Budget plan highlights state of state

After only one week of being sworn in as governor, Mitch Daniels delivered his first State of the State address Tuesday night to a packed Senate Chamber. During his address Daniels introduced a tax increase on the richest Hoosiers. In addition, he declared education a top priority in the coming months.\nDaniels was also quite frank concerning the severity of Indiana's economy.\n"Let me sum things up: Our state's economy is too weak, too narrowly based and too often impeded by the very state government that should be its chief advocate and promoter," Daniels said. "The state government is too expensive, too antique in its practices, too indifferent to real, provable results and in place after place after place, too slow."\nDaniels proposed many solutions, some he was reluctant to make, to ultimately overcome economic problems affecting the state -- promising to balance the budget in two years. One such proposal involves creating more small businesses that he said will hopefully keep college graduates from leaving the state. Daniels also said getting Indiana on daylight-saving time would help businesses in a cost-effective way. \n"I propose that existing local economic development funds be freed to establish new venture capital funds in each region of our state," Daniels said. " ... But the loss of Hoosier jobs is no laughing matter and any step that might help is worth trying. So, without changing anyone's time zone, and without spending a penny, I ask this body to lift this handicap from Indiana's businesses and join the national and global economy in the use of daylight-saving time."\nOne of the most important proposals Daniels announced was to reduce spending by imposing a surtax on the wealthiest Hoosiers, which would cut his two-year balanced budget promise in half.\n"Even if we do all the difficult things I just outlined, we would still run a quarter of a billion dollar budget deficit next year, and still have no real savings set aside for the next rainy day. Duty commands to finish the job, to put our house in order and do it now," Daniels said. "So tonight I propose one more step that I would rather not propose. I ask for the most fortunate among us, those citizens earning over $100,000 per year, for one year, to pay an additional 1 percent on the income they receive. With this money we will achieve a balanced budget not two years from now but in the year immediately ahead, and bring our savings account to a level near the minimum standard of prudence."\nSen. Earline Rogers (D-Gary) raised concerns regarding Daniels' proposals and questioned the governor's solutions to improving education in Indiana.\n"We stand ready to work with the governor," Rogers said. "But we would like to talk about some questions we would like to raise. Education I guess was the most surprising thing to me. I think the state of education is competitive and that Indiana was moving forward and doing well. I think Daniels saying that Indiana is not competitive when it comes to education and that is sending the wrong message." \nSen. Timothy Lanane (D-Anderson) questioned the origin of the tax cuts and was surprised by the surtax on wealthy Hoosiers.\n"What we didn't get to hear is where are the cuts going to come from; I heard Medicaid mentioned, and that's some of the most vulnerable people to be affected by cuts," Lanane said. "I was much surprised on the surtax on individuals (earning) over $100,000. Our caucus hasn't much of an appetite to raise taxes; we'll have to see more later."\nHouse Republicans praised the governor's changes and added the debate on important issues would continue into April.\nRep. Ralph Ayres (R-District 4) praised Daniels for attempting to make Indiana competitive on an economic scale.\n"I think the Governor is developing a strategy that is competitive with other states," Ayres said. "When O'Bannon and Kernan would address the issues of the state, they merely stated a problem. Tonight Daniels said the problems are so severe that he proposed a temporary tax to cut our deficit spending."\nRep. Robert Hoffman (R-District 55) was happy overall with the outcome of the governor's speech and noted almost every campaign pledge was addressed in 30 minutes.\n"I think he covered almost every campaign pledge that he promised while out on the road," Hoffman said. "Daniels said 'Here's what I said and now here's what I'm going to do about it,' I was very pleased and I think there was a great reaction."\nSpeaker of the House Brian Bosma said the debate surrounding the issues from Daniels speech, including a tax increase will be debated until the last day of session, April 29.\n"The governor is urging us to tighten our economic belts temporarily," Bosma said. "So far, we have a modest tax increase and I'm sure more details will be available as we have the next 3 months to look it over. We've got a snapshot in our pocket and we'll keep taking photos until April 29."\n-- Contact Senior Writer Lindsay Jancek at lmjancek@indiana.edu.