The Marion City Council budget committee heard from attorney and municipal law expert Karen Arland regarding alleged inadequacies of the six spending cap ordinances that the council reintroduced in November.

City administration officials paid Arland to represent them.

The spending ordinances would require city administration to come before city council for approval of certain expenditures that exceed $5,000.

Arland stated that all six of the ordinances contain a “fatal legal defect” in that they attempt to exercise the powers of the executive, which is not permitted under Indiana Code 36-4-4-2, which states: “The powers of a city are divided between the executive and legislative branches of its government. A power belonging to one branch of a city’s government may not be exercised by the other branch…”

Arland cited case law regarding the code, though it was applied to a township, which disputes whether a council can micromanage expenditures after having already allocated the funds.

“The Indiana Court of Appeals said that they may not do that. You have that language, something similar to that, in all six ordinances,” Arland said. “All six ordinances have that initial problem.”

Regarding the council’s ordinance No. 15-2021 amending an ordinance establishing a Cumulative Capital Development Fund, Arland stated that the council failed to comply with statutory procedures for either establishing it, amending it, or changing the rate.

“If there is a statutory or constitutional manner prescribed for the exercising of power, you must comply with that exercise, that prescription,” Arland said. “You didn’t do that. The ordinance would be rejected by the Department of Local Government Finance when it’d be submitted to them for approval.”

General Ordinance No. 16-2021, an ordinance establishing regulations regarding spending of the General Fund, also requires the city to seek additional approval after the funds have already been allocated.

“In addition to the legal defects described above, the ordinance fails to comply with the statutory described procedures for the presentation and adoption of the annual budget,” Arland said.

Arland described General Ordinance No. 17-2021, which pertains to the city’s Insurance Fund, as another “attempt to micromanage the executive branch.”

The council’s attempt to amend the ordinance regarding spending from the Cumulative Capital Improvement Fund, which is funded with revenue from the cigarette tax, involved the addition of purposes which are not authorized under the statute which established the fund, Arland said. She argued the ordinance would fail for that reason.

The ordinance establishing regulations regarding the spending of the Economic Development Income Tax Fund (EDIT), attempts to “micromanage” the EDIT fund, Arland said. Arland cited a statute that specifies the purposes for the EDIT fund.

“Your ordinance fails to include all of the statutory definitions of economic development purposes and since it does not, again, it fails to comply with the statue and the Home Rule Act,” Arland said.

Lastly, the council had presented an ordinance that would require there to be no less than 5 percent of the city’s annual budget in the Rainy Day Fund by 2025, requiring a 1 percent increase each year.

However, Arland stated that the council is unable to require future councils to meet certain percentage allocations.

“...One council may not bind a future council in respect to discretionary functions. This would all be part of a discretionary function,” Arland said. “If a future council wanted to change this, you’ve attempted to bind them, so that they can’t, but in fact, they probably could.”

Council president Brian Cowgill announced that the council would not be asking follow up questions during the meeting, but would schedule a future meeting to discuss Arland’s findings.
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