We salute Gov. Mitch Daniels and Amazon.com for coming to a recent agreement, resulting in the company collecting Indiana sales tax, beginning in 2014. We think this is a step in the right direction to level the playing field for other businesses, but, like Daniels and Amazon.com, we believe there is a clear need for a federal solution to this matter.

Governor Mitch Daniels announced today that the state has reached an agreement with Indiana’s largest online retailer, Amazon.com, Inc., to begin collecting Indiana sales tax on internet purchases.

Indiana will become the fourth state to reach such an agreement with Amazon, but the governor said he will continue to push for federal action to fairly address the issue.

“The only complete answer to this problem is a federal solution that treats all retailers and all states the same. But for now, Amazon has helped us address the largest single piece of the shortfall, and we appreciate the company working with us to find a solution,” said Daniels.

According to the agreement between Amazon and the Department of Revenue (DOR), the company will voluntarily begin to collect and remit Indiana sales tax beginning January 1, 2014 or 90 days from the enactment of federal legislation, whichever is earlier. The state will not assess the company for sales tax for other periods.

Estimates of uncollected online sales taxes are about $75 million each year. Of that, the State Budget Agency and DOR estimate that revenue from sales tax remittal by Amazon would be approximately $20 million to $25 million per year.

Keeping track of townships and local government spending is a complicated, but necessary measure. That should now be a little easier thanks to some efforts of the Indiana Dept. of Local Government Finance and their new web site. The Tribune (Seymour) has the story via Indiana Economic Digest:

Hoosiers now have an opportunity to take a deeper look at how local governing units collect and spend their money thanks to a new website recently unveiled by the state.

And Jackson County seems to be faring better that (sic) a lot of Indiana counties, a local official says.

“We look really good,” county Councilman Brian Thompson told his fellow council members during their recent meeting at the courthouse annex.

Thompson was basing that assessment on information located on the web at https://gateway.ifionline.org/ …

The Indiana Department of Local Government Finance unveiled the website developed in cooperation with the Indiana Business Research Center at Indiana University’s Kelley School of Business in mid-November.

According to a press release from the DLGF, the website is the second phase of a new online data collection system and public access website that “substantially increases the transparency and accessibility of local government finance” for Hoosiers.

The first phase of the system, known as the Indiana Gateway for Government Units or Gateway for short, allowed local officials to submit 2012 budget forms electronically from July 1 to Nov. 3.

As part of the second phase, those budget figures are now incorporated into the interactive research website. Visitors to the site can compare against other units and analyze per capita revenues and spending.

The public site allows taxpayers to access relevant data by property address, view up-to-the-minute budget summary information and download customizable reports.

“Once Gateway is fully implemented, with a few mouse clicks, citizens can obtain local government budgets, property tax information, debt tallies, and spending reports,” Department Commissioner Brian Bailey said.

Local officials also will use Gateway to submit annual reports to the state Board of Accounts, allowing users to tie budget information to expenditure information easily for the first time.

They also will report debt information through Gateway, providing taxpayers with information about borrowing costs and overall indebtedness. This data, which local officials must submit by March 1, will be made available through the public access website this spring.

“By linking local government finance to the other data hosted on Stats Indiana, policy makers and businesses will have information at their fingertips to help them make fiscal decisions in the context of their overall community, or communities they may consider joining,” IBRC Deputy Director and Chief Information Officer Carol Rogers said.

How to pay for current and future road repairs is a challenge for nearly all states. The federal Highway Trust Fund is not the answer, at least not in its current form. Governing magazine asked a Tax Foundation expert for his perspective on some alternatives. Governing reports:

Commute to work is a bit on the bumpy side, then you know the answer is road repairs. The follow up question is: Given how long this downturn has afflicted state and local budgets, who’s going to pay to repair potholes and the like?

Well, it’s not going to be the feds. The Highway Trust Fund, which finances an average 45 percent of a state’s highway and transit capital costs, is shrinking. One reason for that shrinkage is that the federal gas tax has been stuck at its current rate (18.4 cents per gallon) since 1993, which means it is not keeping up with inflation, to say nothing of state needs. Congress is not likely to raise the federal gas tax rate this year or next, so that leaves the states. In theory, they have a little room to raise or tinker with their gas tax formula — something most states have not done in years.

Given the importance of a healthy road system to economic development, what approaches could states take to raise revenue for road repair and building? I put that question to Mark Robyn, an economist with the Tax Foundation. Here’s an edited version of our conversation:

Is this a good time for states to raise their motor fuel taxes?

