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Indiana Legislative Update – Governor Signs the First Bill of 2023

Indiana lawmakers expedited passage of SB2, making it the first bill of the 2023 legislative session to receive the Governor’s signature. Currently under federal law, businesses who pay income tax as corporations are entitled to deduct state tax payments from their federal tax liability, but entities such as LLC’s and S- corporations, have been capped at $10,000. Under the new law, pass-through entities may fully deduct their state tax payments from their federal returns.  Proponents of the bill suggest SB2 encourages entrepreneurship in Indiana by providing tax relief to small business owners with no impact on state finances, but a big impact on Hoosier businesses. 

The first half of the 2023 legislative session soon comes to a close. On Monday, Feb. 27, the House will face its third reading deadline, followed by the Senate’s deadline on Tuesday. Bills that don’t get a final passing vote in the house of origin by these days will be considered dead for the session. This week, bills had to clear committee – many bills did not clear that hurdle, so your bill report is much shorter after we have weeded out all those bills no longer under consideration. 

“It was a long week, but a good week,” said Speaker Todd Huston (R-Fishers) during his weekly wrap with media, “We finished this on the right note, passing HB1001 and getting it over to the Senate – investing in needed things like education, public health, infrastructure and also returning money back to the taxpayers.” The budget includes record investment in education, but detractors note that much of that increase is going to school vouchers which are expanded to be used by families earning as much as 400% of the federal poverty level. The bill also invests heavily in communities with READI 2.0 and more economic development resources and increases the pay for many state employees to be competitive with private employers. 

Speaker Huston was peppered by questions from reporters after an unexpected amendment to HB1001 offered by freshman Rep Lorissa Sweet (R-Wabash) to defund the famed Indiana University Kinsey Institute passed 53-34 on Thursday. Sweet claimed some of Kinsey’s research was child exploitation, “By limiting the funding to Kinsey Institute through Indiana University’s tax dollars, we can be assured that we are not funding ongoing research committed by criminals.” The Speaker kept to his talking points when asked, “Do you think IU is shielding sexual predators,” expressing his disappointment in the amendment and pivoting to focus on bipartisan support for Rep Chuck Goodrich’s (R-Noblesville) HB1002, an “incredibly important bill that gives more kids, more opportunity to get involved in the workforce and take classes meaningful to their long term experiences.  

The importance of mental health funding in SB1 and 4 came into focus this week as a man perched himself on a statehouse pillar for several hours in a standoff with police before ultimately being arrested.  Lawmakers look to bolster support for struggling Hoosiers and roll out a 9-8-8 crisis hotline statewide to address the crisis of mental health in our state.  

One bill of unusual interest this session is HB1143, a bill that author Rep J.D. Prescott (R-Union City) hoped to use as an interesting history lesson. The bill would have designated “The Hoosier State” as the official nickname of the State of Indiana, memorializing the legacy of Harry Hoosier, who according to Prescott’s bill, was born into slavery in 1750, freed in 1770 before becoming a Methodist minister, and traveled extensively with Francis Asbury preaching across the Mid-Atlantic and Appalachian frontier.  In the end, historians and committee members were left with unanswered questions unable to support the bill’s passage. Harry Hoosier may not be memorialized as our namesake, but I for one will not never forget his story. 

As mentioned earlier, we’ll celebrate deadline days next week with legislators taking their “mid Session break) with a shorter week. All bills that successfully made passage in their respective chambers will move across the hall and we begin this exciting process all over again with Committee hearings kicking off the week of March 6th.  

Attached please find your updated bill report; bills are listed numerically within High, Medium and Low Priority rankings.  As always we welcome your input on these matters.  There are no committee meetings scheduled yet for after the break, so our only event reminder is to register for the 2023 E-REP Day at the Statehouse scheduled for Tuesday, March 14th

