INDIANAPOLIS - Gov. Mitch Daniels said Friday that without a state budget nearly all state services will cease July 1, including parks, bureau of motor vehicles, casino gambling, highway construction and environmental inspections.

Daniels said he has legal authority to transfer money to fund the continued operation of the Department of Correction and the Indiana State Police, but all other state employees would be immediately furloughed.

The Department of Homeland Security, Board of Health and National Guard would be on standby.

Daniels also said the state could send public assistance to Hoosiers already deemed eligible - such as unemployment and food stamps - because the benefits are funded with federal dollars. But he said no one could apply for new services because state employees are responsible for determining eligibility.

"This would be an incredibly cruel and unfair result and again we appeal to the House Democratic leadership," the governor said. "They would be the only reason this would happen."

Daniels said he believes lawmakers would easily approve a Senate Republican budget compromise if House Speaker Pat Bauer, D-South Bend, allowed a vote.

Daniels' statements came after Bauer gave an interview to an Indianapolis TV station Thursday night indicating the special session might continue on past the June 30 budget deadline.

nkelly@jg.net