UPDATE: Daniels: State doing better than most
LAST UPDATE: 9:35 p.m.
INDIANAPOLIS -- In his State of the State address Tuesday night, Gov. Mitch Daniels said that while the economic climate is glum nationwide, there are reasons why Indiana should look toward the future with optimism.
However, the economic forecast is indeed gloomy.
November’s unemployment rate was 9.6 percent, floating just below the national average. The budget passed last June maintained the state reserve. The governor made an additional $300 million in education cuts. Virtually every state agency has seen budget reductions.
Indiana expects to have a budget deficit at the end of this biennium, which Daniels says the state’s once untouchable reserves will help alleviate.
“The budget you passed just six months ago may have seemed reasonably frugal at the time, but almost immediately we could all tell that it spent beyond our declining means. If we had done nothing, its spending levels would have obliterated our entire state reserve by six or seven months from now,” Daniels said.
But Daniels said the state has been taking a proactive approach to the recession and is in much better shape than neighboring states. He said states across the nation have slashed education budgets by several or many times Indiana’s cuts, and many others have also increased taxes.
Sen. Brandt Hershman, R-Wheatfield, approved of Daniels' message to the people of Indiana.
"When you consider Indiana's relative position as compared to states like California and New York who are basically in fiscal ruin, Indiana comes out very well indeed," Hershman said.
Indiana is expected to lead the way in America’s auto, recreational vehicle and steel jobs at the end of the recession, and Daniels said his goal is for Indiana to be the capital of the electric vehicle industry.
“Even in this hardest year in so long, signs of strength are everywhere,” Daniels said. “We know that our jobless rate, though intolerable, is below the national average and well below that of neighboring states.”
Some House Democrats were unsatisfied on the time Daniels spent talking about jobs. Rep. Scott Pelath, D-Michigan City, said he was in “disbelief” over some points the governor made.
“Spending time on wonkish matters was not what I wanted to hear from him tonight,” Pelath said. “The governor said nothing about job creation. We can always find points to agree, but it’s hard to get through what he didn’t do well.”
Rep. Peggy Welch, D-Bloomington agreed with Pelath's assessment of the speech.
“The governor definitely knows how to turn a phrase and he knows how to paint pretty pictures. He was talking to us about bold moves, but I didn’t hear anything bold about how we’re going to create jobs in the state," Welch said.
Despite cuts to education, new reforms aimed at increasing standardized test scores and literacy and graduation rates are being moved through the legislature. Daniels endorsed Senate Bill 258, which would end social promotion and make third grade the crossroads of literacy - if a child cannot read “independently and well” by the end of the third grade, the child will be retained.
Rep. Sheila Klinker, D-Lafayette, says the governor should take a deep look into education spending.
“I do worry about educational funding, some of the areas I agree with the governor. It takes money to make sure that our kids can learn, so I would like to see the budget cuts done away with some way, because it really is affecting teachers and school corporations right now,” Klinker said.
SB 258 would not call for new allocations, but it would refocus monies toward a stronger commitment on improving reading programs.
“Sending an illiterate child on to higher grades is unfair to the next teacher, damaging to our state’s future, but cruelest of all, disastrous to the young life being blighted by that failure,” Daniels said.
The governor applauded the work of the legislators thus far in tax caps, local government reform and ethics despite it being a short, non-budget session.
The Senate took the final step Tuesday in passing property tax caps. The caps will place a referendum on the ballot in November for voters to decide whether to adopt 1-2-3 caps into the Indiana Constitution. The opposition has said that the caps will cause local governments and essential services to suffer, while supporters have said that the caps will provide predictability to taxpayers.
The proposed Indiana tax caps include a 1 percent cap for homeowners, 2 percent for farms and rental property and 3 percent for businesses.
“You gave the people the chance to decide, as I believe they will, that lower property taxes are here to stay,” Daniels said. “Thank you for this latest bold move to show the world that in Indiana, we trust our fellow citizens and we truly put the interest of taxpayers first.”
Local government reform has also been moving quickly through the Legislature. Kernan-Shepherd reform also calls for a ballot referendum where voters can decide, township by township, whether to keep township government. Township government was implemented in 1848, and Daniels said it’s “wasteful and antiquated.”
Sen. Connie Lawson, R-Danville, said she thinks Daniels painted an accurate picture of the issues that local governments are facing and approves of the ways the assembly is looking into correcting those issues.
"I'm really glad the governor made it part of his priority," said Lawson. "Anyone who is behind local government reform is good to have."
Ethics reform and non-partisan redistricting legislation is also working its way through the General Assembly. The ethics legislation puts restrictions on the executive, legislative and lobbyists alike; redistricting calls for the end of political gerrymandering.
“Let’s commit to the kind of principles that assure Hoosiers that in our state, voters will pick their officeholders and not vice versa,” Daniels said.
Sen. Luke Kenley, R-Noblesvile, said he thought Daniels' speech was "aggressively positive."
"When you're a state that is struggling, it is good to see a leader who is confident and looking forward," Kenley said.
Rep. Eric Turner, R-Cicero, shared his support for the speech, calling it "terrific."
“The governor has talked consistently about being the first in the nation out of the recession and leading the way... providing for the future for jobs, and the way you do it is keeping taxes low, keeping your budget in check and making it attractive for business and industry to come to Indiana," he said.
In the midst of economic crisis and job loss, Daniels said that Indiana will not follow in the footsteps of other states by taking the hardship to the taxpayers.
“I hope you will join me in saying tonight to the people for whom we all work, we will make the hard choices, we will stretch the available dollars, we will do whatever is necessary but we will not take the easy way out and we will not make this recession worse by adding one cent to the tax burden of our fellow citizens,” Daniels said.
- The following Franklin College Statehouse Bureau writers also contributed to this story: Bryan Ault, Julie Crothers, Ben Fisher and Rachel Lemon.
