INDIANAPOLIS - The state of Indiana's lead economic development agency has given companies $165 million in state-paid incentives, but only a sliver has been spent in Southwestern Indiana, according to an analysis by the Evansville Courier & Press.
The Indiana Economic Development Corp. replaced the former Department of Commerce as an economic development agency soon after Gov. Mitch Daniels took office in January. Daniels said the change will help the state focus more on luring new businesses to Indiana and helping promote expansion among existing companies.
This year, the state agency doled out $165 million in state aid, but only $7.2 million, or 4 percent, has been promised to companies in the Southwestern Indiana region.
The newspaper's analysis also shows incentive packages vary significantly in their cost to taxpayers.
For example, the state spent $519,000 to help Hurst Manufacturing in Gibson County expand its auto parts manufacturing plant. The deal will bring 82 jobs, costing the state $6,329 for every new worker. That is below the $12,000 average that the state spends for luring a new job. The highest offer, however, cost almost $114,000 per new job, or $6.5 million for the 57 new jobs created by a new ethanol plant in Linden, Ind.
Michael Maurer, president of the development corporation, said variations among state incentive packages are expected.
"It doesn't need to be consistent because economic development is an art," Maurer said. "It's not a science, it's an art. It shouldn't be consistent and doesn't need to be consistent."
The development corporation has funded 116 projects so far, including seven in the local region. The state-funded aid can come in many forms, but it is usually tax write-offs against future capital costs or business income. There are also some direct grants for training or infrastructure upgrades.
When the spending is analyzed on a per capita basis - using the number of people living in each region - northwest and Southwestern Indiana fare the worst. The statewide, per capita spending average on economic development projects is $26.45. In Southwestern Indiana, it's $12.21. Maurer said the state agency must respond to all companies interested in locating in Indiana, regardless of what region they are interested in.
"We can obviously not refuse to work on a deal that comes through the door just because we've done deals in that area before," Maurer said. "On the other hand, it's imperative that we bring every county along and that we try to make deals on a fair geographical distribution."
Maurer said many deals for Southwestern Indiana are in the pipeline, and he's encouraging more participation among all regions. However, the agency gets fewer requests for aid from this region, and the area's rural nature is sometimes a challenge.
"What we've learned is that in order to convince companies to relocate, their CEOs have to ... want to live here," Maurer said. "And if you live in an urban area, you want to move to an urban area."
Jim Holderread of Vision-e, the Evansville regional economic development corporation, said his interactions with the Indiana Economic Development Corp. have been very positive.
"I think it's a matter of where the prospects are looking and, unfortunately for us, more of them are looking in the central part of the state," Holderread said.
Greg Wathen with the Perry County Development Corp. said he's worked well with the state's regional director. But none of Perry County's development projects n which total $43 million in investments n have received state incentive packages.
Wathen said timing of the business' decision can also mean no state aid. For example, he said, ATTC Manufacturing Inc. was considering a $35 million expansion of its auto parts plant. It was in negotiations with state and local development officials and had a deal for local aid, Wathen said. Before the state deal was finalized, though, ATTC Manufacturing announced the expansion so it could meet a deadline. "Because it was already announced, (the IEDC) looked at it as a subsidy rather than an incentive to attract investment," Wathen said. Maurer said the state shouldn't give money in such cases. "Our mission is to give away as little as possible in order to still get the deal done," Maurer said. "In general, if you're dealing with a company, and they've said they're definitely going to come to Indiana, why would I give them any money?"
In Warrick County, Alcoa Power Generation received $520,000 towards the revamp of the power plant. That project, according to state records, will cost Alcoa $332 million. The state contribution equals 0.16 percent of the overall costs n the lowest percentage of all incentive packages this year. The revamp is expected to create 29 new jobs.
Alcoa spokeswoman Sally Rideout Lambert said the IEDC worked well with Alcoa. It was pleased with the incentive, but she acknowledged that the state's development tools lean more towards recruitment.
"The state as a whole is very tied to trying to bring new jobs and employers in and perhaps doesn't pay as much attention to the existing companies," she said.