Gigerich: Indiana Business Climate is Good News, Bad News Scenario

Larry Gigerich of site selector Ginovus penned an informative column for Inside INdiana Business about Indiana's business climate. While we have come a long way and are currently envied by many states, there is still work to be done. He writes:

A few weeks ago, the Kauffman Foundation and Thumbtack.com released an annual ranking of states for their friendliness to small businesses. Indiana ranked 15th for 2013. The study analyzed several factors including items related to tax climate, work force development and regulatory issues. Eight-thousand small businesses were contacted for feedback regarding the study's criteria. Here is how Indiana ranked in each category.

1. Overall Friendliness: B+
2. Ease of Starting a Business: B+
3. Ease of Hiring: F
4. Regulations: C
5. Health and Safety: D
6. Employment, Labor and Hiring: C-
7. Tax Code: D
8. Licensing: A-
9. Environmental: D
10. Zoning: B-
11. Training and Networking Programs: C-

The grades given to Indiana are not surprising. Work force development and job training have been a focus of Governor Mike Pence and the legislature since the beginning of the year. Indiana's educational achievement, continuing learning for adults in the work force and availability of certification/credential programs have not been where they need to be. While progress has been made, there is still much to be done by government, educational providers, not-for-profits and the private sectors.

Indiana has been recognized as a relatively easy place to start and grow a business. This report points to that in terms of licensing, zoning and other factors affecting the launch of a new business.

The tax code ranking is a bit surprising, but the survey asked small businesses if they were paying too much in taxes for their locations. The elimination of the state inheritance tax, which impacts small and family-owned businesses, could help improve this ranking.

Indiana continues to struggle with rankings where health and environmental issues are considered. In particular, the state's obesity and smoking rates are unacceptably high. These items impact healthcare costs, number of missed days of work and quality of life. In terms of the environment, Indiana's long-term large manufacturing presence has impacted water, air and soil quality. While important steps have been taken in the areas, there is much left to be done.

The top five states for small businesses are (in order): Utah, Alabama, New Hampshire, Idaho and Texas. The bottom five are (in order): Illinois, California, Hawaii, Maine and Rhode Island.

In summary, Indiana's ranking relative to the rest of the country is good. Policymakers in the state should focus on ways to improve our weaknesses in order to move Indiana into the top 10. Due to the fact that Indiana has never been a location for large headquarters for companies, small businesses are and will continue to be the lifeblood of the state's economic growth.

Poll: We’re Striving to Thrive But Falling Short

Gallup is certainly one of the kings when it comes to the polling world. Its latest effort, the Gallup-Healthways Well-Being Index, seems to require a bit more interpretation than most.

Respondents were asked to rate their lives today and their expectations for their lives in five years. The answers lead to classifications of ‘thriving," "struggling" or "suffering." Indiana finds itself on the bottom 10 list of states with the lowest percentage of residents thriving.

Biggest improvement from 2011 to 2012: South Dakota, third overall; biggest drop over the last year: Alaska. In somewhat of a contrast, South Dakota was also among the four states (with Wyoming, West Virginia and Vermont) that are "least optimistic" about five years from now compared to today. In the "most optimistic" category for five years hence, honors go to Louisiana, Georgia, Texas, Florida, Ohio (breaking the Southern monopoly) and Hawaii.

Top 10 "thrivers" in 2012: Hawaii, Utah, South Dakota, Maryland, Texas, New Hampshire, Nebraska, New Mexico, Colorado and Minnesota. The bottom 10: West Virginia, Maine, Delaware, Nevada, Oregon, Tennessee, Kentucky, Ohio, Indiana and Florida.

What does it mean? In Gallup’s words:

Gallup’s research has shown that people take a variety of factors into account when rating their lives. While this thriving measure doesn’t always align perfectly with macro-level trends on economic indicators such as economic confidence and job creation, it is known to correlate with personal factors in one’s own life including career, social, physical, financial, and community wellbeing. To that end, the states that do best overall in "thriving" are similar to those best positioned for future livability based on a variety of factors encompassing economic, workplace, community, and personal choices. As such, it remains clear that a broad-based approach will likely fare best in terms of improving how residents rate their lives and their level of optimism for the future.

 

There’s Only So Much (Political Advertising) a Person Can Take

Who doesn’t enjoy a good campaign commercial? With politicians lambasting their opponents, blaming them for the recession, mortgage failure, tax crisis, Midwest drought and McDonald’s taking away the McRib sandwich (okay, those last two are a bit facetious – obviously no one controls the weather), what’s not to love?

And no doubt you’re already saturated with political campaigns. “How can this be?,” you proclaim. “It’s only August!”

