7/17 Torchbearer Weekly Policy Update

Welcome back! We hope you enjoyed your weekend. Thank you for allowing us to be your trusted source for news at the local, state, and federal levels.

Local, state, and federal highlights in this week’s memo include:

Deep Dive: HEA1005
Indiana Sees Healthy Surplus at Close of Fiscal Year
Hoosiers Owe More Than $30B in Student Loan Debt
Justin McAdam to Serve as State’s Next Tax Court Judge
Purdue Names Jim Bullard as Dean of Mitchell E. Daniels Jr. School of Business
Indiana Ranks 13th in Top States for Business
Indiana High School Graduate Rates Remain Steady
Inflation Creeps Up to 3% in June
Share the Torchbearer Newsletter with Your Network!
Important Dates

Let’s dive in.

Deep Dive: HEA1005

HEA1005 is a large housing infrastructure bill that aims to foster workforce housing in communities and allow conversations regarding these decisions to happen at the local level.

The details: HEA1005 makes the following changes to law:

Establishes the residential housing infrastructure assistance program and residential housing infrastructure assistance revolving fund
Provides that the Indiana finance authority shall administer the fund and program.
Provides that political subdivisions may apply to the fund for loans for certain infrastructure projects related to the development of residential housing.
Provides that money in the fund may not be used for: (1) debt repayment; (2) maintenance and repair projects; (3) upgrading utility poles; or (4) consulting or engineering fees for studies, reports, designs, or analyses.
Provides that loans from the fund must be allocated as follows:

- 70% of the money in the fund must be used for housing infrastructure in municipalities with a population of less than 50,000.

- 30% of the money in the fund must be used for housing infrastructure in all other political subdivisions.

Requires the authority to establish a project prioritization system for the purpose of awarding loans from the fund, and specifies the criteria that must be included in the project prioritization system.
Allows the authority to establish a leveraged loan program to or for the benefit of program participants.
Requires the public finance director to prepare an annual report of the fund's activities for the legislative council and the budget committee.
Provides that the fiscal body of a county may adopt an ordinance to designate an economic development target area.
Removes the threshold conditions for establishing a residential housing development program and a tax increment allocation area for the program, including the condition that the governing body of each school corporation affected by the program pass a resolution approving the program before the program may go into effect.
Changes the duration of a residential housing development program from 25 years (under current law) to 20 years after the date on which the first obligation for program is incurred.

What’s next: Through House Enrolled Act 1005, the Indiana Finance Authority will administer the program and residential housing infrastructure assistance revolving fund. Indiana communities will be able to apply for loans through the fund for infrastructure projects related to residential housing development.

Indiana Sees Healthy Surplus at Close of Fiscal Year

Indiana had another good economic year — but don't get excited about another automatic taxpayer refund.

Driving the news: State officials yesterday announced that Indiana had $3 billion in the bank at the close of the fiscal year that ended June 30.

The state brought in $21.6 billion over the last 12 months, falling short of the previous year's general fund revenue collections but beating expectations.

State of play: Indiana's previous two fiscal years ended with uncharacteristically high surpluses, fueled by pandemic-related cash infusions to both institutions and individuals.

This fiscal year is a return to historic growth patterns, said Cris Johnston, director of the Office of Budget and Management.

Of note: Though the state is banking more than $3 billion, it's not enough to trigger another automatic taxpayer refund like those distributed last year.

What we're watching: In December, experts predicted we'd see a mild recession this year.

That hasn't come to fruition, yet, but the state did see softening in its three main revenue sources — sales, income and corporate tax collections — over the last quarter. (Axios)

Hoosiers Owe More Than $30B in Student Loan Debt

While President Joe Biden works on a Plan B for student loan forgiveness, nearly 1 million Hoosiers are on the hook for payments scheduled to come due in October for the first time in more than three years.

Why it matters: The pause in loan payments gave many borrowers — particularly millennials — newfound economic freedom to buy homes, start families and reach other milestones that debt burdens had delayed.

By the numbers: More than 921,000 Hoosiers are estimated to have outstanding student loan debt with the federal government totaling more than $30 billion, according to the U.S. Department of Education.

The average borrower owes $33,116.
Nearly one-third owe less than $10,000 and could have seen their balances wiped out, so long as they fell under the income threshold for forgiveness.

What's next: The Biden administration announced a one-year on-ramp for loan repayments, during which borrowers who miss payments won't be reported to credit bureaus, placed in default, or referred to debt collection agencies.

The Department of Education also finalized a new income-driven loan repayment plan. (Axios)

Justin McAdam to Serve as State’s Next Tax Court Judge

What’s new: Indiana Office of Management and Budget senior official Justin McAdam will be the state’s next tax court judge, Gov. Eric Holcomb announced last week. McAdam is the office’s deputy director and its chief legal counsel.

