Bumpy Road for Road Funding in Senate?

The Chamber recently testified in support of HB 1002, citing the need for long-term, sustainable funding to adequately maintain, finish what we have started to build and build out our priority new road projects. We also noted that we do not see where the state can magically find the funds in the present budget to address the need outside of taxes, plus the additional 10 cents a gallon to ensure our road quality is a wise investment.

There were no amendments offered as of yet but it is safe to say the bill will have several committee amendments to change it.

Additionally, there are several major issues to iron out in this bill. One is whether to dedicate all of the sales taxes collected on fuel sales to road funding or keep most of that revenue flowing into the general fund. Another is what the Senate will do with the $1 a pack cigarette tax increase passed by the House. The cigarette tax increase would have replaced much of the revenue in the general fund if the fuel sales tax would have gone to the road fund. Yet another issue is to toll or not to toll major interstate highways. While that is a pure user fee for roads, there is quite a disagreement about if and where such tolls should be considered.

Another aspect is there are legislators who don’t want to be labelled as “raising taxes” and shy away from the fiscal realities of our very important road infrastructure.

Folks, this is an investment in our future that won’t cost that much individually and has the potential to enhance commerce and Indiana’s “Crossroads of America” location advantage.

The Chamber will continue to advocate for a strong, user-fee based model to address Indiana’s $1.2 billion per year road funding gap.

Call to Action: Connect with your state senator via our grassroots page. Let them know today that long-term funding is important to you and your company!

Hits and Misses: The Indiana Legislature Halftime Report

We are pleased that several of our top priorities are alive and in good shape at the midpoint – including long-term transportation funding, pre-K expansion and anti-smoking legislation. All of these tie directly to the Indiana Vision 2025 economic development plan.

Long-term transportation funding – tolling around the corner?
This is the Chamber’s top priority in 2017. House Bill 1002 is the proposal to take care of the state’s transportation needs; the 20-year infrastructure plan addresses the erosion in funding that has taken place and the lost purchasing power from the enhancements in automotive technology and fuel efficiency.

We believe that the bill’s proposed gas tax increase is pretty solid. Senator Luke Kenley (R-Noblesville), who appears to be taking the lead on this bill in the Senate, may change things like dedicating all of the sales tax on gasoline to transportation needs and put a heavier emphasis on tolling, which would enable the state to undertake major projects like adding additional lane miles to Interstate 70 and Interstate 65 throughout Indiana. Overall, we are very encouraged by the commitment we have seen to date from the House, Senate and Governor. We also realize this will be a little tougher sell in the Senate and are prepared for a strong advocacy effort.

Tax threats avoided; overall outlook good
Everyone should be thrilled that two detrimental proposals – on mandatory combined reporting and sales tax on services – didn’t really get out of the gate. And that’s thanks to the good work of the Chamber’s Bill Waltz over the course of the summer. That means there are no big, threatening tax bills looming for us to worry about.

Instead, this session has brought some positive activity that will improve things procedurally within the Department of Revenue. Additionally, while not involving the Legislature, the Chamber has provided substantial input to the Department of Local Government Finance on a rule with respect to the so-called big box commercial/industrial property assessments. (That input was made possible thanks to a subgroup of the Chamber’s Tax Committee that analyzed the big box assessment issue; we are always grateful to our members for lending their expertise!)

On track: expansion of the state’s pre-K pilot for children from low-income families
Obviously, the expansion – to $16 million total in the Senate (including funds for a new online pre-K pilot); at $20 million in the House proposal – is not as significant as we would like, but we recognize this is still a very young program and are encouraged that what’s being debated is the level of increased funds, not the merit. We also appreciate all of the programmatic language that allows for potential expansion into all 92 counties (SB 276) and increases the income thresholds for eligible families (HB 1004). That said, we are going to continue to work to get as many dollars as possible directed to this. It’s vital for children to have that strong early education as a foundation.

Making the superintendent of public instruction an appointed position still can happen
We remain optimistic this longstanding Chamber goal will be realized this session. Yes, House Bill 1005 will have to be amended because it’s too similar to the one the Senate voted down last week. What happened there was, by all accounts, a blunder created by a perfect storm of factors – including little caucus discussion before the vote. But the good news is that the House bill is alive AND Senate leader David Long (R-Fort Wayne) has assigned it to the Senate Rules Committee that he chairs, so he’s going to go to work on it and will ultimately determine how much of it needs to be changed. We speculate that requiring Indiana residency – which is not currently in HB 1005 – could be one modification. It definitely will have to be different than the failed bill to pass the Senate Rules Committee.

