A Senate committee debated a bill Monday that’s meant to help establish businesses in economically-depressed areas of Indiana, but members postponed a vote following questions about its usefulness.
Senate Bill 165, authored by Republican Sen. Randy Head of Logansport, would distribute up to $10 million in tax credits to venture capital firms investing in Indiana businesses.
The companies would be locked into a seven-year agreement with the state and would be required to pay a conditionally refundable fee of $500,000 and a non-refundable application fee of $5,000 for each project.
Head said the goal is to create jobs in the state’s economically depressed areas and draw venture capitalist groups to invest in Indiana businesses.
“There is no venture capital in Indiana and we are looking to change that,” Head said.
Republican Senator Brent Waltz of Indianapolis raised concerns about the bill’s necessity and the amount of help the tax credit would actually mean for local businesses.
“It’s remarkable, but I’m not sure it’s remarkable in a good way,” said Waltz, owner of a venture capitalist firm for 19 years.
Waltz also expressed his apprehension about the decision-making process to determine which businesses would be eligible to receive the tax credit.
“I’m nervous about creating a scenario where we are essentially creating winners and losers,” Waltz said.
The bill gives the Indiana Economic Development Corp. the authority to determine which projects qualify for the credits.
Mark Shublak, a lobbyist who has represented venture capital firms in the past, said the tax credits would go straight to the investors in those companies and not to the firms themselves. Shublak also said the businesses would essentially get the benefit of a low-percentage loan.
Committee members also discussed adding penalties to the bill for businesses that failed to provide jobs in the seven years they are given to earn back their deposit fee.
However, Shublak said he didn’t think investing companies should be penalized if jobs weren’t created in the seven-year time frame.
The Senate passed a version of the bill last year but it never made it out of a House committee.
Head said the committee would hold the bill for a week to make the necessary revisions.