Hope Springs Eternal

Temperatures are just above freezing as we write this, but it feels like springtime at the statehouse: We’ve got plenty of good news to report as we enter the last few days of this short session. First and foremost, a concurrence of common sense on COVID policy, as the House accepted the Senate’s amendments to HB1001.

As we reported last week, the bill was amended to reinsert the public health and federal benefit provisions requested by Governor Holcomb to end the COVID emergency. It aligned workplace vaccine policies with existing occupational health and safety rules allowing employees to seek limited exemptions (with documentation). It also boosts vaccine authority for sports, music, and entertainment venues to avoid contractual conflicts with athletes and entertainers.

The Senate crafted a plan with more reasonable accommodations on vaccine requirements and minimal damage to Indiana’s pro-business bona fides. After it passed third reading Tuesday, we were prepared for a showdown with the House—instead, tomorrow’s deadline for renewal of the public health emergency helped push the compromise through the House and on to Governor Holcomb.

The Governor also delivered a hopeful message on state revenues Thursday, calling for lowering the income tax rate from 3.23% to 2.9% over seven years (versus a reduction to 3% in four years in the original HB1002 that was later streamlined in the Senate).

Proceed with caution:

Holcomb generally takes a deliberate approach to major issues, and tax relief is no exception: He only backed off his previous reluctance to push cuts this session after months of actual revenue data backed up December’s optimistic budget projections.

The Senate has also taken a “wait-and-see” stance on permanent tax cuts ahead of the next budget. Thankfully, caution also won out on HB1134: Senators thought twice before moving forward with an ill-considered bill that would have chilled classroom discussions of race and diversity. It was delayed and eventually skipped by the author, killing it for the session.

Protecting inclusive learning environments for all students, and flexibility for local schools implementing DEI programs, has been a focus of ours this year, and we’re increasingly optimistic about the outcome.

Unfortunately, the push to pass HB1041 through third reading steamrolled any consideration of consequences for trans girls seeking to participate in school sports. The direct harm to innocent kids is obvious, but there’s also broader damage to Indiana’s reputation as a hospitable host and welcoming place for diverse talent, along with the cost to taxpayers defending bad ideas in court.

Now the buck stops with Governor Holcomb for safeguarding equal opportunity for young people and the best economic interests of all Hoosiers by vetoing HB1041. 

Stay in your lane:

We repeatedly made the point this year that “small government” lawmakers should avoid injecting themselves into workplace relationships and restricting employer authority to require COVID vaccinations. The argument seems to have made a difference.

But HB1041 is another example of the General Assembly reaching beyond the usual state policy arena and further into our classrooms, businesses, associations, and communities. In this case, lawmakers chose to casually overrule the IHSAA—the body tasked with regulating high school sports—and its existing policies on trans athletes.

We couldn’t talk about legislative interloping without mentioning IndyGo. But we can get back to the good news side of the ledger here, with a growing sense that most lawmakers are weary of revisiting the details of local transit projects session after session.

Last week, an anti-bus rapid transit amendment to SB290, an unrelated education bill, was tabled in the Ways & Means Committee. This week, a floor amendment to HB1251 would have imposed onerous rules on IndyGo’s hiring and retention of drivers or risk endangering its partnership with IPS to provide transportation services to its high schools.

There wasn’t much suspense as the amendment was defeated by a voice vote—hopefully the sound of slowing momentum behind efforts to undercut improved transit across Indianapolis.

