Election campaign Daniels's decision to run for
Governor of Indiana led to most of the rest of Republican field of candidates dropping out of the race. The only challenger who did not do so was conservative activist and lobbyist Eric Miller. Miller worked for the Phoenix Group, a Christian rights defense group. Daniels's campaign platform centered on cutting the state budget and privatizing public agencies. He won the primary with 67% of the vote. While campaigning in the general election, Daniels visited all 92 counties at least three times. He traveled in a donated white
RV nicknamed "RV-1" and covered with signatures of supporters and his campaign slogan, "My Man Mitch". "My Man Mitch" was a reference to a phrase once used by President George W. Bush to refer to Daniels. Bush campaigned with Daniels on two occasions, as Daniels hoped that Bush's popularity would help him secure a win. In his many public stops, he frequently used the phrase "every garden needs weeding every sixteen years or so"; it had been 16 years since Indiana had had a Republican governor.
Budgetary measures In his first State of the State address on January 18, 2005, Daniels put forward his agenda to improve the state's fiscal situation. Indiana has a
biennial budget, and had a projected two-year deficit of $800 million. Daniels called for strict controls on all spending increases and reducing the annual growth rate of the budget. He also proposed a one-year 1% tax increase on all individuals and entities earning over $100,000. The taxing proposal was controversial and the Republican Speaker of the House,
Brian Bosma, criticized Daniels and refused to allow the proposal to be debated. The
General Assembly approved $250 million in spending cuts and Daniels renegotiated 30 different state contracts for a savings of $190 million, resulting in a budget of $23 billion. Annual spending growth for future budgets was cut to 2.8% from the 5.9% that had been standard for many years. Increase in revenues, coupled with the spending reductions, led to a $300 million budget surplus. Indiana is not permitted to take loans, as borrowing was prohibited in its constitution following the
1837 state bankruptcy. The state, therefore, had financed its
deficit spending by reallocating $760 million in revenue that belonged to local government and school districts over the course of many years. The funds were gradually and fully restored to the municipal governments using the surplus money, and the state reserve fund was grown to $1.3 billion. In 2006, Daniels continued his effort to reduce state operating costs by signing into law a bill privatizing the enrollment service for the state's welfare programs. Indiana's welfare enrollment facilities were replaced with
call centers operated by
IBM. In mid-2009, after complaints of poor service, Daniels canceled the contract and returned the enrollment service to the public sector.
Daylight Saving Time One of the most controversial measures Daniels successfully pushed through was the state adoption of
Daylight Saving Time, which Daniels argued, in a complicated economy, was needed to end constant confusion and bring Indiana into a year-long alignment with the rest of the country. Prior to the change, the counties in the western side of the state did not observe daylight saving time, although the counties in southeastern Indiana near
Cincinnati, Ohio, did observe it unofficially due to being in that city's metropolitan area. Interests for both time zones had prevented the official adoption of daylight saving since the 1960s, leading to
decades of debate. Daniels pressed for the entire state to switch to Central Time, but the General Assembly could not come to terms. Ultimately after a long debate, the General Assembly adopted Eastern Daylight Saving Time in April 2005. The measure passed by one vote and put most of the state on the
Eastern Time Zone, except for counties in the northwest and southwest corners that are in the
Central Time Zone.
