Published: January 07, 2009 10:10 am      

Daniels releases details of his budget proposal

INDIANAPOLIS — Gov. Mitch Daniels has proposed a new state budget that would cut spending for higher education and state agencies while keeping schools and public safety programs near previous funding levels.

The cuts may be painful, Daniels said, but they are needed.

“Indiana’s problems are more manageable than most, if only we have the will to manage them,” Daniels said as he outlined his budget during a Rotary Club meeting in Indianapolis on Tuesday.

Colleges and universities would see 4 percent drops in state funding under Daniels’ proposed two-year budget. Agencies would trim an average of 8 percent from their 2009 allocations. Tourism, recycling and arts programs would get less cash from the state, and funding would be cut for a life sciences initiative of Indiana University and Purdue University.

The state would protect the $1.4 billion it has in its main checking account and reserves, Daniels said, in case the economy gets even worse. And the budget would be balanced without accounting gimmicks or tax increases, he said.

But Democrats say the Republican governor’s proposal lacks a key component needed to rescue the state from recession: jobs.

House Speaker Patrick Bauer said the state shouldn’t eliminate funding for the life science program that could bring new jobs. He said the state could crack open its piggy bank and use its savings to dig out from economic problems.

“That rainy day fund is not for some bankers to keep it for their bottom line,” Bauer said. “It’s to put people to work and to help us get umbrellas out so it doesn’t wash us into the ground.”

Daniels’ $28.3 billion, two-year budget proposal assumes that state revenue forecasts are accurate. But the revised revenue forecast, which came out in December, was off the mark for its first month. Revenues in December were down $33 million from those latest projections, with both income and sales taxes under expectations, budget analysts said Tuesday.

“I hope that’s not a harbinger of the next several months, but it could be,” Daniels said.

Lawmakers return to the Statehouse on Wednesday to begin the 2009 session, when they will try to create a new two-year budget that doesn’t spend more money than it takes in. Meanwhile, those affected by the budget were scrambling to determine what possible cuts would mean for them.

Indiana, Purdue and the Indiana Commission for Higher Education were awaiting more details of Daniels’ proposal.

“Times are tough,” said Stan Jones, Indiana’s higher education commissioner. “We all need to do our part.”

Daniels noted that higher education spending under his proposal would be larger than in fiscal year 2008, even with the 4 percent cuts from 2009 levels. But Democrats worry that a cut to higher education spending could amount to higher tuition — which could keep people from getting degrees that could help them get jobs.

Education advocates say keeping K-12 spending near current levels would essentially be a cut to schools. Schools have to deal with built-in pay raises for teachers and increases in utility and insurance costs, so advocates say a flat budget could mean teacher layoffs or larger class sizes.

Daniels’ budget proposal includes an additional $100 million over two years for prisons and state police. Daniels said the money was needed to keep state troopers on the road and keep inmates in prison. His plan also calls for maintaining Medicaid services and the level of caseworkers for abused and neglected children.

More details of Daniels’ proposal will be announced on Thursday, when state budget officials present it to the State Budget Committee.