Congress Seeks Short-Term Fix to Highway Trust Fund Dilemma

The U.S. Congress voted last week to provide $10.9 billion to the U.S. Department of Transportation to fund the Highway Trust Fund in order to reimburse states for repairs and infrastructure improvements for roads, rails and airports.

The nearly $11 billion was cobbled together from general fund revenues by any number of budgetary gimmicks not rationally tied to the fuel (gasoline and diesel) excise taxes that normally go into the trust fund (e.g., an extension of customs fees as well as so-called “pension smoothing”).

Few lawmakers in the Indiana delegation (and the entire Congress for that matter) are happy that it is not a longer-term solution; those we spoke with were frustrated by the delay and the funding mechanisms. The Indiana Chamber agrees this is no way to conduct the people’s business, but it is better than the alternative of the highway fund going broke, work stoppages and the idling of hundreds of thousands of construction workers across the country. We will work with the delegation to secure a more rational bill and reauthorization of the multi-year surface transportation bill in coming months.

Indiana Chamber Endorses Four Members of Congress for Re-Election

The Indiana Chamber of Commerce is endorsing four members of the state’s congressional delegation from Central Indiana:

U.S. Rep. Todd Rokita (R-IN, 4th District);
U.S. Rep. Susan Brooks (R-IN, 5th District);
U.S. Rep. Luke Messer (R-IN, 6th District); and
U.S. Rep. Todd Young (R-IN, 9th District).

“Good public service deserves to be recognized. These members of Congress continue to demonstrate sound fiscal policy and prudent decision-making on issues that are vital to jobs and economic growth,” says Indiana Chamber President and CEO Kevin Brinegar.

The Indiana Chamber’s nonpartisan congressional PAC determined the endorsements.

At both the state and federal levels, Indiana Chamber support is driven by vote scores on pro-jobs, pro-economy issues. For state endorsements, the Indiana Chamber relies on its Legislative Vote Analysis report. Congressional support is based on the vote tally conducted by the U.S. Chamber of Commerce.

Representatives of the U.S. Chamber, which also is supporting these candidates for re-election, joined the Indiana Chamber in downtown Indianapolis for today’s press conference.

The Indiana Chamber has been the state’s leading business organization for more than 90 years, representing over 800,000 Hoosier workers through nearly 5,000 member companies across Indiana.

Congress Can Do It, But You Can’t

An interesting blurb in a recent Kiplinger newsletter on one of the privileges of congressional service:

Congress can do what employers can’t when it comes to health coverage: use tax-advanced funds to reimburse workers who buy individual health care policies on exchanges. Employers face a tax penalty of $100 a day per worker for violations.

Yet the government gives lawmakers and Capitol Hill staffers tax free contributions to help offset insurance premiums, covering about 72% of exchange-bought insurance. The government allowed the payments because of concerns about higher premiums and the loss of the government subsidy for insurance for both lawmakers and staff.

The IRS restated its view that such subsidies aren’t permitted in the private sector after some vendors told employers that the pretax payments would allow them to meet the mandate to provide insurance. The double standards isn’t likely to change.

Comment Period Open for EPA’s Latest Carbon Regulation

Potentially devastating to our state. That’s how we view a new Environmental Protection Agency (EPA) regulation to strictly limit carbon emissions from the nation’s existing coal-fired power plants. This latest proposal comes on the heels of a plan to put in place greater pollution controls for any new power plants.

The President has left no doubt that he is mounting an all-out war against coal. Congress refused to bite on a climate change bill, so he’s spending his second term trying to legislate via the EPA. Smart, necessary regulations make sense, but that’s the opposite of what we have here; it’s entirely unreasonable given our nation’s energy needs.

These EPA regulations also will barely even move the needle toward reducing carbon emissions (not even by 2% according to the U.S. Chamber of Commerce’s Institute for 21st Century Energy), but they will deal a tangible blow to the national and state economies.

