By Eric Bradner, Evansville Courier & Press
INDIANAPOLIS - Chances of state lawmakers passing a budget and a fix for Indiana's bankrupt unemployment insurance fund are dwindling as the hours pass and tonight's midnight deadline for adjournment of this year's legislative session nears.
Failure to reach an agreement on those two issues, which lawmakers and Gov. Mitch Daniels agree are "musts," would result in Daniels calling a special overtime session.
With Democrats and Republicans already at an impasse, a new wrinkle Wednesday cast further shadows on debate over the budget.
Two House Democrats from Northwest Indiana - Reps. Charlie Brown and Vernon Smith - say they won't support the budget unless it included a last-second gaming proposal.
They want to move one of the two riverboats in their area to another location. Their proposal would cap state tax collections from the riverboats at current levels, and would allow Lake County to use new revenues that come from the more desirable location to fund local projects.
Gary Mayor Rudy Clay met with House Speaker B. Patrick Bauer, D-South Bend, this morning to discuss the proposal.
However, gaming proposals are difficult to advance so quickly. Other legislators are calling for Lake County to give up its other riverboat license and have that casino moved to another part of the state.
The top Senate Republican negotiator said his side would not consider the Lake County gaming proposal.
"That's not going to happen," said Sen. Luke Kenley, R-Noblesville. "Not this year."
Earlier in the day, lawmakers said budget negotiations were stuck.
House Speaker B. Patrick Bauer, D-South Bend, said Republicans and Democrats are no longer trying to negotiate compromises.
Instead, he said, discussions are "more internal at this point" - an indication that the only hope left of getting a deal done is that either the Democratic-led House or the Republican-controlled Senate will decide to cave in.
The sides remain at an impasse over whether the budget leaves enough money in reserves in case the recession worsens.
Democrats had agreed to protect the state's $1.3 billion surplus - an agreement they thought would heed the governor's demands and cement his support.
But Daniels and Republicans now say that surplus needs to increase to $1.4 billion. They say the only way to do that is by lowering the amount they'll boost education funding by $100 million.
Unless they overcome the stalemate, there can be no budget. If Democrats don't get what they want, Bauer won't bring the budget up for a vote. If Republicans don't get what they want, Gov. Mitch Daniels will veto it.
Republicans originally said they wanted to increase education spending by 4 percent over two years, and Democrats agreed. Now Republicans say the increase has to drop to 3 percent.
Bauer accused Daniels of changing his demands at the last minute.
"I believe that we have met the target - $1.3 billion - and he moved it," Bauer said.
"Moving targets are hard to zero in on."
On Tuesday budget negotiators - Rep. Bill Crawford, D-Indianapolis, and Sen. Luke Kenley, R-Noblesville - said they'd worked out nearly all of their other differences.
Republicans would get $45 million in new bonding authority for two state prison expansions; Democrats would get $600 million in bonding authority for university building projects.
Democrats would drop their moratorium on charter schools; Republicans would agree to a limit of one new charter school per school district per year.
Republicans would drop their private school tax credit and allow school districts to continue using their capital projects funds for expenses such as utilities and transportation; Democrats would agree to have the budget cover the traditional two years rather than one year.
But both sides still say the $100 million in education spending - less than 0.5 percent of the overall budget, which will total somewhere close to $28 billion over two years - is non-negotiable, and they can't reach a deal unless the other side bends.
If they fail to pass a budget by July 1, the state government - most of it, at least - would shut down.
House and Senate leaders say they're close to agreeing on a fix for the unemployment insurance fund, which is paying out more than it takes in and has borrowed more than $750 million from the federal government so far.
Negotiators said they'd reached a tentative deal yesterday, but later backed off those claims.
"We had an agreement in principle yesterday," Bauer said. "But again, we think we had an agreement, and then they change."
The hold-up comes from minority Republicans in the House, who say they'll oppose a plan that increases taxes on businesses and keeps jobless benefits the same as they are now.
House Democrats say there are political and practical reasons they need Republicans on board.
The political: Democrats don't want to be the only ones on record voting for a tax increase on businesses.
The practical: Bauer says with a narrow 52-48 majority, Democrats can't pass the unemployment fund fix without Republicans.
Senate Majority Leader David Long, R-Fort Wayne, tried to prod his Republican colleagues in the House into supporting the plan, calling it an instance in which all sides must hold their noses and vote yes.
But House Minority Leader Brian Bosma, R-Indianapolis, says his caucus thus far has not agreed to support the plan.
The deal Rep. David Niezgodski, D-South Bend, and Sen. Dennis Kruse, R-Auburn, said they'd agreed to would:
- Tax employers between 0.75 percent and 10.2 percent on the first $10,000 of each worker's income - up from the current rate of 1.1 percent to 5.6 percent on the first $7,000 an employee earns.
- Add oversight to make sure only those eligible to draw benefits are receiving them.
- Keep benefits the same as they are now, with $390 per week being the maximum payout and $298 per week the average.
- Keep the definition of "seasonal worker" from changing. Had that changed, those in the construction industry would not have been able to draw benefits in the winter, when there is little work to be done and little employment to be found.