11

A State Budget A State Budget Hoosiers Can AffordHoosiers Can Afford

Governor Mitch DanielsGovernor Mitch Daniels

22

FY09 Revenue LossFY09 Revenue Loss$1.5B loss in projected revenue for FY09 since last budget was passed

($935M)($1.5B)

33

Composition of FY09 DropComposition of FY09 Drop

44

FY07 vs. FY11FY07 vs. FY11

FY11 revenues below FY07 revenues by more than $40M FY11 revenues below FY07 revenues by more than $40M

* Projected* Projected

55

Actions Taken to Restrain SpendingActions Taken to Restrain Spending

July 2008: 7% reductionJuly 2008: 7% reduction November 2008: Hiring freezeNovember 2008: Hiring freeze December 2008: $767M of additional reductionsDecember 2008: $767M of additional reductions

Not affected:Not affected: EducationEducation Public SafetyPublic Safety Child ProtectionChild Protection

66

Agency Budgets ReducedAgency Budgets Reduced

Agency FY10 Recommended vs. FY09 Appropriation

Office of Management and Budget -10.3%

Department of Natural Resources -8.4%

Adjutant General -9.0%

Professional Licensing Agency -8.1%

Indiana State Library -14.5%

Department of Environmental Management -10.5%

Department of Labor -8.0%

Commission on Public Records -8.2%

Department of Revenue -8.1%

77

Real Per Capita State Real Per Capita State Government Spending* Government Spending*

* Includes Major Moves Investments

88

Real Per Real Per Capita State Capita State Government Government

SpendingSpending

Indiana improved Indiana improved from 37from 37thth in 2004… in 2004…

to 45to 45thth in per capita in per capita spending in 2007.spending in 2007.

30 North Carolina $2,646 30 Nebraska $3,26631 Montana $2,644 31 Kansas $3,18432 Arizona $2,589 32 North Carolina $3,15633 Pennsylvania $2,587 33 Pennsylvania $3,14534 South Carolina $2,433 34 Michigan $3,05035 Oklahoma $2,409 35 South Carolina $3,01936 Utah $2,398 36 Utah $2,87937 Indiana $2,346 37 Arizona $2,87738 Mississippi $2,275 38 Georgia $2,79839 New Hampshire $2,268 39 Illinois $2,70940 Colorado $2,259 40 Mississippi $2,69941 Missouri $2,243 41 Missouri $2,67042 Alabama $2,241 42 Colorado $2,66143 Maryland $2,187 43 Florida $2,59044 Tennessee $2,182 44 Tennessee $2,52645 Florida $2,066 45 Indiana $2,473

46 Idaho $2,059 46 Nevada $2,47047 Nevada $2,053 47 Idaho $2,43648 South Dakota $1,923 48 New Hampshire $2,37949 Texas $1,860 49 Texas $2,36550 Georgia $1,774 50 South Dakota $2,335

99

K-12 Cuts in Other StatesK-12 Cuts in Other States

At least 35 states are either proposing or At least 35 states are either proposing or implementing cuts to K-12 education:implementing cuts to K-12 education: AlabamaAlabama cut K-12 funding by more than 12%, the cut K-12 funding by more than 12%, the

biggest cut to education in 48 yearsbiggest cut to education in 48 years CaliforniaCalifornia cut K-12 education by more than 16% cut K-12 education by more than 16% New York’sNew York’s proposed cuts would lead to cuts of up to proposed cuts would lead to cuts of up to

13% for all school districts13% for all school districts UtahUtah cuts may lead to a 12% reduction in per pupil cuts may lead to a 12% reduction in per pupil

funding by 2010funding by 2010 Virginia’sVirginia’s Governor proposed cutting public education Governor proposed cutting public education

by more than 9%by more than 9%

-7%

STATES CUTTING EDUCATION

No Announced Cuts

Cuts

-13%

-13%

-16%-5%

-7%

-2%

-8%

-3%

-12%

-3%

-4%

-3%

-1%

-3%

-3%

-1%

-1%

-4%

-3%

-3% -5%

-11%

-14%

-5%

-9%-1%

-4%

-1%

-13%-1%

-7%

-3%

-3%

10

1111

Higher Ed Cuts in Other StatesHigher Ed Cuts in Other States

At least 28 states have implemented cuts to At least 28 states have implemented cuts to higher education:higher education: Alabama’sAlabama’s cuts in higher education funding have led cuts in higher education funding have led

to a 13% tuition increase at state universitiesto a 13% tuition increase at state universities LouisianaLouisiana colleges preparing for cuts of 30% in state colleges preparing for cuts of 30% in state

fundingfunding Tennessee’sTennessee’s colleges and universities facing cuts of colleges and universities facing cuts of

