GUEST BLOG: Public Sector Jobs Deficit
By Brooks Kirchgassner: Brooks is a Legislative Assistant with the Institute and an Associate Faculty member in the Department of Political Science at IUPUI.
Following legislation allowing Indiana counties the option to eliminate the business personal property tax (without providing replacement revenue), accompanied by another round of corporate income tax cuts, even more of the burden of funding critical government services will inherently be shifted towards middle - and low- income families, while local governments are expected to continue to struggle to meet infrastructure and service needs - arguably just as critical to growth as minimizing business costs. Here's a look at the employment picture:
Currently, state and local government employment is down 2.5% since its peak in July 2008. As of January 2014, there were 383,500 jobs in this sector. That's 26,200 fewer than there were during the peak of state and local government employment in July of 2008. Add that to the 19,600 jobs needed to keep up with an average population growth of 4.3% since the job-peak for a total state and local government jobs deficit of 45,800 (Figure A). The total non-farm jobs deficit is 174,700 - that's 32,000 less total jobs since the recession began, plus 142,700 to keep up with an average population growth of 4.3% during the same time period.
You can explore some of the trends yourself with this interactive from Governing magazine on state government employment trends - illustrating notable declines in corrections, financial administration, hospital staff, and highway positions since the beginning of the recession. And because education employment “accounts for such a large share of public employment", here is a state-by-state map displaying "percentage changes in non-education full-time equivalent employment from 2007 to 2012". The author notes that “states with stronger economies tended to add more workers” - yet, only New Mexico, Oklahoma and Maine saw greater percent reductions than Indiana’s 10.8% loss.
Public sector job losses and post-recession austerity measures not only have visibly adverse effects on infrastructure, public safety and health investments, the classroom, and other important service and community needs, but also reduce private sector demand, affecting total economic activity.
Figure A - State and Local Government Jobs Deficit
Source: Economic Policy Institute Analysis of Current Employment Statistics and Local Area Unemployment Statistics January 2014
'Inside the Statehouse 2014' - Victories and Missed Opportunities for Hoosier Families, A Post Session Wrap-Up
Lawmakers officially concluded the 2014 session on March 13, one day before the constitutionally mandated end-date for short sessions. While legislators continued a decade-long focus on tax breaks for businesses and picking winners for the state’s economy, some of the Institute's policy agenda made it on to the General Assembly's radar. Below we highlight some Victories for working Hoosier families as well as Missed Opportunities.
Legislative Victories
2014 legislative victories for working Hoosier families include the defeat of suspicionless drug-testing of TANF recipients, a study of part-time students by the state's Commission on Higher Education (a positive step towards closing Indiana's skills gap), expansion of mass transit for Central Indiana, increased infrastructure spending, and a pre-K pilot program.
SB 330: Better Skills for Adult Learners
Description: Requires the commission for higher education to award part-time student grants totaling at least 50% of the available appropriation each fiscal year to adult students who are pursuing a program of study that will lead to a specific high demand, high wage job. Requires the commission to submit not later than November 1, 2014, to the legislative council a report that provides information about the part-time student population in Indiana, including the population's size, its financial need, its completion rates, and recommendations for increasing the population's completion rates using financial support and student incentives.
Last Action Taken: Passed the House & Senate; awaiting Governor's signature.
Position - Support: The study of part-time learners will be a positive step forward for this population, which makes up nearly half of all Indiana college students. This measure is also a policy priority for the Indiana Skills2Compete Coalition.
SB 176: Central Indiana Transit
Description: Provides for the establishment or expansion of public transportation services other than light rail in an eligible county through a local public question placed on the ballot under an ordinance adopted by the fiscal body of the eligible county. Requires the department of local government finance to review and approve the language of a local public question. Provides that Delaware County, Hamilton County, Hancock County, Johnson County, Madison County, and Marion County are eligible counties. Requires goals for participation by minority business enterprises, veteran business enterprises, and women's business enterprises in the development of a public transportation project.
Last Action Taken: Passed the House & Senate; awaiting Governor's signature.
Position - Support: A step in the right direction towards providing greater accessibility for low-income workers in Indiana to travel to and from work. Click here for a summary of the bill and here to show your support for mass transit.
HB 1004: Early Learning Pilot Grant Program.
Missed Opportunities
Work Sharing: Despite support from both labor and business interests, as well as bi-partisan support in the Indiana House, legislation that would have created a work share program to protect Hoosier jobs and provide flexibility to employers was not given a hearing in committee and was voted down as a second reading amendment offered by Senator Karen Tallian. This missed opportunity has cost the state federal reimbursement to the UI trust fund and $2,074,861 in outreach and implementation grants. Work share is a "win-win-win" for business, workers, and the state. See more on Work Sharing (research, media coverage and fact sheets) here.
Cliff Effect: The Institute called attention to our recommendations to address the cliff effect - policy design in work-support programs that act as barriers to employment and mobility for low-income families – during Restore Economic Mobility Day at the Indiana Statehouse and several communities around the state. While legislation was sidelined, in-roads were made on outreach and education.
