Only a handful of Democrats joined almost all Republicans in the Indiana House of Representatives to pass a budget that was the center of a storm which nearly led to a government shutdown.

The final vote was  62 to 37 .  All 48 Republicans voted yes, joined by 14 Democrats.

Lawmakers tried several times to pass a budget during a regular session, but failed to reach and agreement and shrinking state revenue forecasts only made life more difficult.  To make matters worse lawmakers deadlocked over school funding, with Democrats wanting a formula that favored school districts while Republicans wanted money to follow the student.

At the end of the day, the threat of a government shutdown as outlined by Governor Mitch Daniels, gave a lot of lawmakers a new motivation to get things done.

The final House floor arguments were pretty standard.  Democrats said the budget would hurt schools, Republicans said the state couldn’t spend money that it didn’t have.

Some of the budget highlights include…

• A two-year spending plan at $28 billion.
• No caps on charter schools.
• Creates a pilot on-line charter school program and limited tax credit for education expenses.
• A 1.3 percent increase for schools over the next two years, half of extra new revenue over projections goes to schools
• Higher Education is flat-lined.
• Keeps $1 billion in reserves.
• “Funds” the CIB through short-term loans, a hotel tax increase, and expanding the professional sports development area.

The budget is easily expected to pass the Senate with token opposition.

You can hear Pat Bauer and Brian Bosma’s comments below…

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Here some additional audio from Luke Kenley and Lt. Governor Becky Skillman…

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Here’s the furlough letter…

Dear  Co-Worker:

I apologize that I am only just now communicating with you, but I have held off at the request of state legislators who are working to reach a budget compromise before the fiscal year ends tonight.  When midday arrived with still no formal agreement, I informed the General Assembly that in fairness to state employees I could not wait any longer.  So, it is with great regret, I write to inform you of the unfortunate possibility that as of midnight, our state government will be forced to shut down and suspend many of its operations.

I have done everything in my power to avoid this outcome.  When the legislature failed to pass a budget in April, I called them back into session a week earlier than expected, to give them extra time to reach an agreement. I revised my original January budget proposal to incorporate numerous compromises, including the use of a significant portion of our state reserve funds.  Some observers felt that I had gone too far: the Indy Star, on June 7th, even described our concessions as potentially “foolhardy.”  The Senate subsequently produced a budget that made even greater compromises, which again, in hopes of a reasonable solution, I agreed to support.  Additional concessions were made late yesterday in a final attempt at compromise and early reports suggest that perhaps these last changes have resulted in a deal although no vote has been taken and no budget has yet passed.  At my request the Senate also passed a stop-gap measure to keep government open even if a budget still did not pass in time.

Please note I have a greater sense of optimism today that the members of the Indiana General Assembly have agreed to a budget and will vote to pass it before the deadline of midnight tonight than I did yesterday.  However, in the event that a budget is not passed by midnight tonight, it is my responsibility to notify you of the potential interruption of all state government activities except those of a public safety, life and death nature.   Attached is a memo, detailing the particulars of the shutdown process as a precautionary measure in the event the General Assembly fails to pass a budget.

Though the potential for closure remains a possibility, I still hope for another conclusion.  Over the next 12 hours I will join you in watching the General Assembly as they consider and hopefully pass a responsible, 2-year state budget which I can sign.   You are delivering the finest state government service Indiana has ever seen and I thank you sincerely for it.

Sincerely,

Now here’s the procedures state workers are supposed to follow…

As Governor Daniels stated in his e-mail, if the General Assembly fails to enact a budget by midnight, most of state government will have to be shut down.  Without a budget, the state does not have authorization to spend funds for wages and services.  Employees, other than those engaged in emergency operations, will be on furlough.  A furlough is an unpaid leave of absence.

Please monitor the news reports tonight and tomorrow morning. Also, an update will be posted on www.in.gov.  If a budget has not passed, you should not report to work unless you have received specific instructions to report from your appointing authority.

During a furlough, employees are not paid.  There is no option to use vacation, personal or sick leave during the furlough. Employees are not permitted to volunteer their time.  The ID/access cards of all nonessential employees will be temporarily deactivated during the furlough.

If a budget has not passed by the time you leave work today, please make the following changes to your voicemail and e-mail to notify the public in the event of a shutdown:

Voicemail – “Thank you for calling (agency).  You have reached (Person’s office). Indiana state government offices are currently closed and will remain closed for an indefinite period of time due to the failure of The Indiana General Assembly to pass a budget by June 30.  I will be out of the office until a budget is passed.”

E-mail –  Turn on the out of office assistant and insert this text: “Indiana state government is closed indefinitely because the Indiana General Assembly failed to pass a budget by June 30. I am out of the office and will not be responding to e-mail while this shutdown is in effect. I will return when a budget is passed.”

If a budget passes and there is no shutdown, please change back to current message immediately Wednesday morning.

Once an appropriations bill passes the General Assembly, we will resume regular operations, and you will be expected to report for your next scheduled shift. It is important that you monitor the news reports and keep informed throughout this period.  An update will also be posted on www.in.gov when a budget is approved.