15% in FY1015% in FY10 Nevada’sNevada’s Governor has proposed to cut state funding Governor has proposed to cut state funding

of higher education by 36%of higher education by 36%

1212

States Cutting Vital ServicesStates Cutting Vital Services

At least 34 states have imposed cuts to vital At least 34 states have imposed cuts to vital services:services:

ArizonaArizona has laid off 15% of its child protection investigators has laid off 15% of its child protection investigators CaliforniaCalifornia is considering elimination of the Healthy Families is considering elimination of the Healthy Families

Program, which provides healthcare to 928,000 childrenProgram, which provides healthcare to 928,000 children Minnesota’sMinnesota’s proposed cuts would result in 114,000 fewer people proposed cuts would result in 114,000 fewer people

enrolled in state healthcare programs in FY2011enrolled in state healthcare programs in FY2011 WashingtonWashington has proposed to reduce healthcare for poor by 42% has proposed to reduce healthcare for poor by 42%

At least 11 states are either proposing or At least 11 states are either proposing or implementing early release of prisonersimplementing early release of prisoners

KentuckyKentucky has released 2,000 prisoners early, including violent has released 2,000 prisoners early, including violent offenders and murderersoffenders and murderers

STATES RAISING TAXESSTATES RAISING TAXES

No Tax Increase

Tax Increase

13

1414

General Assembly BudgetGeneral Assembly BudgetApril 29, 2009April 29, 2009

Reserves consumedReserves consumed

$1B deficit entering next budget$1B deficit entering next budget Increased spending by 3% per year, 14% Increased spending by 3% per year, 14%

including stimulus fundsincluding stimulus funds

1515

Revenues Down, Spending UpRevenues Down, Spending Up

8% Decline

14% Increase

1616

The Cliff - 2012The Cliff - 2012

$633M + new spending

Governor’s Second BudgetGovernor’s Second Budget

Cuts executive branch agencies by an Cuts executive branch agencies by an average of 10%average of 10%

Maintains funding levels for public safety Maintains funding levels for public safety and child protectionand child protection

Increases funding for K-12 education and Increases funding for K-12 education and student financial aidstudent financial aid

Education TriggerEducation Trigger Maintains more than $1B in reservesMaintains more than $1B in reserves

1717

Budget ParametersBudget Parameters

No tax increasesNo tax increases Total reserves of at least $1 billionTotal reserves of at least $1 billion Spend a dollar, cut a dollarSpend a dollar, cut a dollar One time funds for one time purposesOne time funds for one time purposes No gimmicksNo gimmicks

1818

Bauer BudgetBauer Budget

Increases funding for more than 100 Increases funding for more than 100 programs = $935Mprograms = $935M

Gimmicks: raids the teachers pension fund Gimmicks: raids the teachers pension fund and Next Generation Trust Fundand Next Generation Trust Fund

Creates a cliff of more than $1 billionCreates a cliff of more than $1 billion Wipes out all reservesWipes out all reserves Would result in massive tax increaseWould result in massive tax increase

1919

The Cliff - 2011The Cliff - 2011

2020

Bauer BudgetBauer Budget

No tax increases - No tax increases - FAILEDFAILED Total reserves of at least $1 billion - Total reserves of at least $1 billion -

FAILEDFAILED Spend a dollar, cut a dollar - Spend a dollar, cut a dollar - FAILEDFAILED One time funds for one time purposes - One time funds for one time purposes -

FAILEDFAILED No gimmicks - No gimmicks - FAILEDFAILED

2121

Senate Budget – Senate Budget – Further CompromisesFurther Compromises

Restores funding for more than 30 Restores funding for more than 30 programsprograms Arts Commission, Public Television, Tourism, Arts Commission, Public Television, Tourism,

Heritage Trust, Clean Water Indiana, Public Heritage Trust, Clean Water Indiana, Public Defender, CHOICE, Area Health Education Defender, CHOICE, Area Health Education Centers, Community Health Centers, etc. Centers, Community Health Centers, etc.

Meets all requested parametersMeets all requested parameters Insurance against shutdown – Continuing Insurance against shutdown – Continuing

ResolutionResolution2222

Bauer’s ChoicesBauer’s Choices

1.1. A fiscally responsible new budgetA fiscally responsible new budget

2.2. Continue under current budgetContinue under current budget

Shutdown unacceptableShutdown unacceptable

2323