Stay tuned throughout the year for new research, up-to-date information on summer study committees at the Indiana Statehouse, our role in federal policy that affects working families in Indiana, and much more. In 2015 we will continue to advocate for meaningful legislation and investments that reward hard working Hoosiers by ensuring they share in economic growth; reflect the economic reality of low- and middle-income Hoosiers by strengthening work support programs, and ultimately; equip all Hoosiers with the opportunity to obtain the skills necessary in order to attract high-paying, quality jobs that are necessary for a family’s economic self-sufficiency.
Legislative Victories
2014 legislative victories for working Hoosier families include the defeat of suspicionless drug-testing of TANF recipients, a study of part-time students by the state's Commission on Higher Education (a positive step towards closing Indiana's skills gap), expansion of mass transit for Central Indiana, increased infrastructure spending, and a pre-K pilot program.
SB 330: Better Skills for Adult Learners
Description: Requires the commission for higher education to award part-time student grants totaling at least 50% of the available appropriation each fiscal year to adult students who are pursuing a program of study that will lead to a specific high demand, high wage job. Requires the commission to submit not later than November 1, 2014, to the legislative council a report that provides information about the part-time student population in Indiana, including the population's size, its financial need, its completion rates, and recommendations for increasing the population's completion rates using financial support and student incentives.
Last Action Taken: Passed the House & Senate; awaiting Governor's signature.
Position - Support: The study of part-time learners will be a positive step forward for this population, which makes up nearly half of all Indiana college students. This measure is also a policy priority for the Indiana Skills2Compete Coalition.
SB 176: Central Indiana Transit
Description: Provides for the establishment or expansion of public transportation services other than light rail in an eligible county through a local public question placed on the ballot under an ordinance adopted by the fiscal body of the eligible county. Requires the department of local government finance to review and approve the language of a local public question. Provides that Delaware County, Hamilton County, Hancock County, Johnson County, Madison County, and Marion County are eligible counties. Requires goals for participation by minority business enterprises, veteran business enterprises, and women's business enterprises in the development of a public transportation project.
Last Action Taken: Passed the House & Senate; awaiting Governor's signature.
Position - Support: A step in the right direction towards providing greater accessibility for low-income workers in Indiana to travel to and from work. Click here for a summary of the bill and here to show your support for mass transit.
HB 1004: Early Learning Pilot Grant Program.
Description: Authorizes the office of the secretary of family and social services to establish a pilot program to make grants to certain entities that provide qualified early education services to eligible children who are four years of age. Establishes the prekindergarten and early learning study commission.
Last Action Taken: Passed the House and Senate; awaiting Governor's signature.
Position - Support: Indiana joins the 41 other states that provide pre-K funding for children who are at least four years-old, and while only a pilot program it is a welcome step in the right direction. Research on the benefits of early childhood education are abundant (particularly for low-income children who face barriers to economic mobility as adults), so examining (and implementing) the right design for Indiana is an action that is long-overdue. Thank you Governor Pence for making this a priority.
Position - Support: Indiana joins the 41 other states that provide pre-K funding for children who are at least four years-old, and while only a pilot program it is a welcome step in the right direction. Research on the benefits of early childhood education are abundant (particularly for low-income children who face barriers to economic mobility as adults), so examining (and implementing) the right design for Indiana is an action that is long-overdue. Thank you Governor Pence for making this a priority.
Missed Opportunities
Work Sharing: Despite support from both labor and business interests, as well as bi-partisan support in the Indiana House, legislation that would have created a work share program to protect Hoosier jobs and provide flexibility to employers was not given a hearing in committee and was voted down as a second reading amendment offered by Senator Karen Tallian. This missed opportunity has cost the state federal reimbursement to the UI trust fund and $2,074,861 in outreach and implementation grants. Work share is a "win-win-win" for business, workers, and the state. See more on Work Sharing (research, media coverage and fact sheets) here.
Cliff Effect: The Institute called attention to our recommendations to address the cliff effect - policy design in work-support programs that act as barriers to employment and mobility for low-income families – during Restore Economic Mobility Day at the Indiana Statehouse and several communities around the state. While legislation was sidelined, in-roads were made on outreach and education.
Stay tuned throughout the year for new research, up-to-date information on summer study committees at the Indiana Statehouse, our role in federal policy that affects working families in Indiana, and much more. In 2015 we will continue to advocate for meaningful legislation and investments that reward hard working Hoosiers by ensuring they share in economic growth; reflect the economic reality of low- and middle-income Hoosiers by strengthening work support programs, and ultimately; equip all Hoosiers with the opportunity to obtain the skills necessary in order to attract high-paying, quality jobs that are necessary for a family’s economic self-sufficiency.
What Corporate Tax Burden?
By Meg Wiehe:
State Tax Policy Director
Institute on Taxation and Economic Policy (ITEP)
On
the immediate heels of significantly cutting taxes for corporations and high income individuals, lawmakers are close to making a deal to deliver additional tax breaks to some
businesses including very profitable multi-national corporations.
The
compromise that has emerged in recent weeks (and will likely be sent to
Governor Pence today) would give counties the option to cut local business
taxes and would include a gradual reduction in the state’s corporate income tax
rate from 6.5 percent to 4.9 percent (Indiana lawmakers cut the rate gradually
from 8.5 percent to 6.5 percent in 2011. The 6.5 percent rate goes into
effect next year).
