March 12, 2021

TOP STORIES One Broadband Priority Bill Clears Next Hurdle, While SPONSORED BY: Reid Health Another Awaits a Vote – Both Looking Similar

SB 377 – Broadband Development Authored by Sen. Andy Zay (R-Huntington) Sponsored by Rep. Ed Soliday (R-Valparaiso)

Establishes 1) broadband expansion fund for deposit and distribution of federal broadband funding, 2) the Indiana Broadband Connectivity Program and 3) the Indiana Broadband Adoption Program. The rural broadband fund provision is similar to the existing statute except that it amends the priorities for eligible areas, as well as the priorities for eligible projects to https://www.reidhealth.org/careers elevate those that will serve more households at a lower cost to the state.

The connectivity program permits residents and businesses to submit their address to an online portal to report that they have slow broadband. Then, providers may bid on a grant to service those addresses. Via the adoption program, the state will provide financial assistance to an individual who reports through the public broadband portal that internet connectivity or broadband internet connectivity is available at the individual's address but they are unable to afford the service.

HB 1449 – Broadband Development Authored by Rep. Soliday Sponsored by Sen. (R-Bedford), Sen. (R-Jasper) and Sen. Andy Zay (R- Huntington)

This bill specifies the following priorities for the awarding of grants from the fund after June 30, 2021. Extending eligible broadband service to rural areas (for which only available internet connections are at actual speeds of less than 50 mbps downstream), as well as to public school corporation buildings and rural health clinics (for which only available internet connections are at actual speeds of less than 1,000 mbps downstream). Also extends eligible broadband service so to ensure that every resident Indiana student less than 23 years of age has at the student’s residence an access point providing such connection. Finally, the bill establishes the Indiana Broadband Connectivity Program, under which the Indiana Office of Community and Rural Affairs (OCRA) must establish a public broadband portal. Through the portal, an individual or business may report that minimum broadband internet is unavailable to them. Grants may be awarded specifically to connect those individuals and businesses.

Chamber position: Support for both

The latest: On Monday, the House Utilities, Energy and Telecommunications Committee heard SB 377, but held the bill to amend and vote at a future hearing. Then on Thursday, the Senate Utilities Committee voted unanimously to recommend passage of HB 1449 (9-0). However, that bill has been recommitted to the Senate Appropriations Committee where it awaits a hearing date.

Indiana Chamber action/commentary: This week was a big week for broadband. The two “leading” broadband funding bills were heard in committee and took the next step towards passage. As a reminder, the House passed a version of the budget bill (HB 1001) that calls for $250 million in new broadband funding during the next biennium.

Representative Soliday is adamant that one or both of the bills heard this week will pass. However, he hopes that the two bills will resemble each other once they get through their respective second houses. He also mentioned a couple times this week (i.e. when his committee heard SB 377 and when he introduced HB 1449 in the Senate committee) that the process of finalizing language is stymied somewhat by the ever-evolving activity in Washington, D.C. Things are coming into focus a bit more after the passage of the fourth stimulus bill on Wednesday, which could send upwards of $3 billion to Indiana that the state would be permitted to use for broadband expansion.

The Indiana Chamber testified in favor of both bills during their respective hearings. The Chamber’s preference is for designating the largest portion of broadband funds towards the connectivity program – arguing in testimony that 1) it offers the most efficient use of state funds by guaranteeing 100% adoption by residents and businesses who currently lack access to high-speed broadband, and (2) the status quo has, to date, failed to produce impressive results both in terms of accomplishing new connectivity opportunities and/or adoption rates.

Regardless of which bill ultimately passes, it is likely that OCRA will be precluded from funding projects proposed by satellite internet service providers. This was an interesting twist to the bill as satellite technology holds a lot of promise if the goal is to expand high-speed broadband throughout Indiana – especially to our rural communities.

While we wait to see where things land, it is important to note that high-speed broadband expansion has been a top Chamber legislative priority for over a decade. Both SB 377 and HB 1449 are giant steps in the right direction to ensure access to and adoption of high-speed broadband, regardless of the city, town or community in which an individual or business resides.

