Times report on IEDC shows low cost of corporate subsidies

December 15, 2012

Easily chafed by media scrutiny, Gov. Mitch Daniels found no quarrel with the results of a 10-month investigation by the New York Times into corporate subsidies granted by states.

That’s because the Times report, published earlier this month, showed Indiana spending less than some neighboring states and others the Indiana Economic Development Corp. competes with for corporate expansions. Indiana spends $142 per capita on corporate subsidies, according to the Times’ database. That’s more than Illinois, which spends $117 per person, but far less than Michigan ($672), Ohio ($281), Texas ($759) and New York ($210).

otr-finish-line-121712-15col.jpg Above, Indianapolis-based The Finish Line Inc. will receive almost $3 million in IEDC incentives if it adds 327 jobs by 2016. (Photo courtesy of The Finish Line)

Daniels said that’s the result of putting tax breaks and other incentives in the hands of IEDC staff and holding them accountable for the cost per job, a metric that has fallen over the past eight years to less than $9,000.

“It’s a dangerous thing to turn politicians loose with a checkbook,” Daniels said during a Dec. 11 IEDC board meeting. Repeating an IEDC catch phrase, he said, “It’s not the incentive. It’s the sandbox.”

Commerce Secretary Dan Hasler told the IEDC board, which Daniels chairs, that the Times’ report confirmed what he hears in negotiations. “We are not the high offer for most of these companies.”

Nationwide, local governments give up $80.4 billion a year in tax credits, grants and other economic development programs, the Times found. Forty-eight companies have received more than $100 million since 2007.

Indiana spends at least $921 million a year on incentives, according to the most recent data available, the Times found. Most of that is in corporate income-tax credits.

In 2009, $799 million went out in the form of net operating loss deductions, in which companies apply current losses to a past year’s income.

Hasler also noted that other states’ incentives aren’t conditional on performance. He said Indiana’s claw-back provisions are among the strongest, and the IEDC has claimed $5 million this year from firms that failed to live up to their agreements.


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