What they’re saying:

“Justin’s vast knowledge of the law combined with his deep conviction to do what’s fair and just have been proven time and time again,” Holcomb said in a news release. “He has become an invaluable member of the team.”
“It is a tremendous honor to be selected to serve as Indiana’s next tax court judge. I am honored by Governor Holcomb’s confidence in me,” McAdam said in the news release. “Indiana’s tax system is key to the continued growth and development of Indiana’s economy, and the tax court is integral to ensuring the system is administered fairly and as the general assembly intended,” he added. “I look forward to working alongside my new colleagues in the judiciary to propel Indiana’s courts forward.” (IBJ)

Purdue Names Jim Bullard as Dean of Mitchell E. Daniels Jr. School of Business

What’s new: Purdue University on Thursday named Jim Bullard, a longtime Federal Reserve Bank leader and economist, the inaugural dean of the Mitchell E. Daniels Jr. School of Business.

Some background: Bullard is known for his leadership within the Federal Open Market Committee and, in 2014, The Economist named Bullard among its more influential economists in the world. For the last 15 years, Bullard has directed the activities of the Federal Reserve’s Eighth District, which branches into several states, including an extensive portion of southern Indiana.

The details: He will begin on Aug. 15 and joins the university at a pivotal time as it looks to invest in and grow its former Krannert School of Management under a new name. Purdue announced in February it would name its expanded business school after Daniels, former Purdue president and Indiana governor.

What they’re saying:

“I am humbled and beyond thrilled to be asked to lead the Daniels School of Business, named for one of the most influential fiscal leaders of our time,” Bullard said in a written statement. “Purdue is known around the world for forward-thinking innovation. I will work to foster that spirit, and I think I can bring some real-world experience to pass on to the next generation of business leaders and innovators.” (IBJ)

Indiana Ranks 13th in Top States for Business

What’s new: Indiana ranked 13th and neighboring Illinois 17th in CNBC's annual ranking of the top states for business.

The details: America’s Top States for Business 2023 ranked all 50 states on 86 metrics in 10 categories of economic competitiveness. CNBC's ranking is unique as it weighs each category on how frequently the state itself uses them as a selling point in its own economic development marketing materials, thereby judging each state on the attributes they use to sell themselves instead of universal criteria generally applied across the board.

Deep dive:

Indiana placed 13th with 1% GDP growth, a 3.1% unemployment rate, a top corporate tax rate of 4.9%, a top individual income tax rate of 3.15% and a bond rating off AAA.
Indiana ranked fifth nationwide in infrastructure and cost of doing business, ninth in economy, 13th in access to capital, 22nd in business friendliness and tech and innovation, 35th in workforce, 44th in life, health and inclusion and 45th in education. (NWI Times)

Indiana High School Graduate Rates Remain Steady

What’s new: The newest college-going rate for Indiana high school graduates is about the same as it was for the graduating class the year before.

The details: Last year, data from the Indiana Commission for Higher Education showed the high school class of 2020 had a 53% college-going rate, which was a significant drop even with years of declining enrollment, prompting concern from state leaders.

This year, the commission’s data showed that the college-going rate for Indiana high school graduates in the class of 2021 was a “mild decline,” the smallest decline in a decade, according to Indiana Commissioner for Higher Education Chris Lowery.

By the numbers:

The class of 2021 went to college at a rate of 52.9%, a half of a percentage point down from 53.4% for the class of 2020. That meant that about 400 fewer high school graduates went to college.
The college-going rate for Black high school graduates in the class of 2021 was 45%, an increase of two percentage points from the previous year, and it was 43% for Hispanic and Latino high school graduates, a drop of one percentage point.
Among 21st Century Scholars in the class of 2021, 80.8% went to college compared with 30.1% of students from low-income backgrounds who didn’t use the scholarship and 59.2% of students from high-income backgrounds.

What’s next: Lowery said the full 2023 College Readiness Report is expected within a few weeks. (Chalkbeat)

Inflation Creeps Up to 3% in June

Inflation rose 3% in the 12 months through June — the smallest increase since March 2021 — while the gauge excluding fuel and food costs rose 4.8%, the government said Wednesday.

Why it matters: Overall inflation has plunged from a peak of 9% last summer, a relief for American consumers. The core measure, watched by economists, also showed notable signs of cooling in June.

Details: Sharply lower energy prices continue to be a major factor pulling down overall inflation. Gasoline prices, for instance, are down 26.5% compared to a year ago.

Used cars and trucks, a category that helped lead the way as prices across the nation started to soar, are down 5.2% compared to a year ago. In June alone, prices fell 0.5%. (New vehicles, meanwhile, were flat.)

Of note: Rent price increases showed no sign of slowing— rising 0.5% in June, the same pace as the previous month. Shelter costs have put upward pressure on inflation.

Private data has suggested that nationwide rental prices have climbed at a more subdued pace.
Economists expect that development to be reflected in official government data and cool core inflation further down the line. (Axios)