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Indiana Legislative Update – Spy Balloons, Biden’s State of the Union and Indiana Statehouse Updates

In a 1966 speech, John Kennedy said, “There is a Chinese curse which says, ‘May we live in interesting times.’ Like it or not, we live in interesting times.” This week Americans tuned in to learn more about an “errant” balloon that passed overhead for eight days. While the Chinese condemned the U.S. for destroying what it said was a mere weather balloon, the U.S. intelligence community reported the balloon included multiple antennas capable of collecting signals intelligence and part of a broader Chinese military surveillance operation. For many Americans, it brought the China problem up close and personal for the first time.

President Joe Biden delivered his State of the Union address Tuesday night, telling Republicans that he wants to work together instead of “fighting for the sake of fighting.” Healthcare and the economy were the focus of the speech that hit on themes of bipartisanship, economic reform, inequality and his views of the middle class, “So many of you feel like you’ve just been forgotten,” he said, directly appealing to his base, “Amid the economic upheaval of the past four decades, too many people have been left behind or treated like they’re invisible. Maybe that’s you, watching at home. You wonder whether a path even exists anymore for you and your children to get ahead without moving away. I get that,” he said. For the third time, the President reminded all Americans that the state of our union is strong.

Closer to home, Rep Doug Miller (R-Elkhart) began remarks introducing HB1005 saying “I’m very excited to address housing in the State of Indiana.” The bill establishes “a residential housing infrastructure assistance program that is a direct outgrowth of the housing task force,” said Miller. Funding will be available to every single municipality in the state, with 70% of funding for local units with populations of 50,000 or less. The bill defines residential housing as single and multi-family housing and includes guardrails to ensure all of the monies go to infrastructure such as water distribution and treatment, roads, bridges, etc. and not architect and engineering fees. The bill passed the House 91-6 and proceeds to the Senate for further consideration. 

Sen Scott Baldwin’s (R-Noblesville) SB2 addresses the taxation of pass through entities, such as LLC’s and SCorps. The bill, which promises to “make a more level playing field” between large and small business entities, joins 29 other states in reducing taxes and penalties for small businesses. SB2 authorizes certain pass through entities to pay tax at the entity level based on each owner’s aggregate share of adjusted gross income and provides a refundable tax credit equal to the amount of tax paid by the electing entity with regard to the owner’s share. The bill passed out of the Senate 48-0 and was referred to the House where it has already been scheduled in Ways and Means for a hearing on Monday. 

SB5 establishes consumer protection for data effective January 1, 2026. Sen Shelli Yoder (D-Bloomington) weighed in on the bill, “Currently, we don’t have any protections in the State of Indiana. This is boilerplate language that is moving state-to-state. I appreciate Sen Brown saying she will keep an eye on this, but what has me concerned is this language seems business-friendly, and is not as consumer-friendly as Hoosiers deserve.” Bill author Sen Liz Brown (R-Ft Wayne) replied, “Obviously, this is a first start. If you vote against this, you are voting against any protection at all for Hoosiers.” The bill passed 49-0 and moves to the House.

Your updated bill report is attached; bills are listed numerically according to their High, Medium, and Low Priority rankings. Note that some bills we might be interested in might be rated “Low” because we have good reason to believe it will not move through the process; this keeps those we are watching more carefully at the front of the list. If you believe we should change a ranking for any bill or, as always, if there are other additions or deletions you want made to your report, please let us know. Here are updates on action this week followed by a list of committee hearings or other upcoming events/deadlines that are on our radar. 