The Institute for 21st Century Energy predicts the regulations will result in a whopping $51 billion in annual economic losses through 2030. On top of that, some 224,000 Americans will lose their jobs and consumers will pay $289 billion more for electricity. Separately, the U.S. Department of Energy has estimated the electricity cost increase could be as much as 80%.

Most Hoosier businesses and families can’t afford to pay that, and they certainly can’t afford a slumping economy and job market.

The reality is that Indiana will be hit far harder than most states because it’s the number one per capita manufacturing state in the nation. Over 80% of Indiana’s electric power comes from coal, compared to only 45% for the country. Despite diversification efforts, coal remains Indiana’s primary energy source.

For decades, companies that have located in Indiana have often cited a reliable and affordable supply of electricity among the determining factors, according to site selectors and information gathered by state government. Losing that competitive advantage entirely is now a real possibility with coal coming under attack by the Obama administration.

We encourage you to let the EPA know your thoughts on this latest regulation by visiting www.indianachamber.com/EPA. Also, let your members of Congress know; they need to take action before irreparable damage is done to our economy.

Chamber Comments on State’s Blue Ribbon Panel on Transportation Infrastructure

Indiana Chamber of Commerce President and CEO Kevin Brinegar on the release of the report from the state’s Blue Ribbon Panel on Transportation Infrastructure:

“The recommendations of the Blue Ribbon Panel on Transportation Infrastructure are an important first step. The group has identified priority projects and clearly defined the funding challenges. Equally important will be the work called for in HEA 1104 (2014), legislation outlining an Indiana Department of Transportation study of financing alternatives that will help meet future funding needs.

“In addition, it’s time for Washington to get its act together and assure that federal funding shortfalls are addressed. Some states are already cutting back on important projects in fear of Highway Trust Fund deficiencies as soon as August 1. What is truly needed – instead of short-term, crisis-avoiding extensions – is a multi-year renewal of the federal transportation plan.

“Superior infrastructure is one of the four drivers of the Indiana Chamber-led Indiana Vision 2025 and strong transportation via road, rail, air and water is critical to our state’s economic future.”

Apple Reaches Settlement in E-Book Pricing War

Step into my room at home and you’ll find a row of book-lined shelves, stacked atop one another and overflowing onto my desk. When I was younger, summers meant days filled with devouring books. And yes, I was that kid who brought books to school and read whenever a spare moment presented itself, only occasionally hiding them beneath my teacher’s line of sight so I could read during class (but only if it was a book I absolutely couldn’t put down).

As a book nerd, I’ve kept up a bit with the raging paper versus e-book war. Personally, my loyalty remains with paperback books. I enjoy physically turning the pages and have felt a sort of cold detachment whenever trying to read an e-book. On the other hand, I have nothing against e-books and believe the two forms can co-exist peacefully—someday.

But for that day to come, publishers and booksellers need to straighten out e-book pricing issues. In April 2012, the U.S. government sued Apple and five of the biggest publishers for contracts Apple made with the publishers that raised e-book prices. The agreement in these contracts involved the publishers establishing book prices and Apple receiving 30%. The purpose was to force Amazon, who often sold below cost, to raise e-book prices.

Apple has now reached a settlement in this e-book pricing lawsuit, in which it faced up to $840 million in claims. The terms of the agreement have not been made public.

This is only one example of the controversies e-books have caused in the publishing world, but hopefully this is a step in settling pricing issues.

In the meantime, as a stubborn paperback-enthusiast who has not been personally affected by this problem, my biggest hope is simply for the industry to thrive as a whole, whatever that takes.

Iowa Senate Race is Pretty Farmin’ Serious

Politically, Iowa remains one of our most interesting states. Obviously, its early caucus status lends itself as a power player in presidential politics. But its makeup is also rather vexing and seemingly unpredictable at times, featuring successes for both Republicans and Democrats — and the longevity of its Senators Chuck Grassley (R) and Tom Harkin (D), who’ve been in office since 1981 and 1985, respectively.