Highways In 2006 the legislature enacted Daniels' controversial plan to remake the state's highways system by leasing the
Indiana Toll Road. Called the Major Moves, the road was leased to Statewide Mobility Partners, a joint venture company owned by Spanish firm
Cintra and Australia's
Macquarie Infrastructure Group for 75 years in exchange for a one time payment of $3.85 billion and the commitment to make $4.4 billion worth of upgrades to the road. Daniels claimed that the road was not earning the state money because of the historical lack of political will to raise tolls. He told a congressional committee, "...instead of making money for the state, the road had operated at a loss for 5 of the previous 7 years...Political timidity had kept tolls locked at the same price since 1985...Even if we raised the tolls, there was little reason to believe that the governors who would come after me would have the inclination or the political ability to do the same. I once asked how much it cost to collect that 15-cent toll on the road and the answer came back at 34 cents. I joked that we would have been better off with the honor system and a fishbowl for occasional donations." Daniels and an independent accounting firm believed the road was worth $2 billion at most and were surprised by the offer of nearly $4 billion in cash, plus that much in contracted improvements. Daniels called it the best deal since "Manhattan was sold for beads—except this time, the natives won." Most Democrats opposed the measure and the party launched an advertising campaign accusing Daniels of selling the road to foreign nations. Initially, his support for the controversial legislation led to a rapid drop in his approval rating; in May 2005, a poll showed an 18-point drop in support and that only 42% of Hoosiers approved of the way he was doing his job. In the following months, many of his reforms appeared to have a positive effect and his approval ratings rebounded. The income from the lease was used to finance a backlog of public transportation projects and create a $500 million trust fund to generate revenue for the maintenance of the highway system. Over the next ten years, Indiana would use the cash and interest from the deal to add or expand several major new roadways such as US 31, the Hoosier Heartland Highway, I-69, and the Ohio River bridges. It also rehabilitated 1,400 bridges and 50% of the state's roads without using tax dollars or taking on new debt. The contract prohibited toll increases until 2010 and allowed residents with a transponder to avoid paying the higher tolls until 2016. Annual toll increases were limited to the greater of 2%, the rate of inflation, or the rate of increase in the GDP. The operator of the toll road filed for bankruptcy in 2014, citing lower than projected traffic volumes and revenues. Indiana retained the $3.85 billion lump sum payment and the lease was transferred to another Australian investment company without altering the terms of the lease.
Healthy Indiana Plan In 2007, Daniels signed the Healthy Indiana Plan, which provided 132,000 uninsured Indiana workers with coverage. The program works by helping its beneficiaries purchase a private health insurance policy with a subsidy from the state. The plan promotes health screenings, early prevention services, and
smoking cessation. It also provides tax credits for small businesses that create qualified wellness and
Section 125 plans. The plan was paid for by an increase in the state's tax on cigarettes and the reallocation of federal
Medicaid funds through a special waiver granted by the federal government. In a September 15, 2007,
Wall Street Journal column, Daniels was quoted as saying about the Healthy Indiana Plan and cigarette tax increase saying, "A consumption tax on a product you'd just as soon have less of doesn't violate the rules I learned under
Ronald Reagan." The plan allows low to moderate income households where the members have no access to employer provided healthcare to apply for coverage. At the time of initial implementation, the fee for coverage was calculated using a formula that resulted in a charge between 2%–5% of a person's income. A $1,100 annual deductible was standard on all policies and allowed applicants to qualify for a health savings account. The plan paid a maximum of $300,000 in annual benefits.
Property tax reform In 2008, Daniels proposed a property tax ceiling of one percent on residential properties, two percent for rental properties and three percent for businesses. The plan was approved by the Indiana General Assembly on March 14, 2008, and signed by Daniels on March 19, 2008. In 2008, Indiana homeowners had an average property tax cut of more than 30 percent; a total of $870 million in tax cuts. Most money collected through property taxes funds local schools and county government. To offset the loss in revenues to the municipal bodies, the state raised the sales tax from 6% to 7% effective April 1, 2008. Fearing a future government might overturn the statute enforcing property tax rate caps, Daniels and other state Republican leaders pressed for an amendment to add the new tax limits to the
state constitution. The proposed amendment was placed on the 2010 General election ballot and was a major focus of Daniels's reelection campaign. In November 2010, voters elected to adopt the tax caps into the Indiana Constitution. Daniels's successes at balancing the state budget began to be recognized nationally near the end of his first term. Daniels was named on the 2008 "Public Officials of the Year" by the
Governing magazine. The same year, he received the 2008 Urban Innovator Award from the
Manhattan Institute for his ideas for dealing with the state's fiscal and urban problems.
Voter registration In the 2005 session of the General Assembly, Daniels and Republicans, with some Democratic support, successfully enacted a voter registration law that required voters to show a government issued photo ID before they could be permitted to vote. The law was the first of its kind in the United States, and many civil rights organizations, including the
ACLU, opposed the bill, saying it would unfairly impact minorities, poor, and elderly voters who might be unable to afford an ID or be physically unable to apply for an ID. To partially address those concerns, the state passed another law authorizing state license branches to offer free state photo ID cards to individuals who did not already possess another type of state ID. A coalition of civil rights groups began a court challenge of the bill in Indiana state courts, and the Daniels administration defended the government in the case. The U.S. District Court granted summary judgment to the state. The petitioners appealed the bill to the
United States Court of Appeals for the Seventh Circuit, and that body upheld the U.S. District Court decision in the case of
Crawford v. Marion County Election Board. Upon appeal the
United States Supreme Court also ruled in favor of the state in April 2008, setting a legal precedent. Several other states subsequently enacted similar laws in the years following. On November 4, 2008, Daniels defeated Democratic candidate
Jill Long Thompson and was elected to a second term as governor with 57.8% of votes, despite
Barack Obama carrying the state in the presidential race. He was re-inaugurated on January 12, 2009.
