2016 Primary Illustrates Rapidly Changing State, National Political Landscape

60498552To describe the 2016 primary elections in Indiana as anything less than dramatic and jarring seems an understatement. Two years ago, record low turnout tipped the balance to ideological sub-groups of motivated voters. This year, unprecedented turnout in both parties was the environment.

In the same election where Hoosier voters overwhelmingly chose “anti-establishment” leaders in Donald Trump (R) and Bernie Sanders (D) in their respective party primaries for president, Hoosier Republicans preferred by a 2-1 margin Todd Young over the conservative, Freedom Caucus poster-boy Marlin Stutzman. This seeming contradiction carried down into state legislative races.

A large majority of Hoosiers detest the federal government, distrust both political parties, and want someone or something to lash out at. With Republicans in charge of both houses of the General Assembly by strong quorum-proof majorities, if you’re looking for some political payback in Indiana, the Republicans are the ones calling the shots.

In the 2016 primary elections, only one Democrat incumbent legislator faced a primary election challenger. However, 14 Republican legislators faced primary election challengers. The 2016 primary elections – just like in 2014 – were about the Republicans.

Two years ago, candidates at the primary election faced a likewise frustrated and ideologically-driven electorate feeding tough challenges from the right. In 2014, the very low turnout election resulted in highly-energized subgroups of voters – those angry and motivated to vote against someone – to turnout to vote. This year, huge volumes of new GOP primary voters, motivated by the presidential race and “anti-establishment” anger, washed over races like tsunamis of discontent.

In state legislative races, incumbents and new candidates alike who distinguished themselves in both aggressive personal contact with voters, organized and efficient campaign operations and who positioned themselves solidly to the right or left with their party’s bases were generally successful. There were exceptions, but this continues to be the formula to win in primary elections.

A fundamental, foundational shift appears to be underway in the Hoosier electorate. This is not unique to Indiana, but the state does appear to continue to be on the cutting-edge of political conflict and change. A relatively “conservative” state in terms of culture and political attitudes, Indiana has not been a sleeper state in terms of policy and political conflict.

Back-to-back legislative battles over highly-charged social issues of abortion, LGBT civil rights protections, RFRA, and gay marriage aren’t the only policy battlegrounds. Infrastructure, tax cuts, education reforms, right to work, and more have been a focus.

There hasn’t been much “sleepy Indiana” to be found in policy debates or political activities in the state for some time. The ingredients of conflict in this political soup are a product of significant and often rapid changes in our culture, society, economy and workplaces. Our political system is where these competing priorities and often difficult personal and societal transformations are debated and competed over at the ballot box.

Indiana Business for Responsive Government (IBRG), the non-partisan political action program of the Indiana Chamber of Commerce, was heavily engaged in the primary election cycle to help elect pro-jobs, pro-free enterprise candidates to the Indiana General Assembly. Unlike most other PAC programs, IBRG is not in the business of “picking the winners,” but being there to defend incumbents with strong voting records and to challenge those who do not.

IBRG continued its record of election successes with 18 of 22 endorsed primary election candidates winning.

Four Areas Where Gov. Pence’s State of the State Address Missed the Mark

?????????????????????????????????????????The 2016 session of the Indiana General Assembly may be short in time but, as usual, there is a long list of important issues. In outlining his priorities in the State of the State speech, however, Gov. Mike Pence fell short in four key areas.

First is civil rights expansion. After appropriately listening to Hoosiers since last spring’s public relations crisis, the Governor failed to articulate a clear vision. His words, depending on interpretation, bordered on telling legislators to do nothing at a time when action is needed.

The Indiana Chamber went through a similar lengthy listening process as public policy committees, the executive committee and the full board of directors (all comprised of representatives of member companies) debated the issue. Once a final determination was made, the Chamber communicated the decision that the members had voted to support the expansion of civil rights to protect sexual orientation and gender identity. Although not popular in all circles, similar clarity was needed from the Governor.

In the critical area of infrastructure funding, the Governor advocated against the only long-term solution presented thus far because it included several responsible revenue increases. As an organization that works each day to create and maintain the best possible business climate, the Indiana Chamber does not go looking for tax hikes. But in this case, they are necessary.

Third, on education, the “let’s take a step back on ISTEP” remark goes too far. Indiana already has a new test that measures our new, stronger standards. The test needs rebranded, not revised, and administered correctly to achieve the desired results.

