Week of Feb. 4, 2008

Politics: The Art of Compromise
Legislature Alters Several Bills as Session Reaches Halfway Point

 “Laws are like sausages. It is better not to see them being made.” The saying, first uttered by 19th Century German Chancellor Otto von Bismarck, rang true last week as the Indiana General Assembly reached the halfway point, when a bill must pass from its chamber of origin for consideration in the other chamber (From House to the Senate or Senate to the House) or the bill is dead for the session.

In order for a bill to survive, compromises are often made with hopes of correcting these compromises later in the process. What is often a frustrating and confusing part of the legislative process, the halfway marker provides a reprieve from action and a chance for legislators refocus their attention on the surviving pieces of legislation.

Unfortunately, several bills that would provide Marion County the opportunity for increased efficiency, accountability and transparency in local government fell victim to this process. SB280 and SB16 were both heavily amended to restrict Marion County’s ability to consolidate township government and provide greater oversight to local government. Fortunately, the session is far from over and there is plenty of time to correct the problems.

With property tax reform on the mind of every legislator, the legislature will be back in full swing starting today. If the first half was any indication, this will be a whirlwind of activity. Your Chamber business advocates will be there watching out for your bottom line.

Read on for a more detailed account of the action.

LOCAL GOVERNMENT AND FISCAL POLICY

Issue: Marion County Government Modernization (SB280)
What it means to you: Increased efficiency, accountability and transparency in local government. Authored by Sen. Jim Merritt (R – Indianapolis), SB280 combines the remaining Marion County township and airport fire departments with Indianapolis Fire Department, creating a single, county-wide fire department while saving an estimated $15 million a year. SB280 also puts control of IMPD under the Mayor, eliminates township assessors in Marion County and permits the Indianapolis/Marion County City-County Council to eliminate township trustees in Marion County by 2011.
What happened last week: The bill was amended to remove several provisions of the bill. The amended version, which includes full fire consolidation, passed the Senate 38-10. It will be carried by Reps. Bill Crawford (D-Indianapolis), Jerry Torr (R-Carmel) and Phil Hinkle (R-Indianapolis).
What’s next? With the control of IMPD shifting to the Mayor by action of the City-County Council, expect most, if not all language except county-wide fire consolidation to be removed in the House. Even with this removal, the issue could once again become a political football.

Issue: Marion County Fiscal Management (SB260)
What it means to you: Combines the duties of the Marion County treasurer, auditor and controller and establishes the board of finance and management for Marion County, promoting better coordination and oversight of municipal revenues and expenditures.
What happened last week: No action was taken.
What’s next? It looks like the end of the line for this bill as is, though there is always a chance the language could re-appear in another form and another bill.

Issue: Property Tax Reform (HB 1001)
What it means to you: Contains the elements for property tax reform as proposed by Gov. Mitch Daniels, including: plans to limit property taxes to 1 percent of assessed valuation for homesteads, 2 percent for rental properties and 3 percent for commercial/industrial properties; shifting payments for child welfare and school general funds from counties to the state; limiting the growth of municipal budgets to the growth of county income levels, consolidating township assessors into a single appointed county assessor; requiring referenda on debt issued by a county that exceeds 1 percent of the county budget and increases the state sales tax to 7 percent.
What happened last week: The bill was assigned to the Senate Tax & Fiscal Policy Committee after passing the House 93-1 with 27 amendments to the bill including: freezing property taxes for senior citizens on fixed incomes, reducing the cap for property taxes on agricultural land to 2 percent from 3 percent, doubling the renter's deduction on state income taxes to $5,000 from $2,500, requiring referenda only for school projects that include recreational facilities such as stadiums and swimming pools and increasing the state’s Earned Income Tax Credit (EITC) from 6 percent to 9 percent.
What’s next? The bill will be heard 9 a.m. Wednesday, Feb. 5 in the Senate Tax and Fiscal Policy Committee where Chairman Sen. Luke Kenley (R-Noblesville) will play a significant role in crafting the Senate version. Expect many possible changes including restoring referenda for all significant capital projects. Ultimately, a compromise will be hashed out in the final days of the legislative session by the leaders of all four caucuses.

