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Published: June 27, 2009 3:00 a.m.

Singing shutdown blues

Daniels warns of layoffs, closed casinos if budget fails to pass by Tuesday

Niki Kelly
The Journal Gazette
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Associated Press

Gov. Mitch Daniels says Friday he plans to maintain essential services if lawmakers don’t pass a new budget.

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At a glance
How some specific agencies and services would be affected if the General Assembly fails to pass a budget:

Public assistance – Daniels said the state could send welfare and unemployment checks to Hoosiers already deemed eligible, 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.

Schools – K-12 schools and public colleges and universities can continue to run on previous payments from the state, but no new checks will be sent. A Legislative Services Agency memo says schools can borrow against future state distributions through a tax anticipation warrant.

Gambling – The governor said the state’s 13 casinos – including those at the horse tracks – would close because state law requires gaming agents from the Indiana Gaming Commission to be on hand regulating the activity.

Daniels said he does not consider casino gambling essential to public safety, so those employees would be sent home and the casinos would shut down. This could cost state and local government about $3 million a day in taxes and other payments.

The Hoosier Lottery also would not operate.

Bureau of Motor Vehicles – All BMV branches and operations would halt, meaning Hoosiers could not renew driver’s licenses, plates or registration or obtain any other service. Daniels said he thinks some sort of waiver of penalties might be necessary so that Hoosiers aren’t ticketed or fined for something they couldn’t avoid.

Parks – State parks would close, including for the Fourth of July holiday weekend.

Local courts – Daniels’ administration is still reviewing how a shutdown might affect local courts, because prosecutors and judges are paid by the state.

Legislative and judicial branches – Employees could not be paid. Daniels said these consequences are a last resort and can be avoided if the legislature passes a new budget or a continuing resolution allowing the governor to run the state by temporarily spending based on last year’s appropriations.

INDIANAPOLIS – Gov. Mitch Daniels warned Hoosiers on Friday of the dire consequences caused by a possible state government shutdown, saying parks would close, thousands of state employees would be furloughed and legalized gambling would cease.

But he said it could all be avoided if House Democrats would accept a Senate Republican version of a new two-year state budget.

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

Lawmakers failed to pass a new budget in the regular legislative session, causing an overtime session. But the current budget expires Tuesday. Without a new one, the governor can’t legally spend state dollars.

The key sticking point in the budget negotiations is education funding. A Senate Republican proposal tried to temper cuts to spending on urban and rural school districts that are losing students, but House Democrats say it hasn’t gone far enough.

And they don’t understand why Daniels and the GOP are insisting on leaving $1 billion in reserves instead of funneling more money to Hoosier children.

“The governor has had a good time flying around the state the past few days trying to scare people into supporting his budget demands,” Rep. Scott Pelath, D-Michigan City, said of Daniels’ travels this week. “I think what people really ought to be scared of is the budget he wants passed, because it would decimate public education.”

Budget conferees are expected to have negotiations over the weekend with the House and Senate reconvening on Monday.

Daniels said he was forced to start talking about the consequences of a shutdown because House Speaker Pat Bauer, D-South Bend, won’t allow his members to vote on a Senate Republican compromise bill.

He wanted to assure Hoosiers that public safety will not be affected if lawmakers don’t pass a budget. He contends he has the legal authority to transfer money to fund the continued operation of the Department of Correction and the Indiana State Police.

A recent memo from the non-partisan Legislative Services Agency did not mention this as an option to run the state. Daniels instead is depending on a 1993 opinion by the Indiana Fiscal Policy Institute – a private non-profit organization that does nonpartisan fiscal research – that says there might be “some very limited authority” to do so.

A separate state law keeps open the Indiana School for the Deaf; Indiana School for the Blind and Visually Impaired; Indiana Veterans’ Home; Plainfield Juvenile Correctional Facility; and state mental hospitals.

In addition, Daniels said the Department of Homeland Security, Board of Health and National Guard would be on standby.

All other state employees would be immediately furloughed.

nkelly@jg.net