It’s difficult to raise most taxes. The gas tax — an excise tax — is interesting because it’s one of the few that states levy that really looks like a user fee. You pay it when you use a specific service, and the rate is set at a level to pay for the service you consume. It’s like an entrance charge to a state park. You wouldn’t call that a tax as long as that revenue is used to pay for upkeep of the park and the charge reflects what the costs are.

The gas tax, though not perfect, is an approximation of that relationship. Revenue received from gas taxes usually is used for road and highway maintenance; the fee you pay approximates how much road you consume. But different cars get different gas mileages; electric cars don’t even use gas but they also don’t cause less damage to the road. So the gas tax is not perfect but it is similar to a user fee. If states want to structure the gas tax like a user fee and if the state is not getting the money it needs for roads and repair, the next logical step would be to increase the gas tax. But people have to believe the money is being spent wisely. Not all states do that, and people say, "Well, I see this waste of money. If you increase my taxes, you’ll waste a portion of it." When I say states are wasting money, I mean they are using it for road projects that people don’t see as valuable — the "bridge to nowhere." If there are no "bridges to nowhere" and people are driving over potholes, they’ll be more willing to accept gas taxes to avoid potholes.

Here are a couple key developments from the NLRB within the last week. If you’re a business owner, prepare to be annoyed:

Mandatory Posting Requirement
The National Labor Relations Board decided Friday to delay the required posting date of its new NLRB posting yet again — this time until April 30, 2012 (it was previously January 31, 2012). The NLRB’s web site reports:

• The National Labor Relations Board has agreed to postpone the effective date of its employee rights notice-posting rule at the request of the federal court in Washington, DC hearing a legal challenge regarding the rule. The Board’s ruling states that it has determined that postponing the effective date of the rule would facilitate the resolution of the legal challenges that have been filed with respect to the rule. The new implementation date is April 30, 2012.

Rules Regarding Union Elections
Baker & Daniels reports: 

The National Labor Relations Board (Board) has formally adopted a final rule that will expedite the pre-election process and limit the post-election process in union representation cases. The rule will be published in the Federal Register on December 22, 2011, and is due to take effect on April 20, 2012.

As we previously informed you, the Board enacted this rule, which will significantly impede an employer’s right to communicate with its employees and petition the government for redress, while faced with the prospect of losing its quorum at the end of 2011. The rule focuses primarily on union representation cases in which parties cannot agree on issues such as whether the employees the union seeks to represent are an appropriate voting group. It significantly changes existing procedures in these types of cases by limiting the issues to be determined in the pre-election process and precluding pre-election review of regional office decisions in most cases. This rule will likely mean that elections are held in a much shorter timeframe.

It is expected that a variety of pro-business advocacy groups will pursue litigation in an attempt to overturn the new rules.

Unions will most likely be emboldened by the Board’s action, and it may spark an increase in union organizing. To remain union free, it is increasingly important for employers to focus on positive-employee relations and supervisory training.

The Indiana Chamber and MySmartGov have been champions of sensible government reform in Indiana, and have supported suggestions from the Kernan-Shepard Report that would eliminate townships, among other excesses. The Evansville Courier & Press now reports Governor Mitch Daniels will firmly put his weight behind these measures in the 2012 session:

Gov. Mitch Daniels will make one last push for local government reforms – this time, a select and scaled-back set of them – during the final legislative session of his administration, he announced Friday.

Daniels unveiled his legislative agenda for the Indiana General Assembly’s 10-week 2012 session, which starts Jan. 4, during a speech at the Kiwanis Club of Indianapolis.

He said he will lobby for structural changes at both the township and county levels, as well a crackdown on conflicts of interest among municipal workers who also sit on the elected bodies that set the budgets for their employers.

It’s another try at implementing more of the recommendations offered in 2007 by a blue-ribbon panel chaired by former Gov. Joe Kernan and Indiana Chief Justice Randall Shepard.

This year, as freshman Rep. Kevin Mahan, R-Hartford City takes over the chairmanship of the House Government and Regulatory Reform Committee, Daniels said he believes the conditions are right for more progress than he has made in the past.

“We’re going to try to approach it in a little simpler way,” Daniels said.

He said he hopes four local government changes that have stalled out in previous sessions can gain more traction this year. Those four are:

- Allowing counties to switch their executive structure from three-member groups of commissioners to a single county commissioner.

- Abolishing three-member township advisory boards that oversee township trustees’ budgets and bumping their fiscal oversight duties up to county councils.

