Mitch Daniels
Governor

Comments and Articles from the Governor

Governor's Proposed Budget to be Heard in House of Representatives

The Indiana General Assembly is charged with one job every other year; to create and pass a state budget. House Republicans have vowed to create a balanced budget that meets our state’s critical needs without raising taxes. On Thursday, the Governor released a recommended budget. Rep. Jeff Espich, Chairman of the House Ways and Means Committee introduced the Governor’s budget where it will be considered in the next several weeks.

The Governor’s budget goals are aligned with the House Republican Caucus:

No tax increases
No gimmicks or payment delays
Structural balance by FY 2013
End biennium with adequate reserve

After the House considers the proposed budget, the budget will make its way to the Senate. In the past few years, Indiana – along with the rest of the nation – has been hit by the national recession. With job losses for Hoosiers, came a loss of revenue to the State. The State of Indiana had to cut back on expenditures, just like families and businesses across Indiana. Just because the State needs more, doesn’t mean that we should tax Hoosiers to make up for the loss of income. Families cannot afford that. We have followed the lead of Hoosier families across the state as they have been tightening their belts with this economy, we must continue to do the same.

Currently, Indiana is facing 2011 expenses, with revenues that are equal to 2005. Demand for government programs has increased, but revenues have decreased. For example, two years ago approximately 870,000 Hoosiers were on Medicaid – today we have nearly 1.1 million Hoosiers on the program, which now accounts for roughly 13% of the state budget.

The Governor’s recommended budget meets our shared goals of structurally balancing the budget, maintaining adequate reserves, and preserving funding for K-12 education. We can’t continue to maintain the status quo. If we were to maintain the current spending levels, Indiana’s finances would dive into the red before the end of the 2011 and leave us no choice but to raise taxes. In order to protect Hoosier taxpayers and pass a balanced budget, difficult decisions must be made. The recommended budget will contain provisions that some will not like, these cuts will not be easy. We must make hard decisions to keep our state on solid financial footing.

Daniels: East-end bridge could be downsized

> SOUTHERN INDIANA — Indiana Gov. Mitch Daniels hosted an end-of-the-year conference call with several media outlets Monday afternoon. Topics of discussion ranged from infrastructure projects, to school funding and the expectations for the upcoming General Assembly session.

One topic germane to Southern Indiana residents was a possible change in the Ohio River Bridges Project that could reduce the number of lanes on the proposed east-end bridge from six to four, and still require local residents to pay tolls to cover a gap in funding.

Ohio River Bridges Project

While Daniels said everybody agrees they would like the lowest tolls possible to help fund the Ohio River Bridges Project — the Louisville and Southern Indiana Bridges Authority has set a target rate of $1 for frequent commuters — finding ways to rescope the project to reduce the cost was a topic of discussion when he met with Gov. Steve Beshear, D-Ky., last week to discuss the plan.

Indiana has already earmarked more than $1.1 billion toward the project — which is coming from Major Moves funding by leasing the Northern Indiana Toll Road — for the $4.1 billion project to construct an east-end bridge, downtown bridge and reconstruct Spaghetti Junction in Louisville.

Combined with Kentucky’s funding and federal dollars that are already in place, an estimated budget shortfall of $2.2 billion exists and will be covered by tolling vehicles crossing the new structures, the bridges authority proposes.

To likely lessen the amount being paid in tolls, and the overall cost of the project, Daniels said a couple of the changes would be on the Kentucky side of the project, but included the discussion of a cost-cutting measure that would reduce the number of lanes planned for the east-end bridge. The original plan for the project called for a six-lane bridge and approach — three lanes in each direction — but it could be reduced to a four-lane bridge.

No decision has been made on officially changing the project and Daniels said he is “very sensitive” to the concerns that have been brought up by the residents of Southern Indiana in relation to the bistate bridge project.

Addressing the budget

A priority for Indiana, as it is for many other states, is ensuring the state’s budget for 2011 stays in line. The state is in better fiscal shape than many of its neighbors, but it has not escaped its share of cuts.

Daniels said that the cuts made this year and essentially freezing spending in the state’s budget has set Indiana up well to avoid making additional cuts. Indiana has a base of state spending that if the national economy doesn’t turn back into recession, the state revenues should catch up, he said.

