Indiana: Governor

Gov. Mitch Daniels (R)

Mitch Daniels (R) Elected 2004, 1st term up Jan. 2009
Born:	04-07-1949, Monongahela, PA
Home:	Indianapolis
Education:	Princeton U., B.A. 1971, Georgetown U., J.D. 1979
Religion:	Presbyterian
Marital Status:	married (Cheri)
Professional Career:	Advisor, Mayor of Indianapolis Richard Lugar, 1971-76; Chief of Staff, U.S. Sen. Lugar, 1976-82; Exec. Dir., NRSC, 1983-84; senior adv., White House, 1985-87; CEO, Hudson Institute, 1987-90; executive, Eli Lilly, 1990-2001; Dir., OMB, 2001-02.
DC Office	206 State House, Indianapolis, 46204 317-232-4567 Fax: 317-232-3443 Website: www.in.gov/gov
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Mitch Daniels, elected governor of Indiana in 2004, grew up in Indianapolis and graduated from Princeton and Georgetown law school. He worked as a staffer for Richard Lugar when he was mayor of Indianapolis in the early 1970s, as chief of staff for Lugar from 1976 to 1983 when he was in the Senate, and then as political director in the Reagan White House. In 1987, he returned to Indianapolis to work at the Hudson Institute and then went to work for the Eli Lilly company in 1990 where he climbed high in its ranks to president of Lilly's North American pharmaceutical operations; when he resigned to reenter government in 2001, he made $27 million from liquidating his stock holdings. He reentered government at the top level, as George W. Bush’s director of the Office of Management and the Budget. There he developed a reputation for cutting spending and for having disdain for members of Congress, whose motto he said should be, “ ‘Don’t just stand there. Spend something.’ This is the only way they feel relevant.” Bush insiders referred to him as “the Blade”; Senator Robert Byrd called him “Little Caesar.” Senator Ted Stevens said the only way he could fix his relationship with Congress was to “go home to Indiana.”

Which is what he did, in May 2003. Daniels’s family had remained in Indianapolis, he was tired of commuting on weekends and he saw an opportunity to run for governor. Democrats had held the office in mostly Republican Indiana since 1988—first Evan Bayh, elected in 1988 and 1992, then Frank O’Bannon, elected in 1996 and 2000. For most of that time Bayh and O’Bannon cut taxes, cut the welfare rolls and instituted education testing. But after the 2001 recession cost the state jobs and revenues plummeted, O’Bannon was forced to take a different course. In 2002, the sales tax was raised. Out-year deficits loomed. Small scandals were exposed—DMV employees selling black market IDs, a state contracting official accepting favors, child protective workers filing false reports. Lieutenant Governor Joseph Kernan, a Vietnam veteran and POW for 11 months and a popular three-term mayor of South Bend, was widely assumed to be the strongest Democrat to succeed the term-limited O’Bannon. But in December 2002 Kernan shocked just about everyone by announcing that he would not run. “I just want to have a beer in my back yard on a Tuesday night. I’ve got a great job. I’ve enjoyed it, but I want to go back to South Bend.” That left the Democratic field to former Democratic state and national Chairman Joe Andrew and state Senator Vi Simpson.

Soon after he returned home, Daniels announced he was running for governor. All but one of the Republicans then running, including 2000 nominee David McIntosh, left the race and endorsed him. Bush, on a visit to the state, referred to “my man Mitch,” and in time Dick Cheney, Laura Bush and Andy Card made appearances for him. He campaigned around the state in checked shirts and sweaters, traveling in an RV with supporters’ signatures all over it; he touched down in every one of Indiana’s 92 counties and eventually visited each of them three times.

Then in September 2003 O’Bannon was found in his hotel room in Chicago paralyzed by a stroke. Two days later, Kernan was sworn in as acting governor. Three days after that, on September 13, O’Bannon died and Kernan became governor in his own right. He handled the tragic transition gracefully and, perhaps inevitably, reconsidered his decision not to run in 2004. In November he announced he was running; quickly Andrew and Simpson ended their campaigns and supported him, as did Indianapolis Mayor Bart Peterson, often mentioned as a potential candidate himself.

From there on in it was a two-man race, although Daniels did have primary opposition. While his former boss George W. Bush was put on the defensive about losses of manufacturing jobs nationally, Daniels was attacking Kernan and local Democrats for losses of manufacturing jobs in Indiana and said it was time for a “new crew.” He called for tax breaks for new business property investments, new hires and research and development. He said he would put more emphasis on winning federal grants. He said he would create a state agriculture department and would provide tougher enforcement of child support obligations. Daniels opposed drug reimportation and favored an online referral service to match patients with drug discount programs. He called for health savings accounts for state employees and credits for employees who stop smoking and stay fit.

