Indiana Governor Warns Government Shutdown Possible

Gov. Mitch Daniels has said he was prepared to keep essential services such as public safety running if lawmakers do not pass a budget by midnight June 30, but warned that most of state government would shut down.

Daniels said he would use emergency powers to keep state police and prisons operating, and public assistance – including unemployment insurance – would keep being distributed to those already eligible. The Indiana National Guard, state Department of Homeland Security and health officials would be available on standby.

But he said state parks would not be open and Bureau of Motor Vehicle branches and other state offices would close, as would casinos and the lottery because they are regulated by the state. Most of the state’s 30,900 employees would be furloughed.

Daniels, a Republican, said the blame for a shutdown would rest solely with Democratic leaders who control the House because they have not budged on a budget he said would destroy the state’s finances and force a future tax increase.

The governor said with the deadline looming for lawmakers to pass either a budget or a stopgap funding measure, he felt compelled to speak out.

“I did not want to wait until 24 hours before this remote possibility could occur to let the public know what the consequences would be, and that we’re ready if forced – and I stress forced – to do this,” he said at a news conference.

House Speaker Patrick Bauer, D-South Bend, issued a statement saying he welcomed the governor back to the Statehouse after his travels. Daniels had made a two-day tour of the state this week during which he accused House Democratic leaders of trying to “blackmail the state into bankruptcy,” and urged them to allow a vote on what he has called a compromise budget bill passed by the Republican-ruled Senate.

Bauer and other House Democrats say that two-year, $28.5 billion bill would result in devastating cuts to many school districts. Unlike a one-year, $14.5 billion budget passed by House Democrats, the Senate plan would not ensure that all districts get as much or money next year as they got this year.

“Now is not the time to resort to blackmail and threats of what could happen,” Bauer said. “There are serious consequences in passing June 30 without a budget. There are equally serious consequences in passing a Senate budget that will create lasting, devastating damage to our state.”

The General Assembly did not pass a new budget by the regular session deadline of April 29, forcing a special session that began June 11.

The Legislative Services Agency has concluded that except for a few state institutions – including psychiatric hospitals and schools for the blind and deaf – state government would come to a halt at midnight Tuesday without a new funding measure.

LSA, the General Assembly’s nonpartisan research arm, cited a state constitutional provision that forbids money from being drawn from the treasury except through an appropriation made by law. It also concluded that the governor does not have emergency powers to spend money to protect public health and safety.

But the Daniels administration said its research indicated that there were legal and fiscal means to keep vital services operating. The governor said he could declare an emergency, and the Republican-controlled State Board of Finance could approve the use of certain state funds for essential services.

Running the state government costs an average of $38 million per day. Closing the state’s casinos alone would cost state and local governments about $2.7 million every day in lost tax revenue.

Although a conference committee held three days of public hearings on the budget this week, much of the time was devoted to taking public testimony. Rep. Scott Pelath, D-Michigan City, said private budget negotiations would occur over the weekend.

Daniels said the budget passed by Senate Republicans included several provisions meant to appease House Democrats, but said they had wasted a week without a word of cooperation.

Bauer said he encouraged Daniels to take a more active role, and said there was still time to get the job done.