Energy, Water Supplies: We Better Take Them Seriously

When a lengthy information-gathering/discussion meeting ends with a lot of people nodding their heads and a few "ah-hah" moments, it has generally been a success.

An example is a recent Indiana Vision 2025 task force meeting dealing with energy and water issues. Sounds thrilling, right? But it was most informative and I’m confident the 15 or so business leaders present would agree. (2025, by the way, is the process of the Chamber looking beyond the short term and developing a long-range economic development plan for the state; you’ll hear more as the work continues over the course of the rest of the year).

Expert presenters on nuclear, wind, coal, energy policy and water issues presented a variety of interesting facts and future scenarios. I’ll only scratch the surface here. The task force will use the information and the importance of ensuring adequate, cost-efficent energy and water supplies in helping craft the state’s economic future.

A few numbers:

  • In the U.S, 104 nuclear reactors supply 20% of the nation’s electricity. Globally, 59 plants are under construction, 149 are planned in 28 countries and 344 additional ones are under consideration
  • Although no facilities are coming to Indiana any time soon, the state certainly has manufacturing opportunities to support the industry
  • "Demand sourcing" in the oil market refers to Saudi Arabia, Kuwait and the United Arab Emirates holding back oil capacity to help control fluctuations. (How successful is that strategy?)
  • The Energy Information Administration expects 45% of U.S. gas production by 2035 to come from shale gas — bringing a new set of questions about processes and reliability
  • Indiana now stands 11th in wind energy capacity. But despite 35% annual growth nationally over the last five years, wind accounts for just 2.3% of U.S. electricity
  • Jobs are also part of the wind picture. There are 400-plus manufacturing facilities for wind-related products, with Texas and Illinois leading the way in numbers employed in such positions
  • Indiana is one of only two states with more manufacturing workers than government workers. In Indiana, manufacturing accounts for 45% of all energy used
  • The average power plant in Indiana is 53 years old, the average worker in those plants is 52 and the average coal miner is 51
  • Indiana has pending water supply problems in the southern part of the state, an area that also shows a higher level of projected growth (if water and other resources are available)
  • Other states are utilizing regional systems to manage water supply, while local resources manage water demand and delivery 

Online vs. Main Street Tax Debate Continues

The dispute over collection of online sales taxes is not a new one. The Alliance for Main Street Fairness argues that online-only retailers have a distinct advantage, but the author offers that convenience (not avoiding sales taxes) drives the buying decisions for many. TechJournal South offers analysis:

Federal law currently requires retailers to collect sales taxes in states where they have a nexus (a physical presence such as a store, warehouse or other facilities). Since Internet-only retailers do not have a nexus in most states, they are not currently required to collect the taxes.

Other states wrestling with the problem include Arkansas, California, Florida, Illinois, Indiana, Minnesota, New Jersey, Pennsylvania, Tennessee and Texas. The National Conference of State Legislatures says states lost about $8.6 billion in 2010 in failing to collect sales tax from online and catalog sales. The number is projected to be approximately $37 billion from 2009 to 2012.

Personally, we can see how buying a big ticket item from an online retailer might save a significant pieces of change, but even there, we doubt that most people buy online just so they won’t have to pay sales taxes. We buy online because it is convenient. We can do our shopping from our desks, which has inherent advantages that will not disappear when online retailers collect sales taxes.

We shop online because we often find a much wider selection available at the lowest possible prices online, whether we are looking for a book, a camera, or a refrigerator. We save gas and wear and tear on our vehicles and ourselves. But we have never bought an item online to avoid paying a sales tax.

Sooner or later, we suspect, this problem will be resolved through legal means that require online retailers to collect state sales taxes. That’s fine with us, although we think states threatening to collect years of back taxes are certainly wrong-headed as well as on legally shaky ground.

In the meantime, the way states and the online retailers are going about dealing with the problem is just causing more problems: such as Amazon dismissing its associates in North Carolina and other states attempting to use their status to say the reatailer has the physical presence in the state to create a nexus.