Issue: Elimination of Township Assessors (SB16)
What it means to you: Seeks to transfer the duties and responsibilities of township assessors to a county assessor. By eliminating township assessors, SB16 will create more accountable, transparent and uniform assessments statewide.
What happened last week: Facing an uncertain fate, the bill was unfortunately amended to exempt townships with more than 15,000 parcels and townships with an international airport from forced consolidation—which means every township in Marion County has been exempted. The amendments, pushed by modernization opponent Sen. Mike Young (R-Indianapolis) was vehemently opposed by Sen. Theresa Lubbers (R-Indianapolis) who voted against the amendment due to the harm caused to the taxpayers of Marion County. Ultimately, the bill passed 29-18 and was sent to the House for consideration.
What’s next? As is, the bill will face a lot of scrutiny in the House. House leadership may choose to wait to see what action is taken on similar language encompassed in HB1001, which is now being considered in the Senate.

Issue: Limits on Redevelopment Commission and TIFs (SB17)

What it means to you: SB17 limits the amount of time placed on repayments of debt with respect to Tax Increment Finance projects (TIFs) to 25 years. The bill also creates greater oversight by local fiscal bodies on debt issued for economic and redevelopment projects and restricts the expansion of TIF districts.
What happened last week: The bill unanimously passed out of the Senate 47-0 and was sent to the House for consideration, where House Ways and Means Chairman Bill Crawford (D-Indianapolis) will carry the bill. No action has occurred since passage.
What’s next? As a major component of several tax reform proposals, expect this bill to garner bipartisan support AND opposition as it moves through the legislative process. The final version will not to be known until the last days of session.

Issue: Limitations on Government Debt (SB18)
What it means to you: Limits the amount of debt issued by local taxing units, while restricting the amount of time placed on repayments of debt to 25 years for Tax Increment Finance projects (TIFs) and 20 years for all other debt. SB18 also limits the authority of the taxing unit to utilize revenue in excess of anticipated amounts or as a result of re-issuance of bonds. The bill also requires referenda for debt issued for major capital projects, with some exceptions for school districts that have an annual growth rate of over 4 percent. The bill could have serious consequences for economic development projects around the state as well as negatively impacting school districts that may not be growing at 4 percent but nonetheless require improvements or additions to their facilities.
What happened last week: The bill passed through the Senate on a split 31-16 vote over a week ago, but no further action as taken place.

What’s next? The bill heads to the House for consideration, where Ways and Means Chairman Bill Crawford (D-Indianapolis), will carry the bill. The final version will not to be known until the last days of session.

Issue: Child Welfare Levies (SB1)
What it means to you: Shifts the burden of funding for Child Welfare, a state administered program, from counties to the state. As the fastest-growing portion of the Marion County budget, removing this levy will provide immediate property tax relief to Marion County and counties across the state.
What happened last week: The bill unanimously passed the Senate 48-0 and was sent to the House for consideration more than a week ago, but no further action has taken place.
What’s next? As a major component of several property tax reform plans, expect this issue to garner bipartisan support as it makes it way through the legislative process.

ECONOMIC GROWTH

Issue: Sunset of Economic Development Incentives (HB1242)

What it means to you: Sunsets all state and local economic development incentives at the end of 2009. Legislative Council will have the ability to review all incentives and make determinations to keep certain incentives deemed effective. While the Greater Indianapolis Chamber of Commerce supports a comprehensive review of these incentives, sunsetting the incentives from the start sends a dangerous signal to the world that Indiana is no longer open for business.
What happened last week: No action was taken.
What’s next? The bill is currently dead, though the issue of state and local tax incentives will continue to be debated during as a component of the property tax reform discussions.

Issue: Transportation Tax Area (HB1220)
What it means to you: Further develops and expands the mass transportation opportunities in Northwest Indiana and provides Central Indiana with additional evidence of the economic benefits related to mass transportation. Money raised through a Sales Tax Increment Financing arrangement will be leveraged to match $500 million of federal funding secured by US Rep. Pete Visclosky (D-IN).
What happened last week: The bill passed third reading 55-41.
What's next? Expect this bill to move through the legislative process and gain bipartisan support. Communities throughout the state will view this legislation as a funding model for mass transportation in their areas.

