INDIANAPOLIS | Legislation allowing local governments to ask for a state takeover to fix financial issues instead of declaring bankruptcy took the first step toward becoming law Wednesday.
An Indiana Senate committee voted 9-0 to send Senate Bill 105 to the full Republican-controlled Senate. A final vote there could come as soon as next week.
The legislation permits the executive and council of a local government that meets one of eight financial conditions -- such as missing two consecutive payrolls or defaulting on bond payments -- to jointly ask a reconstituted Indiana Distressed Unit Appeals Board to appoint an emergency manager to take over its finances.
The emergency manager would have the authority to cut the budget, renegotiate labor contracts, approve or veto loans and hiring and audit the books, independently of the government's elected officials.
State Sen. Ed Charbonneau, R-Valparaiso, the sponsor of the measure, asked the committee to change the legislation to take away the ability of a local government's creditors to ask for a DUAB takeover. The committee agreed to the change.
The committee also approved an appeals process for a local government that doesn't like DUAB's financial prescription and inserted language allowing a newly elected executive to ask for a suspension of the emergency manager so the executive can implement his or her financial plans for the government.
Several Gary residents spoke to the committee Wednesday and predicted the Steel City will be first to seek a state takeover.
But Charbonneau said his legislation isn't targeted at Gary and if enacted would apply statewide.
Republican Gov. Mitch Daniels has said he supports the proposal.