Comprehensive smoking reform, now in HB 1001 and HB 1578, would send big message
We are hopeful that the increased tax on cigarettes ($1 per pack) and funding for a more robust smoking cessation program will stay in the budget bill (HB 1001). Likewise, that the repeal of the special civil rights privileges for smokers will survive on its own in HB 1578; this marks the first time that policy has been passed by either house, so we are making progress. Seeing these three elements cross the finish line would be a clear indication that the state is taking seriously the ever-increasing costs to employers of Hoosiers smoking – more than $6 billion annually in health care costs and lost productivity on the job.

The provision raising the cigarette buying age from 18 to 21 is most likely not happening this session after its removal in the House Ways and Means Committee. That group felt there wasn’t enough definitive information or testimony.

ISTEP, energy and technology updates
The Chamber is supporting legislation that will replace ISTEP with a shorter, more focused assessment. You can put all the debates and disagreements aside because this has to happen this session.

We are encouraged by the Senate’s passing of SB 309, an energy bill, which, among other things, addresses net metering for those investing in wind and solar energy; we believe the bill is consumer-friendly. Moreover, utilities have offered up some ideas and concessions that we think will help control electricity prices. The water infrastructure proposal (SB 416), while not funded, sets up the appropriate framework and keeps that needed policy moving along.

The budget bill (HB 1001) contains some pro-technology priorities, including the transferability and expansion of the venture capital tax credit. This would incentivize additional out-of-state investors without state tax liability to invest in promising early stage Indiana companies. Additionally, the open data measure (HB 1470) would allow public access, in an appropriate way, to the tremendous amount of data the state has collected. This is one of a couple of new initiatives coming from our Indiana Technology & Innovation Council policy committee. To see these efforts making progress right away, in their first session, is very encouraging.

A disappointment for the Indiana Chamber
There were several bills centered on litigation that couldn’t get out of committee. That’s because there are too many attorneys on both civil justice committees who are standing with trial lawyers, which essentially is blocking any sort of tort reform.

Local Option Transportation Bill Moves Forward

SB 128 was amended on the Senate floor last week and passed third reading yesterday. It was previously determined that HB 1141, with similar language, would not move out of committee and efforts would be focused on the Senate legislation.

These were two bills with similar goals – to allow for communities all around Indiana to supplement road funding to enhance the possibility for a priority regional project – and were introduced in their respective legislative bodies. Both bills would apply to all areas of the state and create a mechanism for local communities to create a regional development authority, which can be used to apply for federal grants, create separate funding for a particular road project, give them the authority to issue bonds and have a referendum to raise property taxes to pay for transportation infrastructure.

The authors of both bills are from Jasper, and they see great economic value in connecting their community and surrounding communities with Interstate 69. They want to create options for communities to step up to provide additional local funds to enhance the possibility of getting a road built sooner.

The Chamber supports the effort as it creates a viable local funding option and it doesn’t require INDOT to elevate the priority. However, if the funding is there, it is more likely to happen. The authors and other supporters will continue to work on moving the Senate bill through the process.

Road Funding Bill Now Travels to Senate

Chamber-supported HB 1002 was amended last week on the House Floor and then passed 61-36 largely along party lines and is now up for consideration by the Senate.

The floor amendment prohibits any new toll road within 75 miles of any other toll road, terminates the gas tax indexing after July 2024 and allows additional time for public comment before a significant road project begins. Earlier, changes were made to the bill to have all sales taxes collected on fuel costs to be designated for roads (currently it’s only a penny of the seven-cent tax) starting in 2018 versus a phase-in of the sales tax to roads over three years through 2021. This creates a potential general fund budget deficit of over $300 million a year that must be addressed, either through budget cuts or other identified revenue sources. Moreover, the Chamber will continue to advocate for a strong, user-fee based model to address Indiana’s $1.2 billion per year road funding gap.

Call to Action: Connect with your state senator via our grassroots page. Let them know today that long-term funding is important to you and your company!