Yet,
an analysis of the aggregate state corporate income taxes paid (or not paid) by
two of the largest and most profitable corporations based in Indiana –Eli Lilly
and NiSource– shows that lawmakers should first be concerned with asking how
much if anything these and other profitable corporations operating in Indiana
are actually paying before further cutting the rate.
Eli Lilly and NiSource have been staggeringly successful in avoiding state corporate income taxes in recent years. In 2011, both corporations actually paid a negative state tax rate despite recording profits. In other words, rather than paying any state income taxes in 2011, Eli Lilly and NiSource received rebates.
Between 2008 and 2012, NiSource paid only $9 million total in aggregate state corporate taxes on more than $2.4 billion in profits for an effective rate of just .4%, far below Indiana’s rate. During the same period, Eli Lilly’s effective rate was just .6%, paying only $61 million in total aggregate state income taxes on more than $10 billion in profits.
When some of Indiana’s most successful corporations are paying such a small fraction of their profits in state income taxes to states around the country, it raises serious questions about whether reducing the corporate income tax is a worthwhile priority.
Lawmakers interested in true corporate tax reform should start by ensuring that profitable multi-national corporations are paying something resembling the legal rate. When these large companies are able to dodge almost all state income taxes on their U.S. profits, the inevitable impact is a tax shift away from big corporations and onto everyone else, including small businesses and middle-income families. Creating a level playing field between large businesses and “mom and pop” businesses should be a priority for state policymakers—but that is best done by repealing harmful tax giveaways, not through reducing corporate income tax rates.
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Inside the Statehouse 2014: Week 9
The following is an overview of activity surrounding legislation the Institute is monitoring this week, followed by legislation on next week's agenda. Here is a comprehensive list of all legislation the Institute is tracking this session. Legislative calendars are subject to change. Please check back for updates.
This week was the Third Reading deadline for legislation in the House and Senate and the start of conference committees to reconcile differences in the bills that have passed both chambers. Work Sharing was offered as a Second Reading amendment to HB 1346 Unemployment Insurance by Senator Karen Tallian (D-Portage) but failed on a voice vote. The Senate advanced a bill that would cut business personal property and corporate taxes; strengthen child care safety standards; study and make recommendations on career and technical diplomas; and mandate drug testing of convicted felons receiving TANF. The House voted in favor of a mass transit initiative in Central Indiana; legislation that establishes charter schools for adults, and nixed proposed language that would have set an expiration date on Indiana’s State Earned Income Tax Credit, which, along with the Child Tax Credit, kept over 100,000 Hoosier children out of poverty between 2010 and 2012.
Next Friday, March 14, is the deadline for the General Assembly to send bills to the Governor for his signature. Anything can happen during conference committee negotiations, so follow us on Twitter @INInstitute and use the hash tag #INlegis for all updates.
This Week
HB 1351: Welfare Matters
Description: Welfare matters; drug testing. Requires the division of family resources to establish a statewide program that prohibits Temporary Assistance for Needy Families (TANF) assistance from being used for any food, food product, or beverage that is not permitted to be purchased under the Supplemental Nutrition Assistance Program (SNAP) program. Requires the office of the secretary of family and social services to administer a drug testing program (program) for individuals who have been convicted of a controlled substance offense and are applying for or receiving TANF assistance or receiving TANF assistance on behalf of a child.
Last Action Taken: Passed the Senate 34-14; House dissented from Senate amendments; in Conference Committee.
Position - Oppose (see testimony): While barriers to self-sufficiency do include substance abuse and addiction, there are more effective solutions within TANF itself to combat substance abuse. See our recommendations here for policy changes that would instead help Hoosier families transition off of welfare.
Position - Oppose (see testimony): While barriers to self-sufficiency do include substance abuse and addiction, there are more effective solutions within TANF itself to combat substance abuse. See our recommendations here for policy changes that would instead help Hoosier families transition off of welfare.
HB 1001: State and Local Taxation
Description: Specifies that if the acquisition cost of a taxpayer's business personal property in a county is less than $20,000 for a particular assessment date in 2016 or later: (1) the taxpayer is not required to file a personal property return for the taxpayer's business personal property in the county for that assessment date; and (2) the taxpayer's business personal property in the county is exempt from taxation for that assessment date. Phases down the corporate income tax rate from 6.5% in 2015 to 4.9% after June 30, 2021. Phases down the financial institutions tax rate to 4.9% in calendar year 2023.
Last Action Taken: Passed the Senate 33-15; House dissented from Senate Amendments, heads to Conference Committee.
Position - Oppose. Taxpayers and communities have already been squeezed to provide essential services and have yet to feel the full impact from previous cuts in the corporate income tax. From the Indiana Fiscal Policy Institute: "Research on the effects of taxes on development is not precise, but most studies find the effects to be relatively small. The associated reductions in public services valued by businesses might also limit the effects on development. the majority of existing alternatives for raising revenue locally will fall on individuals rather than businesses – and could represent yet another shift of the tax burden."
HB 1020: Economic Development Incentives
Description: Requires the commission on state tax and financing policy to review, analyze, and evaluate state and local tax incentives that are provided to encourage economic development or to alter, reward, or subsidize a particular action or behavior by a tax incentive recipient. Provides that certain income tax credits (which were reviewed by the commission on state tax and financing policy in 2012 and 2013) expire on January 1, 2020. Language that would have let Indiana's EITC sunset was removed.
