Michael J. Hicks, PhD, is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University. His column appears in Indiana newspapers.
This is election week in Indiana, and the most visible seat is that of the Indianapolis mayor. Most of what transpires in a campaign is of little interest to the author of an economics column, but the discussion about local economic development matters a great deal. Comments by Chuck Brewer and Joe Hogsett offer a window into the broader debate that is now animating Indiana and lots of other places. Let me explain.
In a series of debates, both candidates talked about local economic development efforts, and TV ads for both feature a discussion about development. But this has not been a rehashing of the past. Both candidates have been talking about 21st century economic development policies, not outdated 20th century efforts, and that is a splendid turn of events.
Most visibly, Mr. Hogsett’s TV ads talk about community development, including a clear description of how he would enforce ordinances to fix up neighborhoods. This is exciting stuff that ought to be part of every municipal election conversation, although it is not something that can be done in every city and town in Indiana. Our capital city has been seriously in the business of fixing its downtown for 40 years. That success allows it to focus on some decaying peripheral neighborhoods in ways that most cities cannot yet consider.
Most courageously, Mr. Brewer last week called for the virtual end of property tax abatements in the city. He acknowledges, as does everyone without a financial interest in them, that abatements and other economic development incentives have been dramatically over-deployed. Indiana’s local governments sacrifice almost $1.5 billion per year on development incentives, abatements and other local economic development efforts. That is more than we spend locally on anything but public schools. Serious scrutiny of property tax abatements are just beginning.
Both candidates back some incentives, primarily those involved with quality of place efforts inside the city. Like most Hoosiers, they both understand there are some good uses for local government incentives. But like most Hoosiers, they also apprehend that most local economic development spending is wasted, yielding little or no benefit for taxpayers or communities while depriving schools, cities and towns of much-needed revenue.
This policy shift isn’t confined to our largest city. In many places outside of Indianapolis, a focus on quality of place seems to be taking hold. The state’s Regional Cities Initiative was bold enough that 70 percent of the state’s residents now live in regions with an honest and realistic plan to attract more people to their areas. That alone is a monumental policy achievement, as significant as anything that has been tried by any state in a couple decades.
It is hard to have a conversation about the revolutionary thinking about local economic development without mentioning Kokomo Mayor Greg Goodnight. His experiences and success would fill a textbook on how to execute 21st century economic development.
The debates within the Indianapolis mayoral campaign offer clear and cheerful evidence that Indiana is finally embracing the need to make our communities aspirational places to make a home.