New day at the Indiana Statehouse begins Wednesday

INDIANAPOLIS — When they return to the Statehouse this week, Indiana's lawmakers will begin four months of work on items such as education reform, criminal sentencing and redistricting. 

But they can't leave town until they've accomplished one key objective: crafting the state's next two-year budget, a job Gov. Mitch Daniels insists must be done without tax increases. 

They'll try to do so under new circumstances, including Republican leadership in both chambers of the General Assembly and a popular governor who knows this could be his last chance to push through major reforms. 

The work starts Wednesday, when the 2011 legislative session kicks off. It will pick up steam next week, when Daniels is expected to deliver his State of the State address on Jan. 11. And it all must end by April 29, the date by which the Indiana Constitution mandates lawmakers must have adjourned.

Here's a look at some of the other issues that will be up for discussion during the General Assembly's 2011 session, and some of the outside forces that will affect those conversations.

Budget

Lawmakers got what looked like fairly good news in December when they heard the latest revenue forecast that details how much fiscal experts believe Indiana will have to spend over the upcoming two-year budget cycle, which begins July 1. 

According to the forecast, the state will collect just shy of $27.5 billion during that period. State Budget Director Adam Horst predicted that will be enough to pass a balanced budget without raising new revenues and without further cutting K-12 education spending. 

Lawmakers who will be involved in the budgeting process tended to agree. 

"It's becoming a possibility," said state Sen. Luke Kenley, a Noblesville Republican who heads the powerful Senate Appropriations Committee. "At the time of the election, it was a longer shot. I think everybody was speaking with their hearts at that time. We're almost to the point where we can say we're thinking with our heads."

The question of K-12 funding is an important one, because it makes up 55 percent of Indiana's general fund spending. Higher education is another 13 percent. Various state agencies and program make up most of the rest. 

"What we're hopeful for is that we can even keep what money we have. The bottom line is that there's not going to be any increases," said Denny Costerison, executive director of the Indiana Association of School Business Officials. 

That would be good news for schools that saw Daniels order a $300 million cut during the current budget cycle. According to the Indiana State Teachers Association, that cut cost as many as 3,000 teachers their jobs. 

Daniels said he would support another so-called education trigger in the budget, directing extra money to education if more money came in than expected. The two-year budget passed in 2009 contained such a trigger, but schools didn't get any extra cash because tax revenues fell short.

"That's the place to start investing," he said.

Though education will be one important budget area, it won't be the only one being watched closely. 

The effects of the low revenues Indiana has seen as a result of the recession have ranged from higher education, where universities have increased tuition rates, to Medicaid, where Indiana might have to shed some auxiliary services that are covered, to foster care for children, where the state also has sought to trim funding. 

"A lot of the state budget cuts have really impacted them in terms of reductions of services. We understand that there is a lot less to work with in terms of resources, but we still want to provide a voice for those children who don't have a voice," said Sharon Pierce, president and chief executive officer of The Villages, of which Prevent Child Abuse Indiana is a division. 

Eduction reform

Beyond the budget, education reform is at the very top of Daniels' list of priorities. 

He's arguing for a series of changes, including merit pay for teachers. Daniels and State Superintendent of Public Instruction Tony Bennett, a fellow Republican, say teachers should be paid as professionals, with those whose students achieve the best results earning more money, instead of basing salary strictly on degrees held and years of experience. 

They're pushing for rules that would prevent local collective bargaining agreements from requiring schools to lay off teachers based on age, without factoring in quality. 

They want to eliminate the "de-ghoster," which slows the rate at which funding is taken away from schools with shrinking enrollment and then transitioned into schools where the student population is growing. 

And they want more school choice, such as authorizing more charters and virtual charters, allowing for means-tested vouchers that parents could use to send their students to private schools, and ensuring students can transfer from one public school to another easily. 

Daniels said he believes every bit of competition that is introduced into the system will encourage schools to make changes in search of better results. 

Education reform was a key item in the campaigns of many Republican legislators. But Democrats, who often align closely with the teachers association, might resist major changes, though their only real tool to stop a unified Republican caucus is walking out of the House chamber in protest, leaving the House without a quorum to conduct business. 

"Our hope is that they won't overstep their bounds and try to eliminate collective bargaining," said Nate Schnellenberger, teachers association president. 

"For almost 40 years, it's worked pretty well in Indiana as a way for school corporations and the teachers association to work together and solve problems. We would hope that they would only tweak collective bargaining and not limit it too severely."

Schnellenberger said his organization opposes merit pay for individual teachers. "We are much more supportive of merit pay for an entire school building where the scores have all risen," he said. 

