Funding for workforce training, manufacturing readiness and flight incentives in limbo after state budget cuts

When state lawmakers last month faced a $2 billion drop in projected revenue for the next two-year budget, they turned in part to a handful of line items for economic development grant programs and funds, eliminating about $42 million a year in specific allocations.

That leaves Indiana Secretary of Commerce David Adams and his leadership team to review those programs and decide whether to fund any of them out of the Indiana Economic Development Corp.’s more general funding. That includes a catch-all fund for business promotion that did receive a boost—although not enough to fully make up for other cuts.

“The Legislature opted to put some of the IEDC’s funding in a broader bucket rather than providing line items for individual programs,” IEDC spokesperson Erin Sweitzer told IBJ in an emailed statement. This model will “provide flexibility as we move forward,” she said.

Programs that lost line-item funding include grant programs that support new manufacturing technology adoption, workforce training and infrastructure development. A fund to incentivize direct flights was also dropped.

Sweitzer said the commerce secretary’s review will seek to align economic development spending with Republican Gov. Mike Braun’s vision, which includes workforce training, boosting support for existing businesses, Main Street entrepreneurship and regional planning. Braun was elected last November after a campaign that took aim at IEDC priorities and transparence; he took office in January.

Business leaders said many of the existing programs are important. In fact, Indy Chamber CEO Matt Mindrum said all of the programs that lawmakers targeted are ones “that we think have delivered strong ROI in the past. We’d love to see as many of them continue—even if it’s in a new form or a slightly evolved form—as we possibly can.”

And Adam Berry, vice president of economic development and technology at the Indiana Chamber of Commerce, said business leaders are “hopeful that the administration leverages discretionary funds to preserve programs that have proven to help employers grow, invest in their operations and attract and retain talent.”

“In other words,” he said, “protect initiatives that are demonstrably ‘investments’ rather than expenditures by the state.”

Lawmakers were forced to make revenue and spending decisions with days left in the session when they learned the state would likely have $2 billion less over the next two fiscal years than they previously expected. The final version of the biennial state budget passed last month included a tripling of the cigarette tax and cuts for a wide swatch of entities and programs.

Funding for economic development programs were slashed overall by about 25%. The budget for IEDC operations and its programs was cut from nearly $100 million a year to about $74 million.

But the agency’s business promotion line item had a big boost, increasing by $20 million to $37 million a year, which could give the IEDC a pool of money from which to fund some of the programs that previously had specific line items. Sweitzer did not clarify when asked whether that’s the broader bucket of funding she was referring to. The IEDC’s operating budget increased by $3.2 million a year, as well, bringing that total to $11.3 million.

“Commerce leadership is reviewing all of the funding allocated to the IEDC and determining how to categorize it around the four priorities,” Sweitzer said in a follow-up statement.

Programs that lost specified line-item funding include Manufacturing Readiness Grants ($20 million a year), Skills Enhancement Fund ($11.5 million per year), Economic Development Fund ($947,000 per year), direct flight establishment fund ($5 million per year) and Industrial Development Grant Program ($4.85 million per year).

The program with the largest footprint is Manufacturing Readiness Grants, which provides financial support for companies to adopt new innovative technologies and manufacturing processes. The program has provided $57 million in matching grants through 526 awards in 79 counties, according to an October 2024 Central Indiana Corporate Partnership study. Berry said the impact has since risen to 750 companies in 85 counties.

Bryce Carpenter, chief operating and strategy officer at Conexus Indiana, which administers the grant program, said in a statement that Manufacturing Readiness Grants have been transformational for the advanced manufacturing sector and have resulted in automation, robotics and artificial intelligence improvements that led to job creation and increased competitiveness.

“Gov. Braun has consistently emphasized the vital role of advanced manufacturing and logistics to Indiana’s economy,” he said in the statement. “Every dollar invested into this program strengthens local economics and enhances productivity across the state. … These grants are a proven tool to build stronger communities and strengthen local economies.”

Mindrum said the Indy Chamber is “anxious to find alternatives” to these grants that have similar benefits. Inside INdiana Business, an IBJ sibling publication, previously reported about how these grants have allowed businesses to modernize their processes and incentivize innovation.

The Skill Enhancement Fund has also been an important fixture for boosting worker skills, Mindrum said. The program provides grants to reimburse companies that need to provide worker training to support new capital investments.

“I would say our perception is that workforce is the critical bottleneck at the moment, so investing in workforce seems to be incredibly, incredibly smart,” Mindrum said. “I don’t think that has to come at the expense of some of these other investments that are delivering strong ROI to the region and to the state.”

Berry said money to incentive direct flights has also been an important tool.

“Over the past year, the IEDC has worked with Aer Lingus to establish a new direct route between Indianapolis and Dublin, which began on May 3, and reestablished Indiana’s direct link to Europe,” Berry said. “The IEDC also helped restore American Airlines direct service between Evansville and Chicago. Having direct links between Indiana and other major economic hubs is critical to maintain our state’s credibility as a place that wants to do business and participate in the global economy.”

The money appropriated in the 2026-2027 budget will become available on July 1 when the new fiscal year begins.