By DANIEL SUDDEATH
A bill designed to curb incentives offered by Indiana urban enterprise zones and reign-in other tax credits has passed through the State Senate.
The amended version, Senate Bill 236 authored by Republican Sen. Brandt Hershman, would freeze the loan interest and investment cost credits offered by UEZ associations for two years.
The original bill called for the credits to be permanently removed from the state tax code. The measure also calls for the suspension of other tax abatements offered to individuals and organizations such as the neighborhood assistance credit.
After passing 29-21 in the Senate, the bill now moves to the House.
Sen. Connie Sipes, a Democrat from New Albany, voted against the measure.
Even with the approved amendment, the bill would crush enterprise zones if passed maintained Michael Ladd, executive director of the New Albany Urban Enterprise Zone Association.
“Once you lose something like this, in the years that I’ve been around the legislature, I’ve never seen them come back,” he said. “For all intensive purposes, what you’ve done is end that program for all time.”
Of the $98,100 in tax collections the New Albany zone received last year, $75,000 were from the loan interest credit, or about 77 percent of the tax base.
Ladd pointed to surrounding states such as Kentucky, Illinois and Michigan that have bills pending in their statehouses to amplify tax incentives and credits as opposed to limiting what they already offer.
Loosing the zone credits puts border communities such as New Albany and Jeffersonville at a disadvantage when it comes to attracting businesses, Ladd said.
“If we’re cutting these incentives back and you’re 10 miles away from moving across the border to one of these states, what’s to stop you,” he asked.
But more is at stake than UEZ credits, said Rep. Ed Clere, R-New Albany.
The neighborhood assistance credit — as administered through the state’s Neighborhood Assistance Program — was instrumental in the rehabilitation of the Cardinal Ritter House in New Albany, Clere said.
Other organizations have been awarded the credit in Floyd County including Guerin Inc., which operates senior housing centers in Georgetown.
Clere said he understands the need to be wary of state finances, but added the tax credits threatened by the bill spawn development and foster revitalization.
“Individually, each of these programs is a drop in the bucket compared to the state budget,” Clere said.
“Even taken together, there’s a real question as to whether the potential savings would justify the suspension of these various tax credit programs, arguably all of which benefit individuals, communities and neighborhoods.”
The fiscal impact statement attached to the bill showed the enterprise zone loan interest credit cost the state about $2.4 million in corporate tax credits in 2007.
Clere said that kind of reduction won’t make or break the state’s budget, but eliminating the credit could prove harmful to cities and counties.
Other programs at risk of being frozen by the bill include the maternity home, community revitalization enhancement district and small employer qualified wellness program tax credits.
Clere said he’s not aware of the bill being scheduled for a House hearing. With a close vote in the Senate, he added support for the measure was not overwhelming.
“It may be premature to be too concerned about it,” he said.
But Clere vowed to keep a close eye on the legislation as it comes to House committees.
“I appreciate what Sen. Hershman appears to be trying to do, which is to find additional savings for the state,” he said. “But I think in this case we will find that the harm of losing these programs would far outweigh the potential savings.”
ON THE CHOPPING BLOCK
Some of the credits threatened by the bill include:
• Teacher summer employment compensation credit
• Enterprise zone loan interest and investment cost credits
• Maternity home credit
• Credit for offering health benefit plans
• Neighborhood assistance credit
