Fresh analysis released last month on the economic impact of the Indianapolis Motor Speedway and the satellite industries attracted by its location in Indiana make it clear the General Assembly is on the right track in moving legislation to bolster the track and the jobs it helps create.
It should also remind us of the importance of examining the costs and benefits of lending a hand to expand private-sector enterprises.
Government has been making these choices on behalf of us citizens for a long time indeed. One of state government’s earliest plunges into promoting economic development was the massive set of projects set in motion by the Internal Improvements Act of 1836, financing a series of roads, railroads and canals.
This initiative during Indiana’s earliest days ultimately proved a financial disaster due to the failure of the Wabash and Erie Canal. The canal was a case of old technology being overtaken by new techniques (like railroads), and the weight of its debt eventually carried under the state government itself.
The canal’s failure and the state’s bankruptcy were so dramatic that they overshadowed the fact that other elements of the Internal Improvements program put in place valuable assets that help advance the state’s economy to this day: Michigan Road, U.S. 150 across southern Indiana, multiple rail lines in central and southern Indiana, to name a few.
That some of these projects proved valuable to the state’s future while others did not reinforces the need to examine what we’ve come to call “public-private partnerships” by gathering as much information as we can, putting it under the microscope, and asking a straightforward question: “Is there likely to be sufficient benefit to the public to warrant the government support at stake?”
That question gets asked regularly these days, and not just at the Statehouse. A similar query was on the table when the City-County Council overwhelmingly voted to move forward with certain tax incremental financing districts to boost inner-city commercial districts and residential neighborhoods.
There are times, of course, when the cost/benefit analysis is difficult to assess. It has not been difficult in the case of the legislative proposal to advance the Speedway and the automotive industry.
Analysts for Indiana University’s Public Policy Institute recently quantified the direct and indirect impact of the Speedway and associated industries. Briefly put, IMS means $510 million a year and 6,200 jobs for Indiana’s economy.
A relatively small part of this total represents ticket purchases and spending by Indiana residents who go to the races. Most of it comes from sources like the out-of-state visitors, the value of Indiana-based racing teams, and the manufacturing operations attracted to Indiana by the motorsports cluster.
From the period of Tony George’s stewardship onward, we have come to understand that the IMS is much greater than a week in May. The institute’s new analysis makes it plain just how much greater it really is.
The pending legislation creates a special taxing district that would commit a small portion of the public revenue being generated toward the goal of building an even greater enterprise. The IMS would likewise have skin in the game.
I suggest that the discussion of this proposal is an example of public policy being well conducted. It is the exact opposite of the old line about “not wanting to watch laws or sausage being made.”
And the answer about whether to move forward seems pretty plain.•
Shepard, Indiana chief justice from 1987 to 2012, is executive in residence at Indiana University’s Public Policy Institute, a research arm within IU’s School of Public and Environmental Affairs. Send comments on this column to firstname.lastname@example.org.