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GREENWOOD, Ind. | Gov. Mike Pence signed into law a package of business tax cuts Tuesday that's smaller than he originally sought, but which he believes still will lure companies to Indiana and help existing Hoosier employers grow.

"Job creation is job one in Indiana and the legislation signed today will strengthen our competitive edge to attract new businesses and good-paying jobs to our state," Pence said. "We are in a national and global competition for jobs and these important reforms will improve our pro-business tax environment and bring good jobs for Hoosiers."

Senate Enrolled Act 1, sponsored by state Sens. Brandt Hershman, R-Buck Creek; Ed Charbonneau, R-Valparaiso; and Sue Landske, R-Cedar Lake, steadily reduces the state's corporate income tax rate from 6.5 percent next year to 4.9 percent in 2021.

It also gives counties the option of eliminating the business personal property tax on new equipment or on companies with less than $20,000 in taxable business equipment, or keeping the tax as is.

In addition, cities and towns can abate local business taxes for up to 20 years starting in July 2015, instead of the maximum 10 years allowed under current law.

"We have attempted to build on the momentum that Indiana has developed to create even more opportunity in what is still a very difficult economy across the country," Pence said.

Hershman, whose Senate district includes a portion of Jasper County, said Northwest Indiana, in particular, stands to benefit from the business tax cuts because it is the most logical place for Illinois companies fleeing that state's unforgiving business tax climate to relocate, and 33 already have.

"At a time where Illinois is discussing raising its income tax again, which will hit a lot of small businesses ... and while they've discussed lowering their corporate rate they haven't done it, Indiana just continues to rack up wins," Hershman said.

But House Democratic Leader Scott Pelath, D-Michigan City, said Hoosiers shouldn't buy into the Republican governor's hype on the business tax cuts, calling them a "jobless creation program" and warning that they imperil the state's ability to invest in education and the workforce.

"This law will not create good-paying jobs for Hoosiers — unless, of course, you live under the misguided belief that $8 an hour jobs are worth celebrating," Pelath said. "Of course there will be high-fives in the corporate boardrooms of our state, as they gleefully add taxpayer giveaways to their balance sheets. There will be no such bounty for the people who need it the most — the middle class."

When fully implemented, the corporate income tax cut will reduce state revenue by approximately $135 million a year. The impact on local governments will depend on whether they choose to eliminate the business personal property tax or abate taxes for some or any business taxpayers.

There is no state replacement revenue provided for counties that get rid of the tax. Statewide, the business personal property tax contributes more than $1 billion a year to schools and local governments.

In December, Pence called on the Republican-controlled Legislature to figure out a way to eliminate the business personal property tax altogether, prompting protests from local officials already struggling to balance their budgets under state-imposed property tax caps.