Video: Sen. Simpson offers a look into 2012 legislative session

Gearing up for the 2012 legislative session, Sen. Vi Simpson (D-Ellettsville) is preparing legislation to address economic development and other essential issues. Simpson is hopeful legislators can come together and craft bipartisan solutions to the state’s most pressing issues.

Video: Sen. Arnold outlines 2012 legislative priorities on Organization Day

Senator Jim Arnold (D-Michigan City) speaks on addressing job creation as the most pressing issue facing Hoosiers in 2012.

Video: Sen. Tallian to take on job creation in 2012 legislative session, seeks constituents’ input

Sen. Karen Tallian (D-Portage) notes the contentious start to the 2012 legislative session but is hopeful legislators can table discordant issues and focus on fueling job creation.

Video: Sen. Lanane eager to advance job creation initiatives

Sen. Tim Lanane (D-Anderson) discusses the events of Organization Day, emphasizes the need to fully evaluate the long term effect of potential “Right to Work” legislation on wages and invites constituents to reach out to his office with their input.

Budget Brief: The final piece of the Budget Breakdown

The agencies and state operations listed among the “other” designation of the budget include public safety (excluding corrections), economic development, conservation and the environment, transportation, gaming and redistributions to local units.

Transportation: The Indiana Department of Transportation (INDOT) is responsible for the maintenance, preservation and construction of the state’s roads, bridges and other infrastructure. Transportation funding is largely a product of federal and dedicated funds. The 2011 budget appropriated $4.5 billion of primarily dedicated and federal funds in FY12 and FY13. The amount marked a 23 percent decrease from the total combined appropriation for transportation in FY10 and FY11 of $5.9 billion and was the result of significantly lower support from dedicated funds in FY12 and especially FY13.

“Buy local” program for state government

HEA 1183 expands the opportunity for local Hoosier businesses to gain contract opportunities with the state. By giving in-state business a preference in the bidding process, the new law promotes the idea that state agencies will be able to use their purchasing power to help Indiana companies that employ Hoosiers and contribute to local economies.

Approved with bipartisan support, the new law provides a preference for purchases made by a state agency for supplies that are manufactured, assembled or produced by an Indiana business located within the state. It also provides a preference for agriculture products grown or processed in Indiana. The governor recently signed this act into law, and it will become effective on July 1.

How it works…

Price preferences make “preferred” bids more competitive by subtracting a certain percentage from the bid price during the evaluation process. For example, if an Indiana business offers to do a job for $30,000 and the price preference is 3%, then when the state evaluates the bidders they will evaluate the Indiana business as if they offered to accept the project for $29,100 (3% less than $30,000). The state would still pay the contractor $30,000 for their services, but using this formula during the bidding process gives the Indiana business a competitive edge above out-of-state companies.

In order to be eligible for this price preference, an Indiana business must offer to provide supplies manufactured, assembled or produced in Indiana. The business must also be a “defined Indiana Business” as determined by the Indiana Department of Administration. A detailed explanation of this definition can be found at the IDOA website.

HEA 1183 provides for four levels of preference:

• 10% for purchasing agriculture products that are grown, produced or processed within Indiana
• 3% for purchases expected by the state agency to be less than $500,000
• 2% for purchases between $500,000 and $1 million
• 1% for purchases expected to be $1 million or more

Preference for veteran-owned businesses

Finally, the act also directs the Commission on Military and Veterans’ Affairs to study the issue of veterans’ procurement preferences and report its findings to the General Assembly by November 1 of this year. This will give legislators the opportunity to hear how other states implement preference for veteran-owned Indiana businesses. The commission is expected to recommend changes for the 2012 legislature to consider.

Real Ideas, Real Jobs: Proposals for Indiana’s new economy

INDIANAPOLIS –Senate Democrats released a package of proposals today aimed at spurring business activity and creating new jobs in Indiana. Focused on fostering entrepreneurial ventures and leveraging small business investments, members of the Senate Democratic Caucus believe the proposals would improve Indiana’s job market and generate income to support families and communities.

