posted by Zach Patton

Mitch_1 Indiana Gov. Mitch Daniels stopped by 13th Floor HQ the other day to discuss what's going on in Hoosier Country.

Daniels has only been in the Indiana governorship for 18 months (after leaving his job as Director of the national Office of Management and Budget). But he's taken a remarkably active role -- something that's somewhat unusual among Indiana governors.

One of his big challenges, he said, is to diversify Indiana's economy, which is the most manufacturing-heavy in the nation.

"A lot of states are in a rosy upside of the [economic] cycle right now. It's hard for me to pay much attention to that, because in our state we're not.  We're not seeing those recent surges. If we don't diversify our economy, there's only one direction those arrows can keep going."

After the jump, Daniels discusses toll roads, Daylight Saving Time, and the power of a couple hundred hot dogs.

On the toll road controversy

Daniels said his biggest surprise so far has been the controversy that erupted over his sale of the Indiana Toll Road. Under a deal worked out earlier this year, the 157-mile toll road was leased to a Spanish-Australian consortium, which agreed to operate and maintain the highway for the next 75 years. The company gets to keep any profits it makes, but it paid the state $3.8 billion up front.

It was a sizeable windfall for the state, but Daniels was met with staunch opposition.

"It was one part sincere misunderstanding," he said. "People look out 10 years and think, 'We're not going to get any more toll revenue.' Yes, but we're also not going to have the expenses."

State laws, Daniels said, have kept tolls in Indiana from being raised since 1985. Some tolls cost drivers as little as 15 cents -- but they cost the state 34 cents to collect. "It was a money-losing endeavor. If we'd gotten one dollar on the sale, it would have been a good deal."

Part of the uproar, too, was over the fact that the company that leased the toll road was owned by foreign investors, Daniels says. "If the postmark on the check had had USA on it, this would have been a completely different issue.

"The controversy took me very much by surprise," Daniels said. "But it was sound policy, and I'd do it again in a flash."

On Daylight Saving Time

Another controversy erupted over Daniels' decision to make the entire state of Indiana observe Daylight Saving Time (a decision that previously had been left to individual counties).

"The issue is very hot in some places," he said. "The majority of people you talk to think it's fine. They like it. But the ones who oppose it may vote [against Daniels in the future]."

On hot dogs and succession planning

"Succession management is something I don't think governments do well at all," Daniels said. He's trying to instill better succession planning, like requiring state employees to maintain a list of three other employees who could perform their job.

But just last week, Daniels tried something more novel. "We held a cookout at the governor's mansion. Anyone in the state government could come. But the price of admission was that you had to bring someone along who could work in state government. Not to fill specific vacancies, but just to increase the pool of people we could consider."

The event was a big success, Daniels said, drawing about 150 potential new management recruits. "If we picked up three or four all-stars, that's a pretty good investment on a couple hundred hot dogs."

On Indiana's education system

"We have very little to brag about in K-12 in our state. We have one of the worst drop-out rates in the U.S. We're below the middle of the pack in any objective measure.

"Full-day kindergarten is going to be at the top of my agenda for next year.

"Our school construction costs are 48 percent higher than the national average.  And they account for four times more of people's property taxes than the national average.

"Indiana needs to reform its K-12 system. We need to move beyond laying more money on a system that's not as good as it needs to be."