Tax Issues Aired by Interim Committee

The Interim Committee on Fiscal Policy, chaired by Sen. Brandt Hershman (R-Buck Creek), met three times in October and took testimony on several important issues.

At the first meeting, the group discussed the pros and cons of granting counties the general authority to adopt a food and beverage tax. Representatives for restaurateurs spoke against; county officials argued in favor of the measure. Following that debate was over four hours of testimony regarding property tax assessment procedures and appeals under Indiana’s market value in use standard – a continuation of the “big-box” issue that was addressed last session. The issue is being revisited as county officials think more needs to be done. Commissioner Jonathan Elrod of the Indiana Board of Tax Review presented a lengthy legal analysis; his memo and a flow chart of the process created under last session’s legislation (SB 436) are part of the collection of documents (Oct. 7 meeting) incorporated into the committee’s proposed final report (Oct. 21 meeting).

But in keeping with traditional practice, this committee is not making any recommendations for future legislation. The draft report simply references the volume of data, memos and other evidence brought before the committee during the course of its meetings. The committee has typically served as a forum to air the issues and collect information. Rarely is there any level of consensus on how difficult tax matters should be resolved; yet the information and discussions do often provide the impetus for various proposals in the next session. This will no doubt be the case as to the assessment issues and other matters considered by the committee.

In the following two meetings, the committee studied many substantial tax issues. It pondered the idea of permanently authorizing schools to pay for several operating expenses such as insurance, utilities and maintenance service with property tax revenues. Generally speaking, property taxes may only fund capital projects and debt service (since the state pays for general operating expenses via the school funding formula). But leeway to pay for these other items with property taxes has been granted on a temporary basis in the last several state budgets.

Purdue professor Larry DeBoer presented a cost-benefit analysis evidencing the ratio of tax pay to benefit received by different categories of taxpayers. No surprise to businesses, the ratio is not good. The committee also looked at farmland assessments (another almost perennial issue). Finally, the group received annual reports from the Legislative Services Agency’s fiscal analysts and economists evaluating existing tax incentives. These reports are always full of hard data on the utilization of numerous credits and deductions. These discussions included consideration of Tax Increment Financing (TIF) districts, the Earned Income Credit (EIC) and the Economic Development for a Growing Economy (EDGE) credits.

The committee’s draft report, and everything that was presented in each of the three meetings, is available for downloading, and archived video of the meetings is available at the at the General Assembly web site.

Student Scores: ISTEP and ‘National Report Card’

The Indiana State Board of Education (SBOE) met last month with the plan to set cut scores and finalize ISTEP grades from the 2014-2015 school year. As a reminder, setting cut scores is done by a panel of educators that determines the passing score for that year’s test. However, during that meeting, questions were raised regarding the differences between the online and paper-pencil versions of the exam. This was identified in a report submitted to the Indiana Department of Education in early October – yet that report was not provided to the test’s Technical Advisory Committee or the SBOE until right before the meeting. The SBOE then requested a comparison study done by its own test experts to determine any discrepancies. Sarah O’Brien, vice chair of the SBOE, had originally made this request back in July.

SBOE – after the comparison studies were in hand – set pass-fail benchmarks for the latest ISTEP scores. What’s anticipated is that a notable increase in students will see drops in their scores, with a portion falling below the pass line. While no one wants to see test scores go down, it is explainable as students and teachers were adjusting to the new, more rigorous academic standards and a new assessment that were adopted for the same school year. In other words, this drop is expected, and many other states have experienced similar decreases. In fact, Indiana’s scores were either on par or higher than other states that have recently adopted new standards and/or a new assessment. While the news of dropping ISTEP scores is disappointing, it is important to note that the changes to the standards will benefit students as they will be more prepared for college and career in the future. The Indiana Chamber appreciates all of the hard work of Indiana teachers and students.

Due to this somewhat turbulent transition year, Gov. Pence released a letter to Superintendent of Public Instruction Glenda Ritz and SBOE members recently stating that he is working with leadership in the Indiana General Assembly to have legislation drafted to ensure that the 2014-2015 test results would not negatively impact teacher evaluations or performance bonuses this year. The Chamber has a longstanding policy to support accountability and transparency for students and teachers but understands that unforeseen circumstances with ISTEP delays and testing issues would allow the need for this pause.

Positive news:

The recently-released National Assessment of Educational Progress (NAEP) scores – aka a “National Report Card” – shows that Indiana is achieving more than other states in all four categories:

  • Fourth grade math: Indiana 248; national average 240
  • Eighth grade math: 287; 281
  • Fourth grade reading: 227; 221
  • Eighth grade reading: 268; 264

Indiana is actually widening its advantage over other states. We commend our teachers and school administrators for their important role in helping our students reach these higher levels of achievement.

