Navigator Award Finalists: Jim Landers and Team, Indiana Legislative Service Agency
Leading the way to evaluate the costs and benefits of economic development tax credits.
This is the 31st in a series of profiles on the 50 finalists for Route Fifty’s Navigator Awards program. The first 10 finalists were from the Government Allies and Cross-Sector Partners category. Finalists 11-20 were from the Agency and Department Leadership category. Finalists 21-30 were from the Executive Leadership category. Finalists 31-40 were from the Next Generation category. Finalists 41-50 are from the Data and IT Innovators category. Explore our complete list of 50 finalists.
Economic development tax credits are commonplace in state and local governments. They’re an important tool that policymakers can use to attract new businesses and industry to plant roots in a particular community.
But are governments getting a good deal from the various tax breaks they make available? Are businesses using those tax breaks following through on promises they make, like commitments on job creation?
In Indiana, the state government didn’t publish single tax incentive evaluation from 2007 to 2011, just as cost-benefit questions and other concerns were being raised by members of the media and others in the Hoosier State.
In 2014, Indiana lawmakers OK’d House Bill 1020, which laid out a framework to evaluate the effectiveness of economic development tax credits and bring those insights to the policymaking process.
Under H.B. 1020, the Indiana Legislative Services Agency’s Office of Fiscal and Management was tasked with the responsibility to build a schedule to regularly evaluate the effectiveness of economic development tax credits.
According to a Route Fifty Navigator Awards submission for Jim Landers, the director of Office of Fiscal and Management Analytics, and his team of skilled analysts, who were nominated in the Next Generation category:
A small team of skilled analysts, led by Director Jim Landers, quickly and successfully implemented this new law. Within months, this office produced evaluations that are among the highest quality available in any state. Their rigorous techniques and econometric models are innovative for this type of work. One of the crucial questions when measuring the results of these programs is to what extent the incentives are influencing companies’ actions (as opposed to rewarding what they would have done anyway). Indiana’s evaluations have answered this question more clearly and compellingly than perhaps any other state.
In order to complete these evaluations, the office has collaborated with other parts of state government, including the state’s Economic Development Corporation, Department of Revenue, and the state legislature. By working collaboratively, LSA has been able to overcome one of the key challenges to effective tax incentive evaluations: gathering relevant data. For example, Indiana’s Tax Increment Financing (TIF) program allows local authorities to offer tax breaks in special redevelopment districts. When LSA began studying the program in 2015, a key piece of information was missing for many TIF districts: the year the zone was created. LSA responded by contacting the local units of hundreds of TIF areas to gather the information. That research helped LSA produce a rigorous evaluation that showed how the creation of a TIF district affected property values and employment.
The first economic development tax credits evaluations have made Indiana a leader among other states in using evidence to help policymakers make better economic development decisions. In 2015, members of the state legislature eliminated two tax credit programs that were shown to be less effective.
Other state governments have been turning to Landers and his team in Indiana for guidance on how to set up similar tax credit evaluation programs. National organizations, including the Federation of Tax Administrators, the National Conference of State Legislatures and The Pew Charitable Trusts, have pointed to Indiana’s program success.
We’re happy to include Landers and his team as Navigator Award finalists.
Michael Grass is Executive Editor of Government Executive’s Route Fifty and is based in Seattle.
NEXT STORY: Navigator Award Finalist: Long Beach, Calif., Mayor Robert Garcia