Republicans in Indiana proposed and then today withdrew a gay rights bill, a bill AP described as “a measure designed to restore the state’s reputation following a national boycott over a religious objections law last year.” The bill would have replaced the state’s Religious Freedom Restoration Act passed last year with a bill its advocates — who included not just gay activists but Republican and business leaders —claimed balanced gay rights and religious freedom.

According to a press release from state senator Travis Holdman, who sponsored the bill, it “would add sexual orientation, active duty military status and veteran status as protected classes in Indiana’s civil rights laws for employment, housing and public accommodations, while also including provisions aimed at protecting Hoosiers’ religious liberty and rights of conscience. The bill would charge a legislative study committee with examining issues related to discrimination based on gender identity.”

Majority leader David Long blamed activists on both sides for the legislature’s inability to pass the bill. “We took a beating from all sides in trying to do this. This effort was unfortunately hampered by well-organized extreme messaging from groups representing both sides of this discussion — many of them from out of state. Neither of those sides were truly seeking a solution.”

“I think there are a lot of people willing to move forward on the LGB issue, but the T is a stumbling block at the moment,” he told reporters, in a video on the Indianapolis Star‘s site. “We weren’t able to get there. A coalition could have been forged if that hadn’t been part of the bill, but there was insistence on its being there.”

Democrats would not accept a bill without transgender rights, while Republicans would not accept one with them, according to the Star. The sides were also divided over religious exemptions, with LGBT activists strongly opposed to any concessions for religious conscience.

Several sources speculated that withdrawing the bill solved a political problem for governor Mike Pence, who faces a tough battle for re-election, and other Republicans in state office, by letting them avoid taking a public position. Pence, who had earlier said he would not approve a bill that restricted religious freedom, had not commented on the withdrawal of the bill at the time of writing.

Strong business support

The bill was also strongly supported by business interests, the Star reported, as well as by Republican leaders like former state GOP chairman Jim Kittle. Eli Lilly said in a statement that “This issue is not going away for Lilly and hundreds of other Indiana businesses as all of our competitors will continue to use this unnecessary burden against us.”

The chairman of the state Chamber of Commerce called it a “critical issue.” The group’s official statement declared that “the bottom line is that this inaction – coupled with the RFRA black eye last spring — leaves Indiana at a disadvantage in the recruitment, attraction and retention of talented individuals. All of our state leaders must find a way to work together to craft a solution; the Indiana Chamber will continue to advocate for expanded civil rights protections.”

Holdman warned that if the legislature did not pass such a bill, “there is a very real possibility that the courts will do it for us, and I don’t think that is in the best interest of the state — either for the protection of our friends in the LGBT community, or our friends who seek to protect religious liberty.”

The director of the American Family Association of Indiana, Micah Clark, welcomed the Republican leaders’ action, calling the bill a “fatally flawed concept” and a threat to religious freedom.