That move causes grief for many online startup businesses. Some larger ones actually left North Carolina when Amazon fired its state associates, and others complain it makes it harder to get that early revenue necessary to achieve outside growth funding.

Amazon is not helping matters by negotiating not to pay sales taxes even in states such as Texas, Indiana, Nevada and Tennessee where they have distribution centers.

The whole mess will likely require action on the part of the US Congress.  “The Main Street Fairness Act,” H.R. 5660 was introduced in the US House in July 2010, and it would behoove Congress to vote on the bill.

The Circus Continues: What the House Standoff Means

What a circus! And next week is shaping up to possibly be more of the same for Indiana’s House of Representatives. That’s a real shame because the House Democratic walkout jeopardizes a number of key bills that the Indiana Chamber believes would be extremely beneficial to Hoosiers. In fact, the Chamber has actively supported all 11 bills House Minority Leader Pat Bauer is demanding be defeated.

Among them, of course, is the right-to-work legislation that would give workers the choice of whether or not to join a union. There is overwhelming evidence that passing right-to-work this session would be the single biggest action to stimulate Indiana’s economy and bring more jobs to the state. Any policy that can do both of those things over the long term and has the support of seven out of every 10 voters deserves full consideration. Nonetheless, while disappointed, we respect the decision by House Speaker Brian Bosma to steer right-to-work to a study committee where legislators can continue the discussion this summer.

Right-to-work, though, was only one of the labor measures singled out by Bauer, while a collection of important education reform bills were also cited as reasons for the standoff. These education policies would: improve student outcomes and prepare students for the workforce; give parents of low-income students, in particular, more options for getting a quality education for their children; and allow more local managerial control in our schools.

These targeted bills – and nearly 50 in total – have been caught in the political crossfire and are now in limbo. On Thursday, the House Rules Committee voted to extend the deadline for bills to pass out of the House to next Friday (March 4). For the Rules Committee action to go into effect, the House must be able to vote on it – and a quorum of 67 members is needed for that.

The question is whether the House Democrats will reappear next week. It is certainly the Chamber’s hope that legislators return to work and put the best interest of all their constituents first. If they object to certain bills, they should show up, speak their mind and can vote against them. That’s how the process works. Then when election time comes, make their case to the voters. Activity coming to a screeching halt is not acceptable and is a disservice to all Hoosiers.

Our Statement on Right-to-Work and the Standoff

Indiana Chamber of Commerce President Kevin Brinegar comments on right-to-work and the continued legislative standoff:

While there is overwhelming evidence that passing right-to-work is the one General Assembly action that could do the most to stimulate Indiana’s economy this year, the Indiana Chamber respects the decision by legislative leaders to continue the discussion in a study committee. Any policy that can help create more jobs, raise the per-capita income of Hoosier workers over the long term and has the support of seven out of every 10 voters deserves full consideration.

"Even though the determination by House Democrats to stage a walkout and leave the state was never over this one issue, we strongly encourage an end to this stalemate. Voters elected their representatives to serve as part of the legislative process, not shut down the system of helping lead our state. There is too much at stake – for all Hoosiers – to continue this standoff.

Quotables from House Dems’ Road Trip

A nice article here from Eric Bradner of the Evansville Courier & Press on the Democratic border blitz yesterday. I’ll just defer to the article, which has some attention-getting quotes:

The 37 missing Democrats were holed up together Tuesday night at a hotel in Urbana, Ill., and would not say when they will return to Indiana.

“I don’t know when we’ll come back,” said Rep. Gail Riecken, D-Evansville. “We’ve been pushed with our backs against the wall, and it’s time for them to listen to us.”

After Democrats sent back a list of 11 bills to which they object, though, House Speaker Brian Bosma, R-Indianapolis, did not sound interested in listening.

“This is the most ludicrous political stunt I have ever seen,” he said. “Let them stay in Illinois. They’ll fit right in. Maybe they can vote for a couple of tax increases while they’re over there.”

Democrats left the Statehouse as hundreds of labor union members rallied for the second straight day. They held signs, chanted and marched around the House and Senate chambers.

