all effectively tax increases for somebody. Don’t be surprised if at some point down the road, the politicians qualify what they mean when they say they won’t raise taxes.  

Whatever happens from here (suggestions of tax increases aside), the IFPI is to be commended for nicely compiling the facts in appropriate context, presenting the issues and focusing attention on the realities of our fiscal situation. The steep decline in revenues is a problem and certain to make it very difficult to formulate a budget. But, the problem cannot be resolved by looking at the revenue side of the equation. Expenditures must be kept in line with revenues – whatever they may turn out to be. One reality that cannot be ignored: budget makers must look at education expenditures.

K-12 funding is by far the biggest piece of the pie and the only category where relatively small percentage reductions translate to significant savings. (Everything else has been cut to the bone or legitimately considered non discretionary.) As undesirable as it is, it should be acknowledged that the only way to balance the books is to find ways to reduce this biggest ticket item. How the problem is addressed will depend on how severe the situation is come next year.

Read the IFPI study here.

A Little Less Talk, a Lot More Action at Statehouse?

Tuesday morning at the Indiana Statehouse was a good time for catchy phrases. Whether the rest of the week will see substantive legislative action is yet to be seen.

House Speaker Pat Bauer has reconfirmed his plan to adjourn this session by the end of Thursday (10 days before the March 14 deadline date for such action). His closing words to House members (before calling for a recess until 2:30 today) as he urged them to work diligently on conference committees: "If you can make an agreement, so be it; if you can’t make an agreement, so be it."

Prior to that, House Minority Leader Brian Bosma said his caucus was not opposed to a Thursday ending as long as all the needed business was taken care of. He cited five priorities, led by a clean and clear delay in the unemployment insurance tax increase, that would thwart the "go home early" plan. His final comment: "It’s better to be a little slow and right than quick and wrong."

The Senate has not publicly weighed in today (it has a light calendar with a 1:30 beginning), although President Pro Tem David Long has previously stated there is nothing wrong with an early ending, but not before key issues are addressed.

The real work is taking place in conference committees and in negotiations among leadership. Stay tuned for the outcomes.

Bauer Sends Dobis Packing From Leadership Role

House Speaker Pat Bauer and former Speaker Pro Tempore Chet Dobis have served together as Indiana legislators since 1970. That’s a lot of collaboration, and undoubtedly a little conflict, over 40 years.

Conflict is center stage now as Dobis has been removed from his second in command leadership position. The reason: he didn’t support his Democrat colleagues on a committee report that would have likely killed the Illiana Expressway, a project heavily supported in Dobis’ Northwest Indiana district.

Frugal Hoosiers has the latest, with an assist from the Northwest Indiana Times. The impact on the remainder of the legislative session, and beyond, remains to be seen.

Bauer, Bosma, Long and Simpson Set the Stage

The 2010 legislative session might officially begin Tuesday with Organization Day. The discussion started today, however, at the Indiana Chamber’s Central Indiana Legislative Preview. The four caucus leaders had plenty to say during an hour-plus dialogue. Just a few of the highlights:

  • Plenty of debate and disagreement over the property tax caps. House Speaker Pat Bauer (D-South Bend) tried to insert some ABCs into the 1-2-3 argument, with his main point being that assessment problems still need to be fixed. Senate President Pro Tem David Long (R-Fort Wayne) warned of constitutional challenges (lawsuits) if the caps are not passed. Senate Minority Leader Vi Simpson (D-Bloomington) offered that "we really don’t know if 1-2-3 are the right numbers" and said there should be no exemptions for any counties
  • State budget: House Minority Leader Brian Bosma (R-Indianapolis) says there are two priorities for his caucus — no new taxes and no additional spending. Long: "Any bill that has spending in it is more than likely dead on arrival."
  • Party lines were clearly at play on federal health care reform, with Long "scared to death about what they’re talking about in Washington," while Simpson is "all for a national health insurance plan that insures more people." Bauer arrived in time to add that a fortune could be made and debt problems resolved if a 25% premium charge was placed on every advertisement both for and against health care reform
  • Local government reform: Simpson says exemptions for certain counties or areas have no place in such legislation; Long sees much duplication in township services in urban areas, but not necessarily in rural places; and Bauer gave arguments on both sides of the question before asserting that reform "must take place in steps and some steps will be taken this session."
  • Support of delay in unemployment insurance tax increase on employers: Bosma said "yes" to delay or even permanently postpone; Bauer adds that modifying those increases should take place in conjunction with a jobs program; and Simpson notes her caucus will "undoubtedly support a delay" but also believes that reforms in the hearings and appeals processes should be part of the equation
  • Education reform was addressed with Long contending that while some say Superintendent of Public Instruction Tony Bennett is a bull in a china shop, "I say we need a bull in a china shop. He needs to continue to push the envelope." Simpson says Democrats are more open to these discussions due to the efforts of President Obama. Bauer wants the focus more on students, expecially those struggling in inner cities, than teachers. Bosma sees the coming decade as one of "examination and action" on education, but that will not be the case in the 2010 General Assembly session

Bottom line: Excellent discussion; there will be plenty of issues in play during the short two-month session; and no one really knows what the outcomes will be.

