A One Day Special Session (and More?) Preview

Today, the Indiana General Assembly reconvenes to pass five bills; four had been through the entire process during the regular session that ended on March 14 and were ready for final passage.

To use a basketball metaphor to describe the situation with these bills: The ball was still in the shooter’s hands when the shot clock went off. And the bills to be taken up in the special session will substantively be the same bills that were making their way down court in the final minutes of regulation. The only other bill is a technical corrections measure to reconcile inadvertent conflicts in language of bills that passed – i.e., two bills amending the same section of the code, but with slightly different wordage. Such technical corrections bills are routine.

As we reported last month, there are two tax administration bills. House Bill 1316 – the one to update Indiana with the federal tax reform changes – is both significant in effect and time sensitive. Failure to pass this legislation would greatly complicate 2018 returns and be of substantial consequence to Indiana and its taxpayers. Meanwhile, Senate Bill 242 includes a number of provisions the Indiana Department of Revenue sought to improve tax administration.

The remaining two bills are in the education realm: one addressing school safety issues and the other involving state oversight of financially distressed school systems – often regarded as the Muncie and Gary schools bill. There are lingering disagreements attached to the provisions of the latter legislation (testimony was heard earlier this week by the Legislative Council), and it will reignite debates that were had during the regular session. But it is expected that the time allotted for rehashing these debates will be limited.

Given the timeframe, there is little for legislators to do except formally act on the five bills. That leads us to the question: Will they in fact get all their work done in a single day? Probably so, once they suspend most of the rules that would, if applied, serve only to prolong the proceedings.

Separately, it appears there is some other significant business to be conducted by the Senate while they are all in town. Rumor has it that the following day (May 15) will be devoted to some serious internal politics. That would be the selection of a new Senate Pro Tempore to replace the retiring Sen. David Long (R-Fort Wayne). Talk is of a “binding straw poll” seeking to lock members into a statement of who they intend to support when a formal vote is taken in November, after the fall election. Senators Rod Bray (R-Martinsville) and Travis Holdman (R-Markle) are the acknowledged frontrunners for the Senate leadership post.

Results Available; New Poll Seeks ‘Loser’

We’ve been asking you poll questions related to this year’s legislative session, but not reporting back on the final results. What’s up with that? I could offer a variety of excuses, but none would really suffice.

Below are the outcomes of your votes. We’ll do better in the future. And check out the current poll, which asks you to select the "loser" as the result of the recently concluded House Democrat walkout.

  • Do you support an Arizona-style immigration law for Indiana? 53% yes; 47% no
  • Should the responsibilities of Indiana townships be transferred to the county level? 68% yes; 32% no
  • Did you support House Democrats leaving the state in an attempt to kill legislation they opposed? 75% no; 25% yes
  • Do you believe that K-12 education dollars should follow the child — allowing parents to send their children to the school of their choice? 64% yes; 36% no
  • And last week we asked: How do you think this legislative session will end? Gov. Daniels calls special session(s), 47%; Democrats return at end to vote on budget, 29%; key bills revised and House Democrats return, 12%; and Other, 12%

That special session could — but hopefully not — still come into play. As we’ve said multiple times, it’s time for legislators to complete the job they were elected to do.

Budget Approved; Shutdown Avoided

The 2009 special session is officially over — finally — with a two-year state budget passed by the General Assembly.

After a lengthy process that seemingly left few happy based on the floor speeches in both chambers, enough of a compromise was reached to send lawmakers home and avert a government shutdown. The Senate voted 34-16 in favor, with the House approving it 62-37.

All but one of the Republican senators (Jean Leising of Oldenburg voted no) were joined by Democrats Lindel Hume of Princeton and Richard Young of Milltown. The House support came from all 48 Republicans and 14 Democrats.

Governor Daniels’ statement: "Like any compromise, this budget has its defects, but it meets the fundamental condition I laid down in January and every day since: to limit total spending enough to preserve our surplus and thereby protect taxpayers against the tax increases happening in virtually every other state."

Update: The governor proceeded to sign the legislation.

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 …

House Introduces 14 New Bills… Why?

Late yesterday it was revealed that the General Assembly has 14 new bills to contend with… or do they?