But that's a dramatic departure from what Daniels is proposing. 

Criminal sentencing

After a study showed rapid growth in Indiana's prison population, Daniels endorsed a series of recommendation that would keep low-level drug and theft offenders out of prison and in programs he believes would better fit their crimes. 

The state's prison population has increased by 8,000, or 40 percent, in the last decade, to 29,000 inmates, according to a study commissioned by the state and conducted by the Pew Center on the States and the Council of State Governments Justice Center.

The six-month study found that sentences doled out by Indiana judges and the crimes they're for are often uneven. It found that Indiana often hands down harsher punishments for low-level crimes than other states and recommended sweeping changes to that sentencing structure.

"We have hoped for a package of changes that will bring more certain and firm punishments to the worst offenders in Indiana, more sensible, smarter incarceration for those who pose much less of a danger to Hoosiers and, as a byproduct of that, grace to taxpayers in the form of lower costs in the years ahead," Daniels said of the study.

"I am thrilled to say that this group has brought about such a product and I am happy to pass it on to the General Assembly with my strongest endorsement."

The question is whether lawmakers will balk for fear of being labeled soft on crime during their campaigns. 

In an interview in December, Daniels said he believes that charge would be false, and said he will rush to the defense of anyone of either party whose votes are branded as such. 

Local government reform

The report from the blue-ribbon commission chaired by Indiana Chief Justice Randall Shepard and former Gov. Joe Kernan is now several years old, but Indiana still has not enacted many of the local government changes it recommended. 

Daniels said he still supports most of those ideas, but he is narrowing his focus this year to some changes on the township level. 

The governor favors eliminating township government outright and bumping its duties up to the county level. But proposals to do so have encountered bipartisan resistance in the Legislature. 

So this year, Daniels says he wants to eliminate the three-member township advisory boards that are charged with overseeing trustees' work and passing trustees' budgets. Instead, county councils would do that job. 

He also wants to sign legislation that would prohibit nepotism in township government — that is, the practice of choosing relatives to fill jobs in places like the trustee's office. 

Whether a consensus will form around township-level changes remains to be seen. 

Opponents to reform argue that for every example like Vanderburgh County's Knight Township, where ex-trustee Linda K. Durham allegedly made off with more than $70,000 in township funds while the advisory board paid little attention, there are many more examples of trustees and advisory boards doing good work. 

Mary Hart, who in addition to serving as trustee in Vanderburgh County's Pigeon Township is the president of the Indiana Township Association, said she opposes doing away with the advisory boards. 

"We are hoping that local government reform has gone as far as it needs to go. The form of government that we are under right now is working just fine," Hart said. 

Redistricting

Once U.S. Census data is in this spring, lawmakers will go to work on the once-a-decade process of redrawing legislative district maps. 

It's important, because the process has often been used to solidify seats held by majority parties and to try to ensure that the majority party will remain in control. 

For example, from 2000 to 2009, Republican candidates for the Indiana House typically won a statewide majority of the vote in excess of 55 percent. Yet for all but two years, Democrats won a majority of the seats there. 

Furthermore, redistricting includes redrawing congressional district lines, and Republicans captured the Indiana 8th and 9th U.S. House districts in November. It was previously assumed that one of those districts would be altered to favor Republicans while the other would become more Democratic. 

Republicans such as House Speaker Brian Bosma of Indianapolis have pledged to draw district lines based on geographical boundaries and keeping communities of interest together, as opposed to based on political considerations. 

Still, the redistricting process is not likely to ignore completely the residence of incumbent members of the House and Senate. 

As lawmakers work on new maps, outside organizations and people such as Common Cause/Indiana's policy director, Julia Vaughn, will be watching closely and pointing out problems they see. 

The League of Women Voters, the AARP and other groups are organizing a "bird-dogging" commission, Vaughn said, that will include a map-drawing competition. 

The Indiana Citizens Redistricting Commission cochaired by former lawmakers Dave Crooks of Washington, a Democrat, and Republican Bill Ruppel of North Manchester says it wants to ensure the redistricting process emphasizes competition and fairness, not incumbent protection and partisan advantage.

"I've always supported the idea of citizen-drawn districts that ignore legislators' addresses, follow natural boundaries and don't divide communities," Ruppel said in a news release issued by the commission recently. "Districts like that are compact enough that voters know who represents them, and they encourage more candidates to run because they can actually know most people in the district."

Vaughn said it should encourage public involvement in the process. 

