Daniels: Revenue forecast too rosy

By Patrick Guinane, Times of Northwest Indiana
patrick.guinane@nwi.com

INDIANAPOLIS | State lawmakers heard a partly cloudy revenue forecast Friday for the next two-year state budget, but Republican Gov. Mitch Daniels' administration considers the projection too rosy.

How the Democratic-led Indiana House and Republican-ruled Senate interpret the differing outlooks could determine funding increases for region schools and how much is put toward completion for Little Calumet River flood control levees.

Bob Lain, an independent analyst for the State Budget Agency, predicted state revenues will grow just 0.7 percent next year and rebound for a 3.7 percent gain in 2011.

But the estimates -- $690 million lower than a December forecast -- start by suggesting state tax collections will end a current freefall and slip by less than $50 million in the next three months.

State Budget Director Chris Ruhl said the prediction "seems way too good to be true."

"We hope it will happen, but the facts make it highly doubtful," he said. "The governor believes that it's better to be cautious than to bet on a miracle."

Ruhl said it's more prudent to plan for an additional $750 million loss, or about double the revenue Lain predicted for now through the July 2011 close of the next biennial budget.

That means Daniels will be pushing for a new two-year budget that spends about 2 percent less than the nearly $29.8 billion proposal offered by Senate Republicans. The Senate GOP based the spending plan on a revenue guess that is roughly $440 million more optimistic than that of the governor's aides but still $310 million stingier than Lain's official forecast.

"We think we made a comfortably good projection," said Senate Appropriations Chairman Luke Kenley, R-Noblesville. "The important thing is we shouldn't spend any more than the Senate budget spends."

Rep. Scott Pelath, D-Michigan City, called the Senate budget a good start. But he said House Democrats still want to see more emphasis on job-creating initiatives, including university construction projects.

The Senate budget would authorize $397 million in projects, including $33 million to replace Tamarak Hall, the Indiana University Northwest theater building ruined by fall flooding. Democrats have proposed $750 million in projects.

The Senate plan, which incorporates $2 billion in federal stimulus money, would send school districts an average annual funding increase of 2 percent. And it earmarks $9 million for Little Calumet River levees.