Last Action Taken: Passed the Senate 41- 8; House dissented from Senate Amendments, heads to Conference Committee.
SB 176: Central Indiana Transit
Description: Provides for the establishment or expansion of public transportation services in an eligible county through local public questions placed on the ballot under ordinances adopted by the fiscal body of the eligible county. Provides that Delaware County, Hamilton County, Hancock County, Johnson County, Madison County, and Marion County are eligible counties. Authorizes interlocal agreements, public-private partnerships, and bonding with respect to a public transportation project. Requires that fares must cover at least 25% of the operating costs of a transportation system established or expanded under the bill. Requires that revenue derived from sources other than taxes and fares must cover at least 10% of the operating costs of a transportation system established or expanded under the bill. Requires goals for participation by minority business enterprises, veteran business enterprises, and women's business enterprises in the development of a public transportation project.
Last Action Taken: Passed the House 52-47; Senate dissented from House Amendments, in Conference Committee.
Position - Support: A step in the right direction towards providing greater accessibility for low-income workers in Indiana to travel to and from work.
HB 1213: Career and Technical Education; Dual Credit Courses
Description: Requires the Indiana career council to appoint a subcommittee that includes a member of each council and representatives of high school career and technical education programs, the department of education, community colleges, the commission for higher education, and industry to: (1) review the current Core 40 diploma course offerings; (2) make recommendations to the state board of education concerning changing course requirements, including the total number of academic credits required, changing the types of diplomas offered, and the need for a career and technical education diploma; and (3) examine and make recommendations concerning career and technical education offerings. Makes changes to the provision regarding the number of dual credit or advanced placement courses that must be provided by a high school. Provides that a student who is enrolled in a dual credit course must achieve at least a 2.0 on a 4.0 unweighted grading scale to enroll in subsequent related dual credit course work in the same subject area.
Last Action Taken: Passed the Senate 41-7; Motion to Concur in Senate Amendments: prevailed 87-0.
HB 1036: Child Care and Development Fund Eligibility.
Description: Specifies health, education, safety, and training requirements that a child care provider must meet as a condition of eligibility to receive a federal Child Care and Development Fund voucher payment. Provides for decertification of eligibility. Requires certain reporting related to safety of children. Requires certain information to be prepared and distributed concerning the duty to report known or suspected child abuse or neglect. Allows the state department of health to release to certain child care providers information from the immunization data registry.
Last Action Taken: Passed the Senate 36-12; House dissented from Senate Amendments, heads to Conference Committee.
HB 1064: Study of Career & Technical Education Programs
Description: Requires the Indiana career council to complete not later than August 1, 2014, a return on investment and utilization study of career and technical education programs in Indiana.
Last Action Taken: Motion to Concur in Senate Amendments: prevailed 90-0.
Next Week
The General Assembly will continue meeting in conference committees for the final week of the 2014 legislative session. Typically composed of four legislators (aka conferees - one from each caucus in both chambers), conference committees are intended to resolve the differences between amended bills in the House or the Senate (those bills that weren't amended as they traveled through both chambers were sent to the Governor for his signature). After several meetings, the results of these changes will be brought to the House or Senate floor for a final vote on a conference committee report.
The Increasingly Unequal State of Indiana
By Derek Thomas:
Over the past 30 years, the top 1% of Indiana earners captured nearly half of all income increases and saw their incomes grow by nine times that of the remaining 99% of Hoosiers.
In a new report from the Economic Analysis Research Network - The Increasingly Unequal States of America: Income Inequality by State - Estelle Sommeiller and Mark Price conduct
a state-level analysis of income trends from 1917-2011. According to Sommeiller, a socio-economist at the Institute for Research in Economic and Social Sciences: “Our study shows that this one percent economy is not just a national story but is evident in every state, and every region.” Nationally, the authors found that from 1979 through 2007, the top 1% captured 53.9% of the total increase in U.S. income. During this time period, the average income of the bottom 99% grew by 18% while the top 1% saw income growth mushroom by 200%.
Employing the authors' data, here's a closer look at the increasingly lopsided Hoosier economy, which by the way, was in motion decades before the Great Recession began:
- From 1979 through 2007 the top 1% of Hoosiers seized a disproportionate 46.5% of total increase in income. While 99% of Hoosiers saw incomes grow by 13%, the top 1% saw incomes balloon by 115%.
- From 1979 through 2011 (the latest data available, and accounting for all losses at all income levels as a result of the Great Recession), the top 1% saw real income grow by 68% while the remaining 99% saw a 6% decline (Figure A). In contrast, worker productivity soared during this period (Figure B).
- These trends persist in the two years following the Great Recession; the top 1% captured 8.1% of all income growth, while the share for the remaining 99% of Hoosiers has been an almost non-existent 0.4% (Figure C).
- The share of income held by the top 1% has reached levels not seen since the gilded-age of the early twentieth century. Since 1979 their share has increased from 8.6% to 14.4% in 2011 (Figure D).
