LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7506 NOTE PREPARED: Jan 8, 2025
BILL NUMBER: SB 494 BILL AMENDED:
SUBJECT: State and Local Tax Capture Areas.
FIRST AUTHOR: Sen. Mishler BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: This bill amends provisions concerning the designation of an Innovation
Development District (IDD) to add certain qualification requirements (grandfathers in those districts
established under current law). It requires the Indiana Economic Development Corporation (IEDC) to
establish a maximum sales tax increment amount and state income tax increment amount that may be
allocated for each innovation development district, which may not exceed a specified amount per state fiscal
year. It also adds related procedural provisions.
The bill makes conforming changes.
Effective Date: July 1, 2022 (retroactive); January 1, 2025 (retroactive).
Explanation of State Expenditures: IEDC: The bill’s provisions of requiring the IEDC to establish a
maximum annual incremental amount of gross retail tax and adjusted gross income tax that may be allocated
to an IDD and reporting that amount to the State Budget Committee within 30 days of the determination is
within the agency’s routine administrative functions and should be able to be implemented with no additional
appropriations, assuming near customary agency staffing and resource levels.
Department of State Revenue (DOR): The bill’s provision of requiring the DOR to set the gross retail base
period amount and income tax base period amount for an IDD is within the agency’s routine administrative
functions and should be able to be implemented with no additional appropriations, assuming near customary
agency staffing and resource levels.
Department of Local Government Finance (DLGF): The bill’s provision of having the DLGF receive notice
from the local executives of the base assessed value of the IDD is within the agency’s routine administrative
functions and should be able to be implemented with no additional appropriations.
Explanation of State Revenues: IDD: This bill creates a cap on the allocation of incremental sales tax and
adjusted gross income tax revenue to an IDD to be the lesser of 10% of the total cost and benefits of the
proposed investment or $15 M. This provision may result in additional revenue being distributed to the state
SB 494 1 General Fund and to the Industrial Rail Service Fund and Commuter Rail Service Fund (in the case of sales
tax) as opposed to an IDD. The actual fiscal impact would be contingent on if an IDD generates incremental
sales tax and adjusted gross income tax revenue in excess of the newly created cap on these revenues.
This bill also removes current code that states any revenue of $500 M or less in the statewide Innovation
Development District Fund at the close of any state fiscal year stays in the fund and any revenue in excess
of $500 M shall be transferred to the state General Fund. This provision would result in additional revenue
being distributed to the state General Fund since there would no longer be a requirement that the fund
balance in the Innovation Development District Fund remain in the fund at the end of the fiscal year.
Explanation of Local Expenditures: This bill’s provisions will result in an increase in the administrative
workload for local executives who are associated with an IDD since they would be required to provide a
notification of the designation of an IDD to both the DOR and the DLGF. Additionally, they would be
required to determine and establish the base assessed value of the IDD and provide notice to the DLGF prior
to August 1 of the year following the designation.
Explanation of Local Revenues:
State Agencies Affected: Indiana Economic Development Corporation; Department of State Revenue;
Department of Local Government Finance.
Local Agencies Affected: Executives as defined in I.C. 36-7-32.5-3.
Information Sources:
Fiscal Analyst: James Johnson, 317-232-9869.
SB 494 2