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Dems' budget taps $200M in state reserves

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press

House bill allows for school spending increases.

Wednesday, February 18, 2009 - 10:03 am

INDIANAPOLIS — Democrats who control the Indiana House moved forward Tuesday on their version of a one-year budget plan that includes some key differences from a proposal recommended by Republican Gov. Mitch Daniels.

The spending plan, combined with a separate public school funding proposal, would tap $200 million from the state's reserves to prop up spending. Daniels wants to keep the reserves in case the sagging economy becomes worse.

The plan was approved by the Ways and Means Committee on a 14-9 party-line vote and now moves to the full House, where passage is expected because Democrats control the chamber 52-48. Republicans who rule the Senate 33-17 will pass their own version of a budget, setting the stage for later compromise.

Combined budget plans by House Democrats would spend about $14.5 billion in the next fiscal year that begins July 1. That compares with about $14.15 billion Daniels proposed in first-year spending.

The House Democrat plan would increase spending for higher education operating expenses by 1 percent in the next fiscal year, and restore a 1 percent cut Daniels implemented this year. Daniels had proposed cutting basic spending for colleges and universities by an average of 4 percent over the next two years.

Among other differences:

• A separate House Democrat plan would increase basic funding for public schools by an average of 2 percent next year, while Daniels had recommended their funding essentially remain flat.

• The House Democrat proposal would spend more than $100 million in new money for prison operating costs, as Daniels had requested. But it would not authorize $40 million in bonding authority the governor wants to expand the Miami Correctional Facility near Peru and the Wabash Valley Correctional Facility near Sullivan to house an increasing number of inmates.

• House Democrats also want to authorize bonding for hundreds of millions of dollars in building projects, including some Daniels had put on hold in hopes of keeping the budget balanced. The bill also would restore $35 million for a joint life-sciences project between Indiana and Purdue universities.

Democratic Rep. Scott Pelath of Michigan City, vice chairman of Ways and Means, said funding for education was a priority for House Democrats.

In a break from tradition, House Democrats are proposing spending plans that would cover just one year instead of two. They also separated their budget into three bills, one covering education, one for child welfare services and the one endorsed Tuesday for spending on almost everything else.

Pelath said the continuing sagging economy was the reason behind a one-year budget proposal.

“We think it makes sense for the times we are in,” Pelath said. “We have a very conservative measure — one that keeps reserves and one that gives us the flexibility to come back next year and make adjustments as needed because we just don't know what our economic future is going to hold.”

But Rep. Jeff Espich, R-Uniondale, said a one-year budget could set a precedent resulting in lawmakers becoming a full-time Legislature that would be inclined to spend more money each year. He said that could lead to tax increases.

Senate Appropriations Chairman Luke Kenley, R-Noblesville, indicated that the House Democrat version of a budget is likely to undergo many changes in the Senate — in part because he said it spent too much. Daniels and the two chambers ultimately will seek compromises before the session is scheduled to end April 29.

Kenley said he wanted to stick with a two-year budget because he said it gives residents and businesses more certainty about what to expect. He said lawmakers could always make adjustments to a two-year budget next session if necessary.

Kenley said he considered the House Democrat spending plans statements of priorities, and he could understand why they might want to stick to a one-year budget proposal for now.

That was in part, he said, because analysts are still trying to determine how Indiana can spend more than $4 billion in federal dollars the state expects to receive from a stimulus package signed into law Tuesday.