- In Pulling Apart - a state by state analysis of top, middle and bottom fifth income growth from Economic Policy Institute and Center for Budget and Policy Priorities, the authors found that in Indiana, the "pulling apart" is a result of the "poor getting poorer." From the late 1970's through the mid 2000's, Indiana was among 7 states in which average incomes of the bottom fifth of households declined - only 3 states saw greater declines than Indiana. And, from the mid 1990's through the mid 2000's, the bottom fifth of Hoosier households saw the nation's greatest percent decline in average incomes.
While the challenges to Indiana's economy over the past several decades are not much different than many rust belt states, and recently, not much different than the rest of the U.S., public policy choices have compounded the plight of working Hoosier families. During this era of lopsided growth, state-level policies have disproportionately benefited higher-income households (shifting the responsibility of funding critical government services toward middle and low-income Hoosiers), and actively weakened our work support and social safety net system. Instead of a rising tide that lifts all boats, just a few are riding high, while most families are anchored underwater.
If Indiana truly wants to be "a state that works" for all Hoosier families, it's more critical than ever that policymakers begin to provide a toolbox of meaningful and significant state policies and investments that restore mobility and raise the standard of living for millions of hard working Hoosiers to strengthen the state's middle class. To do this, lawmakers should reward hard working Hoosiers by ensuring they share in economic growth; strengthen work support programs for our most vulnerable citizens, and; equip all Hoosiers with the opportunity to obtain the skills necessary in order to attract high‐paying, quality jobs that are necessary for a family’s economic self‐sufficiency.
Figure A: Real Income Growth - Indiana -1979 through 2011
Sommeiller and Price, The Increasingly Unequal States of America: Income Inequality by State, 1917 to 2011
Figure B: Growth of Real Hourly Median Compensation for Production/Non Supervisory Workers and Productivity - 1979 through 2011
(If the minimum wage had kept up with productivity, it would be near $18.75 today.)
(If the minimum wage had kept up with productivity, it would be near $18.75 today.)
EPI Analysis of Unpublished Total Economy Data from Bureau of Labor Statistics, Labor Productivity and Costs Program; Employment Data from BLS, Local Area Unemployment Statistics; and Bureau of Economic Analysis, State/National Income and Product Accounts .
Figure C: Real Income Growth - Indiana - 2009 through 2011
Sommeiller and Price, The Increasingly Unequal States of America: Income Inequality by State, 1917 to 2011
Figure D: The Share of All Income Held by the Top 1% - Indiana -1917 through 2011
For more information:
- Read the full report - The Increasingly Unequal States of America here.
- See the Indiana Fact Sheet here.
- See Lopsided Income Growth Tables here.
- See Interactive Graphic of Top Income Shares by State here.
- See More on Income Inequality in Indiana (with a related feature on the Cliff Effect) from 'The Unequal States of America - A Reuters Series'.
- Infographic: Pulling Apart - Income Inequality Has Grown in Indiana.
Inside the Statehouse 2014: Week 8
The following is an overview of activity surrounding legislation the Institute is monitoring this week, followed by legislation on next week's agenda. Here is a comprehensive list of all legislation the Institute is tracking this session. Legislative calendars are subject to change. Please check back for updates.
This week the Indiana House and Senate wrapped up committee hearings for the 2014 legislative session. Next week will be second reading deadlines. Work Sharing has still not been given a hearing. The legislature did advance bills that would: allow the Earned Income Tax Credit to expire; benefit students and providers of career and technical education diplomas; establish a Pre-K study commission, and; allow Hoosiers in Central Indiana to vote on a mass transit funding plan. Next week is the deadline for House bills to pass out of the Senate and Senate bills to pass out of the House.
This Week
HB 1351: Welfare Matters
Description: Welfare matters; drug testing. Requires the division of family resources to establish a statewide program that prohibits Temporary Assistance for Needy Families (TANF) assistance from being used for any food, food product, or beverage that is not permitted to be purchased under the Supplemental Nutrition Assistance Program (SNAP) program. Requires the office of the secretary of family and social services to administer a drug testing program (program) for individuals who have been convicted of a controlled substance offense and are applying for or receiving TANF assistance or receiving TANF assistance on behalf of a child.
Last Action Taken: Passed Appropriations Committee 7-4; now on Second Reading.
Position - Oppose (see testimony): While barriers to self-sufficiency do include substance abuse and addiction, there are more effective solutions within TANF itself to combat substance abuse. See our recommendations here for policy changes that would instead help Hoosier families transition off of welfare.
HB 1001: Tax Exemption for New Personal Property
Description: Provides that a county income tax council may adopt an ordinance to exempt from property taxation any new business personal property (other than utility personal property) that is located in the county.
Last Action Taken: Passed Tax & Fiscal Policy Committee 8-4; Engrossed.
Position - Oppose. Taxpayers and communities have already been squeezed to provide essential services. From the Indiana Fiscal Policy Institute: "Research on the effects of taxes on development is not precise, but most studies find the effects to be relatively small. The associated reductions in public services valued by businesses might also limit the effects on development. the majority of existing alternatives for raising revenue locally will fall on individuals rather than businesses – and could represent yet another shift of the tax burden."
