Lawmakers say Kernan can handle budget problems

INDIANAPOLIS -- Legislative leaders say they have no plans to address Indiana's budget deficit in the current special session devoted to property taxes or when they return to the Statehouse in January, preferring to leave the issue to Gov. Joe Kernan.\nLeaders of the House and Senate believe Kernan has everything he needs to administer the state's two-year budget, despite tax revenue that continues to fall behind projections and a deficit approaching $1 billion.\n"There's no question the General Assembly has granted the authority to the governor to manage the budget," said House Speaker Pat Bauer, D-South Bend. "We are within that budget parameter that he can do what he has to do to get through this national recession."\nBut Kernan said Friday that the responsibility to manage the deficit lies with lawmakers as well as his administration.\n"I have been told some members (of the General Assembly) said 'this is not my problem. It's Joe's problem,'" Kernan said. "I assume those members must be from some other state. This is our problem, our challenge."\nThe state is projected to finish the fiscal year ending June 30 with $350 million in the bank, an amount state Budget Director Marilyn Schultz described as "very low." She acknowledged it is barely enough to manage the state's cash flow.\nNow the state is relying on cash squirreled away in dedicated accounts and grants from the federal government to make ends meet, especially as revenue during the first four months of this fiscal year has fallen $152 million short of projections used earlier this year to write the current two-year budget.\nThe result is that the state is scheduled to spend nearly $974 million more this year than it expects to receive in revenue from sales, income, gambling and other taxes.\nKernan and Schultz are meeting daily to discuss the state's financial situation and have withheld 5 percent of budget allocations from agencies, a cut that is not expected to mean layoffs or significant program changes.\nKernan has been unwilling to say publicly whether he thinks he will need to cut programs or make other budget changes to compensate for lost revenue.\nState officials have postponed the next revenue forecast from December to January, in part so they can examine emerging national economic data. But Kernan said it also means the state will have more information about revenue to make better decisions about whether cuts are needed.\nSenate Finance Chairman Larry Borst, R-Greenwood, said those decisions will be up to Kernan.\n"The Legislature allocates, but that doesn't mean he has to spend it," Borst said. "We learned that from (former Gov.) Evan Bayh. We would put in money for raises for public employees, and he would never use it."\nRep. Jeff Espich, the top fiscal Republican leader in the House, said the question of making cuts rests primarily with Kernan.\n"The governor is really the only one who is in a position to know what needs to be done, what needs to be cut in agencies," Espich said. "He is the one most knowledgeable to make those decisions. I think the Legislature would accept any actions he took."\nState Rep. Dennie Oxley, a Democrat from English, about 40 miles northwest of Louisville, Ky., said the governor has not asked lawmakers to act.\n"Until the governor comes to us and asks for help, we have to proceed as if he thinks he has the tools to act," Oxley said.