Resource: Adam H. Berry at (317) 264-6892 or email: [email protected]

Student Equity/Workforce Bill Gains Momentum With Unanimous Committee Vote

SB 54 – FAFSA Requirement Authored by Sen. Jean Leising (R-Oldenburg); co-authored by Sen. Stacey Donato (R-Logansport), Sen. (R-Auburn) and Sen. (D-Gary); co-sponsored by Rep. Bob Behning (R- Indianapolis) and Rep. Jeff Thompson (R-Lizton)

The bill would require Indiana high school seniors to complete the Free Application for Federal Student Aid (FAFSA) unless: 1) the student’s parent signs a waiver that the student understands what the FAFSA is and declines to complete it; or 2) the student’s principal or counselor waives the requirement due to extenuating circumstances. As amended, the bill also provides a “FAFSA completion improvement award” incentive for local schools.

Chamber position: Support

The latest: Passed by House Education Committee 13-0 and then recommitted to the House Ways and Means Committee for consideration. Indiana Chamber action/commentary: Completing the FAFSA qualifies students for a variety of financial aid opportunities available from the state and other sources. The Chamber views this priority policy as both a workforce development driver and a lever for breaking the cycle of generational poverty by placing more Hoosier students on the path to upward mobility. State data show that students from educated/affluent families are the most likely to complete the FAFSA while low-income and minority students are the least likely to do so.

Strong advocacy from the Chamber and its coalition partners spurred the House Education Committee to amend and pass SB 54 with unanimous bipartisan support this week. The amendment, developed with support from House Ways and Means Committee members, includes a FAFSA completion award that provides a financial incentive for schools to increase the FAFSA-filing percentage for their low-income students – the group that most needs financial aid but is least likely to complete the FAFSA. Though few could argue the benefits for both students/families and the state in its original form, the bill’s evolution to an incentive-based approach seemed to sway lawmakers who were concerned that the policy (which has proved effective in other states) could be overly burdensome to local schools.

Credit goes to Rep. Ed Clere (R-New Albany) for proposing the pay-for-performance approach, to Rep. Thompson for refining the mechanism for doing so through the state’s school funding formula and to Chairman Bob Behning (R-Indianapolis) for successfully shepherding the bill through the House Education Committee. Though it’s far too early in the process to declare victory, momentum seems to be building to ensure this common sense, consumer-friendly policy becomes state law.

Resource: Jason Bearce at (317) 264-6880 or email: [email protected]

House Takes Up Senate Bill on Business Personal Property ‘De Minimus’ Exemption

SB 336 – Assessments and Tax Exemptions Authored by Sen. Aaron Freeman (R-Indianapolis)

Provides that the business personal property exemption from taxation is based on the assessed value of the business personal property instead of the acquisition cost.

Chamber position: Support in Part (No position on the taxability of reward money)

The latest: The bill was heard in the House Ways and Means Committee and held for possible amendment. Last year this bill passed the Senate but did not receive a hearing in the House.

Indiana Chamber action/commentary: The primary objective of the bill is to base the $40,000 “de minimus” exemption threshold on the depreciated value of the property instead of the purchase or acquisition cost. The Chamber testified in support, citing the need to recognize depreciation in order to make the threshold reflect a true value-based threshold. We argued that a small business owner who bought equipment years ago at a cost that exceeds the $40,000 qualifying threshold by a small margin and is not worth anywhere near that amount anymore “shouldn’t be stuck paying tax on it forever.” Our testimony concluded with the suggestion that this bill is a “small fix with a small price tag, and it helps the very people they (the legislators) are trying to help right now: small businesses.”

Some discussion focused on the administrative process involved in having to establish the assessed value rather than the purchase price in order to determine qualification for the exemption. Opponents focused on the possibility of appeals and the loss of revenue.

We are in communication with the Ways and Means chair in effort to ensure the desirable outcome on the bill.

Resource: Bill Waltz at (317) 264-6887 or email: [email protected]

IN OTHER NEWS

Taxation and Public Finance House Ways and Means Committee Reviewing DOR Bill

SB 383 – Various Tax Matters Authored by Sen. (R-Markle)

This is the Indiana Department of Revenue’s (IDOR) annual bill containing a collection of changes the agency has identified as needed to improve state tax administration. Among the many provisions are those establishing new procedures for how individual partners must amend their tax state when the Internal Revenue Service audits and changes their partnership’s federal tax liability (on which their state income tax return is based). It also makes numerous other changes. Full details at http://www.iga.in.gov/legislative/2021/bills/senate/383.