Washington Post blogger
Chris Cillizza named the Daniels reelection campaign "The Best Gubernatorial Campaign of 2008" and noted that some Republicans were already bandying about his name for the
2012 presidential election. Daniels garnered 20 percent of the African American vote and 37 percent of Latinos in his 2008 re-election campaign. He won with more votes than any candidate in the state's history. On July 14, 2010, at the
Indianapolis Museum of Art, Daniels was on hand to help announce the return of
IndyCar Series chassis manufacturing to the state of Indiana. Dallara Automobili would build a new technology center in Speedway, Indiana and the state of Indiana would subsidize the sale of the first 28 IndyCar chassis with a $150,000 discount. Daniels has been recognized for his commitment to fiscal discipline. He is a recent recipient of the Herman Kahn Award from the
Hudson Institute, of which he is a former president and CEO, and was one of the first to receive the Fiscy award for fiscal discipline. A November 2010 poll gave Daniels a 75% approval rate.
Second term Democrats won a majority in the Indiana House of Representatives in the 2006 and 2008 elections, resulting in Indiana having a divided government, with Democrats controlling the Indiana House of Representatives and the Republicans controlling the governor's office and the Indiana Senate. This led to a stalemate in the budget debate, which caused Daniels to call a special session of the General Assembly. Due to the national financial crisis, the state was faced with a $1.4 billion shortfall in revenue for the 2009–2011 budget years. Daniels proposed a range of spending cuts and cost-saving measures in his budget proposal. The General Assembly approved some of his proposals, but relied heavily on the state's reserve funds to pay for the budget shortfall. Daniels signed the $27 billion two-year budget into law.
2011 legislative walkout In the 2010 mid-term elections, Republican super-majorities regained control of the House, and took control of the Senate, giving the party full control of General Assembly for the first time in Daniels's tenure as governor. The 2011 Indiana General Assembly's regular legislative session began in January and the large Republicans majorities attempted to implement a wide-ranging conservative agenda largely backed by Daniels. Most of the agenda had been dormant since Daniels's election due to divided control of the assembly. In February, Republican legislators attempted to pass a
right to work bill in the Indiana House of Representatives. The bill would have made it illegal for employees to be required to join a
workers' union. Republicans argued that it would help the state attract new employers. Unable to prevent the measure from passing, Democratic legislators fled the state to deny the body a
quorum while several hundred protesters staged demonstrations at the capital. Minority walkouts are somewhat common in the state, occurring as recently as 2005. While Daniels supported the legislation, he believed the Republican lawmakers should drop the bill because it was not part of their election platform and deserved a period of public debate. Republicans subsequently dropped the bill, but the Democratic lawmakers still refused to return to the capital, demanding additional bills be tabled, including a bill to create a statewide
school voucher program. Their refusal to return left the Indiana General Assembly unable to pass any legislation, until three of the twelve bills they objected to were dropped from the agenda on March 28. The minority subsequently returned to the statehouse to resume their duties.
Education Following the legislative walkouts, the assembly began passing most of the agenda and Daniels signed the bills into law. Written in collaboration with
Indiana Superintendent of Public Instruction Tony Bennett, a series of education reform laws made a variety of major changes to statewide public schools. A statewide
school voucher program was enacted. Children in homes with an income under $41,000 could receive vouchers equal to 90% of the cost of their public school tuition and use that money to attend a private school. It provides lesser benefits to households with income over $41,000. The program was gradually phased in over a three-year period and became available to all state residents by 2014. Other funds were redirected to creating and expanding
charter schools and expanding college scholarship programs. The law also created a merit pay system to give better performing teachers higher wages, gave broader authority to school superintendents to terminate the employment of teachers, and restricted the collective bargaining rights of teachers. Daniels's e-mails were addressed to Scott Jenkins, his education adviser, and David Shane, a top fundraiser and state school board member. Daniels and his aides came to agreement and the governor wrote to them, "Go for it. Disqualify propaganda . ... " Part of Shane's input was that a statewide review "would force to daylight a lot of excrement". Three years later, in the wake of the revelations, 90 of Purdue's roughly 1,800 professors issued an open letter expressing their concern over Daniels's commitment to academic freedom. Daniels responded by saying that if Zinn were alive and a member of the Purdue faculty, he would defend his free speech rights and right to publish. In a letter responding to the professors, Daniels wrote, "In truth, my emails infringed on no one's academic freedom and proposed absolutely no censorship of any person or viewpoint." In response to the controversy, Daniels's office issued a statement that included several quotes that had also appeared in an article published in
Reason magazine by journalist Michael Moynihan. as well as a quote from a Stanford University news release, leading to accusations of plagiarism. Daniels later revised his statement stating he "axed the words of a Stanford University professor who expressed irritation with being included in the original remarks" while also removing the quotes that appeared in the Reason article.
