A bill updating the state’s economic development incentive options cleared the Indiana Legislature with final language that gives clearer power to local governments when the state makes decisions on creating innovation development districts.
The House and Senate gave final approval to Senate Bill 361 Tuesday night during the waning hours of what was expected to be the last day of this year’s legislative session.
The measure heads to Gov. Eric Holcomb, who made modernizing the state’s economic development toolkit a top legislative priority and is expected to sign the bill into law in an effort to help the state be more nimble when recruiting new business.
The bill underwent several changes in the House and Senate over the past two months, mostly focused on addressing local governments’ concerns that they be guaranteed adequate input in the formation of innovation districts designed to help the state land mega-deals involving thousands of jobs.
Changes made to the bill in a House-Senate conference committee Tuesday lay out clear requirements for the Indiana Economic Development Corp. in its dealings with local government officials–the main sticking point in the bill’s final negotiations, said bill author Sen. Ryan Mishler, R-Bremen.
If the expected investment in a district is calculated to be less than $2 billion, the IEDC would have to get consent from the local mayor or county commissioners to move forward.
If the deal is worth more than $2 billion, likely a mega-deal that requires fast action, then the IEDC could establish a district without a formal agreement but would have to continue to collaborate with the local officials. However, IEDC would have to establish rules on how they plan to collaborate with locals first to create the district.
Parts of an agreement between the IEDC and local officials could include the expected taxes to be captured in the district, and what percentage of that would go back to the local tax base. At least 12% of those taxes would have to go back to the local tax base.
Established innovation development districts would capture incremental property, state income and sales taxes to go into a local fund to be used back in the district. The fund would be controlled by the state, with oversight from locals per the agreement that would be created.
Gone is a provision that would have created a six-member district board to oversee the local district fund and govern operations in the district. Local government officials thought the boards did not do enough to give locals control, said Ryan Hoff, director of government affairs at the Association of Indiana Counties.
Hoff said the final language makes clear that local governments have to give consent and be involved when a district is established, which is what they had sought.
“I don’t think anyone wants to be in the way to prevent a massive development from coming to Indiana, something that we’re all very hopeful does come to Indiana and will benefit everyone,” Hoff said.
SB 361 also reworks the IEDC tax credit toolkit, establishing an overall $300 million cap on the tax credits that can be given in incentives. It also gives the IEDC $300 million in cash incentives to give out for deals.
The bill passed the Senate unanimously and cleared the House on a 70-22 vote.
Democrat Rep. Ed DeLaney, of Indianapolis, said he thought the bill did not go far enough to solve the state’s issues with not being able to offer large incentives. He said he thinks there should be a statewide fund with designated large funds for big projects.
“It’s a half measure. And at some point we’re going to have to come up with something one and a half measures,” DeLaney said.