Gov. Mitch Daniels sent this to state employees early Tuesday afternoon:

Dear Co-Worker:

I apologize that I am only just now communicating with you, but I have held off at the request of state legislators who are working to reach a budget compromise before the fiscal year ends tonight. When midday arrived with still no formal agreement, I informed the General Assembly that in fairness to state employees I could not wait any longer. So, it is with great regret, I write to inform you of the unfortunate possibility that as of midnight, our state government will be forced to shut down and suspend many of its operations.

I have done everything in my power to avoid this outcome. When the legislature failed to pass a budget in April, I called them back into session a week earlier than expected, to give them extra time to reach an agreement. I revised my original January budget proposal to incorporate numerous compromises, including the use of a significant portion of our state reserve funds. Some observers felt that I had gone too far: the Indy Star, on June 7th, even described our concessions as potentially "foolhardy." The Senate subsequently produced a budget that made even greater compromises, which again, in hopes of a reasonable solution, I agreed to support. Additional concessions were made late yesterday in a final attempt at compromise and early reports suggest that perhaps these last changes have resulted in a deal although no vote has been taken and no budget has yet passed. At my request the Senate also passed a stop-gap measure to keep government open even if a budget still did not pass in time.

Please note I have a greater sense of optimism today that the members of the Indiana General Assembly have agreed to a budget and will vote to pass it before the deadline of midnight tonight than I did yesterday. However, in the event that a budget is not passed by midnight tonight, it is my responsibility to notify you of the potential interruption of all state government activities except those of a public safety, life and death nature. Attached is a memo, detailing the particulars of the shutdown process as a precautionary measure in the event the General Assembly fails to pass a budget.

Though the potential for closure remains a possibility, I still hope for another conclusion. Over the next 12 hours I will join you in watching the General Assembly as they consider and hopefully pass a responsible, 2-year state budget which I can sign. You are delivering the finest state government service Indiana has ever seen and I thank you sincerely for it.

Sincerely,

Mitch Daniels