A recent report from the U.S. Bureau of Economic Analysis indicated that Indiana is ranked 45th among the states in personal income growth.

In fact, Hoosiers have experienced a negative average quarterly growth rate over the past two years when adjusted for inflation, with earnings falling 3.5 percent.

The package calls for a redirection of resources from ineffective programs to those that better serve Indiana’s employers and workers. The proposals require no new state funding or new taxes.

Included in the “Real Ideas, Real Jobs” proposal announced today:

Fast-track for small business: To help Indiana entrepreneurs and small businesses, the caucus wants to create a “Small Business Concierge Team” to provide one-stop service for Indiana start-ups and businesses looking to expand. The team of specialists from various state agencies would be dedicated to assisting small businesses by fast-tracking applications for state licensing and regulatory approval, as well as helping to identify capital and other growth resources. Critical to this service is that the state help entrepreneurs become “capital-ready” by connecting them with regional networks, universities, Certified Technology Parks, and small business incubators that offer management training and low-cost facilities.

Improve access to capital: Indiana scores poorly in small businesses’ ability to access capital, a critical factor for a state’s economic performance. Recent reports on Indiana’s ability to provide an attractive business environment indicate not only that the state ranks in the bottom half of states on access to capital, but that the state has lost ground over the past decade.

The plan calls for a revision of the defunct Capital Access Fund to provide low-interest loans to Indiana businesses. Funded through dollars redirected from failing economic incentives, the program would operate as a revolving loan fund for start up and expansion costs. Management of the program would be moved from the Indiana Economic Development Corporation (IEDC), where it has languished, to the Indiana Finance Authority which manages other state revolving funds.

New hire tax credit: Providing Indiana’s small businesses the same benefit now available to larger companies, this plan would increase access to a new hiring incentive created earlier this year. The program approved under Senate Enrolled Act 23 provides a tax credit for 10 percent of the wages paid to qualified new hires during a two-year period, lowering an employer’s labor costs for those new employees.  The Senate Democrats’ plan removes an existing requirement that a business hire at least 10 new employees to qualify for the tax credit, opening the program to small employers. Other eligibility requirements would be maintained.

Review and reinvest state dollars – beginning with job creation incentives: Senate Democrats want to re-establish the legislative Sunset Evaluation Committee to annually review state programs and suggest potential cuts from ineffective programs, beginning with a focus on identifying IEDC job incentives that have not produced jobs and reinvesting in those that are successful. This committee would ensure that our limited state dollars are directed at the most effective programs benefiting job creation and income generation.

Preference in state contracts to companies that use Indiana labor and Indiana materials: Taxpayer money spent on state contracts should help put Hoosiers to work, not profit out-of-state companies. By requiring state contracts to contain a guarantee that at least 80 percent of the people working on those contracts will be Indiana residents, we can make the most of state projects by reinvesting in Indiana businesses and workers. The requirement would also be applied to professional services contracts that are not competitively bid, such as consultants hired by state agencies.

Additionally, the proposal would mandate that any state contract bid selection process give preference to a company when the principal office is located within the state. Current administrative practice allows the director of a project to take into account the distance to the principal office from the job site, but does not require that the office be located in Indiana.

Release state infrastructure project funds: Finally, Senate Democrats restated their call for the state to immediately begin work on planned construction projects, state universities capital projects, roads and highways and other state infrastructure investments. Many projects have already been authorized by the General Assembly under the state budget signed into law by Governor Daniels in 2009, but have not been put out for bids.

In September Senate Democrats pushed the State Budget Agency to release bonding authority for five university projects that would create as many as 3,000 jobs. Those jobs would have translated into as much as $100 million in personal earnings by Hoosier workers, benefiting local economies. The Democrats emphasized that the projects would not require the state to incur immediate costs, as they will be funded through bond issuances. They also pointed out that bond interest rates are at a historic low, making it less expensive to borrow money.