“I’m optimistic that we’ll be able to continue to manage our fiscal affairs,” he said.

Local governments, however, including Clark County have been struggling to deal with a shrinking budget and many local governments have complained about financial constraints related to the imposition of the state’s property tax caps.

Daniels said recently in an Associated Press report that he would back a plan that would allow local governments in Indiana to ask for a state takeover and declare bankruptcy if the municipality runs out of funds. The bill would allow for the local government — if the state acting as an emergency manager cannot address the finances — to be allowed to seek federal bankruptcy protection.

Indiana law doesn’t allow Hoosier governments to declare bankruptcy.

When asked about the proposed change Monday, Daniels said, “it seems like a useful precaution.”

Another plan Daniels expects to address next year also affects how local government operations may be conducted.

Kernan-Shepard recommendations

Daniels said he plans to revisit some of the recommendations offered in the 2007 Kernan-Shepard report.

“We’ll start where we left off,” he said, referring to four initiatives that died in the House of Representatives and will be reintroduced when the legislature reconvenes next month.

The four initiatives Daniels referenced included a conflict of interest safeguard, which would prohibit employees of a local government unit from profiting off of their position or serving as elected officials within the same local government unit. Conflict of interest also is related to a second action, nepotism, in which local government officials have placed family members or friends in positions of power.

The third topic that likely will be addressed is the elimination of all township government, which would transfer the responsibility for administering the duties of township government to the county executive, according to the report. Daniels admitted that there has been some difficulty generating public support for the idea, due to a small, outspoken group that has stalled moving forward with the plan.

The final recommendation that will likely be addressed once the next legislative session convenes is related to shrinking government, converting the county executive into a single individual instead of the three-member body — known as the commissioners.

“It will get a hearing,” he said. “You can count on it again being emphasized in the state of the state speech.”

Education

Also a repeated emphasis in Daniels’ administration is education reform, including changes to more rigorous teacher and administrator evaluation systems and accelerated graduation opportunities for high school students. The changes are central pieces to Indiana’s 2011 Education Agenda and were passed by Indiana’s Education Roundtable in early December, according to the state’s website.

The roundtable’s recommendation in favor of revamped teacher and administrator evaluations calls for an annual performance review based on measures of content knowledge, instructional skill, classroom management, student academic achievement and leadership effectiveness, according to the website.

Positioning high school students for post-secondary education was also a goal outlined in the educational reforms.

Daniels said the educational changes are cost-neutral and some provide a cost reduction. And for universities that were forced to make cuts because of state reductions, he said it may have been something that was overdue.

“Sometimes [cuts required] leads to businesses or governments taking actions they should have taken before,” he said. “I think they should do more of what they did pretty well last year,” he said referring to how state universities addressed cuts in 2010.

Growth of institutions such as Ivy Tech Community College across the state prompted questions about moving similar institutions to a different type of funding, but Daniels said it would remain status quo for now.

“We’ve been trying to bring about a more ... holistic approach to higher education,” he said.

But post-secondary education costs are often secondary to pleas made by local school districts asking for additional funding revenue. Those requests for funding have faced some opposition, with initiatives in wealthier districts failing that in the past have commonly passed school referendums.

A referendum for an added tax in Clarksville Community School Corp. was voted down earlier this year.

“If there is a trend, it’s a little more skepticism about school’s demands for more and more money,” Daniels said.

Addressing unemployment

A final topic Daniels touched on was reforms slated for Indiana’s unemployment fund. The changes proposed would put the fund back in the black in the first year, which is 2012, and paying back what is borrowed in the next several years, he said.

According to an AP report, since 2000 the state has gone from a $1.6 billion surplus in its unemployment fund to borrowing $1.9 billion from the federal government to keep making payments.

Likely solutions to closing the funding disparity are raising the rate businesses are charged, increasing the amount workers pay into the system and possible cuts to unemployment benefits.

“If you’re going to have the highest benefits, you’re going to have to have the highest premiums,” Daniels said in the interview with AP. “If you want moderate premiums, you have to have moderate benefits.