With Harkin retiring, there’s a heated race for his vacated seat featuring Rep. Bruce Braley (D) and State Senator Joni Ernst (R). (I actually interacted often with Braley’s staff during his 2006 campaign, while I was working on a State House race in Waterloo for U.S. Sen. Evan Bayh’s All-America PAC.) Braley, however, has found himself trudging through difficult terrain in light of some unfortunate and dismissive agriculture-related gaffes — the latest in a stump speech by a surrogate. Columnist Kathie Obradovich of The Des Moines Register highlighted Braley’s problems, illustrating how some unfortunate word choices here and there can quickly change the nature of a political campaign.

Below, you’ll find an ad where Ernst attempts to capitalize by relaying her hog castrating bona fides, because… pork. (I like the snuggly pig embrace 20 seconds in, personally.)

Oh yes, it’s campaign season, America. Let’s get hog wild! (I’ll show myself out.)

Chamber’s Bill Waltz: State Budget Holding Steady for Now

There are plenty of ways to parse the revenue collections over the first 10 months of the current (2014) fiscal year. Officially, the general fund numbers are 0.5% below the most recent (December 2013) forecast. But they are 1.7% below the 2013-2015 budget based targets. Neither percentage warrants great concern, representing in dollars $61 million (0.5%) and $194 million (1.7%), respectively. But the last two months of fiscal year 2014 will be worth noting for the purpose of identifying trend lines. The March and April numbers came in very close to the December forecast, but the problem is the December forecast adjusted the predictions downward from the April 2013 forecast on which the budget is based.

Last month’s actual collections were 6.4% below the original forecast. So there is a need for the May and June collections to be close to the revised forecast amounts, or else the budgeting going into the second fiscal year of this biennium will get trickier. If those collections drop off, the forecasters and budget-makers will be looking at less than desired numbers going into the new budget making session next year. Sales tax revenues are the real key since they make up 49% of the collections. The sales tax numbers are not bad, but are very modest, showing 1.5% growth over last year. Corporate revenues remain stalwart, 14.5% above target for the year. On the other end, gaming remains down, 7.1% below target. All in all, the budget is in an alright place, but there is a lot to be determined in the coming months as far as expectations going into the next biennium.

Stay Tuned for Real Interim Action on Tax Issues
Nothing is happening just yet, but things are in the works: This will not be an ordinary interim for tax matters. The Pence administration is currently busy organizing a major event for next month. The initiative, dubbed the Indiana Tax Competitiveness and Simplification Conference, is set for June 24. It will be opened by Gov. Pence and feature a few nationally recognized speakers. There will also be panel sessions on a variety of tax subject areas. Panelists will have a work group type format. This is a “by invitation” conference. More details will be reported next month.

Dovetailing the Governor’s conference to some degree will be the Blue Ribbon Commission established by SEA 1-2014. It is expected that his body will begin to take shape in the coming weeks.

The Legislative Council has recognized the commission (referenced as the Commission on Business Personal Property and Business Taxation) in conjunction with the other interim committees sanctioned for interim activity (via Council Resolution 14-01). Senate Pro Tem David Long will name one of his Senate colleagues as the chair and Speaker Brian Bosma will name one of his House colleagues as the vice chair. Four other legislators will likewise be appointed, while the Governor will have a designee. And the remaining seven members will be laypersons representing various interested parties, including the Indiana Chamber, the Indiana Manufacturers Association, the Realtors Association, agriculture and local governments.

Chamber Analysis of Governor’s Request to Expand Healthy Indiana Plan

The Pence administration last week unveiled plans to request a waiver from the Centers for Medicare & Medicaid Services (CMS) to expand the Healthy Indiana Plan (HIP). This expansion of HIP would be in lieu of a traditional Medicaid expansion. The announcement had been anticipated for several weeks.

The Healthy Indiana Plan, or HIP 2.0 as it is now being referred to, will have three “pathways” to coverage: HIP Basic, HIP Plus and HIP Employer Benefit Link. It is funded through the existing cigarette tax, the hospital assessment fee and federal Medicaid funds.

