[r63] Messmer Report: Luring Businesses

Posted by: Zach Weismiller  | Friday, June 25, 2010

Have you ever wondered how the state actually lures businesses and jobs into Indiana?

Indiana is in tough competition with 49 other states-and the world-in attracting jobs.   My House Republican colleagues and I have worked hard with Governor Daniels to attract jobs to our state by creating the strongest tool kit.  

Indiana brings a variety of incentives to the table.  We offer low taxes, we work to eliminate bureaucratic red tape and have a talented and hardworking pool of employees to offer.   Indiana also provides targeted tax incentives. 

One of the most successful and utilized incentives is the program called EDGE, which stands for Economic Development for a Growing Economy.

Currently, the state offers around $8,000 per created job through the program. When a business commits to move to Indiana, the Indiana Economic Development Corporation (IEDC) makes a contract with them stating the maximum amount of new employee "incentive cash" they will receive.

After the employee has been hired, the company can send their tax records to the Department of Revenue. Then the company receives the incentive money they were promised in that initial contract.

If the company ends up creating fewer jobs than they thought they would, they don't receive the original stated amount. If they create more jobs, they still can't get more than that very first amount agreed upon with IEDC.

EDGE is a program we have tweaked several times over the years in order to stay ahead of our competition in surrounding states.

We have lowered the threshold over the years on the size of businesses that can apply for EDGE- retention credit.   The legislature eliminated the requirement that a business must employ 35 or more workers in order to be eligible.  This change will help small businesses.

Let me be crystal clear: almost all of Indiana's job creation incentives to attract employers require the employer to make an up-front commitment to the state about the number of jobs they intend to create.

If they don't come through on that, they don't get to take advantage of the credit.

The bottom line is we don't reward the employer until we see the positive result.  If an employer does go back on their word after they receive the credit and eliminates a position, the IEDC can go back and recoup that money from the business.   Again, no taxpayer money is spent on a business that did not fulfill their word.  

As you can see, there are actually two separate agencies that oversee and crosscheck this whole process for even more accountability: the IEDC and the DOR.

All of this work is paying off: the Department of Labor says that Indiana has accounted for 10 percent of total U.S. private sector employment over the past five months, although it has only 2 percent of the nation's population.

The way the state interacts with businesses and with the global economy can be extremely confusing. I hope this has clarified the process, but if you have any further questions, feel free to call my office at 317-232-9793 or email me at h63@in.gov.