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A Tax-Cutter Tries to Solve Indiana's Economy

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A Tax-Cutter Tries to Solve Indiana's Economy

Politics

A Tax-Cutter Tries to Solve Indiana's Economy

A Tax-Cutter Tries to Solve Indiana's Economy

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Gov. Mitch Daniels, seen campaigning last fall, faces revenue shortfalls in Indiana. Governor's Office hide caption

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Governor's Office

Web Extra: Daniels on Taxes, Education

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A second-grade class at Washington Irving Elementary in Indianapolis. Ben Bergman, NPR hide caption

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Ben Bergman, NPR

When he was President Bush's top budget advisor, Mitch Daniels had a reputation as a tax-cutter. But since becoming Indiana's governor, he has proposed a tax increase to help solve the state's budget troubles.

Unlike the federal government, most states have laws that make it hard to borrow billions of dollars. So like many states, Indiana is wrestling with problems that the federal government has been able to put off.

Gov. Daniels' proposed mix of tax increases and budget cuts have met with resistance. Current negotiations would cut money at urban schools like Washington Irving Elementary, in Indianapolis, and increase funding in areas where the population is growing.

Last week, Indiana's Republican-led state Senate voted for tax increases that are considered to be more politically palatable — including added levies on cigarettes and alcohol.