You are not wrong in your exasperation. The sheer number of television campaign advertisements shown so far this year is shocking (with three months to go before the election, even) and the amount of money spent by candidates and Super PACs is astounding.

Think you’ve had enough? Be glad you don’t live in Ohio. Or Florida. Or North Carolina. The money spent on the presidential election alone in this cycle has been $37.2 million in Ohio on TV ads; $36.3 million in Florida; and $20.4 million in North Carolina.

In fact, across nine “battleground” states (the three listed, along with Nevada, Colorado, Iowa, Virginia, Pennsylvania and New Hampshire), the presidential campaigns and Super PACs have spent $174 million on television spots alone. And that amount was just for nine states through the beginning of July.

Let me put that into perspective: According to ESPN, in 2012 the average cost for a 30-second television ad during the Super Bowl was $3.5 million. That $174 million spent so far on presidential advertisements in nine states equals about 50 Super Bowl commercials. (Unfortunately, politicians don’t include the Budweiser Clydesdales or barking dogs dressed as "Star Wars" characters in their ads.)

It’s not just which states you are in, but also the networks you watch. For instance, if you are a regular Fox News viewer, chances are you’ve seen a number of the 479,055 advertisements that have aired on the network thus far. CNN is next with 191,027 campaign ads and another news network, MSNBC, aired 75,207, according to NCC Media.

You can’t really avoid it by changing the channel, either. ESPN, TNT, USA, Lifetime, HGTV, and the Weather Channel, to name a few, top the list of number of ads aired this election cycle. Even Food Network viewers can’t escape the barrage (33,118 ads so far interspersed between Paula Deen and Bobby Flay).

It’s safe to say that as the election draws closer, we will see even more of these ads. But, are they effective? Americans that are planning to vote most likely have decided which candidate they will support – but there are always individuals that can be wooed at the last minute.

One thing is for sure, however: The broadcast television industry must really love election time.

Speculation Time: GOP Primary Scenarios

After his narrow Iowa victory, Mitt Romney appears to be the most likely choice to garner the GOP presidential nomination. However, due to the fact that many conservatives simply don’t like him, that’s far from a certainty. CNN has an intriguing article outlining the different possibilities of how things will play out from this point on. Read the entire piece, but I have to run this portion for the die-hard Mitch Daniels enthusiasts out there:

(3) The long shot: Someone else enters the campaign (10% chance or less). Normally, this late in the game, a new entrant to the contest would be the stuff of science fiction. But conservative voters seem to be singularly dismayed by the choices in front of them: as CNN’s Erick Erickson tweeted last night, "Typical of email I’m getting: ‘If you put a gun to my head and said Romney or Santorum I would say pull the trigger.’"

Who would step into the fray? One hears voters pining for New Jersey Gov. Chris Christie (unlikely to join, especially after endorsing Romney) and some have floated Louisiana Gov. Bobby Jindal (who endorsed Perry). Former Florida Gov. Jeb Bush would be a strong candidate, but that may be a tough sell to Bushed-out voters only four years after the conclusion of his brother’s presidency.

Would a candidate who jumped in this late even have a path to victory? Perhaps. The early primaries and caucuses are richer in symbolic significance than they are in delegates, especially with the new rules prohibiting winner-take-all allotment of delegates in the early states. And even with such a late jump on fundraising and organization-building, a candidate who was able to rack up a string of impressive victories in the middle- and later-term primaries could theoretically build up a big enough head of steam to take the convention by storm while making use of the Internet and earned (read: free) media coverage to play catch-up on money and organization.

The late-entrant scenario is still a dark horse at best, but even the fact that it’s within the realm of possibility underscores the reason Democrats are quietly cheering last night’s outcome: the GOP is still, at best, a party that’s looking for a standard-bearer — or, more dangerously for their 2012 prospects, a disunited collection of smaller groups of voters still pushing their own.

New Hampshire Gearing Up for GOP Primary Fight

It’s getting to be that time when politicos all around the country start living on Red Bull as primaries begin heating up — and circus-like cable news debates dominate Twitter conversation. This time around, it’s Republicans working to find a candidate who can defeat a rather unpopular incumbent president. But, of course, if you’ve been watching the debates and/or the latest mini-scandal surrounding Herman Cain, you can see why a GOP victory is far from a certainty. In this Real Clear Politics article, the focus is on Mitt Romney’s efforts in New Hampshire and how other candidates are hoping to stop him.

The former Massachusetts governor has not yet aired advertisements in New Hampshire, instead choosing to conserve his resources for a potentially lengthy primary fight. But Romney’s campaign is leery about being lulled to sleep here, and several other candidates seem poised to give him at least some reason for concern.