Finally, there was no mention of work share, a common sense program to support employers and employees in an economic downturn. It will be needed at some point and the best time to implement it is now.

The Indiana Chamber has and will continue to communicate with the Governor and his staff our positions on these issues, which we believe are in the best interest of the state’s economy, employers and workers.

RFRA 2.0 and Road Funding

statehouse picElection year dynamics, conservative Republican super majorities and the non-budget nature of the “short” session create the context for all issues facing the Indiana General Assembly in 2016. In economic development, the only issues to see much traction are adding LGBT civil rights protections to the Indiana Code and a short-term fix for the state’s roads and highways with an emphasis on local funding. Other issues will arise, but are unlikely to gain much attention.

Last spring’s rancorous debate over the Religious Freedom Restoration Act (RFRA) damaged Indiana’s brand in the international marketplace for jobs and investment. It led to an economic boycott of Indiana, a viral trashing of our state’s reputation in the international media and a black eye for our state’s political leadership. Moreover, the enduring stigma attached to Indiana as a discriminatory and unwelcoming place, especially among a Millenial generation that represents our future workforce, endangers our prosperity. That is why the Indiana Chamber has made adding protections for the LGBT community in state law a priority for the upcoming session.

New legislation will start in the Senate, where Sen. Travis Holdman (R-Markle) has drafted a bill that attempts to strike a balance between the religious and LGBT communities. The bill, as it stands, will probably not make either of those constituencies happy. The synopsis prohibits discrimination based on sexual orientation or gender identity while also providing protection for religious liberty and conscience. Additionally, it also preempts local civil rights ordinances that conflict with the state civil rights law. Look for an interesting debate as the session progresses.

In the area of transportation infrastructure, the General Assembly likely will take only baby steps to address an acknowledged nearly $1 billion annual funding gap between current revenues and maintenance needs. Legislative leadership seems content to wait until 2017 before pursuing any significant changes to the way Indiana funds its roads, bridges and highways. Nevertheless, armed with the results of a major road funding study by the Indiana Department of Transportation (INDOT) presented over the summer, all legislators will be able to evaluate proposed solutions in 2016 – it is just unlikely that they will move on them, especially any tax or fee increases. (The INDOT study examined existing fuel excise taxes, their future revenue potential and alternative funding mechanisms and revenue streams, such as vehicle miles traveled [VMT] or tolling.)

The legislation to watch is HB 1001, which will contain a number of reforms and potential funding mechanisms based upon the initial data from the INDOT study. The Indiana Chamber collaborated with key legislators in crafting HB 1001, which can be likened to a block of stone delivered to a sculptor’s studio: It will be an array of many options that will be chipped away at during the legislative session, hopefully into something recognizable (and helpful) in the end.

The condition of our infrastructure has already become highly politicized with partisan accusations and dueling proposals from Gov. Pence, House Democrats and the Republican majority caucuses, but nevertheless we expect several issues to be examined in sobering detail: gasoline and diesel fuel excise tax increases; fees for electric or alternative-fuel vehicles; repurposing the 7% sales tax on gasoline for the state’s highway fund; and a discussion of indexing fuel taxes for inflation, among other proposals.

Given the controversial nature of these topics and a near allergic reaction by politicians to tax increases in an election year, we anticipate it will be a very contentious and interesting session.

A Look Back at the Legislative Session: Some Major Accomplishments and a Few Missed Opportunities

statehouse-picMeaningful long-sought accomplishments mixed with a few missed opportunities and one highly unfortunate detour quickly tell the tale of the 2015 legislative session.

The Key Victories
The state’s common construction wage statute has unnecessarily cost taxpayers hundreds of millions of dollars on public construction projects over many decades. With the repeal finally in place, there will be open and fair bidding among all contractors for these projects.

Also gone: The hassle of filing personal property tax returns – or paying to have them filed – for what amounted to a very small tax liability for many small businesses. This will positively impact over half of all businesses in the state – some 150,000 in total. The throwback rule – really an unfair and inappropriate tax – is eliminated, too. It allowed for Indiana to tax whatever portion of your business income that wasn’t already taxed in Indiana or elsewhere.

Other Good Outcomes
We have a balanced two-year budget that puts as much emphasis as the revenue forecast would allow in prioritizing K-12 education, higher education and expanding funding for career and technical education – all Indiana Chamber priorities.

