Editorial: Innovation districts need input from local and state officials

We are pleased to see that lawmakers have continued to work on an economic development incentives bill that will, among other things, provide for the development of innovation districts to help the state land mega-deals that could bring thousands of jobs to Indiana.

And we endorse changes to Senate Bill 361 made this week in the House that give local officials a greater voice in how the money is used.

The districts would operate like local tax-increment-financing districts. Tax revenue generated within a district could be used to acquire land, pay for improvements, and provide grants and incentives to companies locating within the district.

The districts are among several new tools the legislation would offer the Indiana Economic Development Corp. to help the state compete in a rapidly changing economic development landscape. Many states, including some that have lured large development projects recently, already have similar programs.

But local officials, while supporting the concept of the innovation districts, raised questions about who would control the tax revenue generated within them.

Originally, the bill put the IEDC in charge of managing a state fund that would collect the revenue from all the districts and spend it on grants, loans and investments for projects in the districts. As passed by the Senate, the bill would have required at least 10% of the captured revenue to be returned to local governments. But at the state level, the money from individual districts would have been combined into one fund and could be spent in any district.

Local officials said they wanted more control.

And so—as reported by Emily Ketterer in a story on page 5A—the House Ways and Means Committee amended the bill to require separate funds for each district and stipulate that the revenue can be used only in the district from which it was generated. The amendment also removed local income taxes from the revenue that would be captured.

Local boards appointed by the IEDC and local governments in each district would oversee the funds for individual districts. The change, lawmakers say, ensures a working relationship between state and local officials.

Gov. Eric Holcomb, a Republican, and state officials had insisted that, even without the change in the legislation, they would have worked in concert with local leaders on economic development deals, as they do now. But we support changes that give local officials a bigger say in what is happening in their communities.

More important, we understand those officials’ concern that money generated in one part of the state could—under the original bill—be used in another part of the state.

As of this writing, SB 361 was headed to a conference committee so members of the House and Senate could work on a compromise between the differing versions of the legislation.

We hope they reach common ground. We agree with state officials that the innovation districts and other provisions are necessary to modernize Indiana’s incentives toolbox, but we also hope the final bill ensures that local voices are part of the strategy.•

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