Governor's State of the State Address

Governor Mitchell E. Daniels, Jr.
2010 State of the State Address
January 19, 2010

Mr. Speaker, members of the Assembly, fellow Hoosiers, good evening.   This once a year we gather as a family might, to take stock of our state's health and to assess the performance of our public duties.  The sense of privilege one feels on this podium never diminishes, nor the sense of duty to report honestly and accurately on our family's situation and the health of our public institutions.

It's our way in this state to speak plainly and to face reality squarely.  The plain truth is that life is difficult tonight for far too many Hoosiers.  An economy booming at full employment a year and a half ago has taken several steps back.  One in eleven workers is unemployed, one in six people on Medicaid.  The average Hoosier income fell last year, by almost one percent.  We are distressed, disappointed, and dissatisfied at all this.   I know we are united in this chamber in seeking to do what government can to work through and out of the national recession in which we are enmeshed.

But Hoosiers are also known for resilience, for avoiding self-pity, and for keeping a sense of perspective.  We know that we have battled through tougher times before.  We know that the possessions, the technology, even the shrunken incomes in our homes today, are still vastly greater than anything Hoosiers knew just one generation ago.  We know that our jobless rate, though intolerable, is below the national average and well below that of neighboring states.

We also know that this is not the only such meeting taking place this month.  Across America, forty-nine other addresses are being given, almost all under conditions far more grim than those we confront.  The one national study available says that our budget problem is one of the smallest in the nation.  Our day's most celebrated business sage says "You don't know who's been swimming naked 'til the tide goes out."   Well, the tide is out, and now we know.

Compared to its budget, Illinois' fiscal problem is four times larger than ours.  Arizona's, five times. California's, six times.  Out there, the governor recently exclaimed in desperation, "How could we let something like that happen?"  So far at least, no one in this room has to ask that question.

A young seaman sought a veteran mariner's advice, asking "What do I do when I find myself in a gale force wind with a dangerous reef to leeward?"  To which the old sea captain replied "What you do is, you don't get yourself in that position."  Through the discipline of legislators on this floor, and the superb, businesslike management of my colleagues in those balconies, Indiana stands in a position very different from virtually all our sister states.  They crashed on the reef many months ago.

They have seen their credit ratings downgraded and their borrowing costs soar.  Indiana has a Triple-A credit rating for the first time ever, saving millions in interest costs for our cities, schools and universities.  We will be using our carefully built reserves to get us through this next year and a half.  Any reserves most other states had have long since disappeared.

They have slashed, sometimes virtually halted, the construction and repair of state roads.  In Michigan, they are grinding asphalt roads back into gravel, as though to regress by a century.  But here, we are building for Indiana's future at a rate twice the previous all-time record.  All over Indiana, the dreams of decades are becoming real:  the Hoosier Heartland Corridor, the Fort to Port highway, US 31 from South Bend, I-69, and hundreds of others, all at full speed, under budget, ahead of schedule, taking shape before our eyes.

After growing education spending five years in a row, by a total of twelve percent, we were recently, reluctantly forced to trim it, by some three cents on the dollar.  But all across the country, education spending has been reduced by vastly more:  by twice as much in places like Washington, Nebraska, and Connecticut; by three times as much in Virginia, Mississippi, and Utah; four times as much in Minnesota and South Carolina, six times as much in Alabama.

Around our nation, states have closed parks, stiffed vendors, thrown people off Medicaid, stopped plowing snow, and released thousands of dangerous criminals from prison early.  Overnight last night, the citizens of Iowa were protected by seven state troopers, total.   We have done none of those things and don't intend to.

Saddest of all, our sister states, at least forty of them, are doing the worst thing possible in times like these.   They are raising taxes, adding to the burden on families already in distress, and making their economic climates even less attractive to new jobs than they were before.   Michigan, Wisconsin, New Jersey and at least eleven more have raised income taxes.  Ohio, Oregon, Minnesota, and thirty more have raised gas taxes.  Many states have raised multiple taxes at the same time.

I hope you will join me in saying tonight to the people for whom we all work, we will make the hard choices, we will stretch the available dollars, we will do whatever is necessary but we will not take the easy way out and we will not make this recession worse by adding one cent to the tax burden of our fellow citizens. 

