By Eric Bradner, Evansville Courier & Press
INDIANAPOLIS - As state revenues continue to fall well below expectations, Gov. Mitch Daniels says lawmakers will need to make $1 billion in cuts from the budget they'll consider when the governor calls them back for an overtime session.
Indiana's tax collections in April plummeted $255 million below the mark set by a revenue forecast issued just two weeks ago, state fiscal officials announced Monday.
Revenues have sagged for months, but April is the biggest miss yet. Sales, income and corporate tax collections were all down. Income taxes fell the furthest, $173.1 million below the April forecast and 30.6 percent below collections in the same month last year.
Daniels said the "very large miss" is "undoubtedly going to be repeated in the last two months of this fiscal year."
He said tapping into the state's $1.3 billion surplus - a reserve the governor previously considered sacrosanct - might now be inevitable.
State lawmakers will be called back for a special session after the failed to pass a budget before their April 29 deadline.
They were close to agreement on one proposal, which cleared the Senate but did not win passage in the House.
That budget was doomed by $100 million in education spending cuts that the Republican-led Senate wanted but the Democratic-controlled House did not.
Now, though, Daniels says $100 million is a drop in the bucket, and the cut must be much larger.
"So more than $1 billion less money than the budget that failed last week contemplated," Daniels said.
Daniels said he wants the State Budget Committee - a bipartisan panel with legislators from both sides as well as the state budget director - to create a new revenue forecast before he calls the Legislature back for overtime.
He said he wants it because the April 17 projection - one lawmakers and the governor were skeptical of all along - has proven to be wildly off the mark.
But Luke Kenley, the Noblesville Republican who is the budget point man in the Senate, said the forecasts are beginning to lose their value.
Better, Kenley said, for Daniels to "get us (lawmakers) out of town and go to work with his authority to cut."
Kenley said the government does not have to spend all the money the Legislature budgets for it. He said the budget lawmakers were considering would authorize Daniels to make cuts he deems necessary.
"I think the governor has the power to cut what he needs to cut, and he should," Kenley said.
Failing that, he said Daniels should offer his own budget, complete with an education funding formula and a bottom line that makes clear how much the governor wants to spend.
"I think we need to hear more from him about what the solution needs to contain," Kenley said.
Budget negotiations have often placed Kenley squarely between the governor, who wants far less spending, and House Democrats, who refuse spending cuts in areas such as education.
Finding a middle ground, he said, will require Daniels to specify how large a surplus he wants and Democrats to say how low they'll allow education funding to go.
House Speaker B. Patrick Bauer, D-South Bend, said in a special session, Daniels must provide lawmakers with a starting point.
Bauer echoed Kenley's statement that Daniels has the authority to rein in spending on his own, although the speaker's criticism was more direct.
He said the failed budget would not have tapped state reserves if Daniels didn't want that to happen.
"It couldn't have," Bauer said, "because he could have stopped it. We gave him that power."
When asked if lawmakers were deferring tough decisions to the governor, Bauer said no, because the problem has been that Daniels' bottom line keeps moving.
"What he needs to do is write his own budget, so you know exactly what his target is," Bauer said.
The speaker said if Daniels wants a budget with $1 billion in cuts, he'll have to deliver all 48 House Republican votes to get that budget through the House.