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Short session long on action: Led by Major Moves, telecom successes, biz interests fared well in 2006 General Assembly

March 20, 2006

In less than three months, the Indiana General Assembly approved a pair of blockbuster economic-development measures designed to dramatically upgrade the state's infrastructure.

With the passage of Gov. Mitch Daniels' Major Moves initiative, Indiana will lease the Indiana Toll Road to an Australian-Spanish consortium for 75 years. It will use the upfront, $3.9 billion payment to build roads.

Meanwhile, the approval of telecom deregulation sets the stage for more local phone, cable and Internet competition. Daniels, a Republican, argued that increased free-market competition would accelerate the rollout of services, like broadband, that are the virtual backbone of the modern economy.

"For a short session in an election year, I'm not sure how much more you could have hoped for," said Karl Berron, the Indiana Association of Realtors' vice president for government relations.

The debate over both measures was contentious, but Major Moves proved downright divisive, finally emerging from the Indiana House of Representatives on a 51-48 party-line vote.

Business leaders in central Indiana believe Major Moves instantly differentiates Hoosiers from their neighbors. Now Indiana can break ground on 200 road projects that otherwise would have gathered dust on the drawing board.

"Every state has their wish list of projects," Berron said. "What's different about this plan is it literally puts the money in the bank.'"

Indiana Chamber of Commerce President Kevin Brinegar was just as enthusiastic about telecom deregulation. Between the measures, he said, Indiana's economic development took two colossal steps forward.

"Telecommunications companies have demonstrated they'll put their money where the environments are friendly and where they'll earn a reasonable rate of return," he said. "Indiana has just leapfrogged itself over other states with this legislation."

The telecom measure will uncap rates on basic local phone service, in exchange for carriers providing high-speed Internet services to at least half their customers in a given area.

Opponents, including the Citizens Action Coalition, warned basic phone service might more than double in price.

Indiana Legislative Insight Publisher Ed Feigenbaum said 2006 will go down as the year the General Assembly proved it can defy low expectations. Before it convened in January, speculators worried little would be accomplished in a short session.

"Everybody gave a little bit," Feigenbaum said. "The governor now understands he has a fairly co-equal partner in state government."

Below is a roundup of how other business-related measures fared.

IndyWorks

Despite support from Daniels, Mayor Bart Peterson's IndyWorks government-consolidation proposal failed.

For the second year in a row, supporters of township government helped sink the mayor's push to allow the merger of the Indianapolis Fire Department with its suburban township counterparts, and to eliminate township assessors and trustees.

Indianapolis Chamber of Commerce President Roland Dorsen, a supporter of local government consolidation, was disappointed.

"Some have suggested that if a meteor hit Indiana, the only thing left would be the township government system," Dorsen said.

Eminent domain

When the U.S. Supreme Court ruled last year that local governments can apply eminent domain for private economic development projects, in addition to traditional public projects such as parks and highways, it caused a stir around the nation. Property owners of every kind worried their assets might be seized at whim.

The Indiana General Assembly responded this session by enacting a compromise. It established a series of steps parties must follow before they can use eminent domain. It also increased the compensation developers must provide property owners in exchange for their land and buildings.

"The good news there is that we kind of rebalanced the scales in favor of property owners," Berron said. "But we didn't go overboard in terms of eliminating eminent domain for local governments."

Gambling

Before the session began, many observers expected legislators to legalize "cherry masters," or electronic poker machines. The machines already operate illegally in hundreds of taverns around the state. By one estimate, legalized versions would raise as much as $300 million for state coffers annually.

But when the bill's expected sponsor, Rep. Tiny Adams, D-Muncie, died of a stroke in December, cherry-master legalization died with him. Other supporters of the idea backed away.

But Feigenbaum, who also publishes the newsletter Indiana Gaming Insight, expects cherry masters to return.

"Whenever you're looking for revenue and you see a potential source that politically wouldn't constitute a real hit, it's certainly there," he said.

Corporate taxes

Traditionally, corporate taxes in Indiana have been based on a three-pronged system. Tax liability is calculated by measuring a company's total employment, property and sales. Economic developers have long argued that was a disincentive for large employers, who were punished for every new investment.

The Legislature rewrote the corporate tax so it is now based only on a company's sales within state lines. The change is expected to be a boon to manufacturers, as well as logistics and distribution companies that warehouse goods here but sell them elsewhere. Retailers, on the other hand, will see their tax bills increase.

Car-title lending

In some circles, it was snickered at as the white trash bill. A Senate measure would have, overnight, created a loan industry in Indiana that used a borrower's car title as collateral. Don't repay the loan, at up to 22 percent interest per month, and you could lose your ride.

Sen. Johnny Nugent, R-Lawrenceburg, had defended the bill as a solution for folks who have limited choices for obtaining cash.

Regulators at the Indiana Department of Financial Institutions weren't impressed.

