Legislative Update: State of Clarity

Uncertainty swirled around the Indiana General Assembly the first few days of session (insert Indiana weather joke here), but unlike the weather, things have cleared considerably since: The deadlines for introducing bills have passed in both chambers, all caucuses have announced session agendas, and Governor Holcomb delivered his second State of the State address Tuesday evening.

All this gives us a better state of clarity on the positives and potential pitfalls that will shape the next nine weeks.  Of course, the General Assembly is made up of 150 personalities and sets of priorities, with many facing re-election contests this fall – so our legislative crystal ball can quickly turn from clear to cloudy.  But here’s where we stand at the moment:

Get that man a drink!
The hearing that got the most attention this week focused on Sunday alcohol sales; the Chamber supports lifting an unnecessary limitation on commerce, and our Director of Policy Tim Brown testified in favor of SB1 (Sunday carryout sales), which then passed the Senate Policy Committee 9-0.

The House is expected to act next week, but the Senate vote was a significant hurdle cleared.  If the bill ultimately succeeds, we’ll tip our hats to Tim when we tip back our first Sunday-bought beer.

“People, People, People”
Repeating it for emphasis, Governor Holcomb said ‘people’ were his focus for the legislative session, and called the gap between Indiana’s workforce skills and employer needs the “defining issue of the decade.”

We agree, talent is our top economic priority, and we support efforts to restructure the state’s workforce system to anticipate and deliver on the demands of the job market.  The biggest swing at this goal is taken by HB1002, which continues last year’s push to streamline and consolidate various workforce training programs and empower the Department of Workforce Development (DWD), while also giving the Indiana Economic Development Corporation (IEDC) new tools to match training resources to growing business needs.

The bill also dedicates all corporate income tax revenues to a Next Level Workforce Fund, to invest in education and training programs based on employment data and employer input, and makes more Hoosiers eligible for Workforce Ready grants to earn high-demand career credentials.  (Another bill, SB136, allows DWD to expand the Workforce Ready program beyond Ivy Tech and Vincennes.)

This would be a significant investment in a stronger workforce; other bills aiming at the same goal include:

• SB15 and SB245, both creating new income tax credits for employer participation in workforce development programs; and
• SB157 establishing a “Real World Career Readiness Program” to provide targeted career and technical education programs to help high school students successfully enter the job market, managed by the State Board of Education with direction from DWD.  (We’ve been working on these issues at the local level with EmployIndy and others – check out Project Indy – so we’re pleased with the state-level focus.)

Expanding the Workforce
We have to upskill our existing workforce, but we’re also aiming for a stronger, more inclusive economy by expanding our workforce – creating pathways back to employment for those who face unique challenges.

Hoosier veterans deserve our support in their transition to the civilian job market; to this end:

• HB1047 helps veteran students qualify for financial aid (by not counting some veteran benefits against income limits);
• SB253 requires DWD to create a registry of public and private employers that have a voluntary veterans' preference employment policy;
• SB283 makes housing more affordable for veteran workers by creating a veteran rental tax credit.

Ex-offenders also face many obstacles to employment; helping them earn a fresh start as productive taxpayers reduces the risk (and costs) of recidivism and adds to our economic base.  SB11 passed committee unanimously this week, qualifying ex-drug offenders for SNAP benefits as they work to get back on their feet.  HB1082 and SB291 simplify the expungement of criminal records, helping ex-offender job-seekers.

E Pluribus Unum
Governor Holcomb also embraced an inclusive attitude in the State of the State, calling for Hoosiers to “treat each other with respect and focus not on what divides us, but on what we have in common.”

We believe these sentiments demand the force of law, to codify a welcoming climate for diverse talent.  As we noted last week, we continue to fight for expanded anti-discrimination laws (SB285), encouraging the children of immigrants to go to college and contribute to our economy (SB227 – in-state college tuition eligibility), and seeking justice for victims of bias crimes (our preferred approach is SB418 – a sentence enhancement – while SB271 treats bias motivation as a separate offense). The Central Indiana Alliance Against Hate is holding a 'Pass a Hate Crime Law Rally' on Tuesday.

