When the 2009 General Assembly convenes in January, legislators will begin crafting the next 2 year budget for the state of Indiana.
However, lawmakers received a revenue forecast on Thursday that will give them $800 million less to spend from the current $26.4 billion plan. They must also cut $763 million to keep the current budget in balance with tax collections.
"We will adjust spending to preserve a balanced budget in Indiana," Governor Mitch Daniels said during a Statehouse news conference. "These are only the first and hardly the last of the hard decisions that we will have to make."
The state is expected to take in $488.6 million less in revenues for the fiscal year that ends in June and overall, $935 million less than what was anticipated when the current budget was drafted in 2007.
Governor Daniels has already ordered state agencies to cut their budgets by 3 percent and no annual pay raises for state employees, including himself and legislators.
Currently, Indiana has about $1.4 billion in its rainy day fund and is only one of a handful of states that is not in the red. However, Daniels has already told legislators he does not want them to tap into the fund. He is concerned the $1.4 billion will be needed later on if the economic downturn worsens or lasts longer than is predicted. The recession is expected to last through mid-2009, but Indiana's unemployment rate will not peak until early 2010.
We may not always agree with Governor Daniels, but we do agree with him on this issue.
Until the economy improves, make do with what you have and put all non-essential spending on hold.
It's too bad some of our local elected officials can't follow Daniels' lead on being fiscally prudent.