  • HB1002 is an opportunity to rethink high school,” began Rep Goodrich (R-Noblesville).  The ambitious bill, thought to be “transformational for those who have suffered in generational poverty,” through five tactics, including the establishment of Career Scholarship Accounts (CSA) that can help pay for applied learning and a new program to integrate modern youth apprenticeships. These programs will culminate with approved credentials (welding, EMT, etc.) through work at an employer 1-2 days each week and the balance of time in traditional instruction. Some concerns have been voiced about the timeline for educators to implement the program, which requires students to sign up by October 1, 2023 and Rep. Ed Delaney (D-Indianapolis) called it “an unguided missile that hits multiple targets” while only impacting approximately 20 students per county. Rep Jack Jordan (R-Bremen) lent his support to the bill, “We have competent professionals in the school who can launch this with enthusiasm and vigor.” Goodrich closed, “We need to do as much for our kids as we can now.  There is no time to wait.”  The bill passed 70-25 and moved to the Senate for consideration.
  • Rep Craig Snow (R-Winona Lake) was plain-spoken with his fellow members of the Ways and Means Committee about HB1003 as a “work in progress.” The bill provides a credit against state tax liability for employers with less than 50 employees and have a health reimbursement arrangement in lieu of a traditional employer provided health insurance plan. It further provides that a health care provider that enters into a value-based health care reimbursement agreement and an electronic medical record access agreement with a health plan may qualify for participation in a program to reduce or eliminate prior authorization requirements. The bill passed out of Ways and Means 19-3 and was not amended on 2nd reading on the House floor. It will be considered for a final House vote on Monday.
  • HB1004 is another attempt to address “the issue of some Indiana hospitals charging 300 and 400% of medicare for services,” said Rep Donna Schaibley (R-Carmel). Indiana hospital prices rank 7th highest in the nation as of 2020, according to a Rand Corporation study. When only looking at facility charges, Indiana ranks 4th highest, charging 330% of Medicare rates. The bill, which shares some language with HB1003 and creates a healthcare cost oversight board, staffed by FSSA and reportable to the Governor. In an effort to encourage more independent family practice physician offices, the bill provides physicians a $20K credit against state tax liability for 3 years, with a clawback option should the practice sell within 5 years. The bill imposes a penalty of 1% of commercial net patient revenue to hospitals charging over the national average with exemptions for county hospitals, critical access hospitals and independent hospitals. HB1004 passed out of Ways & Means 15-7, was not amended on 2nd Reading in the House and waits a final House vote on Monday.
  • SB4 is a comprehensive plan to address the health of 6.8M Hoosiers,” began Sen Ed Charbonneau (R-Valparaiso) giving an impressive and impassioned plea to his fellow Senators to vote for the bill. “Healthcare costs are either the first or second leading expense for employers at this time. We are chasing our tail by focusing on treating sick people SB4 is a paradigm shift from treating sick people to treating people before they get sick…We live in a state where a significant impact on how long you live is where you live. A state where significant areas don’t have access to trauma care within 45 minutes. A state where life expectancy is 2 years below the national average and trending down. A state where in 36 counties a mother does not have access to inpatient delivery of that child. A state where counties who need help the most can afford it the least. A state where public health funding varies from $1.25 to $83 per Hoosier. A state where every county health dept is funded below the national average. SB4 puts in place the structure to start addressing these issues…It is based on collaboration and cooperation with many entities who have a history of not cooperating. County health dept counties and the state.” The bill passed the Senate 41-7 and moves to the House for consideration. 
  • On Thursday, SB155 The Department of Environmental Management (IDEM) bill seeking to allow increased air permitting fees finally cleared the Senate Appropriations Committee after having passed the Environmental Committee nearly 2 weeks earlier. Appropriations made no further changes to the bill, so it heads to the full Senate allowing the base fee to increase to $6,100 starting in 2024 and to keep the guardrails limiting the frequency and amount of future increases passed in 2019 in place. This was not what IDEM originally asked for in the bill, but seems to be a “compromise” that the agency has reached in working with several industry groups.
  • Several bills are being considered in both the House and the Senate regarding where the state’s public retirement system (INPRS) dollars are invested. HB1008 (from Rep. Ethan Manning, R-Logansport) and SB292 (author Sen Travis Holdman, R-Markle) take slightly different approaches to ensuring the INPRS retirement board will prioritize “return on investment” for its 500,000 members, ensuring the funds are not invested based on environmental or other social issues – the bills are designed to protect coal companies, gun manufacturers, immigration contractors, etc. SB292 is described as “codifying current INPRS Board” investment rules designed to maximize the targeted ROI. It passed the Senate 40-7 on Monday. HB1008 takes a more aggressive tact and generated a fiscal impact report from the Legislative Services Agency estimating a $6.7 billion cost to the state over the next 10 years. The bill was amended in Ways & Means Committee on Tuesday in an attempt to reduce that impact, though not everyone agrees the change will truly fix the issue. HB1008 cleared 2nd reading on the House floor Thursday with Republicans beating back several amendments and the bill will have a final House vote on Monday. 
