Business was front and center during Gov. Mike Pence’s State of the State address Tuesday. Whether it was calling for eliminating Indiana’s business personal property tax, building roads and putting more Hoosiers to work, or more closely aligning education with the needs of employers, making Indiana competitive and prosperous was the underlying theme for the governor’s remarks.
Pence was proud of the fact — and rightfully so — that Indiana added more than 47,000 private-sector jobs last year, that since 2009 the state has had the fifth-fastest private-sector job growth rate in the country and that the state’s unemployment rate had dropped by 1.3 percent during the past 12 months.
“In November, one out of every eight jobs created in this country was created right here in Indiana,” Pence said.
The numbers are good tidings. They are signs that Indiana is a desirable place for businesses looking to grow.
It’s not all roses, however, and the tricky part for Pence and the state’s other elected officials over the next 12 months is to see whether lofty rhetoric can be matched to cold, hard reality.
Yes, Indiana shines when it comes to adding jobs, but gauged by other measures such as, for example, personal income — the income received by all persons within a given area by all sources — we remain stubbornly below average. In the third quarter of 2013, U.S. personal income grew at a rate of 1.1 percent; Indiana, meanwhile, grew by a rate of 0.7 percent.
So Indiana is adding jobs, but those jobs aren’t doing much to raise Hoosiers’ standards of living relative to other parts of the country. We must do better in that regard.
Cutting the business personal property tax is a good-sounding idea, but the tax on business equipment generates nearly $1 billion annually that goes to local government, schools and other entities. Without that revenue, cities may be forced to raise taxes elsewhere or reduce services. For some, the loss of funding would be devastating.
Supporters of the plan say Indiana needs to end the tax to compete for business against neighboring states that don’t tax business property,
Republicans are talking about giving each county the option to drop the tax or not. But ending the tax would have a sharply different impact from county to county.
If other taxpayers have to make up the income lost from the business property tax, it would be much more painful in DeKalb and Noble counties than in Steuben and LaGrange counties, for example.
If the tax truly is a statewide problem, it seems more logical to provide a statewide solution, with all Hoosiers sharing the burden equally.
Pence has given his State of the State address. There’s reason for optimism. Now let’s see if that optimism can be channeled into productive action.