Leading Indiana Business Journal Calls for Halt to Subsidy “Charade”

August 7, 2008

Reacting to a recent spate of taxpayer-subsidized corporate relocations from existing central Indiana sites to nearby communities, the state’s leading business paper

has urged officials

to be more tight-fisted when confronted with business threats to relocate outside the region or state.


a recent article

, Indianapolis Business Journal reporter Peter Schnitzler begins with Bowen Engineering receiving a property tax break worth $290,000 over seven years to move its headquarters and 103 jobs from suburban Fishers in Hamilton County to Indianapolis —a distance of 8.5 miles.

Since Indianapolis and other central Indiana cities claim not to poach each other’s companies, officials of the

unified Indianapolis/Marion County government

approached Bowen only after the company threatened to leave central Indiana entirely if its space needs were not met. As the

Business Journal article

describes, Bowen’s move was part of a trend; over the past year at least six companies have shuffled jobs and investment between Indianapolis and nearby suburbs.

These relocations have been accompanied by substantial subsidies—at least $23.4 million in training, infrastructure and property tax breaks, as well as tax breaks yet to be quantified. Although the Bowen deal brings jobs to Indianapolis, overall the city has been the loser. For example, nearly 80 percent, or $18.3 million, of the recent subsidies went to moving the Indianapolis operations of SMC, a pneumatic and electronic-controls manufacturer, to the

fast-growing nearby suburb of Noblesville

. Indianapolis lost 500 jobs.

State and local officials claim they are not poaching or shuffling companies, but are merely

“doing whatever’s necessary to keep companies in the region.”

Speaking to Schnitzler, Good Jobs First Executive Director Greg LeRoy countered that the recently subsidized companies were very likely not about to bolt to Kentucky or southern Ohio: “Companies want to retain their skilled employees and proximity to suppliers and customers. They are where they are for good reason.” Subsidizing intra-regional relocations most often aggravates suburban sprawl at the expense of needier urban areas.

In a

subsequent editorial

, the Business Journal said the “rumblings about leaving the area” that accompanied the recent subsidy deals “all seem like a charade to us,” adding that the easy availability of incentives makes “companies feel like suckers if they don’t seek a handout.” The editorial urged state and local officials to end the charade and be stingier with such hand-outs. Hopefully more business-oriented publications in Indiana and elsewhere confronting similar subsidy games will start making the same point.