Though Michele Bachmann’s New Hampshire campaign remains on life support after the defection of her entire statewide staff, several viable GOP contenders are set to boost their efforts here.

Rick Perry remains mired in the low single digits in state polls, but his campaign has shown no signs of giving up here despite growing questions about whether he should devote most of his resources to Iowa and South Carolina — the two early-voting states that appear to be his most likely vehicles for a national comeback.

The Texas governor is launching a New Hampshire TV and radio advertising campaign on Wednesday, as he joins Ron Paul as the only candidates to air ads here thus far.

Perry’s wife, Anita, will campaign in the state on Friday and Perry himself will likely return by the end of the month, according to aides.

“He’s going to be campaigning hard in New Hampshire, and he has been campaigning hard,” said Perry’s New Hampshire strategist Paul Young.

Though the three-term governor may be able to survive a poor showing in New Hampshire if he exceeds expectations in the other early-voting states, the same cannot be said for Jon Huntsman. The former Utah governor recently moved his national campaign staff to New Hampshire and has banked his underdog candidacy on pulling off a surprise victory here.

Huntsman drew a crowd of almost 200 mostly college-age voters on Tuesday for a speech at the University of New Hampshire on energy policy. In it, he vowed to eventually eliminate all energy subsidies and called for an end to the oil “monopoly as a transportation fuel.”

Northeast Neighbors Vie to Add RTW

A right-to-work delay in Indiana doesn’t mean it’s not the right time for RTW in other states. The New Hampshire House has passed legislation and Maine Gov. Paul LePage says "we’re going after" right-to-work.

The New Hampshire bill passed the House 221-131 (what the heck they are doing with 350-plus House members in one of our smaller states is a question for another day). The Deputy House Speaker was quoted as saying:

"New Hampshire would be the first state in the Northeast to pass right-to-work legislation and would help us become a haven for employers seeking a pro-business environment,” Pamela Tucker said.

“Freedom is a core New Hampshire belief, and freedom of association and choice is a fundamental right of every NH citizen.”

In Maine, the governor made his intentions known while in Washington for the National Governors Association meeting. His comments to Politico:

"I believe if an individual wants to join organized labor and work under a union contract, they should have the legal right to do so," he said. "At the same token, a person who does not want to work under organized labor and wants to work should have the ability to do so without the threat of having to join and having to pay dues to organized labor."

"It’s that simple," he said. "It’s all about freedom and liberty."

RTW, of course, is on hold in Indiana. It was originally cited as the reason for the House Democrat walkout, but that was quickly proven not to be the case. Legislative leaders said RTW would not return in any form prior to a possible summer study committee, but nearly all the Democrat caucus remains in an Urbana, Illinois hotel, now citing education reform as the reason for their discontent.

The Chamber simply made the case for the advantages of right-to-work in a January 31 study and accompanying press release. We look forward to the debate resuming at a later time on this issue — and now for the other important bills before the General Assembly. 

National Shake-Up Brings ‘Fresh’ Faces to Government

Indiana’s 24 new members of the General Assembly make for an unusually large freshman class. But how about these House newcomer totals: 60 of 110 total in Michigan; 75 of 163 in Missouri; and 128 of 400 in New Hampshire? What will be the impact? Stateline reports:

If you see someone wandering around lost in the Michigan Capitol when the state House and Senate convene next month, there’s a good chance it will be a legislator. The 110-member House of Representatives will include 60 newcomers — all of whom will arrive in Lansing without any state legislative experience whatsoever.

The huge turnover in the Michigan House — the result not only of an unhappy electorate, but also of strict term limits that forced out 34 incumbents — has many political observers wondering what will happen when so many novices suddenly find themselves with so much power over the direction of state policy.

“It’s almost impossible to forecast,” says Craig Ruff, a Lansing political consultant who estimates more than 90 percent of all members of the Michigan House will have no more than two years on the job. At the very least, Ruff says, it could make for some interesting political theater, even within the newly elected Republican majority, as first-term members may not wish to be shepherded by their own legislative leaders.

“It’s much harder to enforce discipline when people aren’t accustomed to being disciplined,” Ruff says, noting that some lawmakers may be inclined to ask a simple question of their leaders: “I’ve got one vote. You’ve got one vote. What makes you so supreme?”