SB 176: Central Indiana Transit
Description: Provides for the establishment or expansion of public transportation services in an eligible county through local public questions placed on the ballot under ordinances adopted by the fiscal body of the eligible county. Provides that Delaware County, Hamilton County, Hancock County, Johnson County, Madison County, and Marion County are eligible counties. Authorizes interlocal agreements, public-private partnerships, and bonding with respect to a public transportation project. Provides that if a transportation project is approved in an eligible county, transportation services must be provided through the transportation project throughout the eligible county and must be made available under this article to all citizens of the county. Prohibits an eligible county from carrying out a light rail project.
Last Action Taken: Passed Ways & Means Committee 17-1; Engrossed.
Position - Support: A step in the right direction towards providing greater accessibility for low-income workers in Indiana to travel to and from work.
HB 1004: Prekindergarten Study Commission
SB 330: Better Skills for Adult Learners
Description: Requires the commission for higher education to award part-time student grants totaling at least 50% of the available appropriation each fiscal year to adult students who are pursuing a program of study that will lead to a specific high demand, high wage job. Requires the commission to submit not later than November 1, 2014, to the legislative council a report that provides information about the part-time student population in Indiana, including the population's size, its financial need, its completion rates, and recommendations for increasing the population's completion rates using financial support and student incentives.
Last Action Taken: Passed the House 93-0; Returned to the Senate with amendments.
Position - Support: The study of part-time learners will be a positive step forward for this population, which makes up nearly half of all Indiana college students. This measure is also a policy priority for the Indiana Skills2Compete Coalition.
Note: we'll send a separate email calling for specific action on particular legislation. For the time being, you can contact your legislator here. To see previous Inside the Statehouse blogs, please visit our archives.
Position - Oppose (see testimony): While barriers to self-sufficiency do include substance abuse and addiction, there are more effective solutions within TANF itself to combat substance abuse. See our recommendations here for policy changes that would instead help Hoosier families transition off of welfare.
HB 1001: Tax Exemption for New Personal Property
Description: Provides that a county income tax council may adopt an ordinance to exempt from property taxation any new business personal property (other than utility personal property) that is located in the county.
Last Action Taken: Passed Tax & Fiscal Policy Committee 8-4; Engrossed.
Position - Oppose. Taxpayers and communities have already been squeezed to provide essential services. From the Indiana Fiscal Policy Institute: "Research on the effects of taxes on development is not precise, but most studies find the effects to be relatively small. The associated reductions in public services valued by businesses might also limit the effects on development. the majority of existing alternatives for raising revenue locally will fall on individuals rather than businesses – and could represent yet another shift of the tax burden."
SB 176: Central Indiana Transit
Description: Provides for the establishment or expansion of public transportation services in an eligible county through local public questions placed on the ballot under ordinances adopted by the fiscal body of the eligible county. Provides that Delaware County, Hamilton County, Hancock County, Johnson County, Madison County, and Marion County are eligible counties. Authorizes interlocal agreements, public-private partnerships, and bonding with respect to a public transportation project. Provides that if a transportation project is approved in an eligible county, transportation services must be provided through the transportation project throughout the eligible county and must be made available under this article to all citizens of the county. Prohibits an eligible county from carrying out a light rail project.
Last Action Taken: Passed Ways & Means Committee 17-1; Engrossed.
Position - Support: A step in the right direction towards providing greater accessibility for low-income workers in Indiana to travel to and from work.
HB 1004: Prekindergarten Study Commission
Description: Establishes the prekindergarten and early learning study commission.
Last Action Taken: Passed the Senate 44-5; Returned to the House with amendments.
Position - Support: Indiana is among 11 states with zero state funding for 3 and 4 year olds to participate in pre-k, and while the research on the benefits of early childhood education are abundant (particularly for low-income children who face barriers to economic mobility as adults), examining (and implementing) the right design for Indiana is an action that is long-overdue.
HB 1020: Economic Development Incentives
Description: Requires the commission on state tax and financing policy to review, analyze, and evaluate state and local tax incentives that are provided to encourage economic development or to alter, reward, or subsidize a particular action or behavior by a tax incentive recipient. Provides that certain income tax credits (which were reviewed by the commission on state tax and financing policy in 2012 and 2013) expire on January 1, 2020.
Last Action Taken: Passed the Senate 41- 8. Returned to the House with amendments.
Position - Oppose: This bill, along with SB 367, includes the expiration of Indiana’s State Earned Income Tax Credit. SB 367 states that a taxpayer may not claim the credit after December 31, 2016 and sets the credit to expire completely from Indiana law on January 1, 2018. HB 1020 sets the expiration of the credit at January 1, 2020, but does not include an end date for taxpayers to cease filing for the credit. The Earned Income Tax Credit is one of our most effective anti-poverty tools. According to a projection analysis by the Institute on Taxation and Economic Policy back in 2011 (the last time this tax increase was considered), reducing or repealing Indiana’s EITC could amount to an 82 million dollar tax increase on our most vulnerable families. Thirty-four percent of those in the LOWEST income quintile and 15 percent of all Indiana tax payers will experience a tax increase, meaning more families would fall into poverty if the State EITC were changed.
Position - Support: Indiana is among 11 states with zero state funding for 3 and 4 year olds to participate in pre-k, and while the research on the benefits of early childhood education are abundant (particularly for low-income children who face barriers to economic mobility as adults), examining (and implementing) the right design for Indiana is an action that is long-overdue.