There should be no lapse in your health, vision, dental or life insurance coverage.

It is our hope that the legislature will resolve the funding issue prior to the deadline so that state government can continue to provide services to Hoosiers without interruption.

An e-mail from the Governor’s Office warning of furloughs has just gone out to Indiana state employees.  I am working to get a copy of it now.

Lawmakers are still saying they will be able  to get  a budget passed but this is not a good sign.

Stay tuned.

I’m on the floor of the House of Representatives waiting for lawmakers to get started.  They are milling around on the floor, but haven’t gotten started yet.

My prediction is the budget will pass 65-35, with 45 Republicans voting “yes” and only 20 Democrats.

My counterparts Jim Shella from WISH-TV says 63-37 (47Rs -yes, and 18 D votes) and Matt Tully from the Indy Star says 60-40 (With 42Rs voting yes and 18 Ds voting no)

It’s how we pass the time away.

Check the Twitter Feed for frequent updates.

As lawmakers get ready to vote on a budget today, there’s some question over whether the plan to address to the Capital Improvement Board’s shortfall is actually legal.

Under the plan the city would borrow $27 million from the state over the next three years to cover operating expenses, however that money would be paid back with interest from increases in the car rental and ticket taxes.  However, those taxes won’t kick in for three years which puts the CIB back in the same position that it is right now.

At first I was shocked and all I could ask my self is what political baboon would come up with something like this?

And then I remembered;  State Senator Mike Young of Indianapolis, the only lawmaker I’ve ever know to make Dennie Oxley, Jr. look good.

House Speaker Pat Bauer says there’s a budget deal, but he cautions, “it’s in theory.”

The House will vote on the budget tomorrow.  The Senate could take up the measure  tonight.  Bauer would not reveal a lot of details, however he says the budget funds education and avoids massive teacher layoffs.  He also says it does not include a cap on charter schools, but it reduces the dollars allotted for virtual charter schools and the educational tax credit is reduced.

The budget leaves $1 billion in the bank and spends it over two years.  There are no tax increases and it spends $28 billion over the next two years.

It also addresses the Capital Improvement Board by expanding the professional sports district, allowing the city to raise hotel, car rental and ticket taxes, alters the make up of the CIB for more state participation.

Republican leader Brian Bosma says there are a substantial number of Republican votes for the budget.

You can hear Bauer’s comments below.

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The House has adjourned until 6 p.m., but not before Speaker Pat Bauer offered up a few thoughts on the last hour budget negotiations.

He says they are making progress, but still won’t say whether lawmakers can meet tomorrow’s midnight deadline.  He says they are working from the same numbers and leaving about $1 billion in surplus.   He had praise for Senate Republican Luke Kenley but accused the Governor of wanting to jump start the shutdown by sending notices to state employees that they could be furloughed.

Bauer says they are working to reach an agreement on charter and virtual schools, but he says the Capital Improvement Board is being negotiated separately.

You can hear the Speaker’s entire comments to the press below.

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Indiana lawmakers continue to work today in order to reach a budget agreement by tomorrow.

Lawmakers have been at odds over school funding, charter schools, and the Capital Improvement Board.

Both Republican and Democratic sources involved in the budget talks tell me progress is being made, however the question is whether they can make enough progress to avoid a government shutdown.

“We’re making progress, but it’s a moving target”  said one Democrat involved in the negotiations.

“I’m optimistic, but we still have a lot of ground to cover” noted a Republican involved in the talks.

Governor Mitch Daniels has said if there is no budget he will close down BMV’s, state parks, the lottery and casinos.  Also, more than 30,000 state workers will be furloughed.

Although the practical side of my nature says these guys cannot risk a government closure, because the political price may be too much to pay.  Here is still a small part of me that wonders what would happen if the whole thing just explodes.

Hopefully, we won’t have to find out.  Check back here throughout the course of the day or follow me and my updates on Twitter.

Here’s what I can tell you about the chances of a government shutdown from my sources close to the negotiations.

Democrats think they have a 50-50 shot at getting a budget passed.

Republicans think there’s an 80-20 chance the government shuts down on Tuesday.

Negotations continue today, care to place your own bets?

My very reliable sources are telling that as of this morning, there’s a 50/50 chance Indiana lawmakers can avoid a government shutdown next week.

Some Indiana lawmakers are meeting this weekend in order to work out a budget deal.

When asked on a scale of 1 to 10 the likelihood of avoiding a government shutdown, my source close to the negotiation told me “5.”

Indiana Governor Mitch Daniels outlined draconian measures that would be taken in the event of a government shutdown, including furloughing more than 30,000 state employees and the closing down of casinos.

Lawmakers are mainly divided over school funding.  Republicans are pushing a formula where the money follows the student, while Democrats want to see a distribution in more a district-based manner.

I’ll keep you posted as I get more information.  Legislators have until midnight Tuesday to pass a budget.

On a side note, Indiana Secretary of State Todd Rokita says his office will stay open on volunteer-skeleton basis for anyone who needs the office’s services.