When Gov. Eric Holcomb unveiled his agenda earlier this month, not everyone was on board. In particular, some Democrats provided new dollars for the Indiana Economic Development Corp. (IEDC), a quasi-public agency that is not bound by the same public reporting and transparency rules as other government agencies.
“We just keep giving them a blank check…I have no accountability whatsoever,” said Rep. Greg Porter, D-Indianapolis, during the presentation. “I have nothing against us investing in the economy; I have nothing against us trying to create jobs. But what are the results of this money?”
But Republicans, who had problems with other parts of Holcomb’s agenda, did not share these reservations.
“You have to have opportunities for those kids to stay, and those investments … that’s what gives those kids the opportunity to finish school and stay here,” said Senator Ryan Mishler, R-Mishawaka.
Business stakeholders say this spending is necessary to keep Indiana competitive in the national job market, especially as Indiana moves from manufacturing to the “economy of the future.” These industries — electric vehicles, semiconductors, agricultural technology — will need incentives to come to the Hoosier State.
In the 2022 legislative session, the General Assembly approved Senate Bill 361, which “modernized” the agency’s toolbox by dictating its local participation requirements and expanding tax credits.
For David Rosenberg, IEDC’s chief operating officer and chief of staff, this legislation enabled the quasi-public entity to secure record investments statewide.
“The tools that lawmakers passed and approved for us in 2022 really set the framework for 2023 and really show how those funds will be used and allocated going forward,” Rosenberg said.
In 2022, the company reported more than $22 billion in corporate equity investments, a 260% increase from the previous year. The 24,059 new jobs had an hourly wage of $34.71, almost $10 higher than the national average of $25.12.
Rosenberg argued that the funding proposed in the governor’s budget for 2023 was more transparent by specifying the funds and how they were used.
“We know these tools work; The market is familiar with these tools, so it’s time to double down and add to them to ensure we’re responsive to market needs,” Rosenberg said.
The biggest deal of the year was Eli Lilly’s $2 billion investment in a LEAP innovation district in Boone County — which has met opposition from some local landowners who fear the project will gobble up the area’s farmland. Recently, some residents filed a lawsuit to stop the annexation or incorporation of property into the district.
The state has been heavily involved in purchasing land for the project and appears poised to continue that trend in future development by asking lawmakers for an additional $150 million to set up a revolving site acquisition fund.
In committee, some lawmakers questioned what a $300 million deal-closing fund could pay for that other funds couldn’t. Rosenberg said these spending, also known as cash performance grants, are critical to securing $6 billion of investments in 2022.
Similar to a tax credit, a company that achieves certain goals receives an award. Similarly, the Illinois legislature earlier this week approved a $400 million deal-closing fund in hopes of attracting electric vehicle makers. In an interview, Illinois Gov. JB Pritzker specifically cited Indiana as a state that gets these companies because of its fund.
“Other countries are also making these investments. It’s one of those things where the competition sees what worked for us and tries to copy it,” Rosenberg said.
A separate IEDC fund, the proposed $150 million Strategic Sites and Infrastructure Fund, will pay for upgrading sites such as B. the rededication or the construction of supply connections.
“Corporate contracts used to take two or three years to complete. Now companies are making decisions in a year or less,” Rosenberg said. “They’re looking for land (that’s ready) … so they know that if they make their multi-billion dollar capital investment, they’ll be able to start operations sooner and not have to wait.”
The COVID-19 pandemic brought an unprecedented rush of federal funding to the state, a portion of which the state earmarked for regional economic development cooperation.
This $500 million Regional Economic Acceleration and Development Initiative (READI) fund proved popular with institutions across the state, with IEDC processing $1.5 billion in requests across 800 projects.
Regional awardees such as the South Central Indiana Talent Region are providing funding to improve the quality of life in the community — such as a $6 million grant to redevelop a mostly vacant 400,000-square-foot mall into a health, wellness, Sports and fitness facility.
But the distribution of funds is slow, largely due to reimbursement requests from the federal government. Holcomb proposed setting up a second fund with all state dollars, citing rejected entries from the previous round.
Rosenberg said the first round of funding will be spread over the next few years as projects develop. To date, $460 million of the $500 million has been committed to specific projects by the IEDC.
“That $460 million … has mobilized approximately $7 billion of investment across all 17 regions; a tremendous return on government investment,” Rosenberg said. “Making this investment now will be critical as we compete for the workforce and talent of the future.”
Quality of life and workforce development were major concerns for the Indiana Chamber of Commerce, which found that the lack of child care and the small number of Hoosiers with college degrees were hurting businesses. Rosenberg said more strategic partnerships with local educational institutions could address those concerns.
As examples, Rosenberg highlighted the LEAP Innovation District’s partnership with Purdue University or Ivy Tech Community College’s Kokomo campus, which are working to train employees for Stellantis and Samsung lithium-ion battery plants.
“Not only have you seen businesses and residents flocking from states like Illinois, you’ve seen an incredible movement from the coasts to the Midwest and mid-Atlantic states,” Rosenberg said. “Because businesses and residents are choosing to live where there is stability and where you can actually afford a house with a lawn.”