Indiana Gov. Mitch Daniels’ prescription for the state’s economic recovery is simple: Get out of the way.
“The organizing principle of our entire administration is to provide the best possible business climate,” he told the Fort Wayne Journal-Gazette. “That’s what we work on all day every day.”
But instead of spending taxpayer dollars to spur the growth, Daniels prefers a different kind of government action.
“It’s action to increase the chance that the private sector can flourish,” he said.
For instance, Daniels said the best way to encourage job creation — if politics and finances didn’t matter — would be to simply remove the barriers to investment. This means, for instance, eliminating environmental and other safety permitting that holds up growth.
“I would set aside some of the barriers government puts to hiring,” he said.
Such a self-certification system could then have government monitoring companies and fining them, if necessary, for violations. But that would come after the company had invested in Indiana and Hoosiers had been hired.
Another proposal would be to reduce the state corporate income tax so it is more similar to individual income tax. Indiana’s corporate income tax of 8.5% is higher than many states, while its individual income tax rate is just 3.4%.
But with those ideas being out of reach in the near future, Daniels is allowing the sandbox he has built since first elected in 2004 help direct Indiana’s recovery.
The governor immediately created the quasi-governmental Indiana Economic Development Corp. to react more quickly to job opportunities. Other improvements include eliminating the tax penalty for companies adding jobs or investing in equipment; creating a property tax exemption on information technology equipment; and enhancing the research and development tax credit.
In addition, Daniels points to leasing the Indiana Toll Road to pay for major infrastructure improvements as well as property tax reform and balancing the state budget as helping to make Indiana attractive and competitive to prospective companies.
Several independent studies have found Indiana to have one of the best tax and regulation climates, as well as being a national leader for the low cost to do business.
Those facts have helped Indiana lead the nation recently in private sector job growth. In August, Indiana gained 54,700 jobs — fifth highest in the nation and third highest in terms of percentage growth.
“We’re clearly recovering,” Daniels said. “We are creating more jobs per capita than just about anybody after taking a big hit.”
For all Indiana’s success, the state unemployment rate has refused to budge. In August, it was holding at 10.2%.
“Unemployment numbers are weird,” Daniels said. “The important thing is to see the number of people in jobs keep growing. It’s sometimes baffling.”
Chris Ruhl, director of the Indiana Office of Management and Budget, said he can see in payroll withholding numbers that many employees are working additional hours, perhaps moving back to full-time after having hours cut. The next step is for companies to add new employees.
One other factor helping Indiana keep ahead of its Midwestern neighbors is the growing national presence of Daniels as a possible 2012 presidential contender — even if he doesn’t want to admit it.
In recent months, he has appeared in numerous national newspapers, magazines and news shows; and has been discussed more and more in national political circles. Even a German reporter came calling in September to chat with Daniels.
“It’s the chicken and the egg thing,” he said.
Daniels believes the only reason he is getting attention is because Indiana has a success story to tell in fiscal policy and other areas. But others think Daniels’ potential run is causing others to look at Indiana differently.
Either way, Daniels said, “If this attention allows us to catch the eye of a business, great.”