Economy Raising Hoosier incomes was a key focus of his tenure as governor. Critics argue that during his administration Indiana's per capita income dropped from 33rd to 38th among states, growing slightly slower than the national average, and the percentage of people living in poverty in Indiana rose from 10.2% to 14.9%. Supporters argue that economic progress was delayed by the
Great Recession and when adjusted for Indiana's low cost of living, Hoosier incomes actually climbed following Daniels' leadership and Indiana rebounded from the recession faster than the rest of the nation in job growth and
consumer spending. ,
FEMA Administrator
R. David Paulison Abortion On April 27, 2011, the Indiana legislature passed a bill authored by State Representative Eric Turner that prohibited taxpayer dollars from supporting organizations that performed abortions. The legislation also prohibited abortions for women more than 20 weeks pregnant, four weeks sooner than the previous law. Although Daniels would later say he supported the bill from the outset, it was not part of his legislative agenda and he did not indicate whether he would sign or veto the law until after it passed the General Assembly. Daniels signed the bill on May 10, 2011.
Planned Parenthood and the
ACLU subsequently brought a lawsuit against the state alleging it was being targeted unfairly, that the state law violated federal Medicaid laws, and that their
Fourteenth Amendment rights were violated. A June 24 ruling prohibited the state from enforcing the law and the court later ruled in favor of Planned Parenthood citing the "freedom of choice" provision. The State of Indiana appealed the ruling and the Seventh Circuit Court upheld the lower courts ruling in part.
Immigration On May 10, 2011, Daniels signed into law two immigration bills; one denying in-state tuition prices to illegal immigrants and another one imposing fines for employers that employed illegal immigrants. Several protestors, at least five of whom were illegal immigrants, were arrested while protesting the law at the statehouse when they broke into Daniels's office after being denied a meeting. Student leaders called for their release, while some state legislators called for their
deportation. State Democratic Party leaders accused Daniels and the Republicans of passing controversial legislation only to enhance Daniels's image so he could seek the presidency. Daniels, however, denied the charges, saying he would have enacted the same agenda years earlier had the then-Democratic majority permitted him to do so.
Energy Daniels announced in October 2006 that a substitute natural gas company intended to build a facility in southern Indiana that would produce pipeline quality substitute natural gas (SNG). The lead investor was
Leucadia National, which proposed a $2.6 billion plant in
Rockport, Indiana. Under the terms of the deal endorsed by Daniels, the state would buy almost all the Rockport gas and resell it on the open market throughout the country. If the plant made money from the sale, excess profits would be split between Leucadia National's Indiana subsidiary, Indiana Gassification, and the state. If it lost money from the sale, then 100% of the losses would be passed onto Indiana consumers. Leucadia agreed to reimburse the state for any losses, up to $150 million over 30 years. Gas from the plant would make up about 17 percent of the state's supply. Critics feared that if gas prices fell over the next 30 years, the costs of the lost profits would be passed onto the bills of residents after the $150 million guarantee by Leucadia was exhausted. Questions were also raised because
Leucadia National hired Mark Lubbers, a former aide and close friend of Daniels, to promote the deal. The Daniels administration maintained that the plant would create jobs in an economically depressed part of the state and offer environmental benefits through an in-state energy source.
Right to Work Indiana became the first state in a decade to adopt
Right to Work legislation. Indiana is home to many manufacturing jobs. The Indiana Economic Development Corp. has reported that 90 firms said the new law was an important factor in deciding to move to Indiana. Daniels signed the legislation on February 1, 2012, without much fanfare in the hopes of dispersing labor protesters before the
Super Bowl in Indianapolis. ==2012 presidential speculation==