For us, economy in government did not begin with this recession.  Together we brought this state from bankruptcy to solvency over a five-year period of careful budgets, stewardship, and reform.  Per capita state government spending in Indiana is now sixth lowest in the nation, an eight-place improvement from a few years ago.  State government has two-thirds fewer airplanes, thousands fewer vehicles; we have the fewest state employees since 1982.

We have heeded the mariner's instruction; what we did was, we didn't get ourselves in the position of other states.  And yet the gale of shrunken revenues is still blowing.  The reef of huge service cuts or higher taxes is still close alee.

Solvency, like freedom, requires eternal vigilance.  We could be Michigan in a minute of meekness, Illinois in an instant of irresolution. The budget you passed just six months ago may have seemed reasonably frugal at the time, but almost immediately we could tell that it spent beyond our declining means.   If we had done nothing, its spending levels would have obliterated our entire state reserve by six or seven months from now.   So we have acted, and we will act again as necessary.  I thank this Assembly and our fellow citizens for understanding the very unwelcome decisions we have made to date.  We will need your continued understanding, for more hard calls are probably coming.

We will make those for which we already have the authority.  But there are savings measures for which we need changes only this Assembly can make.  And so my first request is for legislation to enable the saving of some $70 million through a host of new economies.  The largest of these would permit us to manage our two pension funds, PERF and TRF, under one administration.  Absolutely nothing would change in the benefits, or the amount of funding, or in the totally separate, independent status of these systems.  All that would change is the amount paid out in investment fees, when we bid the job as one large bundle.  If someone's Wall Street bonus is a little smaller next year while we save Indiana taxpayers 40 or 50 million dollars, I think we can all live with that.

We need the savings this bill would make possible.  They are equivalent, for example, to 1 percent of our K-12 payments, or 5 percent of our higher education spending, or 10 percent of our combined law enforcement budgets.  Far better to reduce nice-to-do expenditures in state government than to make even tougher the must-do tasks of educating our young people and protecting the public safety.

I make a second request in the name of some of the bravest and most deserving of all those Hoosiers struggling this evening, the single parents of our state.  There is no one more contemptible to me than a person who brings a child into this world and then fails to live up to the duties of parenthood.  And for those who compound their absence by refusing their court-ordered duty to pay child support, I have even less respect.

After five years of hard effort, we have raised the percentage of child support collected from about 50 percent to 58 percent.  This of course is still unacceptably low - the best states are upwards of 70 percent.  We need new tools to make further headway.  For instance, allow us to see that a delinquent father who wins money in one of our casinos shares some of the take with his children.

Every percent of child support improvement sends $7 million directly into the pockets of some of our neediest households.  Representative Linda Lawson and Senator Richard Bray have joined to help us; please give your bipartisan support to the Bray-Lawson bill and let's provide millions of dollars to some of the homes which need them the very most.

All of us tonight are rightly preoccupied with the recession and the problems it presents to our public services.   But in time these hardships will pass.  What must not pass is an opportunity to continue Indiana's steady progress in reforming our public institutions.

In 2005, you approved our top-to-bottom overhaul of the ethics rules for the executive branch.  We tightened the gift rules, protected whistleblowers, stopped the revolving door between government and lobbying, and stiffened penalties for any violations.  We created an Inspector General and a new battalion of fraud-fighters to police this new era of higher standards.  The dog that doesn't bark rarely gets noticed, but let's notice tonight, that armed with the tools you made possible, Indiana has seen five years of scandal-free government and we are determined to keep it that way.

And so all Hoosiers should welcome the excellent initiative of your leadership to bring similar reform to this, the senior branch of our government.   Mr. Speaker, Mr. President Pro Tem, I applaud your proposals to raise the standards to which legislators will now be held.  It will enhance the quality of your decisions and the confidence of our citizens in those decisions.  Thank you for stepping forward so boldly; I look forward to signing this important new law.

While you're at it, please respond to the plea of mayors of both parties and all parts of our state, and end the egregious conflicts of interest that occur when public employees sit on city and county councils, voting on their own salaries and overriding the decisions of their own management.  How we ever permitted this to occur in Indiana is one of those mysteries of history, but now is an ideal time to strike another blow for good government and end this abuse forever.

