INDIANAPOLIS - Masking for a while the philosophical differences that separate them, Democratic and Republican state legislators exchanged niceties Wednesday during the first meeting of a joint House-Senate committee charged with negotiating the state's next budget.
The two sides remain far apart on several key elements of the spending plan as pressure mounts to broker a deal before Wednesday, the day lawmakers are scheduled to adjourn for the year.
Among the basic issues yet to be decided is whether the budget will cover one year or two years.
Indiana's spending is typically planned two years at a time. However, Democrats say the sour economy makes it impossible to predict how much revenue will be available a year from now. Therefore, they argue lawmakers should break tradition and do what businesses do - budget for just one year.
House Ways and Means Chairman Bill Crawford, D-Indianapolis, said "there is not enough sufficient data" to plan spending for the second year.
Meanwhile, Senate Republicans and Gov. Mitch Daniels insist the budget must be for two years.
And while Democrats say they prefer a one-year spending plan, some are signaling the one-year budget is a bargaining chip they'll exchange for something else they want.
Both sides agree that K-12 education funding should increase by about 2 percent.
Republicans want to pay for the boost by using more than $800 million in federal stimulus money, part of which would backfill spending cuts already made this year and the rest of which would pay for a 1.9 percent increase in 2010 and a 2.1 percent increase in 2011.
Democrats, who wrote their version of the proposed budget before they knew how much stimulus funding would be available, paid for the increase by tapping about $200 million of Indiana's $1.3 billion surplus.
But Republicans and Democrats diverge on how to divvy up that spending boost.
Republicans want to tie the funding more closely to the number of students in each school district. Democrats want to use it to help prop up low-income urban and rural districts that they say most need the help.
Another major difference is over how much the state will spend on capital construction projects. Democrats want to authorize more than $480 million more than Republicans in new bonding authority. They say doing so will spur job creation and economic growth.
Meanwhile, Republicans include new bonding authority for a $45 million expansion of two state prisons. Democrats oppose those expansions.
The joint conference committee is expected to hear public testimony at another meeting later this week. But faced with a recent forecast that downgraded the amount of taxes the state will collect through July 2011 by $830 million, both sides warned Wednesday that they won't consider adding anything new to the budget.