Cash Rules Everything Around Me
As the Wu Tang Clan helpfully reminds us in C.R.E.A.M., it’s all about the money – tax and fiscal policy, in this case.  The push to dedicate corporate taxes to workforce development is a bold idea (especially in a non-budget year), but there are a number of other bills with budget implications or shaping financial incentives:

• HB1001 provides fund transfers to help K-12 schools close budget gaps caused by enrollment growth (passing its initial test in Ways and Means Wednesday);
• SB257 makes it clear that software-as-a-service business revenue is exempt from state sales taxes, an important clarification to support our growing tech economy;
• Less helpfully, SB276 allows taxing units to opt out of Tax Increment Financing (TIF) districts (exempting Marion County), complicating local investment and redevelopment plans;
• SB242 similarly allows local units to protest (and potentially be excluded from) tax abatements in economic revitalization districts, jeopardizing the ability to attract new investment to areas that need it most (this bill will receive a hearing but appears unlikely to move forward);
• There are proposals to give a financial boost to regional redevelopment – HB1048 and SB353 both create new tax credits administered by the Indiana Economic Development Corporation (IEDC) to incentivize reuse and reinvestment in vacant or abandoned properties;
• Property tax reform is also on the minds of many lawmakers, with bills to help long-time and senior homeowners in Marion County, to end annual property valuations and put the brakes on large (10%+) jumps in property tax assessments.

Local Matters
As we wrote last week, we’re encouraged by momentum on township government reform – proposals to merge small townships and force stricter review of township property tax levies (to stop the excessive surpluses being stockpiled by overtaxing townships - SB231).  The township merger plan was officially introduced this week as HB1005.

Also on the local government front, lawmakers are still eager to give ‘five stars’ to services like Airbnb (HB1035 prohibits local bans on short-term rentals, in an issue left over from last session), and HB1045 calls for more information and transparency on debt service during local project referenda.

On the side of local flexibility, HB1099 allows counties (not already authorized to do so) to levy a food and beverage tax for economic development projects and initiatives.

Another Healthy Indiana Plan
As Governor Holcomb awaits federal approval of Indiana’s H.I.P. 2.0 waiver, we continue to push another healthy Indiana plan – raising the cigarette tax to discourage smoking and raise revenue for public health issues, and raising the legal age to buy tobacco products to 21.  Along with repealing the so-called ‘Smoker’s Bill of Rights’ (SB23), these moves would pay off in a more productive workforce and a healthier economy.

A bill raising the smoking age and the cigarette tax will be unveiled next week (with a Statehouse rally on Tuesday the 16th at 11am), and another (HB1217) toughens the penalties for selling cigarettes to minors…we’ll keep tracking this important issue.

Testing the Waters
We’ll report on additional bills aligned with our agenda and continued committee action next week.  It’s also important to note that many proposals introduced this year – particularly those tweaking the tax system or carrying a notable fiscal impact – aren’t seriously expected to pass, but rather to start discussion and build support heading into next year’s long (budget) session.

Major legislation can get passed in its “rookie year” – and we like the odds for workforce development this session, especially since many of these concepts were socialized last year.  But we know first-hand that issues like mass transit have taken multiple sessions to build legislative majorities; having debated the tobacco age last year and anti-discrimination laws for several years now, we’re optimistic that 2018 could be their year.

Many bills are simply introduced to advance a political cause (often by legislators with an eye on November, not March).  But with an increasing number of members announcing their intention to retire after this session (or the end of their terms), we might expect a more pragmatic approach to policymaking as well.

So like a gym filled with New Year’s resolution-makers in January – nearly deserted by February – we expect the legislative docket to shrink dramatically as committees dig in and second- and third reading votes unfold over the next 2-3 weeks.  Stay tuned.