Issue: Transit Districts (HB1245)
What it means to you: Introduced by State Rep. Terri Austin (D-Anderson), this gives flexibility to local communities throughout the state to fund mass transportation projects through the creation of transit districts. The transit district is able to capture part of: 1) the sales tax in the district; and 2) the adjusted gross income tax withheld from the wages of employees within the district.
What happened last week: HB1245 was amended on second reading and passed third reading with an overwhelming bipartisan vote of 90-7.
What’s next? The Senate will take up HB1245 where it should face a warm reception.

Issue: Green Building/Sustainable Design (HB1280)
What it means to you: Requires all new public buildings and structures, (excluding those contracted by a public school corporation, buildings listed on the National Register of Historic Places and structures designed solely to store commodities or other property) and public building repairs in valued in excess $1 million, to meet LEED (Leadership in Energy and Environmental Design) Silver or an equivalent rating system. Currently, building to these standards costs no more than 1.5 – 2 percent more than conventional buildings. However, building to LEED Silver standards produces considerable cost savings. It is estimated that the additional investment required to build to LEED standards can be recovered in 12-24 months.
What happened last week: The bill passed out of the House by a close 51-45 vote.
What’s next? The bill heads to the Senate, where concerns over mandates vs. incentives may prompt opposition.

EDUCATION AND WORKFORCE DEVELOPMENT

Issue: Moving School Board Elections From The Primary To The General Election (SB2)
What it means to you: Greater transparency and accountability with school boards and therefore potentially greater voter turnout. The bill requires that elected school board members must stand for election at general elections.
What happened last week: Authored by Sen. Teresa Lubbers (R-Indianapolis), Sen. Jim Merritt (R-Indianapolis), and Sen. Vaneta Becker (R-Evansville) the bill was ordered engrossed on second reading with no amendments.
What’s next? SB2 passed on Third Reading 34-13 and was referred to the House. The House sponsor will be Rep. Peggy Welch (D-Bloomington) and the co-sponsor will be Rep. Kathy Richardson (R-Noblesville). The bill has been referred to House Elections and Apportionment Committee.

Issue: Graduation Rate (SB111)
What it means to you: SB111 amends the current graduation rate formula to ensure that a student is counted in only one cohort in the graduation rate. This primarily affects students who graduate in less than four years. The bill specifies that students graduating as members of a cohort include students from the cohort who graduate during the expected graduation year or during a previous reporting year. The bill also provides that students may count as graduating members of only one cohort and corrects an incorrect cross-reference.
What happened last week: Authored by Sen. David Long (R-Fort Wayne) the bill was referred to Senate Rules and Legislative Procedure Committee. The committee report passed as amended and the bill was reassigned to Education and Career Development, where Sen. Long was removed as first author and Sen. Teresa Lubbers was added as first author. The committee report was adopted.
What’s next? SB111 was heard onsecond reading and was amended, ordered engrossed. The bill passed 43-5 on third reading and was referred to the House. The House sponsor is Rep. Greg Porter (D-Indianapolis) and the co-sponsor is Rep. Bob Behning (R-Indianapolis). SB111 was referred to the House Rules and Legislative Procedures Committee.

Issue: Scholarship Granting Organization Tax Credit (SB248)
What it means to you: Promotes school choice and provides an incentive for individuals and businesses to donate to approved, non-profit scholarship granting organizations that serve Hoosier students. These programs would provide scholarships to qualifying low-income families and donors would receive a partial credit against their state tax liabilities based on their donations.
What happened last week: Authored by Sen. Jeff Drozda (R-Sheridan) the bill passed as amended out of Senate committee on Education and Career Development along party lines, 6-4, with the Senate majority in favor of the bill. Sen. Luke Kenley (R-Noblesville) proposed the amendment, which removed funding language from the bill. Otherwise, the bill would have to be re-assigned to the Senate Appropriations Committee and would have died in a non-budget year. The bill will need to be revisited in 2009 during the budget session in order to reinsert an appropriation.
What’s next? SB248 was heard on second reading and ordered engrossed. The bill passed on Third reading 27-21 and was referred to the House. The House sponsor is Rep. Greg Porter (D-Indianapolis) and the co-sponsor is Rep. Bob Behning (R-Indianapolis).