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For immediate release:
Feb. 16, 2009 INDIANAPOLIS —— Companies that receive huge financial incentives from the state, but fail to live up to their end of the bargain in creating jobs, would be required to repay those taxpayer–funded benefits, thanks to legislation authored by State Rep. Scott Pelath (D–Michigan City) that was approved today in the Indiana House. House Bill (HB) 1338, passed 60–39, would require the Indiana Economic Development Corporation (IEDC) to include incentive paybacks in any loan or grant package offered to a company that is interested in locating operations in our state. Any company applying for an incentive must agree to a contract that provides clearly defined employment goals. "Then, if the company doesn't deliver on promises to create jobs, or it decides to move out of state or out of the country, the state would have a way to get some of those taxpayer dollars back," Pelath said. "We all agree that economic development is an important tool for our state," he continued. "At the same time, there must be some accountability involved as well. Many of these incentive packages provide millions of taxpayer dollars to encourage companies to come to Indiana, yet there is nothing in law to protect those same taxpayers when a company reneges on its deal and decides to move overseas. We should get the money back and give it to folks who will create Hoosier jobs." These "clawback" provisions have become increasingly popular across the country, with 20 states having such protections on the books. The city of Portage in Northwest Indiana recently strengthened its clawback protections to cover a period of time after an incentive expires. "What is driving this movement is the frustration that most feel about offering the moon to big corporations, only to get shortchanged when promised jobs figures do not materialize," Pelath said. "The IEDC is not required to get these benefits back," he noted. "The public should know that this agency is doing something to recoup any bad investments, and my legislation would provide another layer of transparency and accountability to the people of Indiana." Pelath's plan would require the IEDC to provide an annual report on the effectiveness of incentives offered by the state, as well as efforts to get incentives paid back. Incentive recipients would be required to provide documentation of compliance with employment goals. Companies would be banned from receiving new state tax incentives until they pay back outstanding tax dollars for failure to comply with a previous incentive contract. "A few argue that this bill places a barrier in front of future economic growth in our state, but I believe the opposite is true," Pelath said. "We will make it clear that we will strongly support companies that act aboveboard and live up to their end of the deal. We should focus all of our help on companies that will stick with us. "At a time when more than 266,000 Hoosiers are out of work, and millions of dollars in taxpayer money are involved, we have to focus our resources on Indiana jobs and Indiana businesses," he concluded. HB 1338 now moves to the Indiana Senate for consideration.
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