“You’re going to have to bring those two together somewhere in the middle.”

But the position of the state of Indiana is an enviable one, compared to some of its neighboring states.

“People are beginning to notice now, some states are headed for a seemingly impossible corner,” Daniels said.

He added that he would be against Indiana providing a bailout for other states, which may be called for because of its stronger financial position.

The state’s growth was also supported by the numbers returned in the 2010 census.

“Indiana grew faster than any state from Iowa to Maine,” Daniels said. “I’m not sure what that means, but that can’t be bad. You can’t grow an economy with a shrinking population.”

Daniels unveils ‘ambitious’ plan

INDIANAPOLIS — Indiana Gov. Mitch Daniels will propose some shared pain as a way to fix a $2 billion “imbalance” in the state’s unemployment insurance fund when lawmakers return to the Statehouse in January.

At a press conference Thursday to introduce his legislative priorities, Daniels said he wants to “tackle the imbalance” with a bill that would raise unemployment premiums paid by businesses and cut benefits paid to the jobless.

“There are going to have to be changes in both directions,” he said.

Fixing the state’s unemployment insurance fund is high on his list because of the big hole that exists. The fund was emptied out in 2008, and the state has been borrowing from the federal government ever since. The tab is expected to be up to $2 billion by year’s end.

Daniels’ proposed remedy for the broke fund was among the priorities he listed Thursday, two days after his Republican colleagues claimed major election victories that gave them control of both the state House and Senate.

Also on Daniels’ list: Balancing a budget with no tax increases; automatic refunds for taxpayers if state surpluses reach a certain level; reforming criminal sentencing to alleviate prison overcrowding; eliminating some parts of township and other local governments; redistricting legislative districts fairly; and reforming public education with merit pay for teachers and more charter schools.

He also said he wanted to find a way to entice high school students to finish their degrees early, and give them the money the state would have otherwise spent on them to use for college or other post-secondary training.

Daniels classified his list as “very ambitious.”

“It’s a big set of assignments,” he said.

Absent was any mention of social issues that have been raised by Republican state lawmakers in the past, such as the “defense of marriage” amendment that would ban same-sex marriage.

In what may have been a signal that education reform will receive his strongest support was the presence near the podium of Indiana Superintendent of Public Instruction Tony Bennett, a Republican elected to office in 2008. Bennett flanked one side of the governor during the press conference, while Lt. Gov. Becky Skillman was on the other.

Bennett has been touring the state, talking to parents and teachers about proposals that would link teacher pay and tenure to student achievement. The proposals mirror those of the Democratic Obama administration, but on Thursday, House Minority Leader Patrick Bauer, a Democrat from South Bend, said he opposed the Obama plan for merit pay for teachers. Bauer said tying teacher pay to student test scores might subject students to abuse from teachers who might treat them as a “meal tickets” to better pay.

Bauer also said he would oppose efforts to cut the amount of unemployment benefits paid to people who’ve lost their jobs. Bauer said he doubted if Daniels could deliver a balanced budget without raising taxes, given that the state faces a projected $1 billion deficit.

“I think it’s magic if he can do it,” Bauer said.

> SOUTHERN INDIANA — At this point — just a few days before the Nov. 2 elections — the hypothetical dynamic is that Republicans are poised to reclaim majority in the Indiana House. An analysis by Howey Politics Indiana shows Republicans likely to pick up five seats for a 53 seat majority and another four Democratic seats are rated “toss-ups.”

The big question is, if they do, what will Gov. Mitch Daniels do with it?

He had majorities in both the House and Senate in 2005 and 2006 and rammed through a balanced budget, Major Moves leasing of the Indiana Toll Road, daylight saving time and signed the Indiana Telecommunications Reform Act of 2006 that is bringing broadband into rural areas and small towns.

Democrats reclaimed the House in 2006 and it slowed what Daniels called his “freight train of change.” While there were some achievements — the Healthy Indiana Plan is notable — and two subsequent balanced budgets (he vetoed one which now is prominently featured in TV ads against Democrats this fall), the thrust of his local government and school reforms ground to a halt. He opted for licensing and standard boards, along with the State Board of Education to launch the first wave of school reforms.