- Eliminating nepotism – that is, the ability for local elected officials to hire their relatives to do the area’s work.

- Restricting “conflicts of interest,” or situations where those who are paid by local government, such as police, firefighters, park employees and more, also serve on the councils that set their budgets.

“I think if we could get action on two, three, four fronts like those, this would be good. Those are some important reforms. I’ve always believed that we wouldn’t do this in one or two big gulps; it would have to be an incremental process, and this would get the process moving forward,” he said.

Chamber President Kevin Brinegar explains how passing a right-to-work law will help enhance Indiana’s economy by attracting many new companies that currently won’t consider the state, according to site selection agencies. He also lays out the facts about right-to-work, noting how it does nothing to prevent unions from organizing; it just means workers won’t be forced to join to keep their jobs.  

Creating more jobs for Hoosiers by making Indiana the 23rd right-to-work state heads the list of the top 2012 legislative priorities for the Indiana Chamber of Commerce.  Eliminating the state’s inheritance tax, protecting the education reforms of last session and implementing a statewide smoking ban are also among the group’s key goals.

"Far too often, Indiana is not in the running for business growth and expansion plans, as site selection experts across the country repeatedly emphasize that companies won’t even consider non-right-to-work states for these opportunities. And, with these opportunities come thousands of jobs – none of which are currently coming to our state," offers Indiana Chamber President Kevin Brinegar.

He expects the right-to-work debate to be intense at the Statehouse, but says that should not be viewed as a deterrent to pursuing the policy – or used as an excuse to stay on the sidelines.

"The stakes are too high. With over a quarter million Hoosiers unemployed, ways to generate more jobs should be welcome and top of mind for everyone. We need to do everything possible to lower our state’s unemployment rate and improve our economic competitiveness," Brinegar stresses.

"Right-to-work is the most impactful way to tackle those two needs, plus it offers workers more freedom. Right-to-work protects employees from being forced to join a union and pay dues. It does not prohibit labor unions or collective bargaining; it lets employees decide."

The 10 pre-session objectives fall into seven public policy areas: economic development, education, energy, health care, labor relations, local government and taxation.

Below are the Indiana Chamber’s top legislative priorities. The complete list is also available here.

ECONOMIC DEVELOPMENT
- Support the state adopting a right-to-work statute banning the practice of requiring union membership or financial support as a condition of employment.  Would remove a significant impediment to investment and job creation. Would help Indiana continue to distinguish itself from neighboring states and to build a national leadership position in economic development.

EDUCATION
- Support protecting the 2011 reforms involving charter school expansion, school choice, merit pay for teachers and teacher collective bargaining. These new laws are the most significant enhancements to the state’s education system in more than 20 years; they put the focus where it should be – on students and increasing their potential for academic achievement. We need to make sure these reforms stay intact and are executed as intended.

- Support expanding school accountability. Our system, while improving greatly under current state leadership, still offers far too many loopholes for perpetual failure.

ENERGY
- Oppose renewable energy mandates. Indiana already has significant renewable energy development without benefit of a mandate, which would present unreasonable costs to power consumers and utilities.

HEALTH CARE
- Support ban on smoking in the workplace. Smoking is detrimental to employee health and productivity, and contributes to higher premiums for businesses providing employee health benefits.

- Oppose any health care mandates or assignment of benefits (AOB) policy. Mandates and AOB both serve to increase the cost of health care premiums for employers and their employees.

LABOR RELATIONS
- Support work share component incorporated into state’s unemployment insurance system. Would allow employees to collect reduced wages and partial unemployment benefits – as opposed to losing their jobs; is a temporary and practical alternative to layoffs.

LOCAL GOVERNMENT        
- Support common sense simplification and reforms to local government structures and practices. Current local government system lacks high standards against nepotism and allows for too many conflicts of interest. This, coupled with the streamlining of duties and functions as appropriate in county and township government, will result in a more effective system and better use of taxpayer dollars.

TAXATION
- Support elimination of the state inheritance tax. Only 1% of the state’s revenue pool comes from this tax, but the consequences are much higher. Why? This tax serves as a big deterrent for high income individuals to remain in Indiana (and spend money), or keep their assets here. It’s more beneficial for the state and its residents to remove the tax.

- Support exempting the taxation of machinery and equipment. Indiana needs to be on a level playing field with surrounding states – some of which have already made this move or are considering it now. Exempting machinery and equipment from property tax would be another strategic step in our economic development efforts.