Drawing most of their ire was a measure that proponents call “right to work.” It would allow workers to opt out of paying union dues – a move, protesters said, that would undermine those unions’ funding and negotiating power.

They also objected to several other labor-related measures and to most of Daniels’ education reforms – especially one that would limit the scope of teachers’ collective bargaining rights.

Democrats cited those bills as well, saying they want them killed for the rest of the session, or else they might not return. And Nancy Guyott, the Indiana State AFL-CIO president, said the union protesters approve of Democrats’ tactics.

Late Tuesday night, Bosma learned that Democrats had left the state, and was handed the list of bills from House Minority Leader B. Patrick Bauer, D-South Bend, at the same time.

“Maybe voters need to go over there, drag them back here and get them to do their jobs,” Bosma said. “They need to get their butts back here.”

Or, he said, there is another option.

“They should step down. I mean it. If they’re not willing to do their work here and they’re leaving the state, they should vacate the office and let replacements who are willing to come here and do the people’s business be selected,” Bosma said.

Lugar Skeptical of EPA Dust Regs for Farms

As the Environmental Protection Agency considers regulation to tighten restrictions on dust on rural farms, Sen. Richard Lugar, along with 30 other Senators, condemned the National Ambient Air Quality Standards proposal as not being realistic. He writes:

“Proposals to lower the standard may not be significantly burdensome in urban areas, but will likely have significant effects on businesses and families in rural areas, many of whom have a tough time meeting current standards,” Lugar wrote. 

“Naturally occurring dust is a fact of life in rural America and the creation of dust is unavoidable for the agriculture industry,” Lugar and the others continued. “Indeed, with the need to further increase food production to meet world food demands, regulations that will stifle the U.S. agriculture industry could result in the loss of productivity, an increase in food prices, and further stress on our nation’s rural economy.” 

Lugar’s letter continued: “Tilling soil, even through reduced tillage practices, often creates dust as farmers work to seed our nation’s roughly 400 million acres of cropland.  Likewise, harvesting crops with various pieces of farm equipment and preparing them for storage also creates dust. 

“Due to financial and other considerations, many roads in rural America are not paved and dust is created when they are traversed by cars, trucks, tractors, and other vehicles.  To potentially require local and county governments to pave or treat these roads to prevent dust creation could be tremendously burdensome for already cash-strapped budgets.”

“While we strongly support efforts to safeguard the wellbeing of Americans, most Americans would agree that common sense dictates that the federal government should not regulate dust creation in farm fields and on rural roads,” Lugar letter concluded. “Additionally, the scientific and technical evidence seems to agree.  Given the ubiquitous nature of dust in agricultural settings and many rural environments, and the near impossible task of mitigating dust in most settings, we are hopeful that the EPA will give special consideration to the realities of farm and rural environments, including retaining the current standard.”

Some States Trying to Move Back in 2012 Primary Schedule

Indiana avoided the national rush to move up the date of its 2008 presidential primaries. And national attention ended up being focused on the Hoosier state. Don’t expect any change from Indiana’s early May vote, and for a variety of reasons others are looking to fall back in the pack for 2012.

The modern presidential nominating process, in which candidates must compete in primaries throughout the country to have a chance to win, dates to 1972. After that, it only took a few election cycles for states to realize that the ones voting first had the biggest say in the nomination. By 1988, the push to “frontload” had begun in earnest.

Almost immediately, political scientists began complaining that the primary schedule was becoming perilously compressed. If too many states vote too early, they argued, only the best-funded candidates can compete. Candidates can effectively wrap up nominations in a matter of weeks, before the press and the public have time to scrutinize them. Then, states with primaries and caucuses later in the spring don’t matter. “A lot of states are not just less influential, but have no effective voice in the process,” says William Mayer, a Northeastern University political scientist who co-authored a book on frontloading.

Both the national Democratic and Republican parties have tried to impose some order on the process. But the parties don’t set the dates of primaries. State legislators do — because it’s the states who actually administer the elections, along with local governments.

