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Are Economic Development Efforts in Northeast Indiana at Risk?

Dec 04, 2015 Tim Cook, JD Katie Culp, MBA
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The state of Indiana unveiled its Regional Cities Initiative earlier this year with great fanfare, and with good reason. At a price tag of $84 million, Indiana hopes that its underwriting of regional economic development efforts will pay big dividends towards sustainable economic development success. Regional Cities, a competitive platform overseen by the Indiana Economic Development Corp. (IEDC), works like this:

  1. Plans are submitted by organizations such as the Northeast Indiana Regional Partnership and Greater Fort Wayne Inc. to secure dollars for their projects.
  2. Winning regions will receive millions of dollars to fund strategic long-term investments for their communities.

Areas such as Northeast Indiana hope an eventual winning bid will translate into a profound impact on their local economies.

However, as the IEDC hopes to use Regional Cities as a launch pad to achieve its regional economic development objectives, the 2015 Indiana General Assembly is simultaneously pumping the brakes on the region’s (and state’s) most robust blocking-and-tackling economic development tools by capping the amount in Economic Development for a Growing Economy (EDGE) tax credits and Skills Enhancement Fund (SEF) training grants that the IEDC can dispense in the coming years.

With the EDGE credit, qualified companies receive cash refunds for new hires based on the wages paid to employees. Likewise, SEF training grants provide a 50% reimbursement to companies for qualified out-of-pocket training costs. Raiding the bank accounts of these programs could be especially detrimental to attracting the high-wage jobs the region seeks in high-tech industry sectors.

The reason the caps are so detrimental: As companies in higher populated parts of the state such as Fort Wayne compete with larger markets such as Chicago and the coasts for talent, EDGE and SEF bridge the gap that often exists to attract and train coveted employees. With less EDGE and SEF dollars available to help fund this gap, Northeast Indiana’s ability to win future deals will be severely impacted.

What’s more, with more applicants than prize money to disburse through the Regional Cities process, the losing applicants may actually be worse off than before — nothing to show for the hundreds of hours of work invested in participating in the process, and less funding available from the IEDC to promote their everyday economic development efforts.

Many expect great things from the Regional Cities Initiative. The question remains whether slashes to EDGE and SEF funding will actually result in a net loss to the state’s economic development performance and reputation.