Chamber position: Support in Part

The latest: The bill was presented to the House Ways and Means Committee and held for a later vote at a future meeting.

Indiana Chamber action/commentary: The Chamber expressed its appreciation to IDOR for working with us on provisions in this bill. We are especially grateful for the work that staff and many tax professionals have put into the provisions that address the state tax procedures for adjusting partner liabilities in response to a federal partnership adjustment. Changes made at the federal level to audit partnerships as an entity (rather than individual partners) created the need for Indiana to establish procedures for how individual partner liabilities would be adjusted at the state level when their partnership’s federal liability is altered. Sorting through how to fit model legislation on this subject into our Indiana Code and our established practices has proven challenging for all. We highlighted the importance of putting new provisions in place so tax practitioners and taxpayers can know their obligations when a federal audit adjustment occurs. We also indicated that there may well be a need for additional work on these provisions – both before the bill is ultimately passed and even next year.

Payroll Withholding Bill Likely to See More Amendments in House

SB 234 – Withholding Tax Remittance Authored by Sen. Linda Rogers (R-Granger)

This bill takes a very different approach to addressing the issue of potential mishandling of withholding tax remittances than what Sen. Rogers offered last year. Rather than requiring businesses to set up direct deposit accounts with the Indiana Department of Revenue to protect against fraud, this year’s bill instead establishes registration requirements, notifications and more frequent deposits. Full details at http://www.iga.in.gov/legislative/2021/bills/senate/234.

Chamber position: Support

The latest: The House Ways and Means Committee heard testimony from interested parties. Like the treatment this bill received in the Senate committee, the chair indicated he too is interested in looking at some amendments before a vote is taken.

Indiana Chamber action/commentary: The Chamber offered support for the bill given the substantial differences from the bill proposed last year, with which we had serious issues. We expressed our appreciation to Sen. Rogers’ for her work in finding these different means of reaching the objective of lessening the possibility of a payroll service provider committing fraud at the expense of their business clients. Senator Rogers worked with payroll company representatives, the Chamber and other stakeholders to find reasonable means for improving the withholding procedures. Our focus has been to assure that any changes do not create new problems or makes compliance more cumbersome or costly. A couple additional changes are still anticipated to address remaining concerns. And while we can’t be certain how smooth the implementation of procedural changes will go, we believe every effort is being made to make the bill as workable as possible.

Resource: Bill Waltz at (317) 264-6887 or email: [email protected]

Civil Justice House Judiciary Committee Moves Bill to Corral Misleading Advertisements

HB 1125 – Deceptive Lead Generation Authored by Rep. Matt Lehman (R-Berne) Sponsored by Sen. (R-Fort Wayne)

Makes false, misleading or deceptive advertisements for claims related to medical devices, legend drugs and certain other actions a deceptive act.

Chamber position: Support

The latest: Chairwoman Brown allowed testimony but held the bill without a vote. One amendment to the bill (not seen) allegedly would have addressed an issue that was of concern to Sen. Aaron Freeman (R- Indianapolis) and Sen. Eric Koch (R-Bedford). It appears that the way the bill is drafted there doesn’t have to be any direct impact to a consumer who might bring an action against someone that conducted a deceptive act. Indiana Chamber action/commentary: The Indiana Chamber, Indiana Manufacturers Association and the Insurance Institute of Indiana all testified in favor of the bill. The Chamber commented that this legislation does not impact legitimate lead generation nor prohibit anyone who has a specific claim against a faulty product. The bill was initiated by Cook Group, a Chamber member. Cook Group testified that its company got caught up in litigation resulting from these types of ads and as a result removed a very important biological device product from the marketplace.

Trial lawyers stated in opposition that the bill goes too far when it comes to deceptive acts and may create a “second tier” of litigation. An orthopedic surgeon testified of the confusion and fear expressed by some of his patients in response to misleading faulty knee replacement advertising.

The bill most likely did not have enough votes to pass the committee and was held to possibly be amended. Senator Freeman indicated that he was a “no” until the issue of bringing an action without direct impact was fixed. It is believed that Sen. Koch and Sen. Mike Bohacek (R-Michigan City) may be of the same opinion.

