Americans for Prosperity-Michigan

The Indiana Example

Financial discipline has spared Indiana much of the budget pain Michigan is enduring
Detroit News editorial

Michigan has plenty of company in its financial misery. Most other states are also struggling with balancing government budgets that have been battered by steep revenue declines in this prolonged recession.

Take Indiana, for example. Like Michigan, it’s a Rust Belt state that has lost a great deal of its manufacturing base. And like Michigan, Indiana is heavily dependent on the domestic automobile industry.

So it’s not a shock that Gov. Mitch Daniels is ordering steep budget cuts — 10 percent across most state departments — to make up for revenues that are 8 percent below projections made earlier in the year. That’s not much different than what Gov. Jennifer Granholm did last week to the public school budget to cope with plummeting tax revenue.

But that’s where the similarities end.

The Hoosier state entered this latest budget challenge with a surplus of $1.3 billion. Daniels could probably use that excess to avoid budget cutting pain, but that’s not how he operates.

He was able to compile the surplus through years of innovation and fiscal discipline. He has Indiana on a two-year budget cycle that allows him to make adjustments well in advance of a crisis. Michigan can’t even produce a budget that stands up for six months.

Daniels also differs from Granholm in his sympathy for taxpayers. He says he won’t ask them for more money to spare budget cuts.

“We are not going to raise taxes on people who are strapped as it is,” he says.

Daniels, a Republican, has had to work with a Democratic-controlled House to get the job done.

Leadership does matter. Many of the money-saving practices Daniels has put in place in Indiana, L. Brooks Patterson has also adopted in Oakland County, which is faring better than the rest of Michigan during this downturn.

There are two ways to deal with a budget crisis: You can manage it, or let it manage you. Indiana aggressively attacks its fiscal challenges, while Michigan allows its crisis free rein.