Four of the measures introduced by House members are procedural in nature: the vehicle bills.  The remaining 10 appear to be hot-button issues that couldn’t find their way to passage during the regular session.  Among them:

  • Elimination of townships outside Marion County
  • Smoking ban in public places
  • Constitutional property tax cap amendment
  • Declaration that marriage is between a man and woman

So why bother with them now during the special session, with less than a week before a state budget needs to be finalized?

It’s called going through the motions says Indiana Chamber health care lobbyist Mike Ripley, himself a former state representative.

“The legislators know realistically these bills are not going to move – maybe they have a 1% chance – and that leadership probably can only deal with the budget matters,” he states. “This comes down to legislators wanting to keep the issues that are most important to them out there, and going on record like this is one way to do that.”

Senate Passes Budget; Governor Urges Vote Now

The Indiana Senate definitely plays nicer than the House. Instead of zingers flying fast and furious, there was predominately a civil tone to today’s activity.  I lost track of how many times a variation of the word “respect” was used by both parties. Quite frankly, it made for some very boring talks. 

Still, when it came time for the Senate to vote on its version of the budget bill (SS 1001), the outcome was predictable – much like the House action last week – and had a distinct partisan flair to it. 

The Senate passed SS 1001 33-17; the catch being that one Democrat – Sen. Frank Mrvan of Hammond – voted for it, while Republican Vaneta Becker of Evansville voted no. 

The so-called budget contingency plan (SS 1) – in case an actual budget fails to pass by June 30 – moved from the Senate on a 32-18 vote (Republican Jean Leising of Oldenburg opposed it).

During today’s proceedings, Senate Pro Tem David Long (R-Fort Wayne) said his goal was to have the Senate vote on a finalized budget by no later than June 29. Of course, in order to do that, the House must play nice. Think they can?

The latest: Gov. Daniels issued a plea to the House Democrats to avoid a conference committee and to take a vote on the Senate version of SS 1001. The statement from the governor:

“The Senate compromise, while significantly different from either of my two proposals, protects taxpayers within the limits I’ve requested and I would sign it.  I know there are many House Democrats who would prefer a budget that keeps Indiana in the black to one that takes us into bankruptcy, and we invite them to join this compromise now and bring the special session to a successful close. Mr. Speaker, please just free your followers to vote their conscience and let’s go home.”

Barbs Fly as House Democrats Pass Budget

The elephants and donkeys drew their usual (party) lines in the sand before the House vote this morning on SS 1001, the budget bill.  The result: Everyone looked petty.  In the end, no surprise, the measure passed 52-48 – all on the back of Democrat votes. The parties were on such opposite sides it was hard to believe they were still in the same room.  
Among the verbal gems:
House Minority Leader Brian Bosma, R-Indianapolis: “I found out before I came in here that this budget we’re about to vote on (the House Democrats’ proposal) spends $200 million more in the first year than the bill that was defeated at the end of April … and that was at the end of session with a gun to our head.”
Representative Scott Pelath, D-Michigan City:  “Don’t let anyone tell you that we’re not reigning in our budget on this side of the aisle.  We ought to be proud of this budget; I am. But I know – it’s my guess – there will be no votes coming from over there (the Republicans).  (That’s because) we have different priorities. We believe in helping the poor, public education and giving people a chance to earn a living.”
Representative Jeff Espich, R-Uniondale: “(The Democrats) seem to think it’s unthinkable for government to flatline spending.  Anyone here not tightened their own belts the past few months? … Good news is we’re going home today, saving taxpayers’ money (on the special session).  The bad news is the Democrats are going to pass a budget that will lead to tax increases.”
One of the most unique visits to the microphone came thanks to Rep. Vernon Smith (D-Gary), who led off his remarks touting that several media outlets in Fort Wayne, Lafayette, South Bend and elsewhere have come out in support of the House Democrats budget proposal.  Smith thought this was significant. Really? 
Sifting through all the banter, the great divide centers on the Republicans’ view that the Democrats are being free-wheeling with spending, while the Democrats contend that the Republicans and the governor are trying to “decimate school funding” with their approach to the state budget.
“I don’t want to get into the governor’s alleged 2% increase in education spending,” remarked Pelath. “It counted all sorts of things that have never been counted before” in terms of federal sources.  “It’s unsettling, gimmicky and didn’t meet his own criteria for what a budget should look like.”
Meanwhile, Espich predicts the state “could have another budget crisis four or five months from now – and that  budget crisis in November or January will be worse than the one we have today.”
Agreeing with that assessment, Rep. Randy Borror (R-Fort Wayne) warned that if the Legislature ultimately passes a one-year budget, “We will become full-time legislators.” 
Borror went on to list many of the digs Democrats made about Gov. Daniels during the proceedings and then closed with, “ At least you can’t accuse him of being stupid.  He knows how to balance a budget. Maybe you should have listened to him a little more.”
All in all, another proud day for the Legislature.  Look for Act II from the Senate.

