Opinion and Forefront

DELPH: Job creation incentives demand more transparency

February 2, 2013

DelphQuestion: State Sen. Mike Delph has introduced a bill to force the Indiana Economic Development Corp. and other state and local agencies to disclose more about businesses receiving tax incentives. Among other stipulations, the businesses would be required to publicly update information about investment levels and job creation. Is the IEDC too secretive, and to what extent should the companies be forced to reveal the information?

Answer: Recently, Gov. Mike Pence announced his plan to launch a new “transparency portal” to allow open tracking of the Indiana Economic Development Corp.’s tax credits and the jobs created by those incentives. For some time, I have had my own concerns about how much return taxpayers are getting for their public investment in Indiana’s economy.

This issue was first brought to my attention by WTHR-TV Channel 13 reporter and constituent Bob Segall. His research revealed a large discrepancy between the predicted outcome of many IEDC tax deals and the actual results that recipients of financial incentives were producing.

Upon contacting IEDC, Segall found the department unwilling to release concrete data on the impact of each economic development project it had announced—regardless whether the project was a success or a failure. Segall’s review found as high as 40 percent of IEDC’s “successes” or promised jobs were non-existent.

I reached out to senior leadership of the IEDC requesting answers to what I believe to be reasonable questions. In exchange for special tax breaks, how many jobs promised by a given company were in fact created by that company? How much promised investment was actually invested by the company? What companies are currently receiving public tax dollars from IEDC?

This effort was not fruitful.

This is why I introduced Senate Bill 162. Under my proposal, IEDC would be required to release basic information to show Hoosiers how many jobs have been created and how much economic investment a company has made in Indiana in exchange for its tax breaks. IEDC is already required to collect that information, but the details are withheld from the public. This information, they say, is confidential.

Those who oppose transparency at IEDC argue it will chase away business. That simply is not true.

Illinois has the strongest economic development transparency law in the nation, resulting in an extensive online transparency portal such as the one discussed by Pence. Yet, according to Site Selection Magazine, Illinois has attracted more facilities and expansions during the past three years than Indiana (617 versus 523)—proof that economic development and full transparency can, indeed, go hand-in-hand.

The same publication lists Ohio as gaining 1,255 facilities and expansions, and Michigan 669 during the same period. Both outpaced Indiana while having transparency laws on the books.

The bill would not require corporations to give away proprietary information and competitive secrets. It would require IEDC to provide basic information to Indiana taxpayers to track the effectiveness of our investments.

If IEDC and corporations are willing to hold press conferences and ribbon-cutting ceremonies to announce their plans before they get tax incentives, it only makes sense to tell us whether those plans are coming to fruition after they start receiving state money.

As we move forward with a new legislative session, preserving and improving Indiana’s economic status will be a goal for lawmakers from both sides of the aisle. Our first step should be to ensure we are encouraging projects that truly grow our economy. We should work to ensure that taxpayers are receiving a decent return on their public investment. We need access to detailed job data from IEDC to accomplish that. Most important, we should stand for the public’s right to know.•

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Delph, a Republican, represents state Senate District 29. Send comments on this column to ibjedit@ibj.com.

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