Greater Lafayette Alliance
          for Indiana's Future

May 8, 2002

Alliance calls on state lawmakers to do what's 'right for Indiana'

Local members of the Alliance for Indiana's Future met in nine cities around the state today (Wednesday, 5/8) to send a message to area legislators: The Indiana General Assembly must take action in the upcoming special session to solve the looming problems of property tax reassessment, the state's anticompetitive tax structure and the budget deficit.

"We simply cannot wait any longer to address these pressing issues," said Lafayette Mayor Dave Heath, who convened today's meeting. "Our legislators absolutely must stop fiddling around while the Indiana economy burns to the ground."

The Alliance for Indiana's Future is an unprecedented statewide coalition of business groups, labor, agriculture, public schools, higher education and local government. The alliance has identified five principles that are keys to a strategic vision for the future of Indiana:

1. A broad-based reduction of property taxes so that home ownership remains affordable and farmers can keep their land.

2. A restructuring of business taxes to support economic development for the global economy and the information age of the 21st century.

3. Funding for our K-12 public schools that is sufficient for excellence and that allows schools to accomplish the state's academic standards and school accountability reforms.

4. Funding for a high-quality public higher education system that keeps our colleges and universities accessible and affordable for the state's high school graduates and that supports the interconnection of research with advanced technologies and economic development.

5. Creation of a tax structure that provides the revenues needed to fund the investments required to achieve the alliance's vision for Indiana's future.

"We have come together because we know that our state is at a crisis point," said Dana Smith, president of the Greater Lafayette Chamber of Commerce. "We are asking our local legislators to give us strong, courageous and visionary leadership to resolve this crisis. This is the time for bold strategic decisions. This alliance wants to help our leaders meet the challenges of Indiana's future."

The current climate of uncertainty about the state's tax structure and fiscal condition has caused economic development activities to slow dramatically, said Mike Brooks, president of Greater Lafayette Progress Inc.

"We cannot afford to lose a year of opportunities for creating jobs and economic growth," Brooks said.

He went on to draw attention to the following statistics:

Indiana has lost more than 100,000 jobs in the past two years: the worst performance of any state in the country, and one of only 17 states to lose jobs during that period.

• Indiana's job performance was 50 percent worse than the state ranked just ahead of us: Mississippi.

• Over the past 30 years, Indiana's personal income has fallen out of the top third and into the bottom third of all states – the worst decline of any state in the country.

• On a national survey of "state economic momentum," Indiana ranked dead last in 2001 in economic performance.

• Between 1998 and 2000, Indiana ranked last among Great Lakes states in significant company expansions (defined as a capital investment of more than $1 million that created more than 50 jobs):

Michigan 6,255 projects
Ohio 3,425 projects
Illinois 1,882 projects
Kentucky 759 projects
Indiana 359 projects

"Let's look at what else we know," said West Lafayette Mayor Sonya Margerum. "We know that we have an antiquated tax code that creates serious disincentives to invest in this state. We know that every day we are losing jobs, businesses and opportunities. We know that our neighbors are leaving us in the dust when it comes to attracting new industries and creating good jobs.

"To those who say we need to wait for more information before acting, I ask this simple question: What else could you possibly need to know in order to understand that the state of Indiana is in a crisis that demands immediate action?"

Brooks said, "It is imperative that the governor and our legislative leaders move Indiana to a tax structure that encourages the creation of jobs and investment in machinery, equipment and research. We must eliminate unique taxes, such as the corporate gross income tax and the inventory tax, that are barriers to attracting and retaining new businesses in Indiana."

Smith said, "We must also balance the amount of taxes that businesses pay in Indiana. The business share of state and local taxes here is eighth highest in the country, and 31 percent higher than the U.S. average. With this tax structure, we will continue to miss out on opportunities for expanding or attracting new businesses."

Alliance partners also urged legislators to address the impact of the Indiana Supreme Court's decision regarding property assessments.

The alliance noted that the Supreme Court's mandate for a new property assessment system will shift a substantial tax burden to residential homeowners, in turn threatening the Indiana housing market. Higher property taxes also have an adverse impact on renters, who account for 28.5 percent of all Indiana households. Without property tax relief, owners of rental property will have no choice but to pass the additional cost of taxes on to tenants, who will be faced with the dilemma of paying higher rents or seeking lower-quality housing.

Alan Kemper, president of Tippecanoe County Farm Bureau, said, "Indiana's farming community has also struggled for decades under an unfair tax burden. Alliance members feel the Supreme Court property reassessment mandate can be a catalyst for positive changes in Indiana's property tax system. A lesser reliance on property taxes can help sustain hundreds of farms and dozens of small communities throughout Indiana.

"Off-farm employment is becoming increasingly important for Indiana's farm families. A tax structure that promotes economic growth is critical so Indiana's rural communities can attract and retain good paying jobs.

"However, we also recognize that the farming communities need good public schools and that higher education institutions provide significant agricultural research. Indiana needs a tax system that adequately supports education without forcing family farmers to forfeit their heritage."

Donald Thompson, Uni-Serv director, Indiana State Teachers Association, stressed the importance of the alliance's support for public education.

"We must make a commitment to adequately fund K-12 education and higher education in order to have an educated and productive work force that can compete in a global economy," Thompson said.

In addition, the failure to address the current budget crisis and its impact on education funding will undermine the significant progress that Indiana has made in recent years, Thompson said. Deficit reduction measures have already cost public schools more than $193 million in this budget cycle and will result in permanent funding cuts for summer school classes, remediation programs, full-day kindergarten and other significant programs.

The Indiana State Teacher's Association says, to date, more than 1,500 school employee positions – including 1,000 teaching jobs – have been eliminated for the 2002-03 school year, causing class sizes to expand and curriculum choices to narrow. Benton County, Delphi, Frankfort, Rossville, Lafayette and Tippecanoe County school corporations have announced reductions in teaching positions. Tippecanoe County School Corp., for example, plans to eliminate 21 positions.

Equally devastating are the major cuts in higher education, they said.

"At a time when Indiana's public research universities are already at the bottom of the Big Ten in the amount of funding received from the state, the budget crisis has taken nearly a quarter billion dollars away from Indiana's public universities in this budget cycle," said Purdue President Martin C. Jischke. "We must deal with the state's budget crisis if we are to avoid irreparable damage to these opportunities."

Members of the alliance noted that even though they represent diverse groups with often divergent viewpoints on the issues, they were able to come together and agree on a comprehensive tax restructuring and budget proposal.

"We recognize that we must increase revenues to make the investments in our future," Heath said. "The alliance calls on our local legislators to come together in the same manner, to put statesmanship ahead of partisanship, and to get the job done now to protect Indiana's future."