[r23] Friend Report (3/3/2010)

By the end of February, I think we can all could agree that the groundhog was right. Enough with the snow and freezing weather already!

As cold as it has been outside, the environment in the Statehouse has certainly warmed up. Legislation dealing with unemployment insurance was discussed, amended and passed, but is not law. The action of last year's General Assembly HEA 1379 was repealed during the second reading of amendments of Senate Bill 23. HEA 1379 was a poor attempt at fixing Indiana's UI Trust Fund. The "fix" only addressed one of the three issues that have caused Indiana's UI Trust Fund to be more than $1.7 billion in debt to the federal government. Even with the tax increase the fund would still be in debt about $2.6 billion by the end of 2010.

The net result is a complete repeal of the large tax increase on Indiana businesses. That is very good. However, there were five amendments that made the bill "not-so-good." 

Here are the negatives: 

1. The bill increases the threshold for property tax referendum requirements. For example, the bill would increase from $10 million to $15 million the threshold for a referendum on an elementary school. It also increases from $20 million to $30 million the threshold for a high school. These changes will allow for less participation by taxpayers in the process and add to the possibility of higher property taxes because of more school construction projects; 
2. The bill adds permanent liabilities to the fund because it includes federal stimulus money that is a one-time occurrence;
3. It includes language that increases the maximum weekly benefit;
4. It suspends the one application for work (or is it for unemployment?) per week requirement; and
5. Perhaps most offensive, is an employer misclassification portion that causes major problems for employers.

This is a very difficult concept to accept. The unemployment insurance language is an issue that could prolong this session. My goal is to find a solution.

Another problematic issue is the financing of K-12 education. School officials are requesting that several funds be allowed to be used for general fund needs.  For instance, allowing the capital projects fund to be used for operations and salaries seems kind of minor in the big scheme of things. However, this allowance can bring about an increase of property taxes. Senator Kenley (R-Noblesville) supports a requirement to freeze teacher salaries if the legislation permits the transfer of all money within the various school funds. This is another tough showdown that could cause us to stay in Indianapolis longer.

Public-Private Partnerships are being discussed as ways to finance major highway projects at both ends of the state. Allowing the P-3 concept might keep the Ohio River bridge projects moving quicker as well as the Illiana project in Northwest Indiana. Once again, this is an issue that highlights many philosophical arguments about how projects get done.

Senate Bill 396 has become the "catch-all" economic development bill. It originally dealt with the assessment of farmland for tax purposes. But during conference committees this week, the Senate removed various non-germane provisions that were added by House Democrats during second reading with no public debate. I am a conferee and promise to do my best to promote fair farmland assessment on the conference committee for this bill.

This period of the session is hard to predict. I will continue to communicate this information as best I can.  I encourage you to keep participating in our government.

More later,

Bill Friend