2003 REPORT CARD

Report Card on 2003 Legislative Priorities

With the conclusion of the legislative session of the Indiana General Assembly, The Chamber reports progress on many fronts and continuing efforts on others. As a wrap-up, here is a report card on current legislative priorities.

Programs Help Businesses Increase Employment and Investment

Economic growth depends on business taking risks and making new investments to create jobs. For small businesses planning on employment and investment increases, significant cost-saving programs are available through federal, state and local governments to enhance growth.

This year the Indiana Legislature passed a new tax credit program called “Hoosier Business Investment Tax Credit for Indiana Companies.” This legislation provides a tax credit based upon expenditures for “qualified investments” for the purchase of new or costs associated with modernization of existing telecommunications, production, manufacturing, fabrication, assembly, extraction, mining, processing, refining or finishing equipment. It may also include construction of new facilities required for use of this equipment.

The 30% credit is applied against any increase in adjusted gross income, insurance premium or financial institution tax above a base year. This credit can be carried forward nine years.

Increased employment is required by this legislation, and wages need to be at least 150% of minimum wage. Specific information on this legislation should be available from your tax accountant. The investment requires prior approval by the state.

To further support local businesses and make state services more accessible, the Indiana Department of Commerce has opened regional offices. Region 2, which includes St. Joseph County and the surrounding counties, is located at 209 N. Main St. Suite 202, South Bend, IN 46601, phone 574-288-6836. To review the grants available for small business, go to www.in.gov/doc.

Another resource for small business is the Business Development Corporation of South Bend, Mishawaka & St. Joseph County (BDC). The BDC promotes the growth of small businesses by providing term loans for acquisition of equipment/real estate and real estate improvements. The Small Business Administration (SBA) Loan Program must create or retain one job for every $35,000 of financing received. These loans can be for up to 40% of total project costs up to $1 million for owner-operated, for-profit, healthy businesses, if net worth is less than $6 million. Low interest fixed-rate loans are available for 10 to 20 years. Typical financing would include 50% bank loan, 40% SBA loan and 10% owner financing. The BDC facilitates the paperwork required by this SBA Loan Program. The BDC office is located at 227 W. Jefferson Blvd, Suite 1200S, South Bend, IN 46601, phone 574-235-9278. Significant funding is available.

The Chamber is monitoring these programs to determine the best alternatives to create growth of small business and is anxious to receive feedback on how these incentives work for the community. Please let The Chamber know about your positive and negative experiences with these programs.

How State Government Helps Business
Chamber Seeks Member Input

The Chamber’s strong public policy program has achieved major initiatives of importance for the business community. Over the last two years, The Chamber has supported and worked for passage of the “21st Century Tax Plan” and the “Energize Indiana” economic development plan. The resulting legislation has helped raise Indiana to a 10th place tie with Tennessee as a “business tax-friendly” state for 2002.

Despite this success, major problems for business in Indiana still exist, such as reassessment. Tax plan projections indicate that business would have an average of a 23% reduction in property tax bills, although it’s still too early to predict the impact in St. Joseph County and throughout Indiana. A second looming issue is new 8-hour ozone standards for clean air requirements of the Environmental Protection Agency. St. Joseph, LaPorte and Elkhart Counties are in non-attainment designation under the new standards that will be implemented next year. Business also wants permanent elimination of the inventory tax as soon as possible. These issues will be a major focus of The Chamber in next year’s legislative session.

Each year during summer and fall, members of six committees and task forces meet to set an agenda for legislative issues of importance in St. Joseph County. The Chamber welcomes ideas and input from business and individuals on public policy issues. Suggestions should be emailed to Terry Miller, director of public policy, at tmiller@sjchamber.org. The appropriate task force for relevancy to the interests of member businesses and the community will review these issues. While specific industry issues are best addressed by industry trade groups, The Chamber can consult with members on the best approach for accomplishing their goals.

Public policy issues supported by The Chamber range from proactive community goals for a limited access highway between South Bend and Indianapolis on U.S. 31 to reactive efforts to defeat new government mandates on business. The Chamber has endorsed initiatives of educational and governmental units for public expenditures for infrastructure improvements. The Chamber is one of the few community organizations that have relationships with nearly all major organizations throughout the county and significant political contacts at the state and federal level. The upcoming session is an appropriate time to work on significant legislation for the economic vitality of the community. Email us your thoughts on how state government can help your business.

Environment
Chamber’s Position 2003
The Chamber believes that the Air Pollution, Solid and Hazardous Waste and Water Control environmental boards should require the Indiana Department of Environmental Management (IDEM) to provide scientific rationale and a credible cost/benefit analysis if proposed rules exceed federal requirements, or if no standards exist.

Outcome
House Bill 1671 was passed and signed by the governor. This law includes provisions requiring justification for restrictions that exceed federal standards. This law also helps speed up the process of renewals of environmental permit applications. This may have an important impact on new EPA air quality regulations for St. Joseph County.