The Basic HIP plan is for Hoosiers below 100% of the federal poverty level (FPL). Basic members use an entirely state funded power account (similar to a health savings account) to cover a $2,500 annual deductible. The HIP Plus plan is for Hoosiers under 138% of FPL. They will be required to make contributions that range from $3-$25 per month. Members of HIP Plus and the state will jointly fund the power account based on a sliding income scale. This plan also includes dental and vision coverage.The HIP Employer Benefit Link allows HIP eligible individuals to enroll in either HIP Plus or receive a defined contribution power account funded by the state to access an employer-sponsored program. The defined contribution must be used to pay for premiums, co-pays or deductibles.

The Indiana Chamber has supported the expansion of HIP as an alternative to a traditional Medicaid expansion. The HIP plan has encouraged individual responsibility by attempting to mirror consumer driven health plans. HIP also reimburses at 100% of Medicare (higher than Medicaid), which ensures more provider participation and reduces cost shifting to the private sector, a point that is important to employers. The Indiana Chamber believes that the HIP Employer Benefit Link option will be an interesting program to potentially provide coverage to Indiana’s working poor. The Indiana Chamber will be securing more details on how the program will be implemented and will provide our members that information as it is received.

On a related note, this $25 million budget savings to the state – if the HIP expansion is approved by CMS – could cause some problems for insurance carriers providing health insurance coverage to the individual market in the insurance exchange/marketplace. The state is transitioning from a (209b) state, with its own disability definition, to what is called a “1634” state. Under a 1634 state, the administration will accept disability definitions of the Social Security Administration. As a result of the switch, the state will no longer be required to maintain a spend-down program. This program allowed those with high medical expenses to become eligible for Medicaid after they spent a designated portion of their monthly income on medical expenses. As of December 2013, there were over 134,000 people in this spend-down program.

Of that spend-down population, nearly 7,500 have incomes over 100% of FPL. It is this population that will be transferred to the insurance exchange/marketplace to purchase qualified plans in the commercial market. Medicaid claims for those individuals have been over $1,800 per member per month. Total claims for March 2013 through March of 2014 were $134 million. That amount is significantly higher than under normal individual insurance plans.

Insurance carriers participating in the insurance exchange filed their rates in May of last year. Those rates included calculations for the high risk pool being transitioned into the exchange, but the 7,500 “1634” transition eligibles are not included in those rates. This has serious impacts on those carriers: Significant losses to those participating which will result in considerable increases in current rates to cover the cost; those carriers that waited and will be coming into the exchange in 2015 have an advantage over those current participants in that they are taking on none of this additional risk; and for the smaller carriers there is a concern whether they will be able to participate in the exchange in the future, thus potentially jeopardizing Hoosier choices.

The Indiana Chamber will continue to evaluate and comment on this issue as more information is available.

Rep. Susan Brooks Focuses on ‘Connecting Careers and Classrooms’

We at Ready Indiana applaud Congresswoman Susan Brooks for a successful first run of the “Connecting Careers and Classrooms” event series in April. We certainly learned a lot, and it was great to see so many educators and industry leaders gathered to share information.

“Connecting Careers and Classrooms” is a series of workshops convened in Indiana’s 5th District that bridge the gap between industry and educators and fuels the future for our students. The first event focused on agriculture and was held at Beck’s Superior Hybrids in Atlanta, Ind. The next event is expected in the fall, and future sectors of focus will include the life sciences, technology and manufacturing.

Employers such as Red Gold, Beck’s Hybrids and JBS United spoke about their workforce needs, and the running themes through each presentation were the importance of soft skills and the desire for more students to see agriculture as a viable career path.

“I feed pigs. What a sexy profession that is!” Dr. Joel Spencer of JBS United joked at the event. “But what more noble profession is there than feeding the world? People always eat so there will always be jobs.”

“Our work is stable, secure and recession-proof, and that is hard to find,” John Carlson of Red Gold said.

Learn more about the “Connecting Careers and Classrooms” events.