By Eric Berman
11/6/2009
Governor Daniels is ordering state agencies to cut their budgets by 10 percent, after the state's tax revenue fell short of expectations for a 13th straight month.
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Daniels had quietly asked agency heads in July to trim five percent from a budget that already cut spending about 10 percent for most of them. He says the still-dismal economy means they need to go five percent further, a step which could mean layoffs.
"Up to this point, we have managed economy in state government with few if any involuntary terminations, except for poor performance. I can't say that that will remain the case here," Daniels warns. "If anybody is displaced, we will put them at the front of the line for any openings."
Daniels is freezing state employees' pay, including his own, for a second straight year.
Daniels says he believes the cuts can be carried out without affecting vital services. He says agency heads have brainstormed for years about what programs would be easiest or hardest to cut, and where savings could be realized.
Daniels largely exempted public safety and education from the budget cuts hammered out with the legislature in June. The Department of Correction and the state police will make the 10-percent cuts, but Daniels says he doesn't expect any effect on safety.
The only education cuts will be to the Department of Education itself, not schools. But Daniels is repeating a warning that could change if the numbers don't improve. He's cautioning local superintendents not to get locked into long-term spending commitments.
Many school systems are already facing funding cuts, but Indiana is one of the few states with an overall increase in school spending this year.
The state is now $309 million short of where it expected to be in the fiscal year which began July 1. Tax collections have fallen short of the state's official budget forecast every month since last October, even though analysts have lowered their expectations three times in that span.
Daniels notes the shortfall for the year matches almost exactly the $300 million he agreed to spend from the state's $1.3 billion surplus over the full two years. He's remaining adamant the state must hang onto the surplus as a solution of last resort, declaring the only other option if the surplus is wiped out would be tax hikes.
» Democrats Support Daniels' Call for Spending Cuts (11-6-09)
» Indiana Schools Warned of Funding Cuts (11-5-09)
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