  • The House Ways & Means Committee spent Thursday afternoon hearing several hours of testimony from speakers representing every organization you can think of from across Indiana re: their thoughts on the Governor’s proposed budget, HB1001. E-REP lobbyist, Patrick Bennett spoke to the committee emphasizing our priorities for state investments, such as READI 2.0, public health, education at all age levels, and other infrastructure needs. Committee members will take in all that they heard when they unveil their proposed budget as an amendment to HB1001 next Wednesday. 
  • The House Ways & Means Committee passed HB1160 unanimously (24-0) after making some significant changes that removed the TANF language previously in the bill (advocates are OK with that because SB265 addresses this and has passed the Senate). The updated bill is primarily an “incumbent worker training” bill and now goes to the full House for consideration.
  • An effort to assist reduce poverty in working families, HB1290 would increase the state’s Earned Income Tax Credit (EITC) from 10% of their federal credit to 12% and would “recouple” the IN code with the federal code currently in effect. The bill passed the full House 97-0 and moves to the Senate for consideration.
  • Rep Beau Baird (R-Greencastle) presented HB1599, the tourism improvement district bill that comes in response to “constant requests for increases in innkeeper tax rates”.  The bill, said to “lift all boats with rising tide and effort” is deemed better than an innkeeper or food and beverage tax for communities, and allows for an individual to circulate a petition to create a tourism improvement district within a county, city, or town and if the petition is signed by at least 50% of the businesses within the district, the legislative body may adopt an ordinance to charge a special assessment to fund improvements and other district activities within the district.  How the assessments will be determined is still unknown.  Properties that receive homestead exemptions are excluded from the assessments.  The bill allows for the district to issue bonds and requires the legislative body to contract with a non-profit to administer the district’s activities and improvements.  With the understanding of future amendments, the bill passed out of Local Government Committee 9-1 and was recommitted to Ways and Means.
  • Sen Liz Brown (R-Ft Wayne) presented SB20, a bill to allow designated outdoor refreshment areas with the approval of the alcohol and tobacco commission, “Third times’ a charm, this bill does no harm.  Please vote for my bill.” The bill passed in the Senate 39-10 and is very similar to HB1349 that has already passed the House. 
  • In SB155 The Department of Environmental Management (IDEM) seeks to amend Indiana Code to allow the Environmental Pollution Control Board (Board) to have the authority to amend air permitting fees “on a time frame and in an amount” the Board determines necessary to maintain the Title V Air Permitting Program. The program must be funded entirely by fees collected from permit holders and includes a base permit cost plus a charge based on emissions. As emissions decrease over time, funding for the program subsides. This, in addition to natural cost increases, puts pressure on IDEM to seek more funding from permittees. In 2019, the Legislature amended the permit fee statute  to allow for increases with limits (once in five years/no more than 10%). Since, 2019 the Board has conducted a rulemaking to increase water permit fees and solid waste fees. Air fees need to be increased to maintain the solvency of the program. The Senate Enviro Committee will hear the bill again this Monday where we anticipate the bill will be amended to allow the base fee increase, but keep the “once in five years/no more than 10%” limit in place. 
  • Sen Kyle Walker’s (R-Indianapolis) SB186 establishes a state tax credit for employers to provide child care for their employees. The bill hopes to address the problems of limited capacity in childcare across the state and improve workforce participation. EREP was represented with several other Chambers from across the state in encouraging passage of the bill as a way to provide quality care/education for young children while also getting more adults into the workforce. The measure received some pushback from Appropriations committee members asking why the tax credits should not be instead extended to employees.  In spite of stakeholders calling the bill a “win-win” with “immediate workforce benefits” the bill was held this week for further consideration.
  • SB347 would allow for the Unemployment Insurance program to be used to supplement worker pay if an employer needs to reduce the workforce during a downturn in the economy or business cycle. The program is an opt-in for employers, they do not have to participate. For example, if a company has to cut hourly production by 25%, all employees would continue to work/be employed, but for only 75% of the time and compensation; the remaining 25% would be paid from IU benefits. The Senate Pensions and Labor Committee amended the bill on Wednesday to clarify that benefits would continue for the employees before passing the bill 8-1 and sending it to Appropriations Committee for further consideration. 
