Legislative leaders talk energy, taxes in Indiana Chamber Q&A
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Indiana’s legislative leaders—minus one embattled dropout—talked budget, energy, taxes and more in downtown Indianapolis on Monday morning. They spoke at an annual preview from the Indiana Chamber of Commerce, which also released new tax recommendations.
“I think it’s going to be a challenge, obviously, a budget year with a fewer dollars than we’ve had in the last three budget years or so,” Senate President Pro Tempore Rodric Bray said.
“The main issues that we’re looking at this year, none of them seem to have a really clear resolution. So we’re looking forward to … working with all of you to try to find some good solutions,” he told the crowd.
House Speaker Todd Huston extolled the Legislature’s past successes while House Minority Leader Phil GiaQuinta acknowledged “a little more uncertainty this year,” and expressed interest in the state’s forthcoming revenue forecast.
Missing was Senate Minority Leader Greg Taylor, who abruptly pulled out of his scheduled Q&A session. His absence coincided with Monday morning news: the Indianapolis Star reported three woman have accused Taylor of sexual harassment. He was reinstalled as caucus leader hours later.
Rebecca Patrick, the chamber’s senior vice president of communications and marketing, told reporters that her organization learned shortly before the event that Taylor wouldn’t be able to make it.
Leaders talk possible changes
Bray cited the state’s worsening fiscal position for being more open to a $2 cigarette tax hike. The chamber and health advocates have long pushed for an increase, citing revenue and public health benefits. The House has approved legislation — not the Senate.
“(It’s) more likely this year than past,” Bray said. “… The other added feature this year is that we’ve got a Medicaid challenge, financially. … And, so, there’s some added motivation to maybe do this tax as a result of that, to try and help shore that up a little bit.”
Chamber leader Vanessa Green Sinders didn’t have the other leaders weigh in.
But all three expressed concerns as Indiana works to bring power to a slate of extant and forthcoming power-guzzling data centers and tries to attract other heavy industrial electricity users.
“That capacity is beginning to limit us,” Bray said. He added that whatever action lawmakers take should help expand capacity. He also expressed frustration over rising electricity prices, calling them “a slip in the (state’s) competitiveness” and saying policies should “reflect the need to adjust those things.”
GiaQuinta, whose community is set to host a massive Google data center, said he had concerns about energy supply but believed there was enough available to “keep Google going.” He wanted to ensure utility customers didn’t end up on the hook for data center-related utility company investments.
Huston said he expected the state’s energy companies to meet large users’ needs, adding, “I don’t want to hear differently, so figure it out.”
“These are huge economic opportunities,” Huston continued. He said the state’s energy policy shouldn’t be a “hindrance” to such boons, and called for greater capacity development.
Asked if lawmakers would pass stopgap or transformative road funding changes, Bray predicted significant discussion. As more drivers switch to electric or hybrid cars, Indiana’s gas tax—which funds road construction and maintenance for the state and locals—is expected to collect less money.
GiaQuinta, meanwhile, said he wanted larger communities to get their fair share under the road-funding formula. Most are “donors,” with populations that contribute more in taxes than the cities receive.
Huston commended GiaQuinta’s community for tapping into its wheel tax—he said that’s the first thing he asks when communities push him for more road money—and said he wanted a plan to get Interstates 65 and 70 to be three lanes each way from border to border.
“It’s not just about maintaining what we have,” Huston said. “… It’s about growing it.”
Asked how lawmakers could further align education with business needs, Bray and Huston agreed that they “like the trajectory” that Indiana is on. Republicans have led successful efforts to push work-based learning, apprenticeships and more.
Don’t expect big tax changes, despite the upcoming conclusion of what was billed as a potentially transformational two-year examination of the state’s tax system. Some lawmakers had hoped to ditch the income tax but heard little support, and gradually shifted the task force’s focus to property taxes.
Bray said his top takeaway was that Indiana is “extremely competitive.”
“I don’t know that you’ll see really big changes happen this year, maybe some tweaks to … help people feel a little less of a pinch than they have,” he said of property tax reform. “You’ll see maybe some changes to that, maybe some opportunities to increase local government’s ability to do local income tax as well, and perhaps some larger reforms maybe down the road.”
GiaQuinta said he thought the state’s individual income tax was competitive and should be kept “the way it is. He noted that property tax changes impact locals and should come with replacement revenue.
Huston noted that lawmakers have already built in some income tax reductions but agreed that there’d be some focus on “the property tax issue.”
Chamber releases study
The chamber also published the final phase of its tax study—the advocacy element.
An earlier phase found that Indiana’s tax system is less competitive in capital-intensive industries like manufacturing and life sciences but is better for siting headquarters.
In this phase, the chamber had consultant Ernst & Young analyze potential reforms that would benefit businesses, like exempting new firms from the business personal property tax, eliminating personal property depreciation floors, introducing a qualified business income tax deduction and reforming the sales tax for manufacturing inputs.
The report also looked at state and local government: calculating the maximum levy growth quotient at the county level instead of statewide, letting counties increase local income tax by five basis points and reducing the individual and corporate income taxes.