Chris Watts: Indiana’s two-year budget tackles 20-year population challenge

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The end of the 2021 legislative session had more plot twists than the last 20 minutes of an M. Night Shyamalan movie, moved by the scale of the federal American Rescue Plan, a surging state revenue update and a state budget deal that defied all predictions of COVID-induced austerity.

Any discussion of Indiana’s next biennium has 18.7 billion reasons to start with K-12 education. But before the ink was dry on the budget, the first batch of data from the 2020 Census raised another issue: Indiana ranks 29th in population growth since 2010, keeping a spot in the bottom half of states.

Population belongs on the list of Indiana’s most daunting long-term challenges, alongside education. Sure, our schools need to prepare more Hoosiers for success in the job market, but building our economy also takes more Hoosiers—period. The budget takes a two-year swing at this 20-plus-year trend with the $500 million Regional Economic Acceleration and Development Initiative.

READI uses a portion of Indiana’s stimulus money to invest in regional strategies—engaging local governments, the private sector, not-for-profits and institutional employers—to enhance quality of life, talent attraction and economic competitiveness.

READI’s premise is similar to the original Regional Cities Initiative because it encourages cooperation across city and county lines for “transformative” plans to attract people (and the business opportunities that follow). But while Regional Cities distributed $80 million in competitive grants, READI is funded with $500 million.

That shows lawmakers recognize the reality that our economic potential is limited by the number of people putting their talents to work in Indiana. READI’s structure also acknowledges that, while most Indiana counties have fewer people today than a decade ago, the dynamics behind the numbers are different. There are no one-size-fits-all solutions.

And the problems themselves vary. Many rural areas need to address challenges like broadband access, along with population losses. Smaller communities might consider joining forces in entrepreneurial initiatives to repopulate Main Street business districts and restore pre-COVID quality of life.

Parts of Indiana are also still grappling with the decline of traditional industry and could emphasize reskilling and redevelopment efforts to stabilize employment and population. Other regions have unique business clusters—like orthopedic manufacturing around Warsaw or central Indiana’s tech sector—that need a seat at the table on specific workforce attraction and retention needs.

READI provides incentive for regional partnerships that think bigger about the future—quite literally bigger, in terms of people, employment and investment. And it leverages another stream of federal funding, the $2.6 billion in flexible American Rescue Plan aid to Indiana local governments over the next year.

Quality of life starts with the basics—well-maintained streets, police and fire protection, parks, trails and other public amenities. But especially in larger cities like Indianapolis, local budgets can hardly keep pace with essential services. Direct federal stimulus funding will ease fiscal pressures on mayors and county commissions, allowing them to pursue more ambitious local and regional growth plans.

Commitments to K-12 and READI certainly make this budget a blockbuster. But we might not be able to give it a final review for another 10 years, when today’s students are graduating from high school and college.

Will more of them continue to call Indiana home? And will the 2030 Census confirm they’re joining a growing population of Hoosiers living, working and paying taxes here?•

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Watts is president of the Indiana Fiscal Policy Institute.

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