Is the billion-dollar incentive deal for Eli Lilly a good deal for taxpayers?

INDIANAPOLIS — It is the most expensive incentive package ever offered by the Indiana Economic Development Corporation (IEDC).

Price tag: just over $1.25 billion.

That’s what Eli Lilly got in return for placing two pharmaceutical manufacturing plants in the IEDC’s Leap District in Boone County.

Lilly remains, for now, the only tenant in the 9,000-acre, innovation park. But the company has committed capital to the project three separate times.

• May 2022: CEO David Ricks announces Lilly will spend up to $2.1 billion dollars to create a pair of “production sites” at LEAP.
• April 2023: At the groundbreaking, Ricks discloses Lilly has increased its investment for the LEAP District plants by $1.6 billion, bringing the company’s total planned spending on the project to $3.7 billion.
• May 2024: During the IEDC’s Global Economic Summit in Indianapolis, Ricks once again reveals Lilly will add another $5.3 billion dollars for the under-construction, twin plants. Total Lilly investment balloons to $9 billion.

It is the IEDC’s biggest-ever deal, but how do you grade economic development deals? The creator of the IEDC had a few thoughts on that.

“It’s very dangerous, you know, to let politicians loose with the public checkbook,” said Mitch Daniels in an interview back in March.

As governor, Daniels urged for the creation of the IEDC and led the agency in its early years.

Daniels said he was mindful that while politicians go to the ribbon-cutting ceremonies for new economic development projects, taxpayers get stuck with the bill.

A good measuring stick, said Daniels, for such development deals is, “subsidy dollars per job, with the goal of driving it down.”

So, how does the incentive deal given to Lilly stand up?

The package includes:

• $5 million for worker training
• $15 million for infrastructure improvements
• $37 million+ in redevelopment tax credits
• $1.25 billion in tax rebates (over 30-years)

Total outlay: $1,257,085,000 in state subsidies.

Lilly committed to creating 900 jobs at the twin drug-making factories, and the company receives nearly $1.4 million in subsidies for every job it creates.

“The only thing we can honestly say about this is it’s a big transfer of wealth from Indiana taxpayers to Lilly shareholders,” said Greg LeRoy, executive director of Good Jobs First, a non-profit organization that monitors state and local economic development deals.

LeRoy says the Lilly deal fits a recent trend around the county.

“We do see an acceleration nationally of what we call mega-mega-deals, over a billion dollars for individual facilities. There is an interstate war among the states for jobs and investment,” explained LeRoy.

Lilly is also fiscally in very good shape. Its market capitalization (the number of shares of stock outstanding times current stock price) is north of $850 billion.

Indiana Commerce Secretary David Rosenberg recently referred to Lilly as “the largest pharmaceutical company in the history of the world.”

When asked to justify granting the generous package of subsidies to Lilly, Erin Sweitzer, Deputy Chief of Staff and Vice President of External Communication said, “The number of committed jobs represents only a fraction of the anticipated long-term benefit to the state.”

Sweitzer went on to explain that prior to offering Lilly the incentive package, the IEDC conducted a cost-benefit analysis “looking at reasonably attributable new revenue,” including an array of increased tax revenues.

FOX59 learned in the email exchange with Sweitzer that the cost-benefit analysis for all projects produces a specific dollar amount on what the state expects to get out of the deal.

We asked for a copy of the analysis of the Lilly deal, but we were denied.

Sweitzer explaining such details are not shared with companies the IEDC is doing business with or the public.

So, while taxpayers know they are on the hook for the $1.25 billion deal with Lilly, Hoosiers are left in the dark about how the agreement benefits them.

For the latest news, weather, sports, and streaming video, head to Fox 59.