sealPurdue Letter from the President

June 2002

In recent days, a lot of people have asked me how I feel about the budget and tax restructuring bill passed by the Indiana General Assembly on June 22. My first reaction, of course, was relief that we were at the end of a difficult process that had frustrated a great many people for a long time.

I also felt gratitude to the government officials who kept their covenant with the people of Indiana and persisted until they completed a very tough job. Legislative leaders like Senator Larry Borst and Representative Pat Bauer played key roles in the process, and Governor Frank O'Bannon and Lieutenant Governor Joe Kernan were steadfast in their efforts to bring the session to a successful conclusion.

But most of all, I feel hopeful and empowered, because in the midst of one of the worst fiscal crises in its history, Indiana has chosen to act decisively and boldly. We have taken charge of our own future, and that's a good feeling.

Is House Bill 1001 the answer to all our fiscal woes? Certainly not. In the American system, virtually every important piece of legislation is the result of extensive compromise. We may find things to criticize in the bill, but the state unquestionably is better off with it than without it.

While H.B. 1001 is not a solution to Indiana's problems, it does create an opportunity for us to solve them. The bill addresses the state's budget deficit by raising an estimated $600 million in new revenue annually. This is significant, but balancing the budget will still depend on an economic upturn that has not yet begun.

In any event, these additional funds will not be available to the state immediately. It will take time for changes in the sales tax and gaming regulations to start generating revenue. From the perspective of Purdue and all of higher education, we expect to face continued budget restrictions, at least in the short term. Purdue has suffered more than $100 million in cuts over the biennium, and the future of the state's education funding remains uncertain.

However, the bill will restructure taxes in a way that has the potential to create a more favorable climate for business growth in the state, and this is the real key to our future.

The question now is whether we will take advantage of this opportunity to become a competitive player in the global marketplace. There are some hopeful signs.

One provision of H.B. 1001 restores funding for the 21st Century Research and Technology Fund at the level of $15 million in 2002-2003. Although this is $10 million less than the amount originally budgeted, the bill also extends the program for an additional year. This is an indication that we have recognized the role of science and technology in our economic future. Another provision of the bill encourages high-tech job growth by increasing the state's research tax credit from 5 percent to 10 percent.

Indiana needs to make its existing industries as efficient and productive as any in the world through use of the latest technology. It needs to develop a new core of knowledge-based businesses that will provide the opportunity for new growth and encourage young, well-educated people to live here.

Programs like the Central Indiana Life Sciences Initiative and the Purdue Research Park are key to this economic expansion. Discovery Park, which very soon will rise on the west end of Purdue's West Lafayette campus, has the potential to spawn more high-technology industry and new partnerships between the private and public sectors.

These things have tremendous potential, and now our state's leaders have given us the tools to realize it.

Martin C. Jischke