Real Journey Begins for Transportation Funding Bill

During a six-hour hearing before the House Roads and Transportation Committee, there were some technical changes made in the bill and the annual increase for the fuel tax was capped to no more than one cent per year. Chamber President Kevin Brinegar provided testimony that this bill was about “revenue recovery” on the lost buying power of the gas tax since it was last raised. (Read the Chamber’s full testimony.) That lost revenue, plus better fuel economy means less money for roads. The Chamber is grateful to board members Drew Coolidge with SIRVA (moving company) in Fort Wayne and John Thompson (owner of several Indiana-based businesses) who testified how better roads impact their business, their communities and Indiana. House Bill 1002 will be considered in the coming weeks by the Ways and Means Committee before the desired House floor vote.

Call to Action: Connect with your state representative via our grassroots page. Let them know today that long-term funding is important to you and your company!

Get Your Motor Running for Transportation Funding

The long-awaited road funding bill (HB 1002, authored by Rep. Ed Soliday) arrived during the first week of session. It addresses the structural deficit of $1.2 billion per year for Indiana roads. The bill includes many good things that the Chamber supports; it is user-fee based and data-driven. While the bill will have changes during the next four months, we will work to support its basic concepts. The state’s situation: Over the years, technology (that led to better gas mileage) and inflation have combined to erode Indiana’s road maintenance dollars. Also, the last time the gas tax saw an increase was 2003. There will be a major hearing on this bill by the Roads and Transportation Committee on January 25 and the Chamber will be there to formally advocate its full support.

HB 1002 provides for a one-time fuel tax rate increase of 10 cents per gallon on gasoline  currently $0.18), special fuel tax (currently $0.16) and motor carrier surcharge tax (currently $0.11.) It also does the following:

  • Provides for an annual rate increase in fuel tax rates based on an annual index factor
  • Increases alternative fuel decal fees by 50%
  • Establishes a $15 transportation infrastructure improvement fee that applies to all motor vehicle registrations
  • Requires a person who registers an electric vehicle to pay a supplemental registration fee of $150 with an increase every five years based on an index factor
  • Provides that the gasoline use tax is distributed to highway funds over a phase-in period
  • Repeals restrictions on when a tolling project can be undertaken
  • Requires the Indiana Department of Transportation (INDOT) to seek a Federal Highway Administration waiver to toll interstate highways
  • Permits INDOT to approve certain railroad crossing projects and authorizes the Indiana Finance Authority to finance an approved project subject to a maximum annual debt service limit of $10 million
  • Makes various changes to the transportation funding exchange program between the state and counties and municipalities

Chamber Comments on Recommendations from Transportation Funding Task Force

Indiana Chamber of Commerce President and CEO Kevin Brinegar comments on the release of recommendations from the FIRSST (Funding Indiana’s Roads for a Stronger Safer Tomorrow) task force:

“The task force has provided additional emphasis on three key priorities: today’s revenue sources are not adequate; long-term funding is required to meet both current maintenance and future new construction needs; and new funding should be based on a user-fee approach.

“We support the work of the task force and are prepared to assist legislators and the Holcomb administration in passing data-driven legislation that will help drive Indiana’s economic future. Reliable transportation infrastructure is critical for companies and the jobs they provide across the state.”

Indiana Chamber Unveils Top Legislative Priorities for 2017

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Senate Democratic Leader Tim Lanane (right) speaks during Monday’s Indiana Chamber Legislative Preview. He was joined during the panel discussion by Senate President Pro Tem David Long, as well as House Speaker Brian Bosma and Minority Leader Scott Pelath. Our VP Caryl Auslander moderated.

Long-term transportation infrastructure funding, expansion of state-funded preschool to children from low-income families and strategies to reduce the state’s smoking rate are among the Indiana Chamber of Commerce’s top priorities for the 2017 session.

These objectives were announced at the organization’s annual legislative preview in Indianapolis today. The event sponsor was Ice Miller LLP.

“Based on studies, reports and simply travelling across the state, it’s pretty apparent that what we desperately need is a long-term, sustainable, transportation infrastructure funding plan,” offers Indiana Chamber President and CEO Kevin Brinegar.

He believes whatever strategies are ultimately settled on to fund the state’s road and bridges, two factors must be taken into consideration.

“We need to completely fund both maintenance needs and important new projects, and ensure that every user pays their fair share.”