Resources:

• Indiana Economic Dashboard (Council of State Governments – Midwestern Office)
• Indiana Economic Report Card (Council of State Governments – Midwestern Office)
• Report on State Personal Income Growth (U.S. Bureau of Economic Analysis)

Learn more about Senate Democrats’ economic development priorities at senatedemocrats.in.gov>>

Economic Development Committee update

The Study Committee on Economic Development met for the second time today at the Statehouse. Sen. Sue Errington of Muncie said the testimony during this meeting focused on Indiana’s advantages and disadvantages in promoting job creation. The committee is scheduled to meet again on October 5 at the Purdue Technology Center.

Watch Sen. Errington’s brief update on today’s meeting:

Do tax credit cuts = tax increases?

Under two bills now moving through the House, Governor Daniels is proposing the suspension of tax credits given every year for economic and community development. The governor sees the move as a cost-cutting measure, but could it also result in tax increases for the very individuals, non-profits and Hoosier companies that should be protected right now?

As Niki Kelly wrote in a related Feb. 5th Journal Gazette story,

This comes despite his [Gov. Daniels] urging lawmakers in his State of the State speech not to “make this recession worse by adding one cent to the tax burden of our fellow citizens.”

 Many of the tax credits targeted for suspension will hurt already depressed areas in the state.

These tax credits have led to the creation of thousands of jobs throughout the state of Indiana. I am disappointed that at a time we should be doing all we can to create jobs in this state, we are eliminating the essential job creation tools. — Sen. John Broden when his effort to protect economic development tax credits in the Senate on Feb. 1 failed along nearly party lines.

The suspensions are contained in Senate Bill 236,  which is being heard today in the House Ways and Means Committee (Watch LIVE at 10am Wednesday or on the archives). What is in store for the governor’s bill, authored by Sen. Brandt Hershman, is now up to Ways and Means Chairman Bill Crawford and SB236 sponsor Rep. Peggy Welch. SB236 language may also show up again in the Senate as an amendment to a surviving House bill.

Contained within SB236, the proposed suspension of Neighborhood Assistance Program credits has gained the most attention for the community development community.

NAP credits are awarded for beneficial programs including affordable housing construction and rehab, community revitalization, emergency shelter housing, foreclosure prevention services, homeownership counseling, child care services, counseling services, educational assistance, Earned Income Tax Credit services, emergency food assistance, job training, medical care services, recreational facility, and transportation services.

In the 2009-2010 program year, 165 non-profit organizations received allocations of NAP credits. Approximately 3,500 individual and corporate taxpayers receive the credit in any given year. Since 1989, the Indiana Association for Community Economic Development estimates that $36.7M of credits have been awarded, leveraging $73.5M in private investments, for countless projects across Indiana.

Other proposed cuts are the suspensions of credits targeted to incentivize economic development in distressed communities facing high unemployment and poverty:

• Enterprise Zone Investment Cost tax credit
• Enterprise Zone Loan Interest credit
• Community Revitalization Enhancement District (CRED) tax credit

Other proposed credit suspensions under SB 236

• Teacher summer employment tax credit
• Maternity home tax credit
• Tax credit for making available a health benefit plan
• Small employer qualified wellness program tax credit

According to the SB 236 fiscal impact statement, the suspension of the various tax credits could save more than $8 million per year.

Audio: Deig offers strengthened incentive clawback for unfulfilled jobs

Today State Senator Bob Deig of Mount Vernon offered a proposal that would allow local governments to recover funds if companies move operations or fail to employ the number of individuals promised in the agreement. The clawback provision would allow tax incentives to be recouped and used for other economic development projects or returned to taxpayers.

Deig said his proposal was, in part, in response to the recent announcement by Whirlpool that the company would move the Evansville production operations to Mexico, putting approximately 1,100 local workers on the unemployment rolls.

The proposal was offered as an amendment to Senate Bill 239 and was defeated in the Senate.

Listen to Sen. Deig’s comments from the Senate floor today: