CHICAGO — Indiana Gov. Mitch Daniels delivered his State of the State address this week and reiterated his objective to use public-private partnerships to bring in funds for some state programs — a message that Democrats criticized as passing off responsibility for state entities to the private sector.
Daniels’ speech Tuesday night followed state budget director Charles Schalliol’s presentation of the administration’s 2008-2009 biennial budget last week. The budget and state address also set the stage for the debate to come in the General Assembly as Democrats take advantage of a new majority in the House.
The administration proposed a $25.8 billion biennial budget last week that would increase year-over-year spending by 3.8% in fiscal 2008 and by 3.3% in fiscal 2009. The administration projected that revenues would come in 4.1% higher in 2008 and 4.3% higher in 2009.
By the end of fiscal 2009, the administration projects a $1.2 billion ending balance, if revenue forecasts hold up. The proposed budget seeks to increase spending for schools by about $400 million, but the administration rejected Democratic leaders’ efforts to fund property tax relief.
Daniels wants to raise the state’s tax on cigarettes to fund smoking cessation programs, medical insurance for low-income state residents, and immunizations. Indiana now taxes cigarettes 55 cents per pack while nearby states have taxes ranging from 93 cents to $2 per pack.
The governor restated his plans to use revenue from the privatization of the Indiana Lottery to pay for higher education programs and touted the success of the lease of the Indiana Toll Road as one way that the state reduced what had been “not one deficit, but two.”
“Our operating deficit was small compared to a multibillion dollar shortfall in transportation funding, the gap between the roads we agreed we needed and the dollars coming in from gasoline taxes,” Daniels said. “That deficit is also a thing of the past, without a penny of gas tax increase or a penny of new borrowing costs left to our children.”
Daniels said one of the keys to attracting new business in the state is a good road system and touted his plans for two new toll roads — the Illiana Expressway, which would link the state to Illinois and alleviate congestion to allow for new businesses to grow; and the Indiana Commerce Connector, which would link four interstates near Indianapolis. Building the roads with private capital and collecting a franchise fee for the right to operate the roads offers the state an “enormous opportunity” that should not be missed, he said.
While Democrats favored some items in the administration’s plan — including all-day kindergarten and funding insurance for the poor — House Speaker Patrick Bauer, D-South Bend, said the party’s top priority is property tax relief.
Democrats also questioned the state’s ability to fund the programs that Daniels proposed.
“Our support for these concepts must be linked to concerns about their cost and their place in a budget debate that raises many questions,” Bauer said in a prepared statement. “It will not be easy to put a budget together during this session, particularly as personal income growth among Hoosiers continues to lag, and our revenue forecasts are less than rosy.”
Bauer called the public-private partnerships that Daniels proposed another example of “this administration’s fondness for turning over responsibilities to other entities through ‘privatization’ or ‘franchising’ or ‘competitive sourcing.’ ”
