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Daniels talks budget in State of the State


January 21, 2009
On Tuesday, Jan. 13, Gov. Mitch Daniels gave his annual State of the State Address at the Statehouse in Indianapolis. The topic of the speech was the economy and, more specifically, Indiana's budget for the next two years.

The previous week, Daniels had proposed a $28.3 billion budget for fiscal years 2010 and 2011. The budget included a two-year moratorium on all new capital projects that would require state funding except the expansion of two prisons, Miami Correctional Facility and Wabash Valley Correctional Facility, by 600 beds each.

This smaller budget was drawn up amid a report released last December that projected a $763 million spending gap for the state's current budget for fiscal year 2009. Following this, Daniels ordered that spending be cut by 3 percent on top of the 7-percent cut he made in 2008. This move, as well as all the other proposed moves in Daniels' new budget, is projected to save the state $767 million, leaving $4 million left over.

Daniels speech began with praise for the legislators for helping to save Indiana from near bankruptcy and for contributing to the growth of reserves that has resulted in a $1.3 billion surplus for the state.

"Together, you not only brought our state out of bankruptcy," Daniels said, "you placed it in strong condition to weather the difficulties ahead."

When discussing the new budget, Daniels outlined some major points. He said there would be "no tax increases" for the next two fiscal years, saying that in hard economic times the government shouldn't "add to the struggles of the citizens for whom it works" by making them pay higher taxes. In addition, Daniels said the surplus must be protected and maintained at current levels so the state can have a financial cushion if the economy doesn't recover as quickly as projected.

Education was another major talking point for Daniels. He praised taxpayers for digging deep and spending more money per student than "every state but four" at a ratio of $11,000 per student. He coupled this praise, however, with chiding remarks regarding the spending of this education money.

"It is totally unacceptable that 39 cents of every education dollar is spent outside the classroom," Daniels said. "It is inexcusable that fewer than half of school employees are teachers, the third worst ratio in America."

His new budget proposes changes in the way education money is spent by requiring schools to use joint-purchasing agreements unless they can find a lower price on their own.

Daniels went on to say that his educational goals were "smaller schools, smaller classrooms, more and better-paid teachers and better academic opportunities for our kids."

Daniels not only wants more teachers, he wants teachers to have more authority. In a reference to a bill he has proposed that would make it harder for teachers "who act in good faith to preserve order in their classrooms" to be sued, Daniels asked the legislators to help "re-establish complete, unquestioned discipline" in Indiana schools.

Funding for full-day kindergarten and guaranteed college tuition will be postponed for the next two fiscal years, Daniels said. He had praise for full-day kindergarten, saying that "more than two-thirds of our 5-year-olds attend."

Property taxes were also on the agenda for Daniels. He said progress had been made in reducing taxes, but these changes need to be made permanent through a constitutional amendment. This would require a referendum in the next election in 2010.

Daniels also wants state tax collecting to be capped. When the state takes a set dollar amount, everything above that will be refunded to the taxpayers in Daniels' plan. He said that a refund wouldn't come any time soon with current economic conditions, but that it would be good to set it in place now to "examine it purely on its merits."

Lastly, Daniels brought up the Kernan-Shepard Commission, a proposed plan for government reform drawn up by former Gov. Joe Kernan and Indiana Supreme Court Chief Justice Randall Shepard. Among the commission's 27 recommendations, many deal with shrinking local government by eliminating commissioners and having only one executive officer of the county with the county council acting as a legislative body. In addition, the offices of treasurer, clerk and coroner would be appointed by the executive officer instead of being elected.

Daniels told the legislators that he sent them a package containing two-thirds of the Commission's recommendations as they were or in a similar wording.

"Treat it as a starting point," Daniels said, "but please treat it seriously, in a spirit of reform."

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