Beating the clock:

As debate heated up and legislators recessed to caucus on controversial matters, the clock kept ticking towards third reading deadlines on Monday and Tuesday for the House and Senate, respectively. Beyond the top billing given to HB1001 there’s much more to recap:

  • We detailed changes made to SB361 (economic development) last week. It authorizes film production incentives, tweaks existing tax breaks and allows local governments to create remote worker relocation programs, and gives the IEDC (more limited) authority to create up to five Innovation Development Districts (IDDs) that would capture the incremental growth of state and local taxes to fuel pursuit of major corporate employment and investment projects.
  • We neglected to note the $300 million commitment to a flexible business promotion and innovation fund in the next budget cycle, along with a cap of another $300 million on total traditional incentives offered by the IEDC. The bill passed third reading Monday.
  • If the Senate was skeptical on tax cuts, the House took a similar attitude on IDDs, putting tighter limits on the IEDC’s tax increment financing authority before seeing the real-world impacts. We’ll see what approach wins out in its conference committee, which met yesterday.
  • Financial incentives are just one piece of a broader blueprint for economic development. Available housing is also a factor in whether employers can recruit and retain enough workers to match their growth. HB1306 creates a statewide housing taskforce to examine and report on these challenges, making it through third reading Tuesday.
  • Educational attainment is also a workforce and economic development priority, which is why we include issues like FAFSA completion on our agenda to advance college access and affordability. SB82 passed third reading, directing school districts to provide financial aid information to graduating students.
  • Once the anti-IndyGo amendment was defeated, HB1251 cruised past third reading—it authorizes adjunct teachers to fill vacancies in the classroom and expands flexibility on school transportation rules.

Conference Calls:

After third readings, legislation faces three scenarios. In some cases, no amendments were made in the second chamber and the bill heads directly to the Governor’s desk to be signed or vetoed within seven days.

This happened with SB1, expanding eligibility for this year’s automatic taxpayer refund, which sailed through the process. Unfortunately, it was also the case with HB1041.

The original house can also concur in amendments made on the other side of the rotunda and pass the bill along to the Governor with a majority vote. HB1001 was unusual in the scope of changes; often a concurrence happens when changes are minor or non-controversial.

  • This was the case with SB245—the statewide sports and convention bid fund got only modest revisions before moving on. In other concurrence motions…
  • HB1193 revises the formula dictating how Indiana’s share of that settlement is divided among state agencies and local governments.
  • HB1004 provides more discretion to remand Level 6 offenders (mostly drug-related incarcerations) to state prisons—where there are also more treatment programs and re-entry services available—instead of county jails, relieving a major fiscal strain on local government.
  • The House also filed a concurrence on HB1359, making much-needed progress in data collection, analysis, and oversight of our juvenile justice system—hopefully setting up significant investments in educational, vocational, and emotional support programs aimed at giving young Hoosiers the best chance for successful transitions to school and the job market.

The first chamber can also file a dissent from the amended bill, essentially disagreeing with the revised proposal and setting up a conference committee to negotiate a compromise (as with SB361). The conference report then must pass both houses again before reaching the Governor.

  • Some conference committees are already at work. For example, SB284 makes adjustments to Medicaid and professional licensing rules to promote the use of telehealth services post-COVID, which we support in the interests of healthcare efficiency and access.
  • Language from ‘dead’ bills can be resurrected in conference committees, too (we were initially concerned about this with HB1134). On a positive note, housing tax incentives originally in SB262 were added to SB382 in conference, in another step forward for residential development along with HB1306 (housing task force).
  • The conference committee for SB7 met yesterday to refine plans for a Marion County Crime Reduction Board to coordinate efforts among law enforcement agencies, policymakers, the Indiana Criminal Justice Institute, and others. Language from SB10 was also included, originally authorizing pilot programs and resources targeting high-crime areas of the city.
  • The House also dissented on HB1093, which helps organize the state’s efforts on early learning ahead of next year’s budget session, where we’ll also push more financial support for pre-K.
  • In a more high-profile showdown, the House and Senate will confer on HB1002, originally a $1.3 billion mix of individual income, business property tax, utility, and sales tax cuts that was largely stripped by the Senate. The big question—how will Governor Holcomb’s aggressive new stance on income tax relief tip the scales?

We’ll know the answers by next week as the General Assembly wraps up ahead of its March 14 adjournment deadline, along with the outcomes of more conference committees. We look forward to sharing the latest with you and putting the work of the full session in perspective for you thereafter.

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