  • Rep Robert Cherry (R-Greenfield)’s controversial HB1085 targeting TIFs continues to struggle in the House. At the start of the week, the bill was eligible for a final House vote, before the bill was “moved back to 2nd reading” on Tuesday for further amendment. That is only done when a bill needs a technical correction or if it needs further amending to survive a final vote. The bill was amended again on Wednesday removing some of the problematic language, but EREP joined other economic development organizations and local elected officials in continuing to oppose the bill. It is eligible for a final 3rd reading vote on Monday; if it’s not called for a vote or if it is called and fails, it is dead for the session.
  • Rep Chris Judy’s (R-Ft Wayne) HB1266 was amended this week to take the bill from creating a civilian cyber corps to only create an advisory board to make recommendations before the 2024 legislative session for ultimately establishing a corps. The bill passed 94-0 and moves to the Senate.
  • HB1451 is a Department of Workforce Development bill that cleans up several provisions, including an increase in the amount of earnings an individual can keep while on unemployment from $78 to $100 and removing some deductions for holiday pay and pensions. The bill passed the House 89-0 on Tuesday and goes to the Senate. 
  • HB1499 prepares us for the storm that’s coming,” warned Rep Jeff Thompson (R-Lizton), “We have the data. There is an 18% increase in homeowner property taxes. This bill attempts to mitigate that,” said Thompson. Anticipating a rash of property tax appeals, HB1499 uses several tactics to provide relief from higher property taxes over the next few years, including the incorporation of Rep Ben Smaltz’s (R-Auburn) HB1412 re: property tax assessment appeals. Thompson acknowledges the bill is a work in progress and will continue to get tweaked between now and the end of the legislative session. The bill passed the House 94-1 and moves to the Senate for more changes.
  • HB1591 is one of several “education matters” bills covering a LOT of different K-12 education topics. The bill is important to EREP as it was amended to include language originally introduced in SB307 (now a dead bill in the Senate) that increases the income limits to determine eligibility for On My Way PreK vouchers and makes some other positive changes to the program. programs. The language is “partner language” to some funding improvements in HB1001, the biennial budget bill. HB1591 passed the House 94-0 on Thursday to move to the Senate. 
  • Continuing concerns with reliability brought State Senator Jean Leising to introduce SB9 this session. As traditional coal-fired plants are retired some lawmakers worry about the replacement of base-load generation. SB 9, as introduced, would have required utilities to receive permission from the Indiana Utility Regulatory Commission (IURC). Ratepayer groups and utilities opposed the introduced version leading to an amendment in committee to soften the permission required, which moved many groups to a “neutral” stance. This bill will figure into the end of session scrum.
  • Sen Jean Leising’s (R-Oldenburg) SB167 cleared its final hurdle in the Senate, passing 49-3. The bill aims to improve FAFSA completion in the state, which makes students eligible for Pell grants. The Indiana Commission for Higher Education reports that Hoosier students missed out on $69M in scholarships last year. The decision to attend college is so often financially driven,” said Leising, “We need to encourage these kids to go on to higher ed.” The bill has passed the Senate for the past several years and died in the House; time will tell whether the bill will find more success this year.
  • In order to pass out of the Appropriations Committee, SB390 was watered down significantly. The bill now proposes to establish the commercial solar and wind energy ready communities development center within the IN Economic Development Corporation (IEDC). The center will be charged with establishing standards and developing a plan for incentives for local communities that meet the standards and are certified as “ready” for commercial solar and wind development. With the amendment, the bill passed out of Appropriations 11-2 and will be considered next week by the full Senate. 
  • Specific to the City of Evansville, SB473 could save the city up to $40 million in pollution control costs. Current law requires dischargers to the river contribute no “net” increase in pollutants. At issue here is the removal of mercury already present in the water withdrawn from the river and the amount in the water returned to the river. Sen Vaneta Becker (R–Evansville) incorporated language on 2nd reading to satisfy concerns from IDEM before the bill ultimately passed the Senate 48-0 on Thursday. 
  • Sen Linda Rogers (R-LaGrange) presented SB339 for final reading, “I am very excited to bring you SB339, an outgrowth and recommendation of the Governor’s housing task force.” The bill, which creates a tax credit, “designed to help great organizations like Habitat for Humanity and others who do great work.” The credit for contributions to an affordable housing organization equal to 50% of the amount of the contribution that is not more than $20,000 and credits may be carried forward 5 years. The bill which hopes to make home ownership attainable for everyday Hoosiers, passed 46-0.

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