Specific funding strategies the Indiana Chamber could support include: indexing the fuel excise taxes/fees to inflation; raising fuel excise taxes/fees; charging fees for alternative-fuel vehicles (which aren’t subject to the regular fuel tax); tolling a major interstate; and dedicating all of the sales taxes on fuel to infrastructure (the current model allots a penny with the other six cents going to the state’s general fund).

Brinegar notes that the Indiana Chamber would support replacing any revenue lost to the general fund with another revenue source so that the general fund is left whole.

Education is also high on the organization’s agenda.

“We are encouraged that virtually everyone involved sees the need to increase state-funded preschool,” Brinegar begins. “The Indiana Chamber will be advocating that disadvantaged youngsters take priority for the state’s limited dollars.

“We want to see legislators focus on fiscal responsibility, ensure preschool programs are of high quality and adopt a mixed delivery model that includes public schools, Head Start programs, licensed family and center-based childcare, as well as community-based organizations. All of those things are vitally important.”

The Indiana Chamber is part of the All IN 4 Pre-K coalition.

Separately, the Indiana Chamber is supporting suitable testing for students and accountability measures for all involved in the education process.

“Clearly there have been issues with ISTEP testing and the communication of result expectations based on the state’s new college and career-ready standards,” Brinegar says. “But the fundamental importance of measuring students, teachers and schools remains. That’s how we can predict student progress, rate teacher effectiveness and compare and contrast school performance relative to state and national peers.”

Indiana ranks 44th in the nation for highest percentage of smokers. Brinegar stresses that the increased health care costs associated with this level of smoking has the attention of employers.

“These workers are less healthy, have higher insurance premiums and miss more days on the job – and some are not able to work at all.”

The Indiana Chamber, a member of the new Alliance for a Healthier Indiana, is backing a comprehensive approach to reducing the state’s smoking rate. The proposal includes: raising the price of cigarettes via a tax increase; funding a more robust smoking cessation program; increasing the smoking age from 18 to 21; and repealing special privileges for smokers (that prohibit employers from asking possible new hires if they smoke).

“Right now, Indiana is spending substantially more on smokers with health issues who are on Medicaid than it is taking in via cigarette tax revenues. For every pack sold and taxed at 99.5 cents, the state spends at least $15.90 in related health care costs,” Brinegar states. “Obviously that’s not a sustainable tradeoff and needs the state’s attention.”

In the summer, the Indiana Chamber more closely aligned with the state’s technology industry, forming the Indiana Technology & Innovation Council to facilitate better communication and coordination among interested parties.

According to Brinegar, a key focus is public policy so technology leaders can present a strong, unified voice at the Statehouse. Out of the gate, the goal is to “make technology innovation an integral part of the state’s identity.”

Brinegar says: “Indiana is already fostering an impressive entrepreneurial spirit and becoming a technology hub in the Midwest. But we need to better support our technology successes and build on them. After all, our technology efforts now provide tremendous support to the agriculture, logistics and manufacturing sectors in the state – three of our main cogs.”

The Technology and Innovation Policy Summit on December 15 will unveil all the council’s legislative goals.

A complete rundown of the Indiana Chamber’s 2017 key legislative initiatives (top priorities and additional areas of focus) is available at www.indianachamber.com/priorities.

Also at the legislative preview event, five state legislators were honored as Indiana Chamber Small Business Champions “for their hard work and dedication to improving Indiana’s small business climate.” This award is based on voting and advocacy during the past legislative session.

The 2016 Small Business Champions are: Sen. Travis Holdman from Markle, District #19; Sen. Tim Lanane from Anderson, District #25; Rep. Matt Lehman from Berne, District #79; Rep. Karlee Macer from Indianapolis, District# 92; and Rep. Ed Soliday from Valparaiso, District #4.

Recap of the Indiana Chamber’s Top 8 legislative priorities:

  • Support establishing a long-term sustainable funding stream for the state’s roads, bridges, etc.
  • Support the expansion of publicly-funded preschool initiatives for children from low income families
  • Support suitable testing for students and accountability for all involved in the education process
  • Support comprehensive approach to decreasing the state’s smoking rate
  • Support a statewide water policy to assure future resources and our economic prosperity
  • Support making technology innovation an integral part of the state’s identity
  • Support maintaining and enhancing our attractive tax climate
  • Support a work share program that will allow employers to maintain a skilled stable workforce during temporary downturns

Go Vote! Then Let’s Move from Politics to Policy

Indiana Chamber of Commerce President and CEO Kevin Brinegar comments on the election aftermath:

“We probably have just witnessed the most bizarre and bruising election of our lifetimes. It’s critical to move on quickly from any bitterness of the campaigns or results and come together as a state and nation.