Resource: Mike Ripley at (317) 264-6883 or email: [email protected]

Energy and Environment Revised (and Improved) Version of Last Year’s Pesticides Bill Continues to Progress

SB 227 – Enforcement of Pesticide Violations Authored by Sen. Jean Leising (R-Oldenburg)

This bill provides a list of violations for which the state chemist may impose a civil penalty. It eliminates the schedule of civil penalties as adopted by the Indiana Pesticide Review Board. (Under current law, the state chemist imposes a civil penalty in accordance with a schedule of civil penalties as adopted by the Indiana Pesticide Review Board.) This bill also provides that the state chemist may adjust a civil penalty by 20% for certain violations if a person responsible for the violation takes mitigating actions.

Chamber position: Support

The latest: Heard in the House Agriculture and Rural Development Committee on Tuesday, the bill passed unanimously by a vote of 11-0. It is now eligible for a third reading vote before the full House.

Indiana Chamber action/commentary: We testified in support of the bill which is a compromise from the 2020 General Assembly. This is a rework of HB 1119, authored by Rep. Don Lehe (R-Brookston), and SB 438, authored by Sen. Jean Leising (R-Oldenburg), from the 2020 legislative session. We opposed those bills on the grounds that they would have unintended consequences to the overall business community even though they were supposed to be directed at the agriculture community. During the 2020 interim period, the Indiana Pesticide Review Board established a working group, in which the Chamber participated, to review civil penalties and make recommendations concerning civil penalties to the General Assembly. This bill is a result of those recommendations. While it raises civil penalties slightly, it provides the Office of Indiana State Chemist and the Pesticide Review Board with discretion to reduce penalties if there are mitigating circumstances.

Resource: Greg Ellis at (317) 264-6881 or email: [email protected]

Federal Relations Details on the Latest Stimulus Law (Some Surprise Tax Increases), Plus One Item Senate Thankfully Removed

On March 10, the U.S. House of Representatives passed the American Rescue Plan Act of 2021 (H.R. 1319) by a vote of 220-211 (along party lines) which already passed out of the U.S. Senate by a vote of 50-49. H.R. 1319 provides additional relief to address the continued impact of COVID-19 on the economy, public health, state and local governments, individuals and businesses. It provides $1.9 trillion to further support the mitigation of COVID-19’s devastating impact. President Biden signed the bill into law yesterday. This is a comprehensive bill and is 242 pages in length.

The bill includes funding for:

• agriculture and nutrition programs, including the Supplemental Nutrition Assistance Program (SNAP, formerly known as the food stamp program); • schools and institutions of higher education; • childcare and programs for older Americans and their families; • COVID-19 vaccinations, testing, treatment and prevention; • mental health and substance-use disorder services; • emergency rental assistance, homeowner assistance and other housing programs; • payments to state, local, tribal and territorial governments for economic relief; • multiemployer pension plans; • small business assistance, including specific programs for restaurants and live venues; • programs for health care workers, transportation workers, federal employees, veterans and other targeted populations; • international and humanitarian responses; • tribal government services; • scientific research and development; • state, territorial and tribal capital projects that enable work, education and health monitoring in response to COVID-19; and • health care providers in rural areas.

The bill also includes provisions to:

• extend unemployment benefits and related services; • make up to $10,200 of 2020 unemployment compensation tax free; • make student loan forgiveness tax free through 2025; • provide a maximum recovery rebate of $1,400 per eligible individual; • expand and otherwise modify certain tax credits, including the child tax credit and the earned income tax credit; • provide premium assistance for certain health insurance coverage; and • require coverage, without cost-sharing, of COVID-19 vaccines and treatment under Medicaid and the Children’s Health Insurance Program (CHIP).

A Fox Business article reveals there are also $6 billion in “surprise business tax hikes” that were sneaked into the bill. These involve “limiting deductions for publicly traded companies that pay their top employees more than $1 million for tax years beginning after 2026. Another extends a cap on how much certain unincorporated business owners can deduct against their non-business income to reduce their tax liability, and the third clamps down on how multinational corporations do their taxes.” See https://www.foxbusiness.com/economy/bidens-coronavirus-relief-bill-includes-60b-in-surprise-tax-hikes.

