Competitive Drive

It’s the eighth week of session; coincidentally, it was eight years ago that the General Assembly passed enabling legislation allowing Marion County to invest in mass transit to make Indianapolis a more competitive, connected city. While local voters spoke loud and clear in favor of improved transit service, some lawmakers have been working ever since to stall those plans.

We successfully played defense earlier this year on SB369, limiting new construction of dedicated bus lanes outside the Mile Square–attempting to essentially cancel the Blue Line bus rapid transit (BRT) route along Washington Street. But we’ve fought enough of these battles to know to expect the unexpected.

That’s what happened with a surprise amendment to a seemingly random education bill heard in Ways & Means on Monday. SB290 deals with the K-12 funding formula, career coaching programs, graduation requirements and more and was nearly used as a vehicle to inject the state legislature into the role of traffic engineer on a local transportation project.

Speed traps:

At issue was keeping four lanes of vehicular traffic in sections of Washington Street, prioritizing high-speed traffic capacity over pedestrian safety, workforce connectivity, and potential for residential and commercial development more likely to occur along a multi-modal corridor.

Past anti-transit efforts have sought to misinterpret or exploit rules forcing IndyGo to raise money beyond fare collections and local tax dollars to support BRT service. The SB290 amendment took a carrot versus stick approach, proposing to ease these fundraising requirements in exchange for configuration changes accommodating four lanes of traffic.

IndyGo is already working to address concerns in certain spots along the 24-mile route. In neighborhoods like Irvington, there’s strong support for BRT as a transportation option and a traffic-calming mechanism to enhance safety for families and businesses in the area.

But the proposed language might have triggered wholesale changes and massive delays, jeopardizing the project overall and risking millions of federal dollars for much-needed street repairs, new sidewalks, curbs, and crossings.

Aside from the substantive case for BRT and the Blue Line, the maneuver violated legislative norms against rolling unrelated (non-tax) topics into the same bill. Ultimately, the amendment to SB290 was tabled, to the relief of transit advocates packing the hearing.

Driving dollars to the classroom:

While transit isn’t germane to education in the context of SB290, safe and accessible public transportation can connect students with learning opportunities while curbing transportation costs. We’re enthusiastic about a pilot partnership between IPS and IndyGo providing transportation to local high schools, saving money for the district while giving older students a reliable way to extracurricular programs, work, and other activities with free bus passes.

We testified on behalf of HB1251 primarily to support provisions expanding flexibility for school transportation services. The bill passed committee Wednesday but could morph into a new ambush on transit next week. A proposed amendment prohibiting students from boarding buses along BRT routes could be offered on the floor—an egregious example of legislative overreach.

Keeping pace with Indy’s peers:

Transit is also a competitive priority in economic development—another reason the relentless attacks are so confounding.

Growing employers are seeking out communities with convenient public transportation options that help recruit talent with the appeal of vibrant, walkable neighborhoods and helping these employees get to and from work. We’ve seen transit routinely and increasingly listed among site selection criteria for significant expansion and relocation projects.

Hundreds of thousands of jobs are or will be served by the three BRT lines that form the backbone of the citywide transit network; groundbreaking for construction of the Purple Line from downtown to Lawrence across 38^th Street was just this morning. The Blue Line will connect the airport as our gateway to the global economy, high-tech hubs like Infosys, new corporate developments like Elanco, and other commercial hubs including the heart of downtown.

We can’t afford self-inflicted setbacks as we compete with regions across the country and around the world to attract new employment and investment opportunities.

Big projects & local budgets:

The day after the IndyGo amendment was safely shelved, Ways & Means reconvened to discuss other ways to upgrade Indiana’s climate for job creation and business attraction. SB361 expands the state’s economic development toolkit by authorizing film production and remote worker relocation incentives along with adjustments to other tax breaks.

But most of the discussion centered on the mechanics of a newly-created Innovation Development Districts (IDDs) that would capture the incremental growth of state and local taxes to invest in site selection priorities for major, corporate projects.

While there’s support for new deal-making programs, there were concerns about the IEDC creating “super TIFs” as one pundit called the IDD, that could skim away local tax dollars without local buy-in, potentially for use on projects in other parts of the state.