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.

Senate to Play Waiting Game

The special legislative session in the Senate Thursday lasted about 20 minutes. The 50-member Senate (with 46 present) convened, as required, passed a resolution to overturn the existing law that one chamber cannot be in recess for more than three consecutive days during a special session without the approval of the other chamber and said (in my words) "House, send us a budget bill."

In the words of Senate President Pro Tem David Long (R-Fort Wayne), "We don’t know when a bill will come over from the House. But I would keep your calendars locked up from the middle of next week until the end of June."

So much for a quick and easy process here (already evidenced by the antics of the past few weeks). There are two budget plans — the governor’s and the House Democrats — and a big difference on how schools are going to be funded. Let the drama begin.

Special Session: Budget “Cliff” and Governor’s Plan

Everyone on every side of the state budget debate is framing their remarks around a metaphoric “cliff” that the state may find itself standing at the edge of in two years. Three inter-related matters make up the primary elements of this fiscal cliff:

1) the availability of reserve accounts (surplus balances) come 2011
2) the extent that the federal American Recovery and Reinvestment Act (ARRA) of 2009 monies are used for ongoing programs or services for anything other than one-time expenditures
3) the rate at which the economy recovers and accuracy of the revenue projections/forecasts

Taking all of this into consideration, Gov. Daniels’ budget proposal is sound. The uncertainty of the economic recovery makes his line in the sand – maintaining no less than a $1 billion reserve balance – a prudent standard and an important step in avoiding a cliff. (See historic reserve balance data going back to 1976.)

The governor’s use of stimulus money only for things that would not add to the base operating budget is also essential to avoiding a freefall. His plan includes a significant amount to be directed to capital projects; although new construction adds to operating costs over time, the projects still fundamentally constitute one-time expenditures. And much is directed to immediately funding needed repair and rehabilitation of higher education facilities – a good way to apply one-time federal monies without adding costs down the road.

What the governor’s plan is being criticized for is building state K-12 education funding around the federal stimulus money specifically designated for schools with a high population of disadvantaged students (Title 1 monies). The proposed school funding formula results in a 2% overall increase. But critics point out that it is only 2% if you count the extra Title 1 – money that would flow to mostly urban schools, regardless of the level of state support.  It is suggested that this funding approach actually creates a cliff for those schools by making them dependent on that additional money.

This debate requires consideration of the big picture. First, these schools generally have declining enrollments, so their funding can’t be expected to rise steadily. By operation, the Title 1 money goes to schools that have more special needs, so the money will go to cover those needs. Even though state revenues are plummeting, the state portion of the school funding is still increasing, albeit by a very modest 0.5%. It is worth noting that most states are having to reduce education spending. So a 2% increase (0.5% state money; 1.5% federal stimulus money) is reasonable in these tough times. The final item below plays into this discussion too.

According to the projections, state revenues are expected reach a level by 2012 that will be sufficient to bridge the funding gap that will exist when the Title 1 money goes away that year. (See links to May forecast and Gov. Daniels’ budget presentation.)

Unfortunately, yes, schools are probably going to have to make do with smaller increases than anyone prefers.  Only “probably” because of another component of the governor’s budget proposal: if the economy recovers faster than the revenue forecasters projected and the revenues end up exceeding the projections, 50 cents of every unanticipated $1 will go directly to education funding; the other 50 cents goes to build back up the reserve balances.

While the governor’s plan may not be perfect, it is thoughtful and fair, and is well designed to prevent the state from heading toward – or off of – that financial cliff.