The 2005 Indiana General Assembly’s plan for the state budget crisis — and their own good fortune The Indiana General Assembly began its 114th session last week, and lawmakers will spend the next four months debating legislative issues as diverse as daylight-saving time, ISTEP testing and a constitutional amendment banning same-sex marriage. This year’s session convened on Jan. 4 and will adjourn on April 29. Known as a “long session,” the 90-working-day schedule is required every other year in order to produce the state’s biennial budget.
And the budget will certainly be at the top of the priority list for Republicans who now control all three chambers of the Statehouse for the first time since Gov. Robert Orr held office.
Gov. Mitch Daniels was sworn in on Monday, and he will give his first State of the State Address on Jan. 18, when he will also unveil his plans for the state budget.
Republicans hold 33 of 50 seats in the Senate and 52 of 100 seats in the House of Representatives. Though they have a clear majority, the slim lead in the House will require votes on both sides of the aisle in order to pass most legislation.
Daniels and many other Republicans made the state budget a key issue in last year’s campaign and now, with a majority in both chambers, they can’t blame partisan politics for a failure to balance the budget and begin to reduce the state’s $800 million deficit.
In addition to the budget, the state’s 5 percent unemployment rate, a backlog of nearly $750 million in payments owed to schools and local governments, and Medicaid’s growing $4.65 billion annual cost are in need of urgent attention.
And because politicians are rarely altruists, Indiana legislators will also find time over the next few weeks to consider a proposed pay raise for themselves that will increase their annual compensation for part-time work from an average $45,000 a year to $63,000.
The pay raise would add nearly $3 million a year to the state budget and supplement their incomes as they continue to work the rest of the year in such diverse professions as doctors, lawyers, corporate executives and lobbyists.
With the state purse strings firmly in their grasp, our 150 elected legislators are poised to significantly impact pocketbooks and paychecks across the state, but given the empty state coffer, the only financial gain this year may be their own.
Legislative agenda Like the majority of states, Indiana was financially wiped out by the national economic downturn in 2001, and the worst fiscal crisis in recent memory was significantly compounded by heavy manufacturing losses.
The state was lucky in the good years that preceded the recession and amassed nearly $2 billion in “savings” that have since been transferred to cover the costs/decreases in general funds. With that buffer gone, lawmakers must now make significant choices and changes as they prepare a budget for the next two years.
Given the huge deficit and the depletion of savings, something has got to give — revenue must increase, or spending must decrease. Neither Daniels nor legislators have ruled out rumored property and income tax increases.
Republicans see economic development as a key to increasing revenue in the state. With a net loss of more than 100,000 jobs in the last four years and a recent survey that found Indiana workers ranking well below the national average, earning only 90 cents on the dollar, lawmakers need to find solutions.
A change to daylight-saving time is seen by many as one way to increase revenue. Daniels campaigned on the issue and most Republicans support the change. Though it comes up nearly every legislative session, many predict that this will be the year Indiana finally foregoes its schizophrenic time keeping methods and adopts a uniform policy statewide.
Daniels and House and Senate Republicans also want to make major changes in the state’s education system, starting with changing the office of superintendent of public instruction from an elected position to one appointed by the governor. There will also be a push to move ISTEP testing from the fall to the spring, and a well-supported effort for all-day kindergarten.
A constitutional amendment banning same-sex marriage is also expected to get plenty of attention this year. Republicans are eager to vindicate themselves after former House Speaker Democrat Patrick Bauer refused to allow an introduction of the bill last session, prompting Republicans to stage a walkout and holding up numerous pieces of legislation.
Many predict, however, that it will be Indianapolis Mayor Bart Peterson’s proposal for funding a new Colts stadium that garners the most attention.
Funding the new multimillion dollar complex relies in large measure on an increase in gambling. Peterson proposes 1,000 electronic pull-tab machines installed in each of the state’s two horseracing facilities and an additional 1,500 machines at off-site betting locations in Indianapolis and Fort Wayne. Lobbyists are also pushing for video gambling machines to be allowed in Indiana bars and restaurants.