A Republican majority in the House will mean that the thrust of reforms will return to the legislative theater, with education taking center stage.

“America is about to make big changes and the forces defending the status quo are pretty isolated,” Daniels said in an interview Wednesday in his Statehouse office.

He emphasized that he, President Obama, U.S. Education Sec. Arne Duncan and Indiana Superintendent Tony Bennett are all on the “same page.” States that drag their feet on education reforms will “get left behind,” Daniels said.

In the 2011 Indiana General Assembly, Daniels said of his first educational mission, “I would organize it as teacher quality. This means paying the best teachers more, paying the teachers in the most important subjects more. Or at least have the freedom to do that. And teachers earning job security because the kids learn, not because they’ve been around for years. Pure seniority doesn’t work. We have teachers of the year who get laid off.”

The State Board of Education has changed the ways schools will be graded, going to an A through F format. He said it would not be fair to hold schools accountable without taking down “all sorts of mandates and handcuffs, whether it’s by statute or regulation.”

The governor wants to “take the lid off charter schools” so they don’t struggle. This would mean ending a six-month delay in payments from the state. He added that school corporations won’t sell or give charter schools empty school buildings that taxpayers have already paid for.

“We’ll address that and give them a fair shake,” he said.

“I’m going to propose that Indiana students can graduate in less than 12 years,” Daniels said, adding that he’s been approached by scores of students who tell him they had amassed enough credit hours to have graduated one or two semesters earlier. He said seniors frequently tell him “I’m cruising” at a cost of between $8,000 and $10,000 per year to taxpayers.

He said the state had “accidentally” created a competitive environment between public schools when the state assumed all kindergarten through 12 school funding, taking it off the property tax rolls.

“There are now billboards where schools are saying, ‘Check out our test scores.’”

“We should say schools can’t charge tuition,” Daniels said, suggesting that if an Indianapolis Public School student wants to enroll at Ben Davis, “there will be more freedom and more options.” Essentially, the money should follow the student.

“We don’t tell people where they have to buy their groceries,” Daniels said, “but we tell them where they have to go to school.”

Some Democrats have charged that Daniels is intent on destroying public education.

“That is somebody who is thinking about adults and not the kids,” he said. “We’re going to shape it around the kids.”

As for the Kernan-Shepard reforms on local government, Daniels said he would like to start “with the four bills that passed the Senate twice.”

Those deal with nepotism among public employees, conflicts of interest — such as police and firefighters and other municipal employees serving on city and county councils that set pay — eliminating township advisory boards and moving from three county commissioners to a single county executive.

Daniels added, “I will raise the issue of township trustees.”

Critics of House Democrats like to recall House Government and Regulatory Reform Chairman John Bartlett, who killed all the Senate bills in an amateurish committee session on the House floor, beating a path back and forth from Speaker B. Patrick Bauer’s office, where he received his marching orders.

Daniels acknowledged that there will be “bipartisan support” and “bipartisan opposition” to the reforms, but added of a potential Republican House, “At least we’ll get a hearing.”

State Rep. Ed DeLaney, D-Indianapolis, noted in an e-mail Wednesday, “Indiana is in the peculiar position of having too many governments but too little governance. Some institutions hold large reserves, while others are cutting basic public services.”

Of course, much of this is moot if Democrats keep control and Speaker Bauer keeps his power.

By MITCH DANIELS

Ronald Reagan enjoyed telling of the elderly Blitz victim rescued from her demolished London flat in World War II. A fireman found a bottle of brandy under the ruins of her staircase and offered her a nip for her pain. "Leave it right there," the matron ordered. "That's for emergencies."

A look around the American economy suggests that it's time to break out the brandy. By any measure, growth is anemic—alarmingly so for this time in what is supposed to be a recovery period. The administration's wild foray into trickle-down government spending has clearly failed. Funneling borrowed billions to government workers hasn't stimulated anything where it counts, in the private sector.

Moreover, the administration's big-government policies—most notably health-care reform—are holding back job creation. Drowning in new or pending regulations and taxes, businesses, banks and investors are understandably sitting on dollars that could be putting Americans to work.