They'd spent the last decade fighting abusive practices by some payday lenders who made high-interest loans based on post-dated checks. Judith Ripley, the new director of the department, testified against the car-title measure.

It passed out of committee, in part with the help of lobbyists hired by Roy Aycox, head of Atlanta-based title lender Loan Max. But opponents, including AARP Indiana, prevailed. The measure was defeated 25-24 in the Senate.

'McLawsuits'

Hoosiers will no longer be able to take the local hamburger joint to court because of those extra notches in the belt. A bill approved during the session makes it illegal to sue Indiana restaurants for health conditions associated with weight gain.

The so-called McLawsuits bill sailed through the House and Senate by votes of 76-21 and 41-9, respectively. A handful of high-profile class-action lawsuits filed against restaurants on the East Coast prompted the legislation.

Groups-including the Indiana Grocery and Convenience Store Association, Indiana Retail Council, Indiana Chamber of Commerce, Insurance Institute of Indiana and the Indiana Broadcasters Association-testified in favor of the legislation.

Wineries

The session started with a buzz-kill for Indiana wineries when the House passed a bill that would have made it illegal for local vineyards to ship bottles of red and white directly to Indiana consumers.

Thanks to a last-minute compromise, winemakers are once again in need of FedEx accounts. A bill won approval that makes it legal for vineyards to ship direct to consumers, in limited quantities and only after the buyer shows proper photo identification.

Proponents of the original bill had claimed eliminating direct shipments of wine would decrease underage drinking. Opponents claimed the legislation would hurt local vineyards while needlessly protecting the checkbooks of wine wholesalers.

Alcohol sales

Convenience stores breathed a sigh of relief when a House bill they opposed found the scrap heap.

The bill would have restricted where drug and grocery stores could display alcohol, thus making it more difficult for them to sell warm beer and wine.

"In our opinion, it would have potentially put every convenience store in the state out of business," said Grant Monahan, president of the Indiana Retail Council.

The Indiana Association of Beverage Retailers, which represents liquor stores, pushed the legislation on grounds it would curb underage drinking.

The bill also would have changed the definition of who can sell alcohol and required training for all clerks that sell alcohol.

It passed the House 68-27, but never received a vote in the Senate. Monahan expects a similar bill to be introduced next year.

Wellness

A Senate measure that lets employers offer health benefits incentives to employees who avoid tobacco survived the Legislature, albeit in a different bill.

Sen. Beverly Gard, R-Greenfield, said the new law could lead to premium reductions for people with healthful lifestyles, among other incentives.

Gard said the measure amends a portion of a state law commonly known as the "smoker's bill of rights," which prevents employers from discriminating against employees who smoke, with respect to their salary or benefits.

Another wellness bill didn't fare so well. A Senate measure would have provided a health insurance premium reduction for state employees who completed a cardiovascular health program. It never made it out of the Senate's Committee on Health and Provider Services.

Medical discount cards

A bill requiring companies that offer medical discount cards to register with the state sailed through both legislative houses on unanimous votes.

The Indiana Association of Health Underwriters lobbied for the measure. Its members noted that the bill would allow state regulators to investigate complaints and pursue regulatory action if troubles arise with the discount cards.

Insurers had grown concerned about the reputation hits their industry suffered thanks to problems that stemmed from sometimessketchy unsolicited discount offers that have flooded the market in recent years. They say consumers sometimes mistake the discount offers for full-blown health insurance.

Bariatric surgery

A bill that boosts bariatric surgery by reducing the minimum wait period required for insurance coverage survived the session.

The bill, sponsored by Sen. Patricia Miller, R-Indianapolis, trims the 18-month wait to six months.

Bariatric surgery reduces or restricts the stomach of morbidly obese patients. Dr. Samer Mattar, medical director of the Clarian Bariatric Center, has hailed the bill as a "huge victory" for patients.

Insurance regulation

Property-and-casualty insurers caught a break when state Rep. Mike Ripley, RMonroe, revived a proposal that allows them to bypass the state Department of Insurance when they want to change rates. The measure won final approval.

The Department of Insurance contracts with outside actuaries to perform routine rate analysis. Insurance industry lobbyists had said that system causes delays, a problem for insurance companies that operate in a number of states.

Environmental legislation

Some in the business community, including the Indiana Chamber of Commerce, had hoped to see the state adopt environmental laws "no more stringent than" those of the federal Environmental Protection Agency.

Opponents worried doing so would lower air and water quality and allow developers to encroach on protected wetlands. This year, the opponents won the day. They succeeded in routing the issue to a summer study committee.

EDGE credits

The Indiana Economic Development for a Growing Economy tax credit, the state's signature business incentive, usually goes to growing companies. But the state sometimes doles them out to retain jobs.

This year, the General Assembly doubled its annual cap for EDGE retention credits, to $10 million. They're now available to companies with as few as 35 employees. The previous threshold was 75 employees.
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