In practice, the IEDC has every reason to work together with local redevelopment commissions to broker successful economic development deals. But it’s hard to fault local officials for being protective of their tax base, especially when you consider the debate around business personal property tax relief also going on this session.

Economic development balances tax burdens with access to talent and innovation, infrastructure and other business priorities—including local quality of life critical and public services like mass transit. So, we’re also sensitive to preserving local revenue capacity, especially in fast-growing metropolitan areas.

Fortunately, several changes made Tuesday strengthen the IDD concept:

• Requiring local tax increment to be reinvested in the IDD (rather than a statewide fund).
• Removing the local income tax increment, reducing the local revenue impact and avoiding the complexity of dividing distributions for workers employed in an IDD but living in another county.
• Creating an IDD oversight board with state and local representation to codify collaboration on projects in the districts—though we’re wary of creating entities with potentially overlapping responsibilities for economic development along with redevelopment commissions.
• Putting a cap of five IDDs drawn by the IEDC, unless the State Budget Committee approves additional districts, and a 2025 sunset on the authority to encourage selective use and careful evaluation of this new tool.

With this amendment, SB361 moved to the floor and through second reading with minor tweaks.

We’re eager to see what’s next. The Chamber was a proud partner in making 16 Tech a reality in Indianapolis, recognizing that underutilized property adjacent to downtown and IUPUI created a unique opportunity to go after life sciences and high-tech investment. If IDDs are used selectively as part of a broader strategy, they could be a complementary catalyst for major projects.

Competing for the future:

Education is crucial to economic competitiveness, now and in the future. Quality schools are part of a community’s fundamental appeal to talent and the employers that follow talent—and we know today’s classrooms create tomorrow’s workforce.

Earlier we talked about avoiding “self-inflicted setbacks” on transit—the same applies to education bills that serve no scholastic purpose but only sow division:

• HB1134 is no longer as heavy-handed in curtailing honest discussion and unflinching lessons about race and diversity or holding schools hostage to political backlash. The bill that passed committee on Wednesday simplifies transparency via online learning portals, makes curricular advisory groups voluntary, and creates an administrative grievance process.
• But it still targets so-called “divisive concepts,” and an amendment offered by Senator Eddie Melton to incorporate Black history lessons was narrowly defeated. The bill that will be considered on second reading next week risks alienating educators and making students of color feel more isolated instead of engaged in preparation for college and career success.
• HB1041 is another unneeded insult to Indiana’s image as an inclusive state. The bill threatens to deprive transgender athletes of the camaraderie, character-building, and competitive joy of high school athletics. It was skipped on the Senate calendar but will be back next week.
• Both bills create more angst and controversy than, say, a simple requirement that students complete financial aid paperwork. SB82 was weakened from a completion requirement to a directive that schools provide information on the FAFSA to graduating students. The bill then passed second reading in a small step forward for post-secondary affordability.

Competing with the clock:

With time running out for committee and second reading votes this week, the General Assembly raced to advance legislation (or hold it as a negotiating tactic) ahead of the final, third reading deadlines coming up Monday (for the House) and Tuesday (in the Senate).

We’ll hash out a full list of bills that made it next week, but to hit some critical highlights:

• SB3—which addresses COVID rules and federal benefit opt-ins without blocking businesses from requiring vaccines if they choose–failed to advance in an act of gamesmanship by the House.
• The Senate amended public health provisions back into HB1001, which had been limited to address only employer vaccine authority, on second reading Thursday to set up a comprehensive starting point for negotiations with the House.
• The bill was also amended to give smaller music and entertainment venues broader latitude on vaccine requirements, a change we sought via testimony last week.
• We believe the Senate has crafted a compromise that ends the public health emergency responsibly with improved, not perfect, rules on workplace vaccinations and testing. We need common sense to prevail in conference committee with a push from Governor Holcomb.
• The House and Senate also continue to face off on tax policy with the stripped-down HB1002 passing second reading. Governor Holcomb tilted the debate a bit this week by opening the door to a state income tax cut. The prospects for business personal property tax relief remain uncertain.
• Finally, SB245—the statewide sports and convention bid fund—passed third reading and got a concurrence from the Senate to head to the Governor’s desk, in a win for our tourism and hospitality sector.

More bills are competing for space and attention, but we’ll leave the rest for review next week.