In the doldrums of a national post-recession economy which, four years on, has yet to produce any job growth, Kokomo is beating the trend.
With manufacturing and agriculture expected to hit all-time highs in the U.S. this year, things are looking up in what Ball State economist Michael Hicks, head of the school’s Center for Business and Economic Research, terms the West Central Indiana region.
At City Hall Thursday to deliver the first of what could become an annual economic outlook briefing, Hicks, admittedly a fan of Kokomo and Kokomo Mayor Greg Goodnight’s economic development strategies, said he expects the area’s economy to roughly double the performance of the state and national economies this year.
“Kokomo gets it. I give these talks in Muncie, and there, it’s a hard sell. They’re spending $1 million a year chasing the kind of economic development you have here,” Hicks said.
In 2014, Hicks said, he expects a 3.9 percent rate of growth in the gross domestic product of the six-county region, which stretches from Tippecanoe County to Howard County, with different counties seeing growth for different reasons.
In Howard County, there’s little doubt manufacturing is driving the engine, while in Clinton County, a booming agricultural sector is receiving an assist from the outward growth of the Indianapolis metropolitan area, now already encroaching on the southern part of that county.
That same growth will probably be on Howard County’s doorstep in another 20 years, Hicks estimated, driven in part by the U.S. 31 corridor.
“A lot of people worry about the bypass hurting downtown, but what a bypass primarily does is it allows people to make income decisions — it allows them to work in other places,” he said.
If a flood of people living in Howard County and using the new bypass to work in Indianapolis, or vice versa, sounds far off, Hicks also tackled the issue of traffic congestion in the larger city, delved into a discussion of the merits of raising the minimum wage, and even touched on the hottest issue facing the Indiana Legislature right now, the call by Gov. Mike Pence to do away with the business personal property tax.
In Howard County, where perhaps a third of all local government revenue comes from personal property tax, it would be impossible to repeal the tax without replacement help.
Hicks said reducing the cost of capital through a personal property tax repeal or reduction would undoubtedly lead to capital investment. But the cost of making the change could very well offset some of the benefits, he added.
“I don’t want to get in trouble with the [Indiana] Chamber of Commerce [one of the biggest proponents of the change] but I would point out that we have a very favorable tax environment here. We may be near to exhausting the gains we can make through fiscal policy,” he said.
The big “if” hanging over the projections of every economist right now, Hicks said, is the Affordable Care Act and what might happen over the next year or two.
“It could go radically one way or another,” Hicks said, with the potential to create a stable rate base, not unlike purchasing auto insurance, or the potential to end up with 30 million Americans losing insurance and being dumped into health exchanges with rates double or triple what they now pay.
If the ACA appears headed for the latter course, “you can expect to see legislation passed so fast it will make your head spin, before the national elections in 2014,” he said.