  • HB1106 would create an IEDC-controlled tax credit of no more than $1.5M per project (25% of the project total) to encourage new employers to locate on previously-mined land. This could be a significant benefit to several rural counties esp. in SW Indiana as a way to reduce the costs on land often considered too risky or costly to develop. After amending the bill to add the $1.5M project cap, the Ways & Means Committee passed the bill unanimously (21-0) on Wednesday afternoon.  
  • HB1179 streamlines professional licensing and attempts to apply components passed in a bill last year to occupations and professions outside of healthcare. In Committee this week, Rep Ed Clere (R-New Albany) successfully removed music therapy and art therapy language “to keep the bill moving” with hopes a senate bill “will include that language”.  Landscape architect language was added to the bill.  The bill passed out of House Govt Committee 9-2.
  • Committee members voiced concerns about HB1345, a bill that establishes a “regulatory sandbox” program within the IEDC to allow new Indiana business startups to enter the market free of “regulatory burden” but under the watchful eye of regulators.  “We are at record lows in terms of startups.  It is a mission of mine to address that,” said Rep Jake Teshka (R-South Bend).  “Indiana is the best place to start a business and grow a business,” said serial entrepreneur Rep Joanna King (R-Middlebury), “This bill speaks to a great framework for the brightest and best minds in Indiana to flourish and bring their ideas to the market. It will help spur innovation and bring people to our state to create jobs for Hoosiers.” The bill passed out of House Govt 9-4.
  • Rep Alan Morrison (R-Brazil) presented amendments to HB1428, a bill regarding political affiliation of school board members. He emphasized “respect for local control” creating 3 options: a school board can do nothing, the board can adopt a resolution to be partisan, or citizens of the community can petition for a public ballot referendum with 500 signatures or 5% of the registered voters residing within the school corporation to force school board members to identify their party affiliation. Another amendment prohibits employees or agents of a school corporation from serving on school boards. “Why did I bring this bill,” said bill author, Rep J.D. Prescott (R-Union City),  “Transparency.  Why not give people who want to be involved more information, especially since Covid.  Covid changed the world.”  The bill passed House Elections Committee 6-4.
  • HB1451 will increase the amount of earnings an individual can keep while on unemployment from $78 to $100. It removes some deductions for holiday pay and pensions and includes a few other cleanup provisions. The bill passed House Employment and Labor Committee 12-0 on Thursday for consideration by the full House.
  • As an attempt to provide property tax relief as assessed values rise, SB46 allows a county council to create a property tax credit for some or all of the county designated as an area where residential property owners could qualify for capping any property tax increases to 2%. The bill is seen as a particular help to older/historic neighborhoods and passed the Senate 49-0 on Monday. 
  • SB167 addresses Indiana’s poor participation rate in FAFSA filing, which has resulted in more than $65M in Pell grant money being “left on the table” because students didn’t apply. FAFSA filing, considered the gateway to state, federal and most institutional aid, is deemed “too cumbersome” by some parents, and is currently down below pre-covid numbers.  Bill author, Sen Jean Leising (R-Oldenburg) voiced confusion at pushback from principals who opposed the “burden” of school counselors assisting students with FAFSA filings.  She mused, “I’m against mandates, but it appears we have to have mandates for people to do this.”  One solution explored was including FAFSA filing in the new state financial literacy course.  Indiana has a school counselor to student ratio of 694-1, the worst in the nation.  The bill was held for further consideration at a future meeting, which is common practice for the Senate Education Committee.
  • Tank owners seek to expand the Excess Liability Trust Fund (ELTF) statute to cover tanks that are above ground in SB246. Success with underground tanks over the years has led to large balances in the fund. Above ground tanks are seen as a next logical step. The bill was amended and voted out of Committee on February 6. Language from SB389 was added making SB 246 the likely home for ELTF and remediation issues this session.
