Mitch Roob and Indiana Economic Development Corp. and Elected Officials and Economic Development Agencies and Tax Abatements and State Government and Tax Credits and Job Creation and Government & Economic Development and Government and Economic Development

House Speaker pushes IEDC over job-creation numbers

June 14, 2010

House Speaker Pat Bauer is picking a fight with the Indiana Economic Development Corp. over its job-creation figures, which the Democrat from South Bend suspects are inflated.

Last week, Bauer sent Indiana Secretary of Commerce Mitch Roob a letter formally requesting the Indiana Economic Development Corp. disclose public records about promises companies gave the state in exchange for job-creation incentives. He also asked for records to show whether firms kept their pledges.

In the letter, Bauer cites media reports from March that quoted Roob saying that 87 percent of the jobs promised by companies receiving state incentives have actually been created.

“This, by your own admission, means 13 percent of the jobs that were promised were not realized,” Bauer’s letter reads.

Bauer’s letter points out that the incentive-compliance reports IEDC has submitted to the General Assembly showed no gap between jobs promised and created. Citing Indiana’s Access to Public Records act, Bauer requested any records with evidence explaining the 13-percent difference Roob had cited.

“I am aware that your agency has refused to release various records relating to job creation incentives in the past. I am also aware that the IEDC has broad discretion under IC 5-14-3-4.5 to keep records relating to incentive negotiations confidential,” Bauer’s letter reads. “As you may know, K-12 education has been cut by $300 M. Some estimate that as many as 7,000 teachers will lose their jobs, and the state unemployment rate remains around 10 percent. In theses times, I would urge the IEDC to exercise its discretion in favor of sharing vital information with Hoosier taxpayers about Indiana’s true level of job creation success.”

In response to IBJ's questions about the letter, Roob gave the following written statement: “We have received Speaker Bauer’s letter and look forward to responding to him accordingly.”

Bauer said a March investigative story by Channel 13 initially prompted his concerns about IEDC. In the months since, Bauer said, he and State Rep. Bill Crawford, D-Indianapolis, have repeatedly asked for information from IEDC about where and how incentives have been offered and cashed in.

Bauer said he's particularly interested in potential incentive-clawback opportunities to generate revenue that could help “keep schools open and keep the lights on.” He said IEDC has responded with “stonewalling.”

“We’re getting nothing,” Bauer said “We have a right to know how money was spent or misspent.”

IEDC frequently offers incentives to companies that agree to relocate to Indiana or expand their operations here. Most of the awards are in the form of state tax credits and training grants. Incentive deals regularly also include property-tax abatements from local governments. Bauer noted that last year President Obama’s economic stimulus money was also a factor.

According to IEDC’s 2009 annual report, it worked with 160 companies last year, resulting in $1.96 billion in capital investments and promises to deliver 19,955 new jobs at an average hourly wage of $20.95. According to the report, it provided $8,701 in incentives per job.

In the last two years, many companies have had to scuttle expansion plans they made before the recession began. Bauer acknowledged that reality, but said he suspects IEDC has been over-reporting job numbers since before downturn. He wants to investigate the results of company job pledges all the way back to IEDC’s formation in 2005, he said.

Based on media reports, Bauer said he worries IEDC’s job-count inflation is far higher than 13 percent.

“If people said they were going to provide jobs and received money from the state and didn’t create them, it’s fraud,” he said.

It’s odd, and “in some ways, it’s scandalous,” that Bauer, the Democrat with the highest elected position in Indiana politics, has to use a public records request to obtain information from IEDC, said IUPUI Political Science professor Brian Vargus. He said it’s likely that Bauer is legitimately frustrated about IEDC’s lack of responsiveness, and concerned about where incentives went.

But, Vargus noted that Bauer often uses a “street brawl” brand of politics. The House Speaker is clearly concerned about midterm elections this fall, Vargus said, when Republicans could re-take control of the Indiana House of Representatives. Led by Bauer, Democrats currently control the chamber by a 52-48 margin.

IEDC’s response to the records request—or lack of one—could become a talking point for Democrats on the campaign trail this fall. In a deep recession, Vargus said, voters' minds will be on three topics: “jobs, jobs, jobs.”

“It’s obviously a way to get some information that can be used in attacking the governor. Because the main substance of the media reports was the governor was always talking about great job expansions, but not the ones that didn’t get followed through on, or the ones substituting menial jobs for more higher-paying ones,” Vargus said. “Is it politically motivated? In part yes. There’s no doubt about that.”
 

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