By Bryan Corbin, Evansville Courier & Press
INDIANAPOLIS - With Indiana being pounded by a painful recession, Gov. Mitch Daniels told lawmakers Tuesday night that now is not the time to raise taxes or dip into reserve funds.
In his fifth annual State of the State address, Daniels instead urged them to pass local government reform and reduce school overhead costs, even as they wrestle with painful cuts in the state budget.
The governor laid out his agenda to a joint session of the Legislature and to Hoosiers viewing the early evening speech that was broadcast and webcast statewide.
Daniels praised lawmakers in both the Democratic-controlled House and Republican-controlled Senate for passing a law last year capping property taxes on homes.
But he is asking them now to go further and write the tax caps into the state constitution, which would make them much harder to undo.
Opponents of passing the constitutional amendment want to wait a year to see the effect on local government revenues, since the measure would not go to voters for ratification until 2010 regardless.
In his most provocative language of the night, the Republican governor urged lawmakers to act on the amendment this year.
"Even if passed tomorrow morning, your second resolution will afford us three full years of information before a final vote occurs in public referendum late next year. Your procrastination will add nothing to what we know," Daniels told lawmakers in the House chamber. "So the only real question is, do you trust the people of Indiana to weigh the evidence and make this decision or don't you?
"Show your faith in our fellow citizens by affirming now what you voted for so proudly just months ago."
Interrupted 18 times by applause, Daniels listed a few of his 2008 campaign promises.
He wants legislators to enact an automatic tax refund if surpluses reach 10 percent of state coffers, but he acknowledged such a refund is not likely to be triggered soon, given the tight fiscal situation.
Reducing school administrative overhead to deliver more than the current 61 cents on the education dollar to actual classroom instruction is a proposal Daniels is advocating jointly with Tony Bennett, the new state schools superintendent. To save money that potentially could be used to hire teachers, school corporations would be required to purchase supplies through a state quantity-purchasing agreement unless they could find supplies at a better price under legislation the governor is advocating.
A related bill Daniels proposes would give schoolteachers partial legal immunity from lawsuits filed over school discipline.
"It is time Indiana said to its children, sit down and hush up; to their parents, if your child is causing trouble and harming some other student's education, take it up with your kid, not the teacher or principal," he said, prompting the biggest applause of the night.
Daniels, who was sworn in to a second term Monday, did not make an overt reference to a jobs program in Tuesday's speech. Aides said before the speech that the business and tax climate Daniels created during his first term has left Indiana better positioned to withstand the recession than other states.
Democrats in the Legislature bristled at some of Daniels' statements.
"My instant reaction is, it's a total disconnect from what he said and what he's doing. There's no innovative proposal in this current budget; it's just basically, 'We're not going to do anything different than we've done in the past,'" said state Rep. Dennis Avery, D-Evansville. "It always bothers me when politicians get up and make extremely partisan speeches. This was a very partisan speech. We want to work together, but it's very difficult when the governor is making these kind of partisan attacks with partisan criticism."
State Sen. Bob Deig, D-Mount Vernon, also questioned whether Daniels' local government restructuring proposals would save taxpayers any money.
Local Republican lawmakers were more complimentary.
"I thought he presented a very realistic picture of the financial situation facing the state and the country. ... I appreciate the fact he wants to preserve education funding, which is critical for the future of our state," state Sen. Vaneta Becker, R-Evansville, said.
"He is challenging the Legislature to not rest on our laurels, not to take an intermission, but to continue to look at creative ways of doing more with less - tightening our belt and being good stewards of the taxpayers' dollars," state Rep. Suzanne Crouch, R-Evansville, said.
Evansville resident Steve Schaefer, vice president of the Southwestern Indiana Chamber of Commerce and president of Hoosier Voices for I-69, was in the House gallery at the governor's invitation.
Schaefer said he was invited, in part, because of the chamber's advocacy of last year's referendum Daniels proposed that eliminated most of the remaining township assessors.
"It's an honor to be in the same room with the governor and to be a part of state history to witness the State of the State personally," Schaefer said.
Legislative leaders also reacted to the speech on a party-line basis.
House Speaker Patrick Bauer, D-South Bend, called Daniels' address "evasive" and said the governor went for "applause lines" rather than substance. "It's an artful dodge of the problem (of employment)," Bauer said.
House Republican minority leader Brian Bosma, R-Indianapolis, said Daniels set the right tone. "Indiana, as we look around the rest of the nation, is really in an enviable position," Bosma said.
"The governor is stepping backward by reducing investments in our jobs and our people, cutting back on environmental programs and shortchanging education," Senate Democratic minority leader Vi Simpson said. "It's time for the governor to realize that starving our state doesn't make it stronger. Our families are suffering and deserve immediate relief," Simpson, D-Bloomington, said.
The leader of majority Senate Republicans backed the governor's call to resist suggestions from House Democrats that the state dip into the state's rainy-day-fund reserves. "To suggest now that we dip into the rainy day fund ... I think is imprudent," Senate President pro tem David Long, R-Fort Wayne, said.
Courier & Press correspondent Eric Bradner and The Associated Press contributed to this report.