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Indiana Legislative Update: 2022 Session

Your Indiana Legislature wrapped up their regular law-making session in mid-March and will reconvene later this month for a single day to finalize any technical corrections and deliberate overriding Governor Holcomb’s veto decisions on two bills.

In even-numbered years like 2022, the work is done in a “short session,” because they are not developing a budget – it is the 2nd year of the biennial budget passed the year before. This year, the 150 Legislators introduced 849 bills and ultimately passed 177 of those on to the Governor for his consideration.

Unexpectedly, Legislators entered this 2nd year of the budget with revenues running well ahead of expenses and a lack of agreement about how long that trend would continue and what to do with that excess, if anything – invest in programs, provide tax cuts or refunds, or hold the budget as written taking the surplus into the next budget?

E-REP continued our focus on supporting policies that help the region attract and develop talent. I-69 will be our top public policy priority until construction is complete from Indianapolis and across the Ohio River, but there is very little our state legislature can do on this project at this point, so we focus on other issues in the statehouse. We kept an eye on more than 100 bills that would impact your business and our region, covering taxes, economic development, quality of place, environmental, healthcare, insurance, and so much more. That work continues year-round.

On the last day of Session, legislators passed HB1002 – the “biggest tax cut” in state history assuming continued revenue growth. The bill cuts income taxes from the current 3.23% to 3.15% in 2023; then to 3.1% in 2025 if revenue grows by 2% in 2024; then to 3% in 2027 if revenue grows by 2% in 2026 AND the pre-1996 teacher pension debt is fully paid off; and finally to 2.9% in 2029 if revenue grows by 2% in 2028. Missing any of the 2-year benchmarks will put the rate drop on hold until the next two-year check-in. In addition, HB1002 eliminates the Utility Receipts Tax (URT) effective July 1– this 1.4% tax is paid by every energy consumer as part of their utility payment. The bill also ensures that revenue reserves will be directed to paying down the pre-1996 pension liability.  

E-REP took a neutral stance on the final version of HB1002. Our priority of growing working-age population and reviews of policy that help meet this target, led us to believe the bill did not deserve our full support or our opposition. Evidence that suggests the best way to grow our target population group is through quality of place improvements, strong education systems, and other programs that require investment. Income tax cuts have not demonstrated success as a driver of population growth.

There were several bills drafted to address the COVID pandemic, vaccines, and statewide emergency orders. In the end, HB1001 clarified employer options for requiring vaccines and exemption possibilities. Another bill, HB1211, combined several subjects including blockchain technology and data privacy with some limits on emergency orders from the Governor and agencies. An end-of-session addition to HB1211 impacted broadband projects in READI grants leading the Governor to site this language as his main reason for making this bill one of only two that he vetoed.

The IN Economic Development Council (IEDC) proposed SB361 as a comprehensive update to incentives and opportunities to attract new employers and people to the state. E-REP joined other organizations to refine the proposal and to ensure the final bill would foster good partnerships between local and state leaders. The legislation improves state incentives, establishes the Innovation Development District tool, creates the workforce recruitment and retention fund, and makes a variety of other changes that we’ll be able to utilize to benefit our entire region.

Thank you to all of our SW IN Legislators for their hard work during the Session to understand the intricacies of so many issues and be a voice for our region. Special thanks to State Representatives Ryan Hatfield, Wendy McNamara, and Tim O’Brien joined E-REP members at our April AM Connect event to discuss the session, the issues they focused on, and what they expect over the coming months.

We look forward to continuing to work on issues throughout the year and welcome your input to ensure we know the issues impacting your business and community.