"There's very new, very neat technology that gives citizens with an encrypted Internet browser access to the same census data that the General Assembly uses. We want to encourage citizens to do that, to compare the public generated maps to the politically generated maps," she said. 

"We think there are going to be some big differences. We think it's important to point out the General Assembly's attempts to gerrymander" by comparing the maps, Vaughn said. "Hopefully that extra level of scrutiny will stop them from gerrymandering."

Unemployment fund

For the third consecutive year, lawmakers will look for ways to restore balance to Indiana's bankrupt unemployment insurance fund, which has borrowed almost $2 billion from the federal government just to make weekly payments. 

They first addressed the issue in 2009, when Democrats controlled the House and Republicans led the Senate, by passing tweaks that would increase the premiums that most businesses pay into the fund. 

Then, in 2010, the year those new rates were to take effect, Republicans pushed for, and Democrats ultimately agreed to, a one-year delay.

So the higher premiums, which would raise about $300 million more per year, are set to take effect this year. Now that Republicans fully control the Legislature, they want to tweak the plan once again. 

Bosma has said he wants is to phase those new rates in more slowly, rather than dropping their full force on employers at the end of 2011's first fiscal quarter. 

He and the governor also say they want to reduce unemployment benefits, which currently top out at $390 per week, in order to further reduce the burden on businesses that pay into the system. 

That goal is much more plausible this year. In the past, then-House Speaker Patrick Bauer, a Democrat from South Bend, steadfastly refused to agree to any sort of changes that involved reducing benefits for the unemployed. Now, the only way he can stop legislation that the full Republican caucus supports is by orchestrating a Democratic walk-out. 

Abortion rights

Two Republican lawmakers, Sen. Greg Walker of Columbus and Rep. Wes Culver of Goshen, have said they intend to offer legislation that would place new limits on abortions. 

The two want a law modeled after one in Nebraska that restricts late-term abortions. They also are seeking legislation that would restrict Planned Parenthood of Indiana's government funding. 

Indiana law now forbids all abortions after 20 weeks of pregnancy except when there are health-related reasons for late termination. 

According to Mike Fichter, president of Indiana Right to Life, though, Indiana law does not include a narrow definition of what counts as a health-related reason. Therefore, he said, a pregnant woman could cite something like "stress" as a reason to receive a late-term abortion. 

Indiana law requires that all fetal terminations after the 20-week cutoff be performed in a hospital or ambulatory clinic. The legislation Walker and Culver intend to offer aims to eliminate abortions after that point entirely.

The legislation is being drafted in an attempt to thwart the business plans of Nebraska abortion doctor LeRoy Carhart, who is being forced out by the state's new abortion law. He has said he might open a clinic in Indianapolis.

"Because Carhart is so deeply involved with late-term abortions we are concerned that Indianapolis will become a hub for late-term abortions," Fichter said. 

Opponents of the plans of anti-abortion organizations as well as Walker and Culver say that won't happen because Carhart has only discussed an Indianapolis clinic that would offer regular, first-term abortions. 

Meanwhile, Betty Cockrum, the president and chief executive officer at Planned Parenthood of Indiana, said her organization is speaking with state legislators to emphasize the impact that cutting off government funding would have. 

She said doing so could leave 21,000 low-income Hoosier families without health care. 

"It's a heck of a time to be contemplating elimination of health care in Indiana," she said. 

Public infrastructure

One of the signature accomplishments of Daniels' first term was the $3.8 billion, 75-year "Major Moves" lease of a northern Indiana toll road, which provided funding for a host of transportation projects, including portions of the Indianapolis-to-Evansville Interstate 69 extension. 

But, as Lt. Gov. Becky Skillman put it: "Indiana doesn't have another toll road to lease." 

Therefore, the Daniels administration wants to explore further possibilities for public-private partnerships on infrastructure projects. 

Daniels has proposed such projects, such as the Indiana Commerce Connector, in the past. His initiatives could have better chances of succeeding with an all-Republican-led Legislature this year, though. 

Skillman said more details about those possibilities will be forthcoming. 

Smoking ban

Rep. Charlie Brown, D-Gary, a longtime advocate for a statewide smoking ban, says he intends to renew his push this year — and Daniels says he would not stand in the way. 

The question is whether, and how strongly, some lobbies will fight for exemptions to the ban. Mike Smith, executive director for the Casino Association of Indiana, said his organization would seek to have casinos excluded. Others could do the same. 

In previous years, a smoking ban has passed the House but failed in the Senate. 

Other issues

Those are only a few of the key issues that will be up for discussion during the upcoming legislative session. Many others will be on the table. Among them: 

Claire Moorman and The Associated Press contributed to this report.