Indiana Economic Development Association

Final 2008 Legislative Report

 March 18, 2008

LEGISLATIVE COMMITTEE MEETINGS END

The IEDA Legislative Committee will not meet again unless called by the Chair.  We wish to thank all our members for their involvement during the session and especially wish to thank our sponsor, NIPSCO, for underwriting the legislative committee conference calls. 

 SESSION WRAP-UP

Legislature Passes

Comprehensive Property Tax Reform Package

The 115^th Indiana General Assembly reconvened the 2008 “short” session on January 8 and adjourned, sine die, around 6:00 p.m. on March 14, finishing in the daylight for the first time in many years.  Keeping with tradition, the last week of session was fueled by drama, substantial negotiating and essential compromise.

Addressing Indiana’s property tax crisis DOMINATED the session.  Coined the “property-tax perfect storm,” the issue was hammered home last summer when homeowners in certain counties saw their bills double or even triple. Protest signs sprouted up in front yards across Marion County (Indianapolis) in particular, and protest votes cast by angry homeowners spurred the almost unimaginable upset defeat of incumbent Indianapolis Mayor Bart Peterson on November 6, 2007.

With that and the defeat of twenty-two additional mayors fresh on their minds, lawmakers began the session on January 8^th steadfast in their goal to pass extensive property tax reform.  On the very first day the Senate Tax and Fiscal Policy Committee reported out two major tax reform bills.  This expeditious action illustrated the importance and urgency attached to this issue.

Governor Mitch Daniels gave his fourth State of the State address on Tuesday evening, January 15.  As expected, Indiana’s property tax crisis was the major topic in his speech.  The Governor called for a bi-partisan solution and cautioned lawmakers not to make any plans for Spring Break, indicating that he would convene a special session to deal with the property tax issue if it was not resolved by the March 14 statutory deadline.   More motivation!

Periodically during the session, the State House hallways and galleries were filled with property tax protestors in circa-18^th century clothes and individuals wearing sandwich boards advertising their property tax relief message.  Often angry taxpayers met with Governor Daniels to voice their concerns. 

HEA 1001 - The property tax package is characterized by many as Sweeping, Bold, Courageous, or The Strongest Property Tax Reform Measure in Decades.  It will become reality when signed by Governor Mitch Daniels within the next 10 days.  The new law will raise the sales tax by one penny to seven cents effective on April 1, 2008.  It will also cap property tax bills in order to cut the average Hoosier homeowner’s tax bill by about 30 percent this year.  The legislation includes much of the framework first proposed by Governor Daniels on October 23:  the elimination of some township assessors, referenda on major building projects, shifts of several levies off counties onto the state, and spending controls for local government. 

In addition, both chambers voted to put the property tax caps (called circuit breakers) into the state Constitution, potentially starting in 2012. These caps limit homeowners' payments to 1 percent of their property’s assessed valuation, with rental and farm property capped at 2 percent and business property limited to 3 percent.  However, that Constitutional amendment must pass the legislature again in 2009 or 2010, and then be approved by voters in the statewide election in 2010 before it becomes effective.

The final numbers of bills filed were 368 in the Senate and 409 in the House for a total of 777.   Of the 265 that passed their house of origin, 147 made it to Governor Mitch Daniels’ desk for his final consideration.  It takes 10 days after adjournment to complete this final segment of the process.

Another newsworthy issue was the drama that unfolded around one Senator Mike Delph’s (R, Indianapolis) effort to pass restrictions on businesses that hire illegal immigrants. This issue became quite the war of words but ultimately failed.  In fact on Thursday night, February 21, House Republicans staged a walkout to protest an effort by Democrats to ignore a minority (Republican) committee report on the issue. Ultimately, Republicans were unsuccessful in their efforts and all legislators returned to work the following Monday, February 25.  It is clear that finding a solution to the issue of illegal immigration is politically charged and will be an issue during the campaigns leading up to the November 4, 2008, elections.

Mid-session Democrat and Republican precinct committeemen in the 7^th Congressional district (Indianapolis) were required to select a candidate from their respective parties to run for the Congressional seat left vacant by the death of Congresswoman Julia Carson.  On March 11, Democrat City Council member Andre Carson was elected to fulfill the remainder of his grandmother’s term, which expires at the end of 2008.  Carson will now immediately return to the campaign trail and run for a full term.  He will face three substantial Democratic opponents in the May 6 primary – State Representatives Carolene Mays and David Orentlicher, and Dr. Woody Myers, former state health commissioner.  State Representative Jon Elrod, who ran against Carson in the March 11 special election and lost 53% to 45%, will face two newcomers in his Republican primary race as he attempts to secure the Republican nomination for the November 4 election.

Everyone in the State House was deeply saddened by the death of Sen. David Ford (R, Hartford City) on March 5 at the age of 59 after a battle with pancreatic cancer.  Ford, a Republican from Hartford City, died at his home.  Ford had been absent from the Senate since January, when his family confirmed he was critically ill with cancer.  This honorable and dedicated public servant will be missed.