Similar scenarios may emerge in other capitols. The 2010 election cycle is frequently noted for its historic turnover in governor’s mansions, with 28 new chief executives about to take office in the coming weeks. But because of term limits, retirements and the ouster of hundreds of incumbents nationwide this year, there will also be a huge number of state legislators coming to the job for the first time. In many states, including Maryland, Nevada and Maine, incoming freshmen have already taken crash courses on everything ranging from the basics of legislative procedure to the right way to speak with reporters.

Nationwide, the turnover in state legislatures will be about 25 percent, a number that Tim Storey, an elections analyst with the National Conference of State Legislatures, describes as an “extraordinarily high” number in a non-redistricting year.

In several states, as in Michigan, first-time legislators will comprise roughly half of all members in one or both chambers, bringing a new and unpredictable dynamic to statehouses where clout and experience often rule. In Arkansas, for example, where term limits ensured plenty of turnover even before ballots were cast, 44 of 100 members of the state House will be new next year, with no state-level legislative experience under their belts.

In next-door Missouri, 75 of 163 House members will be state legislative novices. So large is the class of “true freshman” GOP representatives in the Missouri House that it outnumbers the chamber’s entire Democratic caucus, as well as the number of returning Republicans.

In New Hampshire, which does not have term limits, the 400-member House of Representatives — the largest state legislative chamber in the nation — will have 128 fresh faces next year, all of them new to the business of state lawmaking.

Indiana’s Business Tax Climate: Not a Perfect One, But a Good 10

We’re No. 10! We’re No. 10! Not exactly the rallying cry one is used to hearing, but a refrain that deserves more plaudits than usual. Here’s why Indiana’s ranking in the Tax Foundation’s 2011 State Business Tax Climate Index is noteworthy:

  • It’s not easy to make substantial improvements in this area. Indiana has ranged between No.12 and No. 14 over the last five years
  • The top eight seemingly head the list by default as they do not impose one of the big three taxes (sales, income or corporate income). So, without too much of a stretch, you could say Indiana is second on the list
  • We’re far away from the bottom 10; in order from No. 50, that’s New York, California, New Jersey, Connecticut, Ohio, Iowa, Maryland, Minnesota, Rhode Island and North Carolina

The Indiana Chamber’s advocacy efforts certainly are contributing factors to the state ranking. Historic tax restructuring in 2002 (including elimination of the inventory and corporate gross receipts levies) is among the Decade of Policy Victories document reflecting major legislative accomplishments from 2000-2009. The Chamber has also achieved success in general property tax reductions and an expansion of a variety of tax credits (good for business, but not earning high marks in this report).

According to the Tax Foundation, the worst tax codes tend to have:

  • Complex, multi-rate corporate and individual income taxes with above-average tax rates
  • Above-average sales tax rates that don’t exempt business-to-business purchases
  • Complex, high-rate unemployment tax systems
  • High property tax collections as a percentage of personal income

Indiana’s rankings in the five categories are: corporate tax index, 21st; individual income tax index, 11th; sales tax index, 20th; unemployment insurance tax index, 12th; and property index, 4th.

Since this tax analysis game is not for the faint of heart, a little more from the Tax Foundation on how it all works.

The methodology of the State Business Tax Climate Index is centered on the idea of economic neutrality. If a state’s tax system maintains a “level playing field” for businesses, the index considers it neutral and ranks it highly. However, each state’s final score depends on a comparison with the other 49 states.

The overall index is composed of five specific indexes devoted to major features of a state’s tax system. Each of these five indexes is composed of several sub-indexes.

Each state’s laws and tax collections were assessed as of July 1, 2010, the first day of the 2011 fiscal year. Newer tax changes are the subject of commentary in an appendix but are not tallied in the scores and rankings.

The Tax Foundation has data charts, further analysis and a full 60-page report. By the way, you have to go west for most of the rest of the top 10 (in order): South Dakota, Alaska, Wyoming, Nevada, Florida, Montana, New Hampshire, Delaware and Utah.

And finally, going into a state budget year that will bring pressure to raise revenues, let’s all keep the vital importance of the tax climate in mind on business attraction and expansion decisions.

Election Day 2008 a Big Day for Women

According to the National Conference of State Legislature’s (NCSL) The Thicket blog, Election Day 2008 was not only a monumental day as America elected its first African-American president, but it also proved to be a big day for women in the "Live Free or Die" state:

The New Hampshire Senate has become the first legislative chamber ever to have a majority of women members. Thirteen of the 24 members of the Senate are women.

Nationwide, women held 24 percent of the state legislative seats coming into last night’s election.  Preliminary indications are that this proportion did not change significantly. 

NCSL also notes that in Indiana, women comprise 21 members in the House and 13 in the Senate. That means women make up 22.7% (34 out of 150) of our state legislature.