Unpacking Indiana’s 2024 Legislative Session: What Comes Next for Governments?

Indiana’s 2024 legislative session has concluded, leaving local government officials and community leaders with the task of unpacking the implications of new legislation. While this session did not address the state’s budget, it did bring forth changes impacting economic development, infrastructure, childcare, taxation, and more. Here is an overview of the changes’ impact, potential opportunities, and future considerations for government officials and community leaders.

Economic Development: Fueling Growth in Innovation Districts

The most significant piece of economic development legislation emerging from this legislative session is Senate Bill 256. The legislation expands the Indiana Economic Development Corporation’s (IEDC) ability to designate innovation development districts (IDDs), which are designed to attract advanced industry businesses and support the high-technology economy through reinvestment of certain tax dollars.

The legislation makes two key changes: It removes the sunset date for establishing IDDs, which would have been in 2025, and it allows the IEDC to establish IDDs on top of existing tax increment financing (TIF) allocation areas, subject to budgetary review and consent from relevant authorities.

This means creating a TIF district will no longer prohibit a site from being designated as an IDD. If an allocation area already exists, establishing an IDD on top of the area prohibits the community from extending or renewing the allocation area until the term of the IDD expires. While large-scale “mega sites” – sites over 1,000 acres – are the most likely candidates for IDD designation, any site with significant development could be a potential target for an IDD.

The IEDC may identify potential locations for IDDs, but a collaborative approach is essential in IDD conversations. Key stakeholders, including state and local government officials, utility leaders, and community partners, should work together to holistically address site readiness, community marketing, and incentivization. This proactive communication and approach will be crucial to ensuring IDDs are a win for both the IEDC and local communities.

Communities should be certain they understand the implications of this legislative change and the potential impact on their economic development strategy, including how this affects tax revenue. Communities should have well-defined, future-focused economic development goals outlined prior to any IDD discussions so they can maximize the opportunity and ensure it is a win for their community for years to come.

Infrastructure Investment: Paving the Way for Safer Roads

Senate Bill 256 also included a provision for transportation infrastructure by extending the Funding Indiana’s Roads for a Stronger, Safer Tomorrow (FIRSST) Task Force for one additional year. In doing so, the state underscores its commitment to addressing critical infrastructure needs, which directly impact economic growth. This extension signifies a proactive approach to addressing infrastructure maintenance and development and addressing the road funding formula, which will be up for discussion during the 2025 legislative session.

Communities should work with the FIRSST Task Force to advocate for the needs of their constituents as it relates to transportation needs for their communities. They should also advocate with their state representatives and the task force regarding the road funding formula, knowing it will be discussed – and potentially budgeted for – during the next legislative session.

Childcare Reform: Promoting Accessibility and Quality

Childcare access and affordability have come to the forefront as pressing issues for Indiana’s workforce and potential growth. According to the Economic Policy Institute, Indiana ranks as the 18^th costliest state for childcare, and a worker making minimum wage in Indiana would need to work for 43 weeks to pay for the cost of childcare for one infant.

Because this legislative session was a non-budget year, lawmakers did not focus on funding childcare. Instead, they focused on reducing minimum age requirements for workers, subsidizing childcare costs for childcare workers, and creating a micro-facility pilot program.

By establishing the micro-facility model tailored to small-scale childcare providers, the initiative seeks to address barriers to entry and streamline regulatory compliance. As local communities grapple with childcare shortages, this program offers a promising avenue to expand capacity and support working families.

Communities should be sure their childcare task force is aware of the micro-facility pilot program so they can consider participating in the pilot group. Communities that don’t already have a childcare task force should start to organize one to address both the opportunities and needs from this new legislation as well as upcoming legislation.

Tax Task Force: Charting a Course for Fiscal Reform

Indiana’s State and Local Tax Review Task Force is diligently examining the state’s tax system, with an eye toward proposing comprehensive reforms in the upcoming budget session in 2025. From exploring the feasibility of eliminating individual income tax to evaluating options for reducing business personal property tax, the task force’s deliberations carry profound implications for local fiscal policy. As discussions progress, local officials must actively engage in the dialogue to advocate for solutions that promote economic growth while ensuring fiscal sustainability.

Gaming Legislation: Awaiting Renewed Discussion

While gaming legislation did not materialize in the 2024 session, its absence signifies a temporary pause rather than a conclusion. Gaming legislation is anticipated to resurface in 2025 and will likely influence both gaming operations and the revenue distribution within communities that host gaming facilities. Local officials should closely monitor these developments to capitalize on potential economic opportunities and mitigate associated challenges.

What Lies Ahead

Indiana’s 2024 legislative session leaves local government officials and community leaders with a mixed bag of challenges and opportunities. Embracing innovation, fostering collaboration, and advocating for prudent fiscal policies will be critical to effectively navigating the complexities of these legislative changes and positioning communities for prosperity in the years ahead.

Whether your community needs help developing a robust economic development strategy, analyzing workforce availability, or addressing childcare needs, KSM’s government advisory team can help. Contact us to explore how we can help you achieve your community’s goals.