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Officials ponder cutting business tax

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GREENFIELD — Though it could be a new tool to draw businesses to Hancock County, local officials don’t have plans yet to eliminate the tax on equipment for corporations.

County council members and economic development officials are just beginning to sort out what the state Legislature’s decision last week on business taxes could mean for Hancock County.

While the elimination could make the county more attractive for economic growth, elected officials also want to keep revenue flowing into government coffers. Because the Legislature left it up to each county to decide in 2015, local officials are beginning to weigh the options.

Reducing taxes on businesses was a top goal of Gov. Mike Pence and one of the more prominent topics of the second half of the legislative session.

While Pence originally wanted to eliminate the state’s tax on business equipment, local leaders – including several town councils in Hancock County – opposed the measure because the tax provides critical revenues. In the end, the Legislature decided to gradually reduce the corporate income tax and state banking tax to 4.9 percent and then let local governments decide whether to cut the business equipment tax. The bill has yet to be signed into law by the governor.

Now, Hancock County officials are not exactly sure what to do, but one thing is certain: They aren’t going to move quickly to cut the tax.

“There will be an effect as far as economic development, but if you do away with the tax, you have to find a way to replace it somewhere,” said county council President Bill Bolander.

Bolander said if other counties around Hancock eliminate taxes on business equipment, it could force local officials’ hand to follow suit and compete. But so far, Bolander said the county council hasn’t even begun to talk about options, and any decision would be made with the help of the county’s financial consultant and director of economic development.

Skip Kuker, director of the Hancock Economic Development Council, acknowledges giving counties local authority to collect or eliminate the tax will make things interesting, but he doesn’t foresee a significant change in how industrial prospects will view the area as a future home.

“It’s going to be interesting when you look at it county by county,” he said. “Every county can offer something different. I’m accustomed to competing with other states and even other communities. But now, even more so, our competition can be across county lines.”

Still whether or not a company received a free ride on the business personal property tax would be only one aspect of highly “nuanced” negotiations, Kuker said.

“Every negotiation is unique,” he said. “With one project, you might use that tool, but on another project, it might not be as big an issue.”

Essentially, the ability to eliminate the tax is just one more tool Kuker said he now has in his bag of development incentives. It probably won’t have the same impact in Hancock and the other counties surrounding the Indianapolis metro area that it might have in more rural and removed parts of the state, he said.

“We have a lot to offer here,” he said.

Based on his experience, Kuker said he’s not sure there will be a noticeable impact on luring business to the state.

“As an economic development director, I think Indiana is competitive in so many areas in so many ways,” he said. “This has only come up once in my 10-year career.”

Indiana has gotten plenty of looks even with the tax on business personal property, Kuker said, while still acknowledging there could be more interest without it.

“The key to any deal is to make sure the local incentives are the right fit for the community.”

What the elimination of business property taxes could mean for local government is hard to tell. A report released earlier this year by the Legislative Services Agency indicated Hancock County could lose nearly $390,000; the city of Greenfield, $376,000; and Greenfield-Central Schools, $674,000.

Sen. Mike Crider, R-Greenfield, said the impact on local government was his primary concern throughout the session, though he ultimately voted in favor of the package last week.

“The concern is really based around the fact that folks have a really difficult funding situation now, and so we’re using all these other tax mechanisms – TIF districts, CEDITs and EDITS – all different kinds of ways to fund activities and local government,” he said, referring in part to local income taxes.

Overall, changes in taxation is confusing to the general public, and Crider is pleased the bill also created a committee to study local taxes further. The fact that the bill won’t allow for changes to begin to take place until next year also means there’s room in the next legislative session for tweaks, he added.

County councilman Jim Shelby said the council would have to weigh how much revenue local units of government could stand to lose if the tax were eliminated; how much it costs the county to collect the tax; and if the change would bring about economic development. He says the county needs to be competitive, but at the same time protect local revenues.

Still, Shelby, the county’s budget chairman, says it’s too early to tell what might happen.

“I didn’t think (legislation) would pass in any form; I put the probability of it pretty low,” he said. “So we really haven’t put much thought or time into it. Obviously, we will have to now.”


The Associated Press contributed to this report.

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