In another area reform has been well begun, and is ready for a second chapter.  From this platform a year ago, I thanked Governor Joe Kernan, Chief Justice Randy Shepard, and their commission colleagues for a superb set of proposals to modernize Indiana's pioneer days system of local government.   A state committed to protecting taxpayers, and limiting government to the role of the people's servant, has no business maintaining more elected politicians than states twice our size.  It's wasteful, it's antiquated, it produces poor decisions, and it obscures the public's ability to assign either credit for success or blame for failure.

This Assembly has taken the first steps toward cleaning up this anachronism.  You have dealt with five of the Commission's twenty-seven recommendations, most notably the elimination of township assessors.  You reduced the number of cooks in the assessment kitchen by about one thousand.  Having as many as 22 different assessors setting property values in a single county was a formula for unfairness, waste and, all too often, corruption.  Moving assessment to a single, accountable county official was a matter of simple common sense. 

The exact same principle applies to poor relief and fire protection, still handled as they were in 1848.  I hope I have seen for the last time new half-million dollar fire trucks bought in fire stations a couple blocks apart because two totally separate township boards were involved.   Just as you already did for libraries, we can maintain local distribution of poor relief, local identity and leadership of our fire departments, while moving resource and taxing decisions to the county level, where they can be made rationally and for the maximum benefit of all citizens.  In the process, we can save millions and delete 3,000 more political offices for which there is rarely any competition, anyway.  And we can put an end to the widespread nepotism which, even when good people are involved, simply doesn't pass the test of good government.

And as we reduce the number of politicians, let's reduce the number of elections we hold.  The Commission's suggestion to shift municipal and school board elections to the fall of even-numbered years would not only boost turnout for these important offices, it would save tens of millions of dollars for our hard-pressed local governments.   This may be, as we say, a short session, but we can still take a long stride toward modernization of our top-heavy and expensive local government.

In no area is reform more urgent, or more critical to Indiana's future, than in education, and here the news is excellent and the momentum even stronger.  2009 was a breakthrough year in improving the way we prepare our young people for the lives and the work ahead.

First, this Assembly heeded the call of President Obama and others and lifted Indiana's backward-looking limits on charter schools and on considering student achievement in evaluating teachers.  Then our Professional Standards Board, led by our superb new Superintendent Tony Bennett, acted to strengthen standards for new teachers, and to open both classroom and leadership positions to those whose hearts call them to teaching from other walks of life.

Next, we must address the single greatest cause of student failure, the inability of so many of our children to read proficiently.  If a school accomplishes nothing else in a child's decisive first years, it simply must enable him or her to read and comprehend the English language.  Yet too often failure is masked by the practice known as "social promotion." 

Sending an illiterate child on to higher grades is unfair to the next teacher, damaging to our state's future, but cruelest of all, disastrous to the young life being blighted by that failure.  If, after four years, the system has failed in this most fundamental duty, then it will simply have to try again until it gets it right.  I ask you to pass our bill to stop social promotion, and to say to the world that Indiana never gives up on its children, not one single kid.

Two more actions can stamp 2010 as an historic moment for better government in our state.  First, let's set the stage for the fairest, most reasonable and non-partisan redistricting ever seen in Indiana.  Too many times in American history, legislative boundaries have been drawn to favor haves over have-nots, ins over outs, incumbents over newcomers.  The worst examples of gerrymandering and politician protection can be found in other states, but a glance at Indiana's current lines shows that they are nothing to be proud of.

We praise tonight the bipartisan expressions of intention that Indiana's next redistricting be its fairest ever.  Members of both parties have offered constructive ideas for lines that make more geographic, demographic, and just plain common sense than today's.  Let's commit to the kind of principles that assure Hoosiers that in our state, voters will pick their officeholders and not vice versa.

Lastly, some heartfelt congratulations.  Just eight days into session, this Assembly has already made history by completing and safeguarding some excellent work you began two years ago. 

In 2008, you passed the largest tax cut in state history, and reduced Indiana's property taxes to some of the lowest in the nation.   At a time when every penny counts, and home foreclosures are a national epidemic, you lowered the annual cost of owning the average Hoosier home by more than $500.  The American dream of home ownership is more affordable in Indiana tonight than in virtually any other place in our country.

But you did more: you provided Hoosiers unique protection and certainty, through caps that secure these lower taxes from ever surging out of control again.  As we all know, those caps will always be vulnerable to either legislative or judicial repeal unless protected by our constitution.

