ANDERSON — Gov. Mike Pence visited the Anderson Rotary Club on Tuesday to once again make a pitch for phasing out Indiana's current business personal property tax.
Pence first said eliminating the tax was part of his agenda for the upcoming session at the Bingham Greenbaum Doll Legislative Preview earlier this month. In his push to make Indiana as appealing to businesses as possible, Pence said the tax has to go.
"I've said since day one, job creation is job No. 1," Pence said. "It's a competition for jobs out there, county by county, state by state."
He cited local competition as the biggest reason for getting rid of the tax. Illinois and Ohio do not have the tax, and Michigan is on a 12-year plan to phase its out.
The tax charges businesses for property and items like industrial machines. The state takes the money, which amounts to $1 billion, and gives it to local governments and schools.
Pence said the state will do what it can to compensate local governments but has not offered an idea for where that money might come. Instead, he said the General Assembly should decide that.
Anderson Mayor Kevin Smith said if the tax was cut off today, Anderson would lose $4 million, $2 million of which goes into the city's general fund. That fund is used to, among other things, pave streets and pay firefighters and other law enforcement. Smith said that would be a significant chunk of the overall budget.
Smith said he appreciates the governor's push to make the state as competitive as possible but thinks there needs to be a middle ground. He argues a lot of the new businesses are here thanks to individual cities.
"Most of the companies that have relocated to Indiana are usually connected to a municipality," Smith said.
He said Anderson specifically invested money from the fund to improve roads, sewers, water and emergency personnel, which companies look at when deciding to relocate. Smith said he doesn't want that to be taken away from Anderson.
"We have to be mindful that we can't cut the legs off of local government's ability to attract businesses," Smith said. "It's a very delicate balance."
Indiana has made progress toward creating new jobs in the state. Pence said the state added 21,700 private sector job this year and has knocked down the unemployment rate to a five-year low of 7.5 percent. He even applauded Anderson as being nationally recognized for their business friendly economy.
But Pence is adamant more needs to be done to help Indiana attract even more businesses. He said an improved economy will help everyone in the state, including local governments.
No tax is certainly appealing to local business owners in the area.
Charles Shumate, president of the Anderson Rotary, is also an owner of the Sears Hometown Store in Anderson. He said if the tax is removed businesses can spend the money on new employees or additional improvements. He said his store would look at additional advertising to improve sales and add to their profit margin.
"It would be extremely beneficial to our little company," he said. "Or at least slowly dissolving that tax."
He also believes no tax would be a very big attraction to businesses all over the nation.
"It would be such a powerful invitation to other businesses to come to this state," Shumate said. "It seems to me it would be a welcome sign written in neon."
Pence said he expects a robust discussion about phasing out the tax in this year's legislative session. He will leave it up to the lawmakers to decide how to implement his vision.
"To make Indiana competitive," Pence said, "we would do well to do this."
Follow Zach Osowski on Twitter @Osowski_THB, or call 640-4847.