Worker’s Comp Provision Pulled

Recently, the Indiana Chamber signed onto a letter in opposition regarding the worker’s compensation presumption for COVID-19 in the Longshore Act, which the House had inserted into its version of the American Rescue Plan Act. (The Longshore Act is a federal worker’s compensation law that applies to maritime employees who work on or over navigable waters in or adjacent to the United States.) A diagnosis of COVID-19, without evidence of employment causation, should not create a presumption that an individual became ill or was injured on the job.

Fortunately, due to the collective efforts of organizations throughout the country, an objection was filed in the Senate under the Byrd Rule (which permits senators to block provisions of reconciliation bills that are “extraneous” to implementing budget changes) and the Longshore provision was removed and is not in the bill just signed into law. The Chamber and our federal coalition will continue to monitor this issue for the potential that a similar amendment may be inserted in other legislation.

For further information on what is included in the American Rescue Plan Act, we recommend these summaries: https://www.congress.gov/bill/117th-congress/house-bill/1319/text, https://www.cnn.com/2021/03/10/success/rescue-plan-small-businesses-feseries/index.html, https://www.washingtonpost.com/business/2021/03/10/what-is-in-the-stimulus/ and https://www.thepowerofa.org/wp-content/uploads/2021/03/ASAE-Overview-American-Rescue-Plan-Act- of-2021.pdf.

Protecting the Right to Organize Act of 2021 Passed House, Would Repeal Right-to- Work Laws

On Tuesday, the U.S. House of Representatives passed the Protecting the Right to Organize Act of 2021 (H.R. 842) by a vote of 225-206 along party lines. This bill expands various labor protections related to employees’ rights to organize and collectively bargain in the workplace.

The Chamber has reached out to the Indiana congressional delegation and expressed staunch opposition to this legislation. We believe that it will negatively impact workers in many ways, including, but not limited to: threatening private ballots during union organizing votes; nullifying right-to-work laws; imposing liability on businesses for workplaces they don’t control and workers they don’t employ; and undermining the gig economy.

Among other things, it (1) revises the definitions of employee, supervisor and employer to broaden the scope of individuals covered by the Fair Labor Standards Act; (2) permits labor organizations to encourage participation of union members in strikes initiated by employees represented by a different labor organization (i.e., secondary strikes); and (3) prohibits employers from bringing claims against unions that conduct such secondary strikes.

The bill also allows collective bargaining agreements to require all employees represented by the bargaining unit to contribute fees to the labor organization for the cost of such representation, notwithstanding a state law to the contrary; and expands unfair labor practices to include prohibitions against replacement of, or discrimination against, workers who participate in strikes.

The legislation makes it an unfair labor practice to require or coerce employees to attend employer meetings designed to discourage union membership and prohibits employers from entering into agreements with employees under which employees waive the right to pursue or join a collective or class- action litigation.

Finally, the bill addresses the procedures for union representation elections, modifies the protections against unfair labor practices that result in serious economic harm and establishes penalties and permits injunctive relief against entities that fail to comply with National Labor Relations Board orders.

For further information and good summaries, see https://www.congress.gov/bill/117th-congress/house- bill/842/text and https://www.npr.org/2021/03/09/975259434/house-democrats-pass-bill-that-would- protect-worker-organizing-efforts.

Resources: Greg Ellis at (317) 264-6881 or email: [email protected]; Mike Ripley at (317) 264-6883 or email: [email protected]

EVENTS / INFORMATION

March 16 – Chamber Day Event – Indiana’s most influential business leaders, legislators and government officials will come together virtually to discuss topics vital to Indiana businesses. Keynote speaker is Myra Selby, a partner with the Ice Miller law firm and first African American to serve as an associate justice on the Indiana Supreme Court. Governor Holcomb also offers remarks. Register to attend today at https://www.indianachamber.com/event/chamberday/

April 9 – Monthly Policy Issue Call – Indiana Chamber members can hear the Chamber’s lobbying team offer analysis of General Assembly action; members can also ask questions important to their business. Register to attend at www.indianachamber.com/policycalls.

The 2021 Legislative Directory will keep you connected with state legislators during this session and beyond. It comes as both a booklet and an app (for iPhones). Each contains contact information for all 150 state legislators and much more. A discount is given for purchasing both versions as well as bulk quantities of the book. Order online at https://www.indianachamber.com/directory or by calling (800) 824-6885.