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Several Indiana lawmakers are pledging to seek a balanced budget in the upcoming session of the General Assembly despite a dismal revenue outlook.
Before their constituents become too impressed by this magnanimous goal, consider one important issue: Indiana, like nearly all other states, musthave a balanced budget. Lawmakers working hard to balance the budget are only doing their required duty.
Gov. Mitch Daniels and some other Republicans have referred to an honestly balanced budget, and their comments are fair. Some administrations – Democratic as well as Republican – have used tricks to achieve a balanced budget, including delaying some payments to schools and other measures.
The real issue will be whether public schools receive no increase for the coming two years – a decision that would put schools behind, considering inflation and the employment contracts some districts are already locked into.
Consumer prices actually went down last month – by a record 1 percent, the most since the government began indexing them in 1947.
Good news, right?
Well, not exactly.
Economists – who seem to always be able to find a dark cloud outside the silver lining – point out that the reduction reflects a weaker economy, which is not good news. Lower prices for houses and cars actually reduce the net worth of many families. And while many prices were down, food – something everyone has to buy – was more expensive.
The real fear is deflation, which, among other effects, can cause consumers to stop spending money out of belief prices will be cheaper soon.
First-term Councilwoman Liz Brown promised she would take a sledgehammer to the city budget Mayor Tom Henry’s administration brought to the council table. But the results of her effort appeared more like an uncivil game of Whack-a-Mole.
Brown proposed more than $7 million in cuts to the proposed budget, but a large portion of the reductions she suggested duplicated cuts that had already happened, were essentially exempt because of union contracts or were not part of the city’s property-tax-supported budget. In the end, only $109,219 of her cuts passed.
In the process she earned criticism for not knowing enough about the expenditures she wanted to cut and not considering the effect of her proposals, such as forcing city employees to pay for their own mileage when they have to drive throughout the city as part of their jobs.
Her effort to be a true conservative and scrutinize the budget is admirable, but there is an obvious learning curve she needs to surpass before being derisive of the administration’s budget.
The full council, on the other hand, rightly ended up short of cutting the $4.5 million from the budget some members sought earlier, settling for a little more than half that amount, about $2.5 million. City employees will get no raise in 2009, but the council did not attempt to cut positions.
The $4.5 million was selected because it is half of the estimated $9 million shortfall for 2010, but that estimate could change significantly.
