Indiana budget problems already looming for legislators

INDIANAPOLIS | With the 2010 Indiana General Assembly already in their rearview mirror, Statehouse Republicans are looking ahead to the long, budget-writing session in 2011 with a wary eye.

"It will be the most difficult budget session in modern times," said state Rep. Brian Bosma, R-Indianapolis, the House Republican leader.

Indiana's state spending plan runs for two years, a system known as biennial budgeting. The current budget was approved in a June 2009 special session, two days before state government would have had to shut down.

Since that time, state revenue has fallen sharply. Through February, revenue collections have been $895 million less than expected, and Indiana is on pace to end the budget cycle in June 2011 with a $142 million deficit. That's even after 20 percent reductions in state agency funding, a $450 million cut to education and plans to spend all $1.3 billion the state had in reserve.

At the same time, those statistics don't account for the more than $600 million in federal stimulus money Indiana used in the current budget that won't be available for the next one. In August 2009, the state substituted stimulus money for regular state funds that normally would have gone to education, freeing up state money to be used for other government programs.

That means lawmakers devising the state budget next year will have to figure out how to come up with some $750 million just to get back to even.

Republican Gov. Mitch Daniels has ruled out any increase in taxes. He said Monday the best solution would be for Hoosiers to elect Republicans to the Indiana House.

"Assuming, and I do, that the next budget will be even harder than the last one, taxpayers would be a lot safer if we were able to work with a different General Assembly," Daniels said. "Speaker Bauer is an expensive date. He believes in a lot more spending."

House Speaker Patrick Bauer, D-South Bend, leads 52 Democrats in the 100-member Indiana House. A switch of just a few seats would make Bosma speaker. Republicans hold 33 of the 50 seats in the Indiana Senate.

Closer to home, state Rep. Ed Soliday, R-Valparaiso, said he believes an improved state and national economy might save lawmakers from having to make tough choices on spending and budget cuts.

"The best fix we can have for it is if employment starts to go up, because you get a double-whammy," Soliday said. "A guy goes off unemployment, we start to collect federal and state income tax and we start to reduce that debt."