“We need lawmakers to concentrate on the business of governing and moving our economies forward. Let’s focus on producing positive outcomes and Indiana continuing to set an example as a state that gets things done.”

Beyond the Bicentennial: Our Letter on Infrastructure, Energy and Telecommunications

The following is the third in our series of Beyond the Bicentennial letters, addressed to gubernatorial candidates. Read them all at www.indianachamber.com/letters.

Dear Mr. Gregg and Lt. Gov. Holcomb:

For Indiana to be the state we all want it to be – one that inspires business location and expansion, brings good-paying jobs to Hoosiers and allows for a high quality of life – a solid infrastructure framework must be in place that reflects both present conditions and is prepared for future developments.

The Superior Infrastructure economic driver in our Indiana Vision 2025 plan champions that belief, with goals regarding transportation, energy, water and telecommunications – all things sometimes taken for granted but inherently critical to running a business and enjoying the comforts of daily life.

Reliable roads and bridges doesn’t seem like a lot to ask for (especially for the Crossroads of America), yet it takes significant investment to keep them functioning, make enhancements and build anew. Frankly, our state has not done enough in recent years and has thus fallen behind.

In 2016, the state Legislature opted to provide short-term funding with a task force set up for the next phase. We all should know at this point – based on studies, reports and simply travelling across the state – that what Indiana desperately needs is a long-term, sustainable, strategic policy plan. One that lasts decades, not a few years or election cycles. And above all, it must be based on the principles that enough revenue is raised to completely fund both maintenance needs and important new projects, and that every user pays their fair share.

There are a number of strategies that should be on the table – any or all of which the Indiana Chamber could support:

  • Index fuel excise taxes/fees to inflation
  • Raise fuel excise taxes/fees
  • Charge fees for alternative-fuel vehicles (which aren’t subject to the regular fuel tax)
  • Tolling a major interstate
  • Dedicate all of the sales taxes on fuel to infrastructure (the current model allots a penny with the other six cents going to the state’s general fund), and replace the revenue lost to the general fund with another revenue source so that the general fund is left whole

But, realistically, how we get there matters far less than advancing to the point where we have a robust transportation fund. It’s time to finally address this in 2017 – hopefully in a bipartisan way – before it becomes a crisis.

For decades, many companies have located in Indiana because of its adequate, reliable and affordable supply of electricity. But now that coal – Indiana’s most plentiful energy source – has come under frequent attack by the Obama administration, affordability is starting to go out the window. And how long will it be before businesses and jobs go with it?

Unfortunately, Indiana is to some degree at the mercy of the incoming president and the Environmental Protection Agency. However, we can take additional proactive steps at the state level to combat their actions against coal.

One avenue is to focus on diversifying Indiana’s energy mix with an emphasis on clean coal, natural gas, nuclear power and renewables. Development and execution of a statewide energy plan (which does not currently exist) is essential.

Turning the attention to water, we need to finish the good work that stemmed from the Indiana Chamber’s 2014 water resources study and legislation carried by Sen. Ed Charbonneau and others to develop and implement a statewide water resources plan.

We must ensure that future water resources are available – our ability to effectively compete with other states depends on it. And we are approaching the point where research and data collection should soon transition to action. Leadership must be shown by the next Governor to help spearhead the process.

While the need for water has been obvious since the beginning of time, the advent of broadband and its economic significance is a much more recent development. It wasn’t that long ago that broadband was spoken about only in terms of faster and more reliable internet entertainment. But today, and in the future, its business, medical, security and quality of life impacts are paramount.

Legislation in 2015 that created the Broadband Ready Communities Development Center assists rural locales in working through the barriers they might have to broadband investment by a provider.

But not enough is happening and not quickly enough. We must find more ways to bring the most rural parts of Indiana up to date technologically to help reverse their downward population and economic trends.

That sentiment – being more aggressive – easily could be said for all of these infrastructure components. If elected Governor, we strongly encourage you to make that shift and put a greater priority on these vital issues.

Sincerely,

Kevin M. Brinegar
President and CEO
Indiana Chamber of Commerce, representing 24,000 members and investors statewide