"every garden needs weeding every sixteen years or so"; it had been 16 years since Indiana had had a Republican governor. His opponent in the general election was the incumbent, Joe Kernan, who had succeeded to the office upon the death of Frank O'Bannon. Campaign ads by Kernan and the Democratic Party attempted to tie Daniels to number of issues—his jail time for marijuana use; a stock sale leading to speculations of insider trading; and, because of his role at Eli Lilly, the high cost of prescription drugs. The 2004 election was the costliest in Indiana history, up until that time, with the candidates spending a combined US$23 million. Daniels won the election, garnering about 53% of the vote compared to Kernan's 46%. Kernan was the first incumbent governor to lose an election in Indiana since 1892. First term On his first day in office, Daniels created Indiana's first Office of Management and Budget to look for inefficiencies and cost savings throughout state government. The same day, he decertified all government employee unions by executive order, removing the requirement that state employees pay union dues by rescinding a mandate created by Governor Evan Bayh in a 1989 executive order. Dues-paying union membership subsequently dropped 90% among all state employees. 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