Those who favor more government, more spending, and higher property taxes have every right to present their arguments before the caps become permanent.  But they must have the courage to make their case before the final arbiters of our Constitution, all the people of our state, voting in referendum next fall.  

At 2:31 PM this afternoon, the "people's branch" of government lived up to its name.   You gave the people the chance to decide, as I believe they will, that lower property taxes are here to stay.  Thank you for this latest bold move to show the world that in Indiana, we trust our fellow citizens and we truly put the interests of taxpayers first.

That we gather tonight in difficulty but not crisis, stress but not disaster, is small consolation.  No one here will breathe easy or sleep well until we return to the full employment Indiana knew just a year and a half ago.   But we must recognize that the way we do our duty today is about more than just muddling through the short term better than the next guy.  It's about lengthening our competitive economic edge.  Every time another state raises a tax, can't pay its bills on time, or sends out IOUs instead of tax refunds, it slips another notch behind Indiana as an attractive place for the next new job, the next new dollar of investment.  The better we handle the people's business today, the more business we will have for our people, and the more opportunity for our children, tomorrow.

Even in this hardest year in so long, signs of strength are everywhere.  Forced by the downturn to a choice between Indiana and some other place, at least fifty companies closed up shop elsewhere and relocated jobs to our state. Jobs came from Michigan to Marion, from Pennsylvania to Decatur, from Wisconsin to Auburn, from Mexico to Elkhart.

There's that long German word I always mispronounce, that means "enjoyment obtained from the troubles of others."  Watching the agonies of other states, we take no delight at their misfortune.  Hoosiers never do; our first reaction to a neighbor in trouble is to look for a way to help.  But if we take no enjoyment, we will take the jobs from companies who know a state built for growth, a state with its act together, when they see one.

When the dust settles on this recession, we will have a higher share of America's auto, RV and steel jobs than we did before.  In a 2009 when national business investment fell by almost one-fourth, the number of new jobs committed to Indiana actually grew over the near-record year of 2008.

2009 was the year when several young companies who may lead the electric vehicle industry chose Indiana for their plants.  Many of their suppliers are following them.  Our goal is to be the capital of this potentially massive industry of tomorrow.

Over the last two years, Indiana has been the fastest growing state in wind power, and now businesses seeking to build the equipment for this new industry are coming to Muncie, to New Albany, and to Clinton.  Within weeks, you'll see us explode onto the solar power landscape.

Perhaps most telling, 2008 brought the welcome word that more people are moving into Indiana than moving out.  The numbers weren't huge, but they mark a big reversal from an era in which most years saw a net exodus, sometimes including many of our most promising young people.  One recent ranking identified Central Indiana as the best place in America for new college graduates.

A tea bag's strength is revealed in hot water.  So far, we have stood up to this recession's heat with a strength reflecting the sturdy character of Hoosiers.  Odds are the year ahead won't be much easier.  Everyone in the public's employ has a chance to help, and a duty to do so, remembering where jobs come from, and who it is that pays for our salaries and every penny we dispense.  

Two years ago tonight, I recalled the toughest question I was asked in my first months as governor, when an East Coast CEO asked, "What makes your state distinctive?  What makes you stand out?"  No need to ask anymore.  Look at any map of states still in the black; states preferred for new jobs; states adding to their public infrastructure; states where taxes have gone down not up.  A single bold patch of color below Lake Michigan, like a peony in a parking lot, is the common feature of all such maps.

Let's conduct ourselves so that a year from tonight America sees in its fullness what it now sees in part:  that there is a special place in our land where hard times are met with resolve; where government is the people's servant, not a privileged class; where bucks are not passed, decisions are not ducked, and where scarce dollars are allocated as adults do, to first things first.

By then America will see that same place leading the nation out of its decline, its traditional industries rebounding and a host of new businesses blossoming.  A place applying the highest standards of conduct and accountability in its public arenas.  A special place called Indiana, to which the bright, the enterprising, the young, the creative are gravitating.

It's not enough to stay off the reef.  It's our duty, and our golden opportunity, to set our sails and man the helm in a way that separates Indiana from a leaking fleet and carries her first and fastest into the sunnier seas ahead.

God bless this Assembly and this great state.