HB 1020: Economic Development Incentives
Description: Requires the commission on state tax and financing policy to review, analyze, and evaluate state and local tax incentives that are provided to encourage economic development or to alter, reward, or subsidize a particular action or behavior by a tax incentive recipient. Provides that certain income tax credits (which were reviewed by the commission on state tax and financing policy in 2012 and 2013) expire on January 1, 2020.
Last Action Taken: Passed the Senate 41- 8. Returned to the House with amendments.
Position - Oppose: This bill, along with SB 367, includes the expiration of Indiana’s State Earned Income Tax Credit. SB 367 states that a taxpayer may not claim the credit after December 31, 2016 and sets the credit to expire completely from Indiana law on January 1, 2018. HB 1020 sets the expiration of the credit at January 1, 2020, but does not include an end date for taxpayers to cease filing for the credit. The Earned Income Tax Credit is one of our most effective anti-poverty tools. According to a projection analysis by the Institute on Taxation and Economic Policy back in 2011 (the last time this tax increase was considered), reducing or repealing Indiana’s EITC could amount to an 82 million dollar tax increase on our most vulnerable families. Thirty-four percent of those in the LOWEST income quintile and 15 percent of all Indiana tax payers will experience a tax increase, meaning more families would fall into poverty if the State EITC were changed.
SB 330: Better Skills for Adult Learners
Description: Requires the commission for higher education to award part-time student grants totaling at least 50% of the available appropriation each fiscal year to adult students who are pursuing a program of study that will lead to a specific high demand, high wage job. Requires the commission to submit not later than November 1, 2014, to the legislative council a report that provides information about the part-time student population in Indiana, including the population's size, its financial need, its completion rates, and recommendations for increasing the population's completion rates using financial support and student incentives.
Last Action Taken: Passed the House 93-0; Returned to the Senate with amendments.
Position - Support: The study of part-time learners will be a positive step forward for this population, which makes up nearly half of all Indiana college students. This measure is also a policy priority for the Indiana Skills2Compete Coalition.
HB 1064: Study of Career & Technical Education Programs
Description: Requires the Indiana career council to complete not later than August 1, 2014, a return on investment and utilization study of career and technical education programs in Indiana.
Last Action Taken: Passed the Senate 49-0; Returned to the House with amendments.
HB 1181: Career & Technical Education Centers
Description: Provides that a school corporation career and technical education center may receive a grant from the Indiana safe schools fund. Provides that a school corporation career and technical education center may receive an advance from the common school fund.
Last Action Taken: Passed the Senate Education Committee 10-0.
Next Week
SB 159: Charter Schools
Description: Requires the Indiana career council to complete not later than August 1, 2014, a return on investment and utilization study of career and technical education programs in Indiana.
Last Action Taken: Passed the Senate 49-0; Returned to the House with amendments.
HB 1181: Career & Technical Education Centers
Description: Provides that a school corporation career and technical education center may receive a grant from the Indiana safe schools fund. Provides that a school corporation career and technical education center may receive an advance from the common school fund.
Last Action Taken: Passed the Senate Education Committee 10-0.
Next Week
Description: Adds a definition of an "adult high school." Repeals a provision that prohibits the establishment of new adult high schools. Provides that an adult high school may only be authorized by the Indiana charter school board or the Indianapolis charter school board. Provides that, after June 30, 2014, before an authorizer may grant a charter to establish or renew a charter for an adult high school, the organizer must have the proposal approved by the budget committee. Requires a charter for an adult high school to contain certain requirements. Provides that, with certain exceptions, for state fiscal years beginning after June 30, 2014, an adult high school is not entitled to receive funding from the state unless the general assembly enacts an appropriation for the adult high school. Provides that an adult high school is subject to alternative accountability system established by the state board. Provides that certain authorizers may collect a 3% administrative fee from the amount appropriated to an adult high school. Requires the office of management and budget to study adult high schools and educational alternatives for students who: (1) are at least eighteen (18) years of age; and (2) have dropped out of high school before receiving a diploma.
Last Action Taken: Passed the Education Committee 12-0; Engrossed.
Hearing Time & Location: Monday, March 3, 2014, 1:00 PM, House Chambers.
SB 225: Various State & Local Financial Matters
Description: Eliminates the requirement that excess state general fund reserves are to be carried over each year for purposes of determining a transfer to the pension stabilization fund and an automatic taxpayer refund. Reduces the number of hard copy documents a state agency must provide to the state library. Permits the state library foundation to choose to have its annual audit performed by an independent certified public accountant or by the state board of accounts. Provides that Indiana Academy of Science (Academy) shall the publish the Academy's annual report of the Academy's meetings. Modifies per campus limits on the amount of outstanding bonds that a state educational institution may issue for qualified energy savings contracts.Last Action Taken: Passed Ways & Means Committee 20-0; Engrossed.
Hearing Time & Location: Monday, March 3, 2014, 1:00 PM, House Chambers.
Description: Eliminates the requirement that excess state general fund reserves are to be carried over each year for purposes of determining a transfer to the pension stabilization fund and an automatic taxpayer refund. Reduces the number of hard copy documents a state agency must provide to the state library. Permits the state library foundation to choose to have its annual audit performed by an independent certified public accountant or by the state board of accounts. Provides that Indiana Academy of Science (Academy) shall the publish the Academy's annual report of the Academy's meetings. Modifies per campus limits on the amount of outstanding bonds that a state educational institution may issue for qualified energy savings contracts.Last Action Taken: Passed Ways & Means Committee 20-0; Engrossed.