  • A diverse and bipartisan group of speakers encouraged a Senate Committee to join 16 other states in granting driving privilege cards to Indiana residents who “cannot provide proof of identity and lawful status in the US.” SB248 would also require them to carry auto insurance, which the Insurance Institute has shown reduced uninsured motorists by 3-5% in other states that have enacted this. Goshen Mayor Stutsman (D) spoke on behalf of nearly 50 IN Mayors who had signed a letter of support for the bill. Others supporting the bill included multiple ethnic advocacy groups, law enforcement officials, the IN Farm Bureau, the IN Catholic Conference, the IN Chamber, and a host of others – all believing the measure will allow more people to participate in the workforce and their community and do daily tasks like grocery shopping and attending church while also delivering benefits to other drivers. Ultimately, the bill passed the Committee 5-4 and will have to stop at Appropriations before it goes to the full Senate – it will have a difficult road in both places. 
  • SB298 amends the statute governing infrastructure improvement charges for water and wastewater utilities. Rarely seen in legislative battles, the utilities, rate payers and Citizens Action Coalition all support this measure. After a small technical amendment the bill was voted out of committee 10 – 0.
  • The Senate Tax & Fiscal Committee considered SB339 on Tuesday. The bill would create a tax credit for “501c3 organizations that use volunteers to build, renovate, and develop homeownership units” (mainly Habitat for Humanity). Homebuilders and Realtors Associations joined Habitat leaders in supporting the recommendation from the 2022 Legislative Housing Task Force as a way to increase housing supplies. The Committee held the bill for consideration at a future meeting, though the feedback from Senators was incredibly positive. 
  • Sen Travis Holdman presented SB344, a bill that establishes the Northeast Indiana Strategic Development fund.  The bill, which prohibits monies in the fund being used for broadband, aims to “increase the per capita income, increase the number of new business startups, incentivize collaboration between K-12, higher ed and industry,” said Holdman, “and is a great model for the whole State of Indiana.”  The bill passed 49-0.
  • Speaking in support of SB375 before the Senate Family & Children’s Services Committee Monday morning, E-REP lobbyist Sally Rideout noted, “While we have long understood the long-term benefits for the children who receive the education, what is becoming more clear each day is the immediate benefits to our workforce and the economy when more families have access to affordable, quality childcare.” While the bill has a long way to go, the introduced version would add 3-year old children to the On My Way PreK program and would increase the income limit to allow more families to receive financial support for the program (current limit is a very low 127% of federal poverty level). The Committee gave the bill unanimous support (7-0) and sent it to the Senate Appropriations Committee for consideration of the fiscal impact.
  • SB390 establishes the commercial solar and wind energy ready communities incentive fund. The bill provides that if a county or municipality receives certification as a commercial solar energy ready community and a project owner develops a commercial solar project in the county or municipality, for a period of 10 years, the IEDC will pay the local govt $1 per megawatt hour of electricity generated by the commercial solar project. The measure, praised by the IMA, AIC, Chamber and multiple renewables companies, received scathing remarks from residents who claimed projects “tore up our roads, polluted our rivers” and complained that siting standards allow for development too close to homes. “Face it. The markets are not buying what you’re trying to sell,” raged one resident. “We are gobbling up massive amounts of farmland with these projects across the Midwest.  I am a farmer.  I make my money from the land.  I love the land. I will protect the land, however I can. If this is so good, why does there have to be an incentive?”  Appropriations Chair Sen Ryan Mishler (R-Mishawaka) closed, “I am receiving texts from committee members and think Sen Messmer needs to work with them before we can move this bill out of committee.” The bill is held.

Important Dates:

  • Monday, February 13
    • Senate Environmental Affairs Committee, 9:00 a.m.
      • SB155 IDEM Matters (Niemeyer)
      • SB320 Environmental Waste Inventory & Grant Program (Zay)
      • SB473 NPDES Limits for Discharges to the Ohio River (Becker)
    • House Ways & Means Committee, 1:30 p.m.
      • HB1085 Tax Incentive Financing (Cherry)
      • HB1266 Volunteer Cyber Civilian Corps (Judy)
      • SB2 Taxation of Pass Through Entities (Baldwin)
  • Tuesday, February 14
    • House Local Government, 8:30 a.m.
      • HB1081 Residential TIF (Heine)
    • Senate Tax & Fiscal Policy, 8:30 a.m.
      • SB3 State & Local Tax Review Commission (Holdman)
      • SB339 Attainable Homeownership Tax Credit (Rogers)
    • House Government & Regulatory Reform Committee, 10:30 am.
      • HB1344 Right to Start Act (Teshka)
  • Tuesday, March 14
  • *Committee hearings only require a 24(ish) hour notice, so this schedule is updated frequently and is therefore not comprehensive of all the activity we anticipate next week.