Chamber Position 2003
The Chamber believes that the Air Pollution, Solid and Hazardous Waste, and Water Control environmental boards should not be dependent on the Indiana Department of Environmental Management (IDEM) staff and supports changes in state law that would provide these boards with separate administrative support. This would encourage a proper separation of powers and allow for an independent review process.

Outcome
House Bill 1272 was introduced. The state spends only $44,000 for management of these important boards with more than one-third coming from fees. Because of the budget restrictions in this session, legislation with even a small fiscal impact was held in committee.

Education, Training and Workforce Development
Chamber Position 1997
The Chamber supports the establishment of state tax credits to be applied to business tax liabilities for qualified employer-funded employee training programs and work-based learning initiatives conducted in partnership with local school corporations.

Outcome
No specific tax credit program was considered this session. Several educational initiatives were included in “Energize Indiana” as proposed by Governor O’Bannon and Lieutenant Governor Kernan. Because of a tobacco class action lawsuit in Illinois, the securitization plan for tobacco funding of “Energize Indiana” became impossible to predict and was killed in the Senate. However, $25 million was provided from federal stimulus funds for workforce development programs, including “Work Keys.”

Upgrade of U.S. 31
Chamber Position 2002
The Chamber supports full funding of the upgrade to interstate quality of the U.S. 31 corridor between South Bend and Indianapolis.

Outcome
Senate Concurrent Resolution 36 was passed by the legislature, which supports the efforts of the Indiana Congressional delegation to seek federal funding for the U.S. 31 freeway project in the upcoming highway bill.

Bonding Power of Municipal Governments
Chamber Position 2003
The Chamber supports adjusting municipal general obligation bonding limits to allow additional authority, which will result in lower financing costs.

Outcome
House Bill 1896 passed the House of Representatives (Rep. Dvorak’s first bill). The Senate Finance Committee failed to hold a hearing on the bill. The unknown effects of reassessment, late support by statewide groups and some opposition by bond attorneys prevented action.

21st Century Tax Plan
Chamber Position 2002
The Chamber urges the General Assembly to enact comprehensive restructuring of Indiana’s tax code to reduce reliance on the property tax and to adopt policies that encourage economic growth. Our Chamber supports a fair realignment of taxes as proposed in the Indiana 21st Century Tax Plan. We support replacement of the Inventory Tax and the Corporate Gross Income Tax with fair business taxes.

Outcome
For 2003, The Chamber considered the most important issue was to protect the gains made in 2002. No new general taxes were enacted. Property taxes will increase because of the correction of the property tax replacement credits and expansion of some local education property tax authorizations.

Energize Indiana: Economic Development
Issues important to St. Joseph County as provided for in the 2003-2005 state budget.

• Extended research and development tax credits to 2013.
• Funding of $4.5 million each year for Technology Parks.
• Funding of $37.5 million for 21st Century Research Fund.
• Funding of $5 million each year for I-Light Fiber Optic Network.
• Expansion of the CREED legislation for counties with second-class cities will give St. Joseph County an option for another economic development district.
• Created Investment Tax Credit for Indiana companies that invest in Indiana facilities. Credit is equal to 30% of total investment and is used to offset growth in tax liability above pre-investment tax liability.
• Extends venture capital tax credit to pass-through entities.
• Established income tax credits for production of ethanol.
• Granted $100 million additional bonding authority to the Port Commission for economic development projects anywhere in Indiana.
• Provides $339 million for statewide university construction projects.

Repeal the Inventory Tax
Chamber Position 1996
The Chamber supports legislation to further reduce or eliminate the negative effects of the inventory tax on business.

Outcome
Joint Resolution 5 approving the Indiana Constitutional Amendment was adopted. This will be subject to a state ballot referendum in the 2004 election. This may require significant Chamber promotion in 2004.

Daylight Savings Time
Chamber Position 1994
Statewide observance of Daylight Savings Time.

Outcome
Issue was not heard in this session.

Standing Chamber Positions
Position 2000
Voluntary Annexation.

Outcome
Supreme Court ruled St. Joseph County Annexation Law was unconstitutional. Legislature applied state law to St. Joseph County.

Position 2000
Support for High Speed Rail.

Outcome
$1.3 million appropriated for planning.

Position 2001
Elimination of textbook rental fees.

Outcome
Issue was not heard in this session.

2003 Local Government Legislative Priorities

St. Joseph County Wheel Tax
Chamber Position 2002
The Chamber supports stabilizing street and road funding through passage of a wheel tax.

Outcome
The St. Joseph County Council and the Commissioners, with support of the Mayors of South Bend and Mishawaka, passed the wheel tax. St. Joseph Country’s road infrastructure is critical for continued economic and community development. This new funding will enable roads to be improved and resurfaced at a sustainable rate.