Though many lawmakers are opposed to increased gambling, the potential $400 million in state revenue and the impending threat of the Colts leaving the state will make it very hard to say no.
The biggest gamble the General Assembly takes this year, however, could be a proposal to give legislators a sizeable salary increase while simultaneously slashing funds in other areas.
Pay raise recommendation Indiana lawmakers currently earn $11,600 per year for their work in alternating annual 60- and 90-day legislative sessions, and they have not had a raise since 1985 when their salaries were increased from $8,000.
Almost every legislative session a bill is introduced to give lawmakers a pay raise, but none have been successful in nearly two decades. That could change this year thanks to the newly established Public Officers Compensation Advisory Commission legislators created last year.
The commission, made up of nine “citizen appointees,” recommended raising legislator salaries to $30,015 — constituting a 159 percent pay raise for our part-time General Assembly and increasing their total wages from $6.8 million a year to $9.6 million.
While the numbers are staggering, the commission did the job they were assigned. After reviewing lawmaker salaries in other states, hearing hours of testimony and considering reams of financial data, they determined a pay raise was justified.
What the commission didn’t do, however, was consider any income for lawmakers other than their base salary of $11,600 because the statute that created the Public Officers Compensation Advisory Commission requires them to review “wages and wages only” when considering pay increases.
But Indiana lawmakers are hardly underpaid. In fact, when all other forms of compensation are considered, the annual income for their part-time work averages $45,000 — nearly $5,000 more than the average household income of their constituents.
Should the pay raise be approved, lawmakers would be compensated nearly $63,000 a year in salary, bonus pay, per diem, expense reimbursement, health insurance and pension contributions.
Fringe benefits The principal income supplement for Indiana legislators is the daily allowance for incidental living expenses while in session that has increased from $112 per day in 2002 to $134 in 2005.
And because the per diem is paid for weekends as well as workdays, combined wages and per diem for this year will exceed $27,000, not including per diem paid to lawmakers at the rate of $52 for out-of-session days.
While some lawmakers claim they are grossly underpaid, a survey of all states demonstrates that Indiana lawmakers earned nearly $25,000 in wages and per diem only in 2003 — well above the $18,751 average income for part-time legislatures.
In fact, Indiana ranked third out of the 10 states whose legislators work an average of 115 days annually.
Wages and per diem are not the only form of compensation Indiana lawmakers receive. Leadership bonuses ranging from $500 to $6,500 a year amount to just one of the fringe benefits paid to nearly half the Legislature each year.
In the Senate, 17 members receive an average of $3,100 in additional pay for leadership roles such as president pro tempore, majority whip and floor leader. Twenty members of the House of Representatives receive an average of $3,200 for their leadership positions. In total, the leadership bonuses total over $100,000 a year in additional compensation.
The daily expense payment of $134 is meant to cover food, lodging and travel costs, even for those lawmakers who live near the Capitol. Senators and representatives are also entitled to a separate expense reimbursement of nearly $15,000 for business expenditures.
Since no receipts are required in order for lawmakers to receive the reimbursement, it is unclear exactly what the funds cover. In general, telephone costs, office supplies and miscellaneous business expenses are the standard items claimed.
But it’s not just cash payments and reimbursements that pad lawmakers’ salaries. Lifetime health insurance coverage and generous matching pension contributions give the part-time Legislature quite a lucrative benefits package.
In 2001, Gov. Frank O’Bannon vetoed the bill that provides legislators lifetime health insurance benefits after six years of service, but Senate President Robert Garton was able to override the veto by funding the bill from the Legislature’s “General Funds.”
While nearly 13 percent of Indiana residents, half of whom work full-time jobs, have no insurance coverage, our part-time lawmakers provide themselves medical, dental and vision insurance that pays nearly 95 percent of costs.
