News From Terre Haute, Indiana

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July 17, 2011

STATE OF THE STATEHOUSE: Weathering the sunny and stormy news from the Statehouse

INDIANAPOLIS — What would you do if you had a lot more money coming into your bank account than you anticipated?

Would you sit on it, fearful of storm clouds on the horizon that might bring a torrential downpour of bad economic news? Or spend some of it on people who helped you weather the last storm and kept you from sinking under water?

The weather metaphors were raining down on the Statehouse this past week when the topic of finances came up; first invoked by state Auditor Tim Berry and a day later by Indiana Gov. Mitch Daniels.

On Thursday, Berry announced some sunny news with the state’s final budget figures for the 2011 fiscal year. After balancing its checkbook, the state has $1.2 billion in reserves. That’s plenty enough to refill the state’s emergency spending fund — also known as its Rainy Day Fund — which was seriously depleted in recent years by sluggish revenues brought on by the recession.

A year ago at this time, Berry was announcing a grimmer assessment: Indiana ended fiscal year 2010 with $188 million in reserve and fears that it would keep draining away.

It went from scary to good due to much better revenues than anticipated and deep spending cuts by state agencies. Berry said the state took in $204 million more than expected in taxes in the 2011 fiscal year, and cut even deeper into state spending than initially estimated by cutting positions and programs.

Some of those cuts came from education spending, but Berry said the deepest cuts were to state agencies whose already reduced workforces were asked to do much more with much less. Berry said it wasn’t unusual for a single state employee to be doing the work that two or three state employees once did.

He repeated that theme frequently in his press conference, calling state employees — from prison workers to state park maintenance workers — the real “heroes” in the story of the state’s fiscal soundness.

As Berry noted, over the past three years state employees have gone without a raise, while watching their health insurance costs go up. Berry more than hinted that the state’s 28,000 employees were due a reward.

A day later, Daniels delivered that reward with what he called an “efficiency dividend” — a one-time bonus payment of up to $1,000 for the state employees who helped him earn his national reputation as a tight-fisted, budget-balancing governor.

The cost of those bonuses will be about $20 million, Daniels said. About 90 percent of the 24,000 state employees who work for the executive branch are expected to receive a bonus, based on their end-of-the-year performance evaluations. 

For state employees who were hoping that a billion-dollar budget surplus would mean the return of regular pay raises, both Berry and Daniels rained on that parade of an idea. Both talked about the “storm clouds” on the financial horizon: a sluggish economy, lagging job growth, and gridlock in the nation’s capital on a debt-ceiling deal. And both mixed in some non-weather metaphors, as well. In explaining why it’s “very unlikely” that he’ll push to spend more money, including more money on K-12 education, Daniels said: “There are caution lights going on all over this economy.”

Maureen Hayden is Statehouse bureau chief for CNHI Indiana newspapers. She can be reached at maureen.hayden@indianamediagroup.com.

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