Township trustees with hefty budget surpluses would be required to justify their reserves under a bill that passed 88-9 through the Indiana House this week.
"Hoosier taxpayers deserve to know where their money is and how it is being used,” said State Rep. Cindy Ziemke, R-Batesville. "Many townships are sitting on large sums of money with no plan to use it. This legislation would spur townships to implement their ideas and provide the public a clear breakdown of their township’s finances and plans for future projects."
But as Ziemke's House Bill 1177 heads to the Senate, it may signify that small township reforms will be the path for legislators seeking changes in the state's centuries-old system of government touted as being closest to Hoosiers.
HB 1177 moved with little House opposition despite a blow dealt a week earlier to House Bill 1650 that would have eliminated township boards. HB 1650 was defeated 75-18 on Feb. 12. The 18 votes in favor of the elimination of township boards came from Republicans.
Both bills were authored by Ziemke, who has sought township reforms over numerous legislative sessions.
After HB 1650 was killed, House Speaker Brian Bosma, R-Indianapolis, was asked if that vote signaled whether the Legislature would struggle for wholesale changes to township government.
"Probably," Bosma acknowledged. "There may be some reforms that are possible, but it took it on the chin this year."
Bosma said, "If we’re going to keep the trustee, it kind of makes sense to me to have the township board as well so that’s their fiscal body to oversee the actions of a single individual. If we were to do away with townships — I think personally that would be a better approach, but it’s not been successful so far."
His comments came a few days before HB 1177 seemed to glide through the House. In the 88-9 passage, all nine votes against the bill came from Democrats. The Indiana Township Association, which represents about 600 of Indiana's 1,005 townships, supports the bill.
The bill requires townships to prepare a capital improvement plan for three years if the balance in capital improvement funds — the money used for projects such as the purchase of a fire truck or park land —- exceeds 150 percent of the township's annual budget estimate.
If a township doesn't adopt a capital improvement plan and file it with the state, the township won't be able to collect property taxes.
Under the bill, townships could also make a one-time transfer of excess balances from one fund, such as poor relief, to another fund, such as fire services. The transfer can only be performed if a capital improvement plan is in place.
"We have many townships that say, 'We have excess funds, but we cannot spend them because it's in the wrong account,'" Ziemke said.
Taxpayers, however, often view government entity surpluses as overpayments that they've made through property taxes, said Rep. Bruce Borders, R-Jasonville. Borders asked Ziemke if she would consider altering the bill to restore surpluses to taxpayers.
"Ultimately the taxpayers are the ones that paid that overpayment. One of the biggest complaints that I get when we deal with these township issues is that people are always saying, well, I want government close to home," Borders said. "But when you start pointing out in certain trustee cases the money that they've got set aside they're like, 'Wow, I didn't realize that. They shouldn't have charged us that.'"
Borders added, "I would love to see, as this works its way through the process, a way of basically not only capping what they can do but also seeing if we can restore that money to taxpayers that it was taken from."
Transfers of funds would need to be approved in a public meeting, which should allow residents to discuss transfers with their township board, Ziemke said.
In addition, Ziemke's bill seeks a study committee to determine the level of preparedness of volunteer fire departments, which typically supply services to townships, and whether those departments have the necessary resources to perform their duties.