Indiana lawmakers also have one of the most generous pension plans in the nation with taxpayers providing $4 for every $1 lawmakers contribute. Wary of making their amassing of funds public, the General Assembly passed a bill in 2003 that now makes the details of legislators’ pensions secret. Only four senators voted against the measure.
In addition to pension funds, members of the General Assembly receive a retirement payment after leaving office and turning 65. The amount of the yearly pension is equal to the average of their highest wages for three consecutive years. Spouses of deceased lawmakers receive 50 percent of the pension each year.
And should all the benefits lawmakers receive at taxpayers’ expense not suffice, members of the House and Senate are also entitled to an unlimited number and value of gifts from lobbyists. State law requires only that they report the name of the giver when the value exceeds $250.
All things considered, working for the Indiana General Assembly earns the 150 men and women who make up the Senate and House of Representatives a hefty $45,000 for less than four months work. And that certainly makes for a profitable side job as more than 80 percent of legislators continue to work in other high-paying professions during the rest of the year.
Moonlighting for big bucks Because Indiana has a part-time Legislature, lawmakers necessarily must have employment outside the Statehouse. Law, education and small-business ownership are the most popular careers of legislators, and most earn a good deal more at their “real” jobs than they do at the Capitol.
For example, in addition to his $11,600 salary, $6,500 bonus as Senate president, approximately $12,000 in per diem and robust health and pension benefits, Republican Robert Garton earns an additional $109,500 each year as dean of professional development at Ivy Tech State College.
House Democrat William Crawford is also on the Ivy Tech payroll, earning more than $65,000 last year as the state college’s outreach manager in addition to his part-time compensation of $52,000 for his work as a legislator.
When not serving in the House of Representatives, Republican Mike Murphy moonlights as the executive director of strategic development for Anthem Insurance. Democrat David Orentlicher supplements his legislative income as a law and medical ethics professor at Indiana University in Indianapolis.
Freshman Sen. Brent Waltz apparently earns so much in his other areas of employment that he has promised to renounce the health and pension plans he’s entitled to as a legislator.
Waltz is the chairman and CEO of The Baron Group, a company he started in 1995, where he works to “develop small businesses with the focus of creating jobs and expanding the employment base in Indiana.”
Waltz is also the principal partner of Indianapolis Diversified Machine, Inc. Founded in November of 2003, IDM became the second company to lease space in the former United Airlines Maintenance Center for its own airline repair and maintenance services last fall.
Additionally, Waltz is a partner in Medical Express Delivery, a medical courier service that recently expanded its Indianapolis operation to Evansville and Louisville.
Other lawmakers forego careers in law, education and business in favor of more lucrative careers as lobbyists.
House Republican Bob Cherry works for Farm Bureau Insurance. Though he was registered as a lobbyist for the company prior to his election in 1998, Cherry has since adopted the title director of government relations.
House Democrat Russ Stilwell, a member of the Indiana AFL-CIO Executive Board, touts his experience as a rank and file miner, though he is a bit more reticent to advertise his position as a lobbyist for the United Mine Workers of America outside of Indiana and lists his job title as political consultant.
With multiple careers and combined salaries, most Indiana lawmakers earn two to three times what the average Hoosier does each year. But should the split employment prove too time consuming or too low-paying, they always have the option of switching teams and going to work as a lobbyist for any number of local groups vying for political clout.
Jumping ship Unlike Cherry and Stilwell, most legislators working as lobbyists wait until they are out of office, though many don’t wait until their terms expire. At least 20 former legislators are now registered as lobbyists in the state, and at least three of those are former House speakers.
Republican Mike Smith caused quite a stir in 2002 when he resigned his seat in the House of Representatives two weeks after winning his sixth re-election bid in order to accept a position as executive director of the Casino Association of Indiana.
And Pat Kiely served in the House for 13 years before leaving office early to become president of the Indiana Manufacturers Association lobbying group in 1991.
Perhaps the most popular lobbying careers are found at Bose-Treacy Associates, the lobbying branch of the Bose McKinney and Evans law firm that boasts a client roster of the most powerful corporations in the state and whose campaign contributions, split almost equally between Republicans and Democrats, have totaled nearly half a million dollars in the past five years.
