PI Original Micah Maidenberg Wednesday September 1st, 2010, 8:46am

The GOP's Love Affair With Indiana

Illinois Republicans love to praise Indiana for its fiscal discipline. But is the Hoosier State a perfect model for state government?

On Monday, we noted that Indiana's Republican Gov. Mitch Daniels is seeking nearly $435 million in funds made available through the Congressional state aid bill. That's legislation Illinois' GOP gubernatorial candidate, State Sen. Bill Brady, has said he opposed.

It's not clear what Brady would do if his lead in the polls holds up and he has the choice, like Daniels, to apply for funding through a federal stimulus program he previously criticized. (Earlier this month, he hinted that he would spend any money sent to Springfield.) But Daniels' flip does mark a rare moment when something happening in Indiana state government hasn't drawn immediate praise from GOPers on this side of the state line.

Throughout the summer, Illinois Republicans haven't been shy about saying, in so many words, "we heart the Hoosier State." Among the recent expressions of admiration:

"Look no further than just right next door with Indiana, who made the cuts back in about '04, '05, '06 during the good times. They have a slight deficit right now but their rainy day fund is enough to cover it." -- State Sen. Matt Murphy (R-Palatine), June 6, WLS-TV

"Indiana is an example, a model of how to run a state. Their job climate is strong, their debt's down, their borrowing's down. Other states are not blaming their woes on the recession or the national problems because they've gotten their fiscal house in order." -- House Minority Leader Tom Cross (R-Oswego), July 25, WLS-TV

"Look at the difference between Indiana and Illinois. Indiana has taken jobs from Illinois and other places because they have a business friendly environment." -- Robert Dold, Republican candidate in the 10th District Congressional, August 22, WLS-AM

Is all well in Indiana? It's a fine place (as this writer, who was born there, can attest). But it's not a perfect model for state goverment, either.

Cross and Dold's praise for Indiana's business climate, for example, isn't exactly showing up in the hard data. Indiana's unemployment rate this past July was 10.2 percent, according to the Bureau of Labor Statistics' preliminary numbers. Unemployment in Illinois in July was 10.3 percent.

Indiana was one of the first in the nation to exhaust its unemployment benefit trust fund, well before the recession finished ripping through the economy. And the state faces looming challenges on prison policy; the cost of running the state's Department of Corrections is up by more than 40 percent since 2000.

The budget situation is better in the Hoosier State than in Illinois, but it's also worth noting that Daniels called for a temporary income tax increase in 2005 and raised the state's sales tax by one point three years later to pay, in part, for property tax caps (a move that is now squeezing local government revenues). Brady, if elected, has promised to veto any tax increase that crosses his desk.

While Indiana passed a two-year budget in 2009, fighting over the plan nearly resulted in a government shutdown. And the state's far from out of the woods on the fiscal front. Earlier this summer, the state's auditor reported that revenues for the state's 2010 fiscal year came in $957 million less than budgeted. By the end of this fiscal year, Indiana's reserve funds are expected to fall to $188 million, "largely due to the further elimination of federal stimulus dollars and a slow recovery in state revenues," the state auditor's report said.

In other words, stimulus dollars have boosted the state's budget. As a columnist for the Indianapolis Star recently put it, savings realized by the Daniels Administration "is thanks in large part to nearly $1.2 billion in federal stimulus money that helped shore up the state's education and Medicaid spending."

Illinois GOPers should recognize these realities as they lay wreaths of praise upon our neighbor to the east. 

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