While our ISTEP scores are lower as expected, these NAEP scores reinforce that our students are achieving at a higher overall level than many of their counterparts. We expect that to accelerate going forward with the enhanced college and career ready standards in place.

Get Your Tickets for the 2016 Central Indiana Legislative Preview

???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????Get a sneak peek of the upcoming General Assembly session at the Indiana Chamber’s 2016 Central Indiana Legislative Preview on Monday, November 16.

You will hear directly from the four caucus leaders – Speaker of the House Brian Bosma, House Minority Leader Scott Pelath, Senate President Pro Tem David Long and Senate Minority Floor Leader Tim Lanane – on what their top issues will be and how they see the session playing out.

What’s more, the panel will share perspectives on key issues in areas such as workforce development, transportation and taxation – all of which have great impact on employers statewide.

The Indiana Chamber will preview the session and reveal its top pro-jobs, pro-economy priorities for the new legislative year.

“This may be a short session but there will be many crucial policies considered. Our preview will be the first public forum for the legislative leaders and it’s always insightful to listen to their viewpoints,” offers Indiana Chamber President Kevin Brinegar. “The priorities we unveil are the ones the Chamber will be pushing hard and what we believe will have the most far-reaching, positive impact on our membership.”

In addition, the Indiana Chamber will honor four legislators as Small Business Champions in recognition of their achievements in enhancing the state’s small business climate.

The traditional 2016 Central Indiana Legislative Preview program runs from 11 a.m. to 1 p.m. and will take place at the Hyatt Regency in the Regency Ballroom (second floor) in downtown Indianapolis. New this year is a networking/coffee break portion that begins at 10 a.m. and coincides with registration.

Tickets are $55 per person and include lunch. Register online or call Nick at (800) 824-6885.

Chamber Board Votes to Support Expansion of State’s Civil Rights Law

?????????????????????????????????????????The Indiana Chamber of Commerce Board of Directors voted overwhelmingly at its annual fall meeting Wednesday to support expanding the state’s civil rights law to include protection for sexual orientation and gender identity.

The Indiana Chamber Board of Directors is comprised of more than 100 top business executives and civic leaders from throughout the state.

“We believe this expansion is a necessary action for the General Assembly to take,” says Indiana Chamber President and CEO Kevin Brinegar. “After the negative perception of our state generated by the Religious Freedom Restoration Act in the spring, we need to get this right in order to secure the reputation of Indiana as a hospitable and welcoming place.

“The time has come for Indiana to expand protections against potential discrimination. This action will increase the state’s future business competitiveness in the recruitment, attraction and retention of talent, as well as enhance respect for all employers and employees. We encourage our state leaders to work together to take this next critical step.”

The Indiana Chamber’s annual fall board meeting is where the organization’s public policy positions (formed by members serving on various policy committees) for the upcoming sessions of the General Assembly and Congress are discussed and acted upon.

Teacher Shortage Concerns at Forefront of Interim Study Group

Portrait of students taking notes while their classmate is raising his hand

A popular phrase in Indiana these days is the term “teacher shortage.” So much so that the Indiana General Assembly leadership asked the Education Interim Study Committee to schedule an extra meeting on Oct.19 to discuss this issue.

This marathon committee hearing lasted close to nine hours and featured testimony from many people (both from Indiana and around the country). Data is often conflicting – while there may be fewer potential teachers applying to education schools, it seems to be that there are pockets of shortages (in STEM, special education and secondary schools). (In fact, a Michael Hicks/Ball State study released last Wednesday said there was actually a surplus of teachers, except for these specialty areas). Emphasis was also provided – with bipartisan support – on the importance of mentoring, as well as flexibility of teacher pay and grant incentive programs in shortage areas.

The study committee proposed 20 recommendations to be put into its final report of the year – of which 17 were agreed upon. But this does not mean that they might turn into actual legislation during the 2016 General Assembly session. Many of these recommendations dealt with further study, but the biggest recommendation called for new money to be used to increase salaries for teachers and other educators for the first 10 years of their career. However, the 2016 legislative session is not a budget session, which essentially handcuffs the ability to propose any new funding.

All in all, while we do not expect the 2016 legislative session to be dubbed another “education session,” we should anticipate some comprehensive bills when it comes to testing, accountability and teacher shortage solutions. The Indiana Chamber is immersed in these policy issues and is in constant contact with policymakers to ensure that we are part of those discussions.

Remarks on Indiana’s Scores on ‘National Report Card’ for Student Achievement

Indiana Chamber of Commerce President and CEO Kevin Brinegar reacts to the latest National Assessment of Educational Progress (NAEP) scoring or “national report card” on student achievement:

“Hoosier students are outpacing the national average and, in fact, Indiana is widening its advantage over other states. This is welcome news and is an important metric. We commend our teachers and school administrators for their important role in helping our students reach these higher levels of achievement.