Crunch Time: Action from House Floor

Mercifully, we’re nearing the end (hopefully).

Members of the House are currently taking turns on the floor voicing their opinions on the budget bill, which is expected to be voted on (relatively) soon.

Regarding the contents of this budget, Rep. Craig Fry (D-Mishawaka) says he’s embarrassed by it.  Rep. Vernon Smith (D-Gary) stated that Democrats were getting only “a teaspoon while Republicans walk away with a truckload.”  Still, not all Republicans were pleased.  Representative Mike Murphy (R-Indianapolis) voiced his concern that the budget didn’t do enough to help homegrown Hoosier companies, many of which he feared would be forced out of business.

Leading up to and including today, much of the wrangling centered on K-12 education – be it funding (districts vs. students), charter schools, the scholarship tax credit program or virtual schools. 

Indeed, Rep. Smith spent most of his floor time on this subject and denounced the education policies contained in the budget.  Like the vast majority of Democrats, Smith had wanted the K-12 dollars to continue to be awarded on a school district basis, while Republicans were adamant the money follow the students.  The problem with Smith’s argument: Large urban districts like Indianapolis and Gary continue to see declining enrollment.  To Rep. Smith, however, Gary is being “treated like a stepchild.”

Smith and many other D’s also still haven’t warmed to the idea of charter schools and see them – as well as the tax credits to allow for school choice – as a threat to traditional public schools. 

Meanwhile, Rep. Bob Behning (R-Indianapolis) pointed out that both the Gary and Indianapolis Public School (IPS) districts receive more funding per student than any other district in the state.  In fact, IPS gets nearly $2,300 more per student than the state average.

Later on, fiscal stalwart Rep. Jeff Espich (R-Uniondale) implored legislators to do the right thing and vote "yes" on the budget.  “We’ve all had our say; we’ve all had to compromise.  I think we’ve done the best we can do.  Anyone can find a reason to vote ‘no,’ but you can also find a reason to vote ‘yes’ … one reason being not having to raise taxes.”

Stay tuned for more …

Conference Committee 101

The budget bill will be in conference committee the next few days – perhaps even through Sunday. Lawmakers will officially return at 9:30 this morning, although most negotiations and compromises take place well out of the public view.

A few basic things to keep in mind about a conference committee:

The makeup is two members (“conferees”) each from the House and Senate as well as “advisors” – all appointed by House Speaker Pat Bauer and Senate Pro Tem David Long. These conferees and advisors may be removed at any time by the respective House and Senate leaders (generally only done if the appointee is threatening to go against the party line).

The conference committee process is less structured than the regular committee process. Conference committees may meet within one (Senate rule) or two (House rule) hours after notice of the meeting is posted (on the bulletin boards outside the respective Senate and House chambers) and are open to the public “whenever feasible.” No further posting is required if additional meetings are necessary, and it is within the chair’s discretion to be forthcoming about time and place of any additional meetings.

A bill may pass out of a conference committee only with unanimous consent of the conferees. This is called the conference report. If it passes out of the conference committee, both chambers vote on the final version.

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?

Budget Forecast is New — and Different

At today’s State Budget Committee meeting, a new revenue forecast for fiscal years 2009-2011 showed a nearly $1.1 billion decline from the forecast offered less than six weeks ago.

No, as committee chair Luke Kenley (R-Noblesville) pointed out, that doesn’t mean a $1.1 actual loss but a decline from a projected increase that many had doubted when it was delivered.

The forecasters went back to the drawing board to try and figure out why the April projections were so far off of the actual April collection. An expanded group of technical advisors decided to revise their sales tax collection model and added variables to the income tax model to adjust each of the three fiscal years.

The projected decreases (from April’s outlook): $444 million in fiscal 2009, followed by $331 million in 2010 and $316 million in 2011. While the projected revenue decline of 7.5% from 2008 to 2009 is unprecedented in state history, forecasters noted that it is a smaller decline than nearly all other states (including Michigan at an astounding 20%).

Kenley offered that more attention should be paid to the actual revenue numbers — $12.9 billion, $13.1 billion and $13.6 billion for the 2009-2011 period, respectively. That compares to a state that operated in 2008 on a budget of less than $13 billion after state agency budget cuts were ordered and enacted. His conclusion, including the addition of the federal stimulus funds: "If we can flat fund or come close to it over the next three years, we will be OK."

Bill Crawford (D-Indianapolis), chair of the House Ways & Means Committee, isn’t ready to buy into that approach. He said during the meeting that he and House Speaker Pat Bauer (D-South Bend), "want to make sure if we adopt the hunker down, man the barricades mentality, that we don’t allow the education infrastructure to decline unnecessarily." It appeared that others on the committee, through their reactions, were questioning whether flat-lining would be enough. In other words, this battle is far from over.

Crawford expressed "discomfort" with the fact that a dramatically different budget forecast was presented today as compared to April 17. He noted that while part one of his AAA philosophy (acquire information) is complete, it is time for analysis before deciding how to act.

Next up: a budget proposal from Gov. Mitch Daniels, likely next Monday, June 1.