Although the belle of the ball this “short” session was property tax reform, we note an unusually large number of retirements.  Currently, 13 legislators have announced that they will not seek re-election this year.  They are:  Sen. Glenn Howard (D, Indianapolis), Sen. Robert Jackman (R, Milroy), Sen. Marvin Riegsecker (R, Goshen), Sen. Sam Smith (D, East Chicago), Sen. Thomas Weatherwax (R, Logansport), Rep. Larry Buell (R, Indianapolis), Rep. David Crooks (R, Washington), Rep. Eric Gutwein (R, Rensselaer), Rep. Phil Hoy (D, Evansville), Rep. Carolene Mays (D, (Indianapolis), Rep. Joe Micon (D, West Lafayette), Rep. David Orentlicher (D, Indianapolis), and Rep. Michael Ripley (R, Monroe).  Sen. Jeff Drozda (R, Westfield) is moving out of state and will resign in June, if not sooner.  The Indiana primary is May 6.  As it turns out, this election is going to be anything but routine.  Normally, the Indiana primary is inconsequential from a presidential selection perspective.  Not true this year!  Obama and Clinton are battling it out here in Indiana too.  In fact, Obama visited on Saturday, March 15.  Bill Clinton is here on March 18 and Hillary all day Thursday, March 20.

This will be an extraordinarily expensive campaign season.  This year candidates and campaign coordinators did not wait until sine die to send their fundraising calendars to us.  We have already received invitations announcing events as soon as next week.  With all 100 Indiana House seats up for election, as well as twenty-five Senate seats, the Governor, and the national presidential election, we will be required to be quite active in the process.  We are presently at work raising funds to support our friends as they seek re-election on May 6 and November 4.  

The Legislative Council, the management arm of the Indiana General Assembly during the interim, will meet in June to create interim study committees.  Among the issues expected to be thoroughly discussed and debated is the Commission on Local Government Reform Report.  This is also known as the Shepard-Kernan Report.  There will additional topics assigned to the standing interim committees by the Legislative Council.  We will report any of interest to you in the coming months. 

Thank You

We appreciate your willingness to contact legislators when called upon during the session. Without the assistance of IEDA’s members, it would be difficult to pass proactive legislation or thwart detrimental language.  Thanks for your dedication, understanding, and continued support. 

BILL HIGHLIGHTS 

Summary of HEA 1001 3-18-08

HEA 1001 – Property Tax Relief – Click on the bill number in order to link and access the 663 page final version.  We have also attached a summary of the major provisions of the bill for you.  (Please note that due to the bill’s length, it may take several minutes to download.)

We are pleased to report that  the petition/remonstrance requirements for TIF were NOT included in the final version of this legislation.  A victory for the membership of IEDA.  A property tax relief bill WAS going to pass in this session.  Although changes were made to the TIF process, we are delighted that the most egregious language that would have  curtailed economic growth was excluded.

Changes of interest that did pass in the bill:

• TIF-financed projects must be "physically located in or physically connected to" the TIF District.
• Appointments of redevelopment commission members in counties  Rather than all appointments being made by the legislative body, two of the five members must be made by County fiscal body (three members in Counties with seven-member Redevelopment Commissions). The  Redevelopment Commission will now have a non-voting local school board member.
• Please note that voter referendum laws and petition-remonstrance laws in the bill are NOT applicable to pure TIF financings.    
• Unless the Redevelopment Commission obtains the prior approval of the Indiana Economic Development Commission (IEDC), a Redevelopment Commission may not expand an existing TIF District without a finding that the existing TIF District does not generate sufficient TIF revenues to meet the financial obligations of the original project.
• For most projects, financings will be limited to 25 years.
• Maximum term for TIF Districts reduced from 30 years to 25 years. 
• Various Redevelopment Commission actions will now require legislative or fiscal body approval.  

HEA 1001 is a far reaching property tax reform bill that will take a significant amount of time for economic development leaders, local government personnel and us to digest its long range impact.  We will keep you informed as we learn more in the coming weeks and months.

HEA 1125 – Various government matters too numerous to list here are included in this bill.  One issue of interest to IEDA is the requirement that the Commission on State Tax and Financing Policy study the feasibility of establishing a sales tax increment financing district in Warrick County to facilitate the establishment of a museum and education complex.

HEA 1220 - The introduced version would have established a transportation tax area for the territory within Lake County and Porter County in order to extend the South Shore Railroad to Crown Point and Valparaiso.  Unfortunately, it was too expensive for a reduced spending session and it was amended to merely require the Commission on State Tax and Financing Policy to study state and local funding alternatives for the South Shore West Lake extension.

The following bills died during the session:

SB17 – Redevelopment commissions and TIF.  Parts are included in HEA 1001.

SB 18 – Limits on Debt.  Parts are included in HEA 1001.

SB 19 – Income tax withholding.  Parts are included in HEA 1125.

SB 114 – Annexation.

SB 231 – Oversight of public money.

TRACKING LIST 

Please note that the attached tracking list includes each bill by number, short title, committee assignment, digest of the bill, and  action.  If you would like to read any bill in its entirety, please click on http://www.in.gov/apps/lsa/session/billwatch/billinfo.  Enter the bill number in the box marked “Go to Bill” and click on Go.  From there you will be able to access information about the bill. 

INDIANA GENERAL ASSEMBLY, INDIANAPOLIS

HOUSE TELEPHONE CENTER                               SENATE TELEPHONE CENTER
317/232-9600                                                    317/232-9400
800/382-9842                                                    800/382-9467

E-MAIL:      http://www.in.gov/cgi-bin/legislative/contact/contact.pl

Formula for e-mailing = S or H (for House or Senate) District number@in.gov.

For example, Sen. Vaneta Becker may be contacted using the following e-mail address:  S50@in.gov.      

ADDRESSES