INDIANAPOLIS – The majority legislative caucuses agree on one thing after another dismal month of revenues and a looming special session – it’s time for Gov. Mitch Daniels to step up and craft his own version of a two-year budget.
“I’ve invited the governor to tell us what his solution is because obviously we haven’t met his standards,” said Senate Appropriations Chairman Luke Kenley, R-Noblesville. “We need to hear more from him.”
House Speaker Pat Bauer, D-South Bend, agrees, saying “he needs to come out with a budget – not just vague references. Numbers, numbers, numbers. Then we can work on it from there.”
Daniels, meanwhile, has made no decisions on when the special session will happen or the course it will take.
“I still think the appropriate role is the one I adopted at the State of the State speech and every single day through Wednesday, which was to say ‘here is the boundary condition.’ We need to protect the reserves and leave the legislature the freedom, give them the respect, to impose their own priorities on it,” he said.
“But if they would prefer a more directive approach, then that is an option.”
The flurry of statements came Monday after Daniels announced state tax collections missed projections by $255 million in April.
He also called for a revised revenue forecast because the one three weeks ago is already inaccurate based on the April data. That was the forecast legislators were using to put together a budget at the end of the legislative session Wednesday. Failed attempts necessitated overtime.
“You can’t build a budget on a forecast that is provably more than a $1 billion wrong,” the governor said.
“That’s playing with pretend money.”
For the first time, Daniels acknowledged the state might have to use some of its $1.3 billion in reserves to balance the current state budget ending in June and possibly to prop up spending in the next budget.
“It may just be inevitable,” he said.
But Kenley said that isn’t necessary because “the governor has the power to cut where he needs to cut, and I think he should.”
Kenley also said that the budget under consideration in the final hours of the legislature last week contained that same option so that if it had passed, Daniels would have had the authority and flexibility to make state cuts.
“I know it puts a lot of pressure on the governor,” Kenley said.
Daniels already has slashed between $800 million and $1 billion out of the current state budget – including cuts to higher education, employee salary freezes and restrictions on travel and hiring.
Kenley seemed ambivalent about a new revenue forecast, saying it has become a moving target and they might lose their value if the state keeps redoing them.
Rep. Jeff Espich, R-Uniondale, chairman of the State Budget Committee, said he agrees with needing a new forecast but would discuss it with his peers before the budget committee would order a new one.
The state’s revenue forecasts are calculated by a bipartisan group of state fiscal experts and usually take several weeks to prepare.
If the revenue trend continues, Daniels said legislators need to consider cutting $1 billion from the two-year spending plan that was on the table last week, something legislative leaders did not embrace Monday.
“It’s going to be very hard to do and very hurtful to many different entities that get state money,” Espich said.
Kenley said that number seems unlikely and said any budget proposal has to garner 51 votes in the Democratic House and 26 votes in the Republican Senate.
“The better question is, how much do we need to cut to get the governor more comfortable and make sure that he has the power to deal with it,” Kenley said.