Legislators’ foremost concern has been maximizing the influence of their own states. Even those who agree with the political scientists about the problems with a frontloaded calendar don’t want their own state to be the one left behind.

The results are dramatic. In 1976, on the Democratic side, the Iowa caucuses were in January and the New Hampshire primary was in February. Four more states voted in March and three more in April, with the other 20 primary states scattered later into the spring.

In 2008, six states voted in January. They included Florida and Michigan, which moved up their primaries in violation of Democratic Party rules. By the end of February, voters in nearly three dozen states had already cast their ballots in primaries or caucuses on both the Democratic and Republican side.

More on Illinois: Tax Until You Drop, And They Probably Will

We told you here two days ago that Illinois lawmakers were seriously considering tax increases of 75% on individual income and 49% on corporations. Well, good news for the residents of the land that might more closely resemble its nickname (Prairie State) in the coming years as those increases were lowered to 67% and 30%, respectively.

Governor Pat Quinn is expected to sign the legislation to help stem an ever-growing budget deficit. The state anticipates it will raise an additional $6.5 billion in revenue in 2011. But do those projections take into account the companies and the families that will be fleeing for points near (Indiana) and far?

We hinted earlier that Indiana would need to be ready to roll out the welcome mat for those defectors. A brief conversation with someone from the Indiana Economic Development Corporation (and public comments from Mitch Roob) confirmed that an aggressive marketing plan is in the works along with additional personnel in Northwest Indiana and focused efforts in Terre Haute, Evansville, etc.

The Tax Foundation reports the moves (if part of the 2011 evaluation) would drop the Illinois tax climate from No. 23 to No. 36. Indiana, by the way, is a solid No. 10.

Here’s the Tax Foundation brief on the impacts of the spend, spend, tax and spend some more plan in Illinois.

Moving Trucks are Headed To …

Sometimes the unscientific surveys provide the most interesting results. Why? Because you know not to fully accept what you find, but in more cases than not you also realize the conclusions are indicative of a bigger pattern or trend.

That’s one way to look at the annual migration results from United Van Lines. For 2010, it was based on more than 146,000 household moves between the 48 continental states.

A quick look at some of the findings:

  • Michigan was dethroned as the "outbound" (more than 55% of the moves being out of state) victim for the first time in five years by New Jersey. Not to worry, our northern neighbors were second in numbers fleeing for greener pastures.
  • Of the nine in the outbound category, Midwesterners Ohio, Illinois and Pennsylvania were also included.
  • The five "inbound" winners (at least 55% of the moves coming into the state) were, in order, the District of Columbia, Oregon (a top destination for 23 years of the 34-year report), North Carolina, Idaho and South Carolina.
  • Indiana, you ask? Among the 35 in the "balanced" category. But the 2,474 shipments out of the state compared to 2,076 inbound put it at the bottom of that category — 54.4% outbound.

But hey, we’ve got a lot of things going for us here in the Hoosier state. And we didn’t jack up our income taxes by 67% this week like our friends to the west. Just one of the many jokes is that action by the legislature after a contentious battle had to be "Ill nois(e)" to economic development officials and many others.

And it just might be enough to move to Illinois to the bottom of the moving list in 2011. 

Land of Leavin’?: Illinois Pushing People to Call Indiana Home

During a first week of January when most legislatures were just beginning their work for the year, our neighbors to the west were taking action that prompted two responses:

  1. Relief, once again, that I work and live in the Hoosier state
  2. Thanks for further opening the state borders with one-way traffic heading from Illinois to Indiana

What are they in the process of doing in Springfield? Increase individual income, corporate income and cigarette taxes to historially high levels. A 75% hike for citizens, 49% for businesses (resulting in the dubious distinction of the highest corporate tax rate in the country and the largest combined {national and state} rate in the industrialized world) and more than 50% on cigarettes.

The Tax Foundation goes into detail on the changes, but common sense tells one that the effort to fix past out-of-control spending is misguided. Economic development officials up and down the west side of Indiana (along with state officials) should be working overtime to attract businesses, entrepreneurs and anyone else looking to escape the Land of Economic Lunacy.