Lawmakers consider tax-credit changes, another round of Regional Cities funding

Lawmakers are considering changes to some of the state's existing economic development tax credit programs in an effort to offer more flexibility and opportunities for local communities.

Economic development officials from across the state offered a plan to the Fiscal Policy Committee on Thursday that would collapse two existing tax-credit programs into a new $100 million regional development tax credit. The plan would also offer $150 million for another round of projects under the Regional Cities Initiative, a program created in 2015 under then-Gov. Mike Pence

The first phase of the Regional Cities Initiative awarded $42 million each to regional authorities in northeast, north central and southwest Indiana.

According to Ball State University research released Thursday, that initial phase resulted in $1.2 billion in investments, with $835.5 million coming from the private sector. Ball State also noted the program is expected to lead to nearly 8,000 new Indiana residents over the next eight years. Attracting and retaining workers was one of the program's initial goals, especially as the state has struggled to attract and maintain its population.

In 2016, 63 counties saw more people move away than move in.

The Regional Cities Initiative "really did exceed most of our expectations,” said former IEDC President Eric Doden, who is now CEO of Greater Fort Wayne Inc.

The regional development tax credit proposed during Thursday's hearing would replace the existing Industrial Recovery Tax Credit and the Community Revitalization Enhancement District Tax Credit programs currently administered by the Indiana Economic Development Corp.

Those programs have no funding caps, so the IEDC awards the credits based on market needs. The Industrial Recovery Tax Credit was established in 1987, and the Community Revitalization Enhancement District Tax Credit was established in 1998.

But the revitalization credit is only available in seven communities, and the industrial recovery credit only applies to vacant buildings that are at least 100,000 square feet and 15 years old.

Doden said the proposed regional tax credit would have fewer restrictions on what projects would be eligible for funding so communities could have more opportunities to attract quality-of-life investments. That's something he said the state needs to focus on in order to attract and keep a talented workforce.

A tight workforce has become an increasing concern in many industries. Doden said one business owner recently told him he would hire an additional 50 employees immediately, if he could only find the workers.

Indiana’s seasonally-adjusted unemployment rate as of August was 3.5 percent, and Doden said if all the open jobs were filled, it would be 0.84 percent.

Economic development officials from the Northwest Indiana Forum, South Bend Regional Chamber, Economic Development Coalition of Southwest Indiana, Southwest Indiana Chamber of Commerce, One Southern Indiana and Our Southern Indiana Regional Development Authority testified in support of the less-restrictive tax-credit program during the hearing.

“This tool really gives us the opportunity to be creative,” said Heather Ennis, CEO and president of the Northwest Indiana Forum.

But some state lawmakers still want to see how the program would be defined. Sen. Karen Tallian, D-Portage, said supporters are asking for a lot of money, so “we need to see what you have in mind for how that's going to work.”

The committee, which is charged with making recommendations to the Legislature for the 2019 session, did not take action on the proposal on Thursday.