By Adam H. Berry, vice president of economic development and technology
For all that we do well to make Indiana business friendly, there is still a lot that needs done to improve our overall quality of place metrics.
Indiana ranks in the bottom half of states in per capita income, high school graduation rate, access to high speed broadband, entrepreneurialism, smoking, obesity, drug-related deaths, high school graduation rate, as well as adults who have less than a high school diploma, associate’s degree, bachelor’s degree or professional credential.
Tackling these problems must come from grassroots, regional cooperation – i.e. local communities banding together – with an eye on attracting the next generation of businesses, workers and residents to their regions.
Senate Bill 350 establishes a framework for a “pilot” central Indiana development authority, and its purpose will be to test a new method of regionalism; one that looks beyond brick-and-mortar economic development projects in favor of quality of place initiatives that make the region a better place to live and work.
The Chamber did not fully support SB 350 as it was introduced, mainly because it would have required counties, cities and towns to impose a new local tax on its residents – with 50% of the new revenue earmarked for unspecified “transformational projects” and the remaining 50% returned to the taxing authority’s general fund for general purposes. Local governments should set aside revenue for economic development, but there needs to be a strategy behind it to provide transparency to residents who are funding it. Further, “economic development” needs to include programs designed to improve workforce quality and quantity aligned with regional employers’ needs.
The bill’s author, Sen. Travis Holdman (R-Markle), tasked the Chamber with offering an alternative regional development framework that omitted any new tax or funding mechanism. In collaboration with other stakeholders, the Chamber supplied language that became the new SB 350, which passed comfortably through both houses.
The two key features of the bill are as follows: (1) it codifies the Indianapolis Metropolitan Planning Organization (IMPO) and positions the IMPO to serve as the managing entity of the new development authority, and (2) it requires the development authority’s “strategy committee” with authoring a comprehensive strategic plan designed, among other things, to address quality of place issues specific to the region, establish a pipeline of investable projects and programs, and identify opportunities to eliminate duplicative government services.
The Chamber is committed to continuing our work with all stakeholders, including municipalities, counties, the Indiana Economic Development Corporation, local chambers and leaders throughout the year – and beyond – to determine what we can do legislatively to improve the chances of success for all regions of our state, especially those that must recruit and retain businesses and people.
Half a loaf in innovation
Senate Bill 262 (Film and Media Production Incentives), authored by Sen. Justin Busch (R-Fort Wayne), and SB 264 (Certified Technology Parks), authored by Sen. Holdman, were legislative measures aimed to attract talent, spur innovation and reward those who invest in building businesses in Indiana. Unfortunately, SB 262 was converted into a study committee and only half of SB 264 survived to the end.
As introduced, SB 262 would have provided a tax rebate to film, media and music projects in Indiana where expenditures exceeded threshold amounts. Before it died, an amended SB 262 merely authorized the newly created Indiana Destination Development Corporation (IDDC), led by Elaine Bedel, to establish and manage the film and media incentive program and determine the best structure for a future incentive.
The film and media production program is an opportunity to lure jobs and economic development to the state – projects that Indiana is currently losing to the 32 states with some form of a media production incentive. In 2016-2017, Indiana’s media production industry generated $242 million in wages compared to Illinois’ $1.9 billion, Tennessee’s $898 million, Pennsylvania’s $810 million and Ohio’s $459 million. Since 2016, Indiana has lost at least $80 million in media business with the biggest loss being Self Made, Netflix’s recently released $50 million TV series about Madam C.J. Walker that was filmed in Toronto.
Opponents argue that Indiana has had similar tax credits in the past that did not work or were misused. Governor Daniels chided the General Assembly for passing 2007 legislation he described as “a careless bill that (gave) millions in incentives to businesses that are already in Indiana without having to hire a single new person.” That incentive was repealed in 2009.
Opponents also argue that IDDC’s “legwork” to structure the program can be accomplished administratively. The Chamber argues, however, that codifying the framework now would send a clear signal to the industry that Indiana is serious about recruiting and retaining projects and talent to the state. Nineteen Indiana colleges and universities offer film and media programs but 65% of graduates leave the state for jobs elsewhere in the industry.
All is not lost, however. Language was passed in HB 1065 to have the Interim Study Committee on Fiscal Policy study production incentives in other states and their effectiveness. Amending language into HB 1065 was necessary after SB 262 did not receive a hearing in the House despite passing the Senate 47-2. House Bill 1065 passed the Senate 31-18 and the House 51-40.
Much appreciation goes to Sens. Busch, Holdman and Chip Perfect (R-Lawrenceburg), as well as Reps. Mike Karickhoff (R-Kokomo), Christy Stutzman (R-Middlebury), Matt Pierce (D-Bloomington), Ryan Hatfield (D-Evansville) and Earl Harris Jr. (D-East Chicago), as well as other legislators who fought to get some measure of success on this initiative.
