Monday, July 11, 2011

More Goodies For Companies - More New Bad Laws

Last week I blogged about a new state law that was illuminated by the proposed abatement for Navistar / Pure Power - whereby it is now legal for cities and counties in Indiana to hand out 10 year, 100% property tax abatements at will.  (See "Navistar / Pure Power Abatement Illuminates New Law - New Bad Law")

Today I want to add two other features of HB 1007 that have made it into law - one sort of a good idea, and the other not.

The better idea is now contained in IC 6-1.1-12.1-16.  A property qualifies for a 3 year, 100% abatement, under one of two conditions.  First, if the parcel is located in a designated downtown district, has a vacant building on it that exceeds 50,000 square feet, and the owner is looking to invest at least $10 million into the upgrades.  Second, if a county has experienced for 2 years, an unemployment rate that exceeds state average by 2% for both years, they may apply this abatement anywhere in their county.

Now this law isn't all that bad.  Its intention is clear and measurable, and the abatement is of short duration.  Not withstanding that, it is totally superfluous, given the next section of the Code that allows 10 year, 100% abatements for any property in any county in Indiana.

Now, for more fun, HB 1007 also spawn a new COIT-sharing law.  IC 6-3.5-9  requires approval of any deal by the fiscal body of the city or county.  Here in Marion County, that would be our City-County Council.  A City or County can enter into an agreement to hand over County Option Income Tax and Local Option Income Tax, created by the hiring of new employees who reside in that city or county.  The COIT and LOIT money may be provided to the employer for up to 10 years.  It can be any fraction of the COIT/LOIT increase up to 100%, or a fixed dollar amount.  There are a couple of blah-blah-blah requirements, such as "the hiring incentive is a major factor in the applicant's decision to go forward", where they just wave their hands and it is so.  There is one limitation, the new employment may not be due to jobs being relocated within Indiana.

So, for those who curse paying taxes...  here's what is going to happen.  Just like already happened with regular abatements with standard rules applied by the State, there will be an all out bidding war between cities and counties.  Places like Lawrence and Hendricks County will likely lead the race to see who can give out the biggest and best tax incentives, until it is not competitive for any other city or county in Indiana to refuse to give the store away, too.

Ten years folks.  Ten years - where all of the increased property taxes and all of the increased COIT/LOIT revenues will be turned over to the business on that property.  This is irresponsible.  Any city or county that utilizes these new laws (and all will), does not have any right to cry and moan about constricting tax revenues and tight budgets.  If they make any cutbacks, they should be required by the public to explain how they then could afford this kind of corporate welfare.

The Indiana Legislature did a lot of damage this past session.  A lot of damage.

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