Kernan called for lower property taxes and for tax abatements for new business on a case-by-case basis. He endorsed full-day kindergarten. He criticized Daniels for his budget cuts as OMB Director, and for signing off on foreign contracts and job outsourcing; he blamed Indiana job losses on federal trade policy. He dropped a state contract with a company based in India to process unemployment claims. He charged that I-69 from Indianapolis to Evansville would have been built if Daniels had put in the money; Daniels said it had to be financed as a toll road.

Daniels had modest leads in polls during most of the campaign and won 53%-45%. He carried metro Indianapolis 57%-42% but ran behind in northern Indiana and Kernan’s home town of South Bend. In southern rural counties, places where people are used to voting Democratic in state races, he ran farther behind Bush than in the north. Republicans increased their margin in the state Senate to 33–17 and converted a 51–49 deficit in the state House to a 52–48 majority: it was the first time Republicans had won control of state government since 1986. Fiscal problems loomed: state government faced a $645 million deficit and owed $710 million in back payments to schools, universities and local governments.

In his first year as governor, Daniels showed that his talent for infuriating legislators had not diminished. He said Democrats "car-bombed" his agenda after they killed close to 130 bills by boycotting the House floor at the deadline for legislation to be passed and transferred to the Senate. And toward the end of the legislative session, Daniels caused a Senate floor walk-out by Democrats after he said they had "zero interest" in the budget process and that the minority leader was a "throwback politician."

But Daniels achieved some notable successes in his first two years. With the help of business interests, he convinced lawmakers to enact daylight saving time to stop Indiana from being one of three states that does not go on daylight-savings time, and he persuaded the Department of Transportation to allow eight counties to switch to the Central time zone. He created a state economic development corporation to replace the Department of Commerce and a new inspector general post for ethics; he also got a small funding increase for schools, a voter identification bill, a methamphetamine crackdown, and signed a bill requiring state vehicles to run on agricultural-based fuels when possible. Daniels led trade delegations to Japan, South Korean and Taiwan to promote agricultural exports and to court foreign investment. He reduced the state’s property tax relief payments, and in turn sought to give local governments more control over how they raise revenue.

Daniels launched his most controversial plan in 2005 when he unveiled “Major Moves” a 10-year transportation plan that aimed to cover shortfalls in the state’s transportation budget by privatizing transportation assets rather than raising gasoline taxes or state borrowing. The centerpiece was a 75-year deal to lease the Indiana Toll Road, a 157-mile-long span across northern Indiana that connects Ohio and Illinois, to an Australian-Spanish consortium in exchange for a $3.8 billion lump sum payment. Daniels sold the plan as a way to raise cash to improve state’s road system and create jobs, while leaving toll collection and highway maintenance to someone else. Democrats protested the state would lose control of toll increases and decades of future revenue. (This was despite the fact the highway was losing money because tolls had not been raised in 20 years.) Daniels and the state Republican party dipped into their campaign funds to run ads to promote the plan. After the Republican legislature approved the deal in 2006, Daniels proposed a spend $12 billion on the state’s infrastructure over the next decade, including the construction of an Illiana Expressway to ease traffic congestion between Illinois and Indiana, and building a privately funded extension of I-69 around metropolitan Indianapolis.

The unpopularity of the Toll Road lease and the switch to daylight-saving time kept Daniels largely off the campaign trail in 2006 and in part contributed to Republican losses, including the ouster of three members of Congress. Democrats also won a narrow 51–49 seat majority in the state House and a check on Daniels’ legislative agenda, particularly new efforts to privatize state transportation, lottery, welfare administration and other state services. The governor indicated a willingness to support a “reasonable” minimum wage increase, and had laid out an agenda that includes all-day kindergarten, low-income health insurance, a cigarette tax increase, increased veterans benefits, a public infrastructure plan and a ceiling on state spending. In spite of the Republicans’ poor showing in 2006, Daniels will be formidable if he runs for reelection in 2008. The governor took on and won unpopular initiatives and his opponent faces the challenge of proposing alternatives or advocating a return to the status quo; perhaps as important, he entered January 2007 with more than $2.5 million cash on hand. Among the announced Democratic candidates were Jim Schillinger, an architect and South Bend native, Democratic state Senate Minority Leader Richard Young and former Congresswoman Jill Long Thompson.