Indiana Governor to Call Special Session After Failure to Craft Budget

CHICAGO — Indiana Gov. Mitch Daniels will call state legislators into special session at a date still to be determined after they failed to pass a two-year budget by the Wednesday midnight deadline.

The special session will be the first under Daniels’ five-year tenure. The governor hopes it will bring about a plan preferable to a proposed $28.1 billion spending plan that he said at a press conference yesterday would have sent the relatively stable state down the “rat hole” with other states.

Daniels, a Republican, primarily blamed the Democrats for the failure to pass a budget on time. But he suggested he would have vetoed the proposed budget — much of which was crafted by Senate Republicans — even if it had passed, as it ignored falling revenues and would have meant an “obliteration” of the state’s much-touted $1.2 billion surplus.

“All that history will remember is the result: Did Indiana find a way, in the toughest circumstances we’ve known, to hold it together and protect taxpayers, or did we go down the rat hole with so many other states?” Daniels said at a press conference yesterday morning. Claiming the budget was built on fictional revenues, he added, “With every passing day this fiction will become more and more clear. The situation is no one’s fault, but it is a reality and we can’t wish it away.”

The state’s budget chief warned in a recent budget memo to lawmakers that revenues will continue to come in below previous forecasts and that all their spending measures were candidates for veto. In April alone revenues declined by $200 million from original forecasts.

“Just wait a couple weeks and it will be off more,” Daniels said. “Why pretend we have revenues we know we won’t have?”

The key sticking points over the proposed $28.1 billion spending plan were additional spending cuts and the preservation of the budget reserve. Republicans, who control the Senate, approved a bill that would have cut public education spending by $100 million and increased the state’s surplus to $1.4 billion. Democrats, who control the House, defeated the bill by a 71 to 27 vote late Wednesday night.

The General Assembly has until June 30 to craft a final 2010-2011 budget or much of the government will shut down.

Daniels would not say when the special session would begin but hinted it would not be soon.

“At this point, the best thing is for the legislators to all go home, get away from the special interests and listen to some real taxpayers,” he said. “We can all watch real revenue receipts for a while longer.”

Democrats, led by House Speaker Pat Bauer of South Bend, accused Daniels of not negotiating in good faith in part by refusing to say how much he wanted the state reserve to total. Bauer added that many House Republicans refused to vote for the budget despite their own party having crafted most of the bill.

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