Another focal point of ours is water resources. The General Assembly took heed of our study last summer and passed two important next-step pieces of legislation that center on getting better data on what water resources exist throughout the state.

The Governor’s Regional Cities initiative recognizes and puts an appropriate focus on the important concept of quality of place. It acknowledges that population within our state and elsewhere is shifting from rural and less populated areas to urban and suburban areas. Similarly, we are in an era where young adults are increasingly choosing the place where they want to live and then looking for employment instead of letting the job dictate their location.

We were also satisfied that a reasonable conclusion was reached regarding the property assessments of “big box” retail stores. As it was initially introduced, it would have been devastating for many businesses by putting far too much specificity into law.

Missed Opportunities and One Detour
Conversely, there are a few decisions that stand out as particularly unfortunate that more or anything wasn’t done.

A work share program that would benefit employers and their workers as well as repealing the smoker’s bill of rights for new hires are still facing resistance from key individuals, which is preventing the issues from even getting a committee hearing. Likewise, regulating the practice called lawsuit lending, which translates to prolonged litigation and more costs for employers, continues to be stymied by two legislators.

An issue we hoped was going to be properly addressed was the dysfunction between the state superintendent and the State Board of Education. The best solution and one we have advocated for the last 30 years would be to let the Governor appoint the state superintendent like he does all other agency heads. But we ended up with something not even a middle ground. Instead, Senate Bill 1 is a rather convoluted piece of legislation that does nothing in the immediate term to remedy the situation in the least.

And then there was the passage of the Religious Freedom Restoration Act, the historical fallout and the “fix”. We were pleased by the legislative response to specify that in no way could that statute be used to discriminate against individuals or different groups of Hoosiers. We anticipate there will be efforts by legislators to further strengthen that stance next year.

Chamber Supports Amendment to RFRA Law

Indiana Chamber of Commerce President and CEO Kevin Brinegar reacts to the proposed clarification to the Religious Freedom Restoration Act (RFRA):

“Our state has suffered tremendously the past week. It was absolutely essential to clarify and affirm that Indiana’s RFRA law does not permit discrimination against any person or group of people. The legislative amendment spells out that Indiana will not permit discrimination based on sexual orientation or gender identity. That’s what businesses and individuals from around the state, country and world needed to hear.

“We believe this effort begins to help re-establish Indiana’s identity as a welcoming place and will go a long way toward reversing the tide of negative sentiments that has threatened our state’s economy.

“We encourage the General Assembly to pass this legislation in a bipartisan fashion today to show the nation that Indiana is united in sending the message that our state is a hospitable one which does not discriminate.”​

Chamber Encourages Swift, Meaningful Action on RFRA Law

Indiana Chamber of Commerce President and CEO Kevin Brinegar encourages state legislators to act swiftly and thoughtfully regarding national reaction to the state’s new Religious Freedom Restoration Act (RFRA):

“Since late last week, we have urged state leaders that additional action is required. We communicated that a legislative fix must be significant and make it crystal clear that the law does not in any way open the door for discrimination of any kind toward any individual or group of individuals.

“Unfortunately, Indiana has taken a tremendous hit to our national identity as a welcoming and hospitable state. The business community is concerned about losing contracts and customers for a law that it did not support and did not want to see happen. Hoosier businesses want nothing more than to continue to serve their customers in the state, nationwide and beyond.”

Background: The Indiana Chamber testified in opposition to the RFRA law and believes that it’s unwarranted.

Brinegar: RFRA Law is Unnecessary, but Indiana Remains Open for Business

16891298Indiana Chamber of Commerce President and CEO Kevin Brinegar comments on SB 101, the Religious Freedom Restoration bill, becoming law today and the reaction to that:

“In our eyes, the law is entirely unnecessary. The reactions to it are not unexpected or unpredicted; passing the law was always going to bring the state unwanted attention.

“Yet we are optimistic that the public overall will continue to look to Indiana as a place to come to do business, attend a convention or enjoy a sporting event. Indiana has shown time and time again – whether it’s hosting the Super Bowl or working with companies to bring new jobs to the state – that it’s full of individuals and businesses who are truly welcoming and hospitable.

“Businesses are open for business and want to continue to serve customers in Indiana and throughout the country. That’s the message we are hearing from our members and want to communicate.”