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Editorials

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Editorials

Openness is Job 1

Koch

The state of Indiana awarded Allen County businesses more than $17 million in tax credits in 2012 alone. Did the investment pay off?

Officials with the Indiana Economic Development Corp., the quasi-public agency established to promote job creation, would argue it has. But a Bedford Republican has filed a bill that would require the state to review and evaluate all state and local tax incentives for their effectiveness. It’s another measure of transparency that can’t help but give taxpayers more confidence in a system that continues to operate with too little.

“I get a lot of questions from constituents who see the incentives being granted,” Rep. Eric Koch told the Indianapolis Star. “We just need to know whether they’re working.”

Koch said his bill would give policymakers and taxpayers data not currently available, including cost-benefit comparison of revenue lost to tax credits and property taxes shifted to other taxpayers when incentives are awarded.

He said the legislation wasn’t intended as criticism of the IEDC and that he worked with the agency in crafting the bill.

Both the IEDC and local economic development agencies, however, enjoy exemptions from public disclosure that justify other checks and balances on spending. The state agency, in particular, has been the subject of complaints that many of its highly touted projects never materialize or don’t create the number of jobs promised. An Indianapolis TV station followed up on job commitments claimed by the IEDC from 2005 to 2009 and found that fewer than 40 percent of the nearly 99,000 new jobs the agency claimed to have supported were actually realized.

A Ball State University study released in October, done at the IEDC’s behest, gave high marks to the agency’s organizational structure but failed to assess its effectiveness in job creation, and the General Assembly last year rejected a proposal to require companies receiving state incentives to submit annual public reports on hiring and investments, although it did approve legislation requiring the state agency to aggregate information on goals, jobs created, expected jobs, recaptured incentives and tax credits claimed each year.

Confidentiality, which economic developers claim is necessary to protect business negotiations, does nothing for taxpayer confidence. When a company is granted tax benefits in exchange for a commitment to create jobs, Hoosiers deserve to know the costs incurred and the return on investment.

Koch’s bill appears to be a good starting point for shining more light on Indiana’s too-hazy job-creation efforts.

If the claims of job-creation effectiveness are on target, it should become apparent with the data he seeks to collect.

If they are not, the data could be used to fine-tune the incentives offered by the IEDC and local agencies to make them more effective.

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