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Editorial

Smart second looks

Bosma
Long

The greatest danger with one-party rule in state government is the loss of vital checks and balances. Fortunately, Indiana’s legislative leaders are applying their own checks on some unbalanced measures, beginning with the state’s troubling 30-year contract to buy synthetic natural gas at what could be an inflated rate.

“Just the fact that the world has changed since this idea came into being requires us to take another look at it and see if it’s viable,” said Senate President Pro Tem David Long, R-Fort Wayne. “Energy prices have dropped substantially, and what looked like it had real potential when the price of gas was so much higher – now you have to bring into question whether it makes sense.”

New methods for extracting natural gas from shale have driven natural gas prices down in recent years. The wholesale price of natural gas has been close to $3.50 per million British thermal units. But the Indiana Finance Authority’s agreement with Leucadia is to charge customers between $6 per million and $7 per million Btu.

Senate Bill 510 addresses concerns with the coal gasification deal, authorized by a 2009 law. Here’s what it would do, along with legislation re-examining other worrisome decisions:

Leucadia National Corp. deal: The proposed bill would require the owner of the Rockport gasification plant to guarantee customers savings based on three-year cycles. A refund would be paid if the plant doesn’t save money for ratepayers.

Under the existing deal, Indiana’s 1.7 million natural gas utility customers – including NIPSCO’s customers – will see a surcharge on their bills to make up 100 percent of the difference whenever the price of the synthetic natural gas exceeds the price of natural gas on the open market. If the price of synthetic gas drops below that of natural gas, utility customers will get a bill credit for 50 percent of the difference.

An Indiana appellate court threw out the state’s 30-year contract with Leucadia in October. The court ruled the contract violated state law in terms of how it treated some industrial gas users. Mark Lubbers, project director for Leucadia’s Indiana subsidiary and a former adviser to Gov. Mitch Daniels, said the proposed bill could derail the project, but opponents say the court ruling gives lawmakers the opportunity to reconsider their 2009 decision.

“There were some revisions to the original program that didn’t receive a lot of attention that collectively, now, when you look back at the program, you wonder if it would have passed that way in the first place,” said House Speaker Brian Bosma, R-Indianapolis.

Online sales tax collection: House Bill 1007 revisits a deal the former governor brokered with Amazon.com to begin collecting state sales tax in 2014. The agreement was prompted by a lawsuit filed by Indianapolis-based shopping mall company Simon Property Group, plus lobbying efforts by brick-and-mortar retailers.

Estimates of tax revenue lost each year range from almost $40 million to nearly $217 million.

The House Ways and Means Committee voted 20-1 last week to send the bill to the full House.

It would require Seattle-based Amazon and other retailers to begin collecting the sales tax in July, six months earlier than planned under the deal made by Daniels. Opponents say it would reflect poorly on the state to renege on the agreement.

Vacant school buildings: Bills filed in both the House and Senate seek to address problems with a law requiring school districts to notify the state of any unused buildings and to allow a public charter school a four-year window to buy or lease an unused school for $1.

The law immediately created problems in Allen County, where an agreement was stalled between Fort Wayne Community Schools and the Fort Wayne-Allen County Airport Authority for the transfer of the former Pleasant Center Elementary School. East Allen County Schools also was stymied in efforts to sell a former elementary school to the Diocese of Fort Wayne-South Bend.

Both versions of the legislation fail to address all the problems with the law, but they do eliminate the burdensome requirement for public schools to maintain vacant buildings – at taxpayer cost – for as long as four years.

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