Republican Paul Mannweiler resigned in 2001 with a year left in his term as House representative to begin working for the lobbying firm, alongside former House representative Tom Freuchtenicht, who is now a senior vice president of Bose-Treacy.
The lobbying group also boasts the credentials of Vice President Don Blinzinger, who left Bose-Treacy when newly appointed Speaker of the House Brian Bosma hired him for a two-year stint as chief of staff for the Indiana House of Representatives Republican Caucus.
Ironically, Bosma is expected to sponsor an ethics bill this session that will require state workers to wait at least 12 months after leaving their jobs before becoming lobbyists in the state. The bill, however, exempts legislators.
Indiana is one of 23 states that currently have no legislation prohibiting lawmakers from leaving their elected positions and immediately going to work for lobbying groups. In 20 states, legislators must wait one year, while six other states require a two-year waiting period.
Tough choices and tougher critics State legislators directly affect the lives of all Hoosiers. Members of the General Assembly are also uniquely positioned to influence their own personal fortunes and the fortunes of the companies they work for when not at the Statehouse.
This year the 150 lawmakers at the Capitol will introduce over 1,000 pieces of legislation and spend billions of taxpayer dollars. In a year of tremendous political change and significant fiscal challenges, these lawmakers will certainly earn their pay. But Indiana residents deserve legislators who put the interests and needs of their constituents before their personal financial gain.
Legislators should also bear in mind who employs them while at the state Capitol. Voters have the right and the responsibility to hire and fire lawmakers as they see fit.
The General Assembly session will be broadcast on cable access stations throughout the state for the first time this year. And numerous bill watch Web sites are also available. Voters have no excuse for not supervising those they’ve hired to represent them.
Indiana General Assembly: Overview
Session: The General Assembly meets every year, for 60 days in even-numbered years and 90 days in odd-numbered years. The governor can call the part-time legislators back for special sessions when necessary.
Membership: 50 members of state Senate, serving staggered four-year terms (one-half elected every two years); 100 members of House of Representatives, serving two-year terms (all elected every two years)
Requirements: Indiana legislators are required to be 25 years old, a U.S. citizen, a resident of Indiana for at least two years prior to the election and an inhabitant of the district to be represented.
Salary: Each member of the General Assembly is paid a salary of $11,600 per year plus per diem and expense reimbursement.
Duties: Legislators in Indiana have broad powers to enact laws, set tax types and rates, create and abolish agencies of state government, determine state budget operations and oversee local government and schools.
Indiana Lawmaker Compensation Package
Base salary: $11,600
Per diem (in session): $134 per day (times 60 days in even years; times 90 days in odd)
Per diem (out of session): $52 per day
Bonus for “leadership roles”: $500 to $6,500
Office expense reimbursement: $14,472 limit
Matched pension funds: $4 by state for every $1 by lawmaker
Lifetime insurance benefits: (pays 93 percent) after six years in office
Average Indiana Lawmaker Compensation
2000 $29,944 Short session (60 days)
2001 $38,079 Long session (90 days)
2002 $36,210 Short session (60 days)
2003 $45,221 Long session (90 days)
2003 Total Legislator Compensation (Top 10)
1 Sen. Lawrence Borst, R — Greenwood $53,031
2 Sen. James Lewis, D — Charlestown $52,829
3 Sen. Vi Simpson, D — Bloomington $52,514
4 Sen. Richard Young, D — Milltown $52,226
5 Rep. Wm. Crawford, D — Indianapolis $52,119
6 Sen. Thomas Wyss, R — Fort Wayne $51,832
7 Sen. Becky Skillman, R — Bedford $51,582
8 Sen. Sue Landske, R — Cedar Lake $50,913
9 Sen. Robert Meeks, R — LaGrange $50,803
10 Rep. Wm. Friend, R — Macy $50,800
Source: Office of Indiana State Auditor