Especially ominous are the implications of slow growth for the nation's burgeoning debt. The government's projections, which already point to national bankruptcy, rely on growth assumptions we aren't even close to achieving. They say the economy must grow at an average rate of 3.4% for 10 years—better than any previous decade in a half century. And that is just to achieve disaster, with debt rising to as much as 90% of GDP. To stave off catastrophe, nothing short of a truly vibrant, extended boom will do.

Most Americans don't know these figures in detail, but they have a strong sense that we are in a dangerous place. As I was leaving a small-town Indiana diner a couple weeks ago, a local said to me, "When the boys in there are discussing Greece, and it doesn't refer to the cheeseburgers, something is different." Odds seem strong that a degree of balance is about to be restored to the currently lopsided Congress.

Republicans may not reach a majority, but they will be looked to for constructive answers to this central dilemma of our era. A time-limited, emergency growth program aimed at triggering new private investment should be a primary goal of the next Congress, one hopes on a bipartisan basis.

What might such a project comprise? Here are a few suggestions:

• Payroll tax holiday. Suspend or reduce for the emergency period, say one year, the Social Security payroll tax on workers. Offset the revenue loss twice over through a combination of the following four policies.

• Impoundment power. Presidents once had the authority to spend less than Congress made available through appropriation. On reflection, nothing else makes sense. Plowing ahead with spending when revenues plummet is something only government would do. In Indiana, we are still solvent, with no new taxes, money in reserve, and a AAA credit rating only because our legislature gave me the power to adjust spending to new realities. I promise you that a president who wanted to could put the kibosh on enormous amounts of spending that a Congress might never vote to eliminate, but the average citizen would never miss.

• Recall federal funds. Rescind unspent Troubled Asset Relief Program (TARP) funds and any unspent funds from last year's $862 billion "stimulus" package, as well as large amounts of the hundreds of billions of "unobligated funds" unspent from previous appropriations bills.

• Federal hiring and pay freeze. Better yet cut federal pay, which now vastly outstrips private-sector wages, by 10% during the emergency term, and freeze it after that.

• A "freedom window." Might we try some sort of regulatory forbearance period in which the job-killing practice of agonizingly slow environmental permitting is suspended, perhaps in favor of a self-certification safe harbor process? Businesses could proceed with new job creation immediately based on plans that meet current pollution or safety standards, or use best current technology, subject only to fines and remediation if a subsequent look-back shows that the promised standards were not met.

• Accelerated or full expensing of business investment. Economists differ about its success on past occasions, and certainly it involves a degree of pulling forward investment that would have happened eventually. But it seems well matched to the current situation where so much money is cowering on the sidelines, and a burst of new investment might jump-start growth that enables more investment in the future. (Reports indicate that the administration is about to propose this very idea. If so, good.)

Surely there are better ideas or variations on these suggestions that a jobs-minded Congress could fashion. And clearly permanent tax and regulatory moderation is vastly superior to temporary. But to have a prayer of avoiding fiscal ruin, we need to go to economic general quarters immediately.

It may be fanciful to imagine that the Obama administration, chastened by economic reality and an election setback, might join or even champion such a plan. But no one has a bigger stake in the kind of private-sector growth it would attempt to generate. Any hopes of paying for their health-care and other spending schemes depend on it.

With or without Democratic help, Republicans should step forward with these or superior ideas. A stagnant, impoverished America will not be a greener or safer or fairer place. Grown-ups make trade-offs. Pass the brandy, then let's get busy.

July 1, 2009– Governor Mitch Daniels today said the two-year budget passed by the General Assembly last night is a victory for Hoosier taxpayer protection and a huge step forward for education reform in Indiana.

“This budget is the product of a healthy compromise. In addition to striking a great bargain that protects taxpayers in this state, almost uniquely in America, we’ve done a good thing for our kids, their future and our state’s future. And we still have a billion dollars in reserve when there are tax increases happening all over the country.”

He also cautioned against future challenges in crafting the next biennial budget in 2011 .

“If the legislature thinks this budget was difficult, just wait for the next time. We’ll be dealing with fewer dollars in two years than we did two years ago. With profound thanks to everyone who produced a really good outcome last night, the work of protecting taxpayers will have to continue.”