“Our new ISTEP scores are lower due to the implementation of more rigorous, but important, college and career readiness standards, which will better prepare students for post-secondary education and ultimately create a much stronger workforce.

“But in the big picture, these NAEP scores reinforce that our students are achieving at a higher overall level than many of their counterparts. We expect that to accelerate going forward with the enhanced college and career ready standards in place.”

In mathematics, Indiana fourth graders averaged a score of 248 with a national average of 240 points. Hoosier eight graders in mathematics averaged a score of 287 with a national average of 281 points. Similarly in reading, Indiana fourth graders averaged a score of 227, higher than a national average of 221 points and eighth grade students averaged a score of 268 with a national average of 264 points.

Lawmakers Hear from INDOT on Road Funding; Gov. Makes $1 Billion No-Tax Proposal

30449450Two key events in recent weeks on the transportation front in Indiana: A long-awaited Indiana Department of Transportation (INDOT) study on long-term funding options for Indiana’s roads, highways and bridges was presented on Oct. 15 to the Interim Study Committee on Roads and Transportation; and just a few days before, on Oct. 13, Gov. Pence proposed a $1 billion, four-year plan for short-term transportation needs whose most prominent feature was no tax increases. INDOT Commissioner Brandye Hendrickson appeared with the governor at his announcement and testified before the interim study committee.

Hendrickson provided a broad overview of the state of Indiana’s roads and bridges during her testimony and INDOT’s study vendor, Cambridge Systematics, testified at length on the options available to the state to address long-term transportation funding, concluding that policymakers need to “decide what Indiana should invest in and how best to pay for it.” Both federal and state highway revenues are expected to decline in future years due to a number of factors, including increased fuel efficiency standards and more alternative-fuel vehicles hitting the roads.

All fuel excise tax revenues from the state’s highway fund are required for maintenance of existing infrastructure; no funding is available for expansion projects such as completion of I-69, adding lanes to I-65 or I-70, or new bridges across the Ohio River. Additionally, more than half of the state’s bridges are in the last 25 years of their useful life (50-plus years or older) and will need significant reconstruction or remediation in coming years.

Bottom line: The state needs more revenues to address a growing need for maintenance of existing infrastructure – let alone expansion of the state’s highway network.

Pence proposes a mix of bonding (debt), general fund appropriations and use of the state’s reserves in his “21st Century Crossroads” plan. His proposal would seek $450 million over three years to be appropriated by the General Assembly from the state’s general fund, $250 million to be used from the state’s reserve funds, $50 million from the state’s Next Generation Trust Fund (established by Major Moves monies) and roughly $240 million in new bond financing as existing debt gets retired or refinanced. The plan is short term in nature and, while tapping appropriate sources, needs the consent of the Legislature (where several Statehouse voices expressed reservations about the bonding aspect of the plan).

The Indiana Chamber would like to see a mix of increased fuel excise taxes, indexation, tolling, fees on alternative fuel vehicles and other tools based upon a “user fee” model discussed in the 2016 legislative session, along with the use of existing tax authority by cities, towns and counties to address the needs of local streets and county roads. Policymakers must make some hard choices with the support of the state’s business community to address the scale and scope of the challenge.

In short, the era of strategic investments fueled by the Major Moves program is over. The prevailing (default) practice of making stop-gap appropriations from the state’s general fund is not a reliable or strategic means to pay for future maintenance and upgrades to Indiana’s surface transportation network. Currently, we risk wasting strategic investments already made, and our roads and highways will deteriorate along with our reputation as “The Crossroads of America.”

Indiana Chamber, Pete the Planner Partner to Promote Money School

PTP Newsletter BannerThe Indiana Chamber of Commerce is proud to partner with Peter Dunn a.k.a. Pete The Planner® in offering his new service, Pete’s Money School, to Indiana businesses.

Pete’s Money School is a financial wellness curriculum delivered via a mobile-friendly e-learning platform. Each course includes videos, quizzes and a downloadable workbook. These tools will help your employees build a realistic path to a healthy financial future. Indiana Chamber member companies will receive 20% off their registration fees for the program.

“The Indiana Chamber has been helping businesses and their employees for nearly 100 years,” Dunn says. “I’m thrilled to be able to help them educate Hoosiers, in regards to their personal finances. Together, we’ll help hard working folks take control of their finances so they can focus on their futures.”

“Financial concerns are one of the leading causes of workplace stress,” adds Jennifer Elkin, Chamber senior vice president of marketing. “Partnering with Pete the Planner is a perfect opportunity to promote financial wellness – benefiting individual employees and enhancing overall productivity.”

A variety of courses, each which can be completed at the users’ own pace, is available.

Simply mention the code INCHAMBER when registering to receive the discount. For pricing and course information or to register, call (317) 762-3240 or visit