Hearing Time & Location: Monday, March 3, 2014, 1:00 PM, House Chambers.
14 Reasons to Raise Indiana's Minimum Wage in 2014
By Derek Thomas:
In 2013, 13 states passed legislation to increase the minimum wage. In the spirit of 2014 (this post is a little late, but not too late), we've laid out 14 compelling reasons the Indiana General Assembly should resolve to be the 14th state to reward hard working families by providing them with the raise they deserve:
- Wage Erosion: When comparing the value of the minimum wage today with the minimum wage in 1968 and inflating it to 2012 dollars, the 1968 minimum wage would equate to $10.77. Because the value of the minimum wage has been left to erode due to inflation, more workers are earning poverty wages.
- Inequality: Reducing the erosion of wages would be a good step towards reducing inequality. Indiana saw the 6th greatest increase in income inequality from the 1990’s through mid‐2000’s. See 'Pulling Apart - an Indiana specific infographic from the Center on Budget and Policy Priorities.
- Working Harder For Less: Working families have not shared in the gains of productivity. If the wage floor in Indiana were indexed to Hoosier productivity, it would be about $18.75 per hour. From 2009 - 2012 alone, productivity increased by 4.5% for all occupations, while real median wages declined by 2.8%, according to the National Employment Law Project.
- Race to the Bottom: 5.2 percent of Hoosiers make at or below minimum wage. That's more than all neighbor states (excluding Kentucky - it's a tie) and the U.S. average of 4.7% (5.2% represents 50,000 at minimum wage and 43,000 below minimum wage).
- 637,000: That's how many Hoosiers (23.4% of the workforce) would get a raise according to a new report from the Economic Policy Institute. This includes those affected directly (436,000 making less than $10.10) and indirectly (201,000 making just above the minimum wage whose wages would be pushed up due to pay scale adjustments).
- $1,000,000,000: According to the same analysis, this large scale policy tool for working families would equal a cumulative raise of one-billion dollars. Like unemployment insurance benefits or tax breaks for low- and middle-income workers, raising the minimum wage puts more money in the pockets of working families when they need it most.
- 23 Years Without a Raise: Waiters and Waitresses make $2.13 per hour. The last time they saw a raise was 1991. See this analysis from Massachusetts Budget project: in the 7 states that require employers to pay tipped workers the same as all minimum wage workers, poverty is substantially lower.
- Not All Low-Wage Jobs Are Created Equal: Nationally, nearly 2/3rds of tipped workers are women, and Indiana is 1 of 5 states – along with Alabama, Arkansas, Louisiana and Mississippi – in which more than 7 in 10 minimum wage workers are women. According to this analysis of the EPI report from GovBeat, 20% of female workers in Indiana would be directly affected.
- Gender Gap: Suffice to say, with women earning just $0.73 cents to their male counterpart (the 6th largest gender gap in the U.S.), increasing the tipped minimum wage is a good step towards equal pay.
- It's Not Just for Teens Anymore: The Wall Street Journal showed this past weekend that less than 12% of those that would benefit are under 20 years old. From Sarah Jackson and Elizabeth at Brookings Institution on the recent shift in low-wage worker demographics: "The typical worker likely to be affected by a raise in the minimum wage today is a woman in her 30's working full-time, with a family to support." Speaking of families to support, Indiana is among eight states where over a quarter (25.5%) of children have a parent who would benefit from the minimum-wage increase.
- Self-Sufficiency: In order to afford the Fair Market Rent for a two-bedroom apartment, a minimum wage earner must work 76 hours per week, 52 weeks per year. Increasing the minimum wage would help a family move closer self-sufficiency.
- Falling Behind: According to the Organisation for Economic Cooperation and Development: Among advanced nations, U.S. is near bottom for ratio of minimum wage to median wage (0.38%) - just better than Czech Republic and Estonia.
- Public Support: American voters support 71 - 27 percent raising the minimum wage.
- The Results Are In: Opponents claim minimum wage hurts job growth. It's difficult to find an issue that has been studied more exhaustively. Here are just a few examples: "Empirical analysis strongly challenges the conventional wisdom that increasing the minimum wage hampers employment" (Indiana Business Research Center - 2008). And, here's an oft cited "natural experiment" from economist David Card: 'Comparing Regional Variations in Wages to Measure the Effects of the Federal Minimum Wage'. The conclusion: "a rise in the minimum wage increased teenagers' wages [and] no evidence of corresponding losses in teenage employment." Finally, here's a recent meta-analysis (study of studies) from John Schmitt at CEPR in which he similarly concludes, "the weight of that evidence points to little or no employment response to modest increases in the minimum wage."
After Hoosiers experienced some of the largest losses in household incomes in the nation, some of the largest increases in poverty and low-income individuals in the U.S., and rising inequality (in a state with a larger share of poverty wage jobs than the U.S. average and all neighbor states), the only question is, why not reward hard working Hoosier families with a quick and easy tool that would begin to make work pay, while not costing taxpayers a dime?