The governor said he will renew efforts to enact local government reform in the 2010 legislative session.

“I hope we make more forward progress next year. We should never ever skip an opportunity or a session, short or long, to try and make positive change, and we’ll be thinking about that starting right away,” said Daniels.

"This is Mitch Daniels, governor of Indiana.

"The role of the loyal opposition is important in our democracy. It imposes a duty to wish for the nation's success, to express not just disagreements, but agreements where they exist, and to leave partisanship at the water's edge.

"I do wish President Obama well. I support his education reform ideas, anti-fraud initiative in social programs, and the great example he and his family are setting for families across America. And I endorse wholeheartedly his stated commitment to 'government that works.'

"One policy being pushed by the President and House Speaker Nancy Pelosi is, I regret to say, a poster child for government that cannot work. The scheme to radically change the sources and the cost of American energy through a system known as 'cap and trade' may be well intentioned, but it will cost us dearly in jobs and income, and it stands no chance of achieving its objective of a cooler earth.

"The national energy tax imposed by Speaker Pelosi's climate change bill would double electric bills here in Indiana, working a severe hardship on low-income families, but that's only where the damage starts. In a state where we like to make things, like steel and autos and RVs, it would cost us countless jobs, many of them heading off-shore to China and India. Our farmers and livestock producers would see their costs skyrocket. And our coal miners would be looking for new work, while we leave affordable, homegrown energy idle in the ground.

"And all for what? Even if one believes the Administration's own computer models, which they claim can predict temperatures fifty years away, the CO2 reductions from their bill will not budge the world thermometer by a tenth of a degree.

"It's become clear that the Pelosi bill has little to do with a cooler planet and everything to do with raising money for the out-of-control federal spending now underway in Washington. Please excuse us Midwesterners for feeling a bit like the targets of an imperialistic policy, devised in places like California, New York, and Massachusetts for their benefit, at our expense.

"We have here a classic example of unwise government: The costs for all Americans will be certain, huge, and immediate. Any benefits are extremely uncertain, miniscule, and decades distant. Surely there is a better way.

"Here in Indiana, we are active in pursuing a better energy future and proving that we can protect the environment, lower energy costs, and create jobs at the same time - all without raising taxes. We have rocketed to national leadership in biofuels. We are the nation's leader in the new technology that can use coal more cleanly. We are serious about major advances in conservation; the best way to reduce both pollution and CO2 is to use less energy in the first place. And last year, we were the fastest growing state in wind power.

"There is tremendous risk in being pushed into an unfair and ultimately counterproductive national energy tax that will cost us dollars today and jobs tomorrow. Let's take a breath, slow down, and work together on conservation, the infrastructure to bring on more wind and alternative energy, and the new technology that will let us use our abundant homegrown coal in ways we can all support. That, Mr. President, would be 'government that works.'

"Thank you for listening."

Just in case you missed it, over the weekend Indiana's own Governor Mitch Daniels gave the GOP weekly radio address. His topic was "cap and trade", a scheme by President Obama, Nancy Pelosi, and other liberals in Washington to hike taxes and increase our electric bills.

Coal power plants and coal mining will be heavily taxed and penalized under this legislation. The "cap and trade" bill currently before Congress will be particularly harmful to Hoosiers, because we get most of our electricity (94%) from coal. A large amount of coal is also mined in southern Indiana, which means that "cap and trade" will cost many Hoosiers their jobs.

Worse still, "cap and trade" will do virtually nothing to help the environment, according to President Obama's own estimates. The real objective of "cap and trade" is to raise taxes to pay for yet more spending by Congress and the Obama administration.

In a recent article in the Corydon Democrat, the Harrison County REMC estimated that "cap and trade" would cause the electric bill of the average Hoosier to go up by around $50 a month.

You can watch Mitch Daniels' address at our website here:

http://www.harrisongop.com/2009/05/mitch-gives-weekly-gop-radio-address.html

The text of his remarks is also available there, in case your internet doesn't do video very well.

Please read up on this important issue, and pass it on to your friends. We can't afford to be silent.

Thanks for your time,

Scott Fluhr
Chairman
Harrison County Republican Central Committee