Senate Bill 264 is another example of progress made but with work to do leading into 2021.
For background purposes, certified technology parks (CTPs) are business incubators created by local redevelopment departments, which are established to improve certain areas of the community. CTPs receive tax increment payments – up to $5 million – beyond what the businesses and employees generate during their base year, which is the year prior to certification.
Once CTPs reach $5 million, which most of the 23 CTPs in the state have, current law says their base year resets to the year in which they meet the cap (new base year); then they may recoup up to $100,000 annually, assuming they continue generating more tax revenue. The problem is CTPs hit the $5 million cap because they are thriving and at full capacity, which means generating additional incremental taxes becomes a challenge. This reset provision was drafted during the conference committee process last year with no input from stakeholders.
At the beginning of this year, our goal with SB 264 was two-fold: (1) to increase the tax revenue that capped CTPs could recoup from $100,000 to $500,000 and (2) to change the way the new base year is defined to improve capped CTPs’ chances of recouping the maximum amount of tax revenue to which they are entitled.
Similar to SB 262, the House Ways and Means Committee decided not to give SB 264 a hearing despite it passing the Senate 43-6. However, thanks in large part to Rep. Tim Brown (R-Crawfordsville), the new base year correction was amended into SB 408, which the House passed 83-0. Senator Holdman, who also authored SB 408, filed a concurrence to avoid the bill getting bogged down during the tight conference committee period.
The upside is that now CTPs are more likely to access the $100,000 that is available to them after reaching the $5 million cap and, due to SB 408 skipping the conference committee process, additional harm was avoided, contrary to what occurred last year.
While this is a partial win, it still falls short of providing communities with adequate state assistance to support young, growing companies within the CTP program. Fortunately, Sen. Holdman has already expressed his commitment to continuing efforts next year to bolster CTPs and the valuable work they do to spur entrepreneurship and economic development throughout Indiana.
Removing occupational licensing obstacles takes first step
It has never been easier to move from one state to another. With advances in technology, transportation, infrastructure and relocation service providers, folks have the ability to easily pick up and move. History is replete with families moving from one state to another in pursuit of happiness and economic opportunity.
However, over the last few decades, interstate migration has fallen by half. Why? Studies suggest that the largest contributor is an aging population. Those same studies also show that occupational licensing decreases interstate migration by 20%, and the “between-state-migration rate” for individuals in occupations with state-specific licensing exam requirements is 36% lower than members of other occupations. In other words, moving from one state to another is a lot easier for those whose professions do not require an occupational license (e.g., DO: plumber, barber, dentist vs. DON’T: web site developer, sales representative, business executive, etc.).
Two bills this session attempted to tackle the issue of interstate mobility for licensed professionals: HB 1008 (Occupational License Endorsement), authored by Rep. Martin Carbaugh (R-Fort Wayne), which died, and SB 427 (Provisional Occupational License) from Sen. Brian Buchanan (R-Lebanon), which passed.
The Chamber supported both bills but lobbied most favorably for HB 1008. Carbaugh’s bill said that if you are licensed in another state or country, and the prerequisites to earn the same license in that jurisdiction are substantially similar to Indiana’s requirements, then Indiana will recognize your “foreign” license and you can work immediately upon establishing residency.
The bill received opposition from licensing associations that argued, as pretext or otherwise, that the law would result in a “race to the bottom” – where people will get a license elsewhere, then move to Indiana and be a bad actor because they are incompetent and/or unfamiliar with the nuances of Indiana’s laws. The opponents’ argument is flawed for two reasons: it assumes (1) that other jurisdictions codify – and maintain – standards that risk the health and safety of their residents and (2) that folks will freely and consciously risk their license, which cost them years of learning and training and thousands of dollars in tuition and fees, by disregarding the laws of our state.
The easier explanation is that by making it easier to enter a particular trade that the state would increase the supply of workers and decrease the demand for existing practitioners.
Ultimately, HB 1008 died because the Senate-passed version carved out a large swath of professions to which the law would not apply. This defeated the underlying purpose of the bill and had negative implications on the Indiana Professional Licensing Agency’s ability to implement the policy.
Senate Bill 427, which passed, moves the needle somewhat. As introduced, it said that if you hold a license from another state, then Indiana would immediately grant you a “provisional license” in the same profession – meaning that you could begin working immediately and then satisfy any state-specific requirements prior to earning a permanent Indiana license. However, the bill was amended in the Senate committee to apply only to spouses of military service members. The amended version passed the Senate 49-0 and the House 89-0.
Occupational licensing’s impact on economic drivers and talent attraction needs to garner more attention. For example, Indiana ranks 10th best among all states in conferring science and engineering degrees, but is 38th in terms of workers who hold those same degrees.
The Chamber will continue its advocacy in this area, as it will in all subject matters that make Indiana the most attractive state in the country for qualified professionals to move and work.
Resource: Adam H. Berry at (317) 264-6892 or email: [email protected]