Local fiscal officers argue Indiana House Bill 1381 pits them against city, town councils

House Bill 1381, authored by State Rep. Ben Smaltz, R-Auburn, would allow the legislative body of a city or town to petition a court for removal of the community’s fiscal officer — an elected clerk-treasurer for towns and third-class cities, or controller for second-class cities — under four circumstances:

• Charging illegal fees for services.
• Failing to perform official duties.
• With certain exceptions, failing to be present in the officer’s office.
• Failing to participate in four consecutive meetings of the legislative body of the municipality.

HB 1381 passed the House 96-0 on Jan. 28, and is now before the Senate Local Government Committee. A hearing has not yet been set.

In the meantime, a group of more than 207 municipal clerk-treasurers, their staffers and other officials have jointly signed a letter addressed to the Indiana General Assembly expressing concerns about the bill — including the clerk-treasurers of Morgantown, New Whiteland, Prince’s Lakes and Trafalgar. The fiscal officers write they understand that the intent of the bill, which is is to establish a path to deal with fiscal officers who truly stop performing the duties of the office, but are concerned the bill “goes far beyond addressing those limited circumstances and instead blurs the line between the legislative body and a separately elected fiscal officer in a way that disrupts the balance that has long existed in municipal government, the letter says.

“By allowing a council to create a policy defining how much time a clerk-treasurer must be physically present — including provisions related to hybrid or remote work — the bill gives the legislative body the authority to set expectations for how the job is performed and then use those same expectations as grounds for removal,” the letter continues. “This is not simply addressing abandonment of duty; it effectively grants one branch of local government supervisory authority over another, separately elected office.

“This creates a real risk that removal actions could be driven by disagreements, misunderstandings about how the role functions, or political conflict rather than a clear failure to perform statutory responsibilities. The same body that defines what is considered ‘reasonable’ would also be the body asserting that those standards were violated,” the letter continues.

In the letter, officials argue the focus should instead be on whether statutory duties are being fulfilled and whether public funds are being properly managed — “objective outcomes that a court can evaluate” rather than “assessing whether an individual is physically present in an office for a prescribed number of hours each day.” They also ask for the language of HB 1381 to be reconsidered and refined so it “addresses the extreme cases it is intended to solve without weakening the structural independence that is essential to municipal fiscal integrity.”

‘A weapon to remove’ clerk-treasurers

Several local clerk-treasurers are equally as concerned about HB 1381. They all support accountability and transparency of elected officials, but the bill doesn’t address it the right way, they said.

”The way HB 1381 is set up, it makes the clerk-treasurer more like an employee instead of an elected official,” said Angela DeVoss, New Whiteland’s clerk-treasurer. “Additionally, why does HB 1381 single out clerk-treasurers? All elected officials should be held to the same standard. Elected officials work for the people, not other elected officials.”

Whiteland Clerk-Treasurer Jenny Roberts says the bill “could be a weapon to remove a clerk-treasurer.”

“This bill, as written, could be a weapon to remove a clerk-treasurer by claiming time spent in the office was not reasonable when in fact the statute does not define ‘reasonable amount of time,’ nor does it designate who defines reasonable,” Roberts said. “If a clerk-treasurer can be removed from office if they do not attend four consecutive council meetings, why can’t a council member be removed from their elected position if they do not attend theirs? What is done about the bullying of clerk-treasurers throughout the state by council members who do not agree with them?”

DeVoss echoed similar points about councils establishing policies to set expectations for how the job is performed, which can then be used as grounds for removal.

”Many clerk-treasurers are concerned because removal actions could be driven by disagreements, misunderstandings, or political conflict rather than a clear failure to perform duties,” she said.

Trafalgar Clerk-Treasurer Donna Moore says clerk-treasurers, including herself, work an “extraordinary number of hours to do the job” while most council members don’t realize “the effort it takes is the number of hours required.” She added that a look at meeting minutes from around the state would show that clerk-treasurer’s attendance is generally not a problem, as most meetings are canceled due to council members not attending.

With challenges from property tax legislation passed by lawmakers last year, councils and clerk-treasurers should be working together for the benefit of those who elected them — “not creating unnecessary conflict with elected offices,” Moore said.

However, Franklin Clerk-Treasurer Jan Jones doesn’t have any significant concerns with the bill. She views it as a “reasonable, balanced measure” to ensure effective local government that “promotes accountability without undermining the elected nature of the role,” she said.

“The requirement for a court petition ensures due process, evidence-based review and protection against purely political motivations,” Jones said. “Most clerk-treasurers perform their financial and record-keeping responsibilities diligently and professionally. The bill targets genuine neglect or misconduct, which is rare but can have serious impacts on municipal operations and public trust when it occurs. Having a structured, judicial pathway for addressing such issues strengthens good governance rather than threatening it.”

Greenwood’s unique situation

Greg Wright, the city controller for the city of Greenwood, is placed in a unique predicament with HB 1381 compared to other local communities. The bill would give the city council supervisory authority over Wright, who is appointed by the executive branch, and allow the council to petition a court for his removal. Greenwood is a second-class city, so it has a mayoral-appointed controller and a voter-elected clerk.

“Under the current system, all department heads serve at the pleasure of the mayor — meaning it is the exclusive power of the mayor to hire and fire department heads — including the controller,” Wright said. “This bill allows a council to usurp a power that is specifically reserved for the executive branch — but only for one department head. Therefore, the bill violates the basic premise of separation of powers in every level of American government.”

The bill also creates potential for abuse in a situation where the mayor and the city council have personality clashes or political party differences. If the city council were the opposite party of the mayor, the council could use the bill’s provisions to create gridlock for city operations by litigating political plays using the controller. The city and council could also be sued for employment law violations, defamation or reputational harm if it were to get to that point, Wright said.

“The eventual fallout — besides a lot of money wasted on legal proceedings — would be that no finance professional would be willing to put themselves at risk by working for such a city. This leads to less oversight, more potential for malfeasance or fraud or large-scale mistakes that our citizens end up footing the bill for,” he said.

Right now, the mayor, city council and controller have good working relationships, but Wright can’t guarantee that future administrations wouldn’t have issues like this. There are many communities that already have issues like this, and HB 1381 “promises to exacerbate those differences to the detriment of their citizens,” he said.

Officials are already held accountable

Another argument against the bill cited by some local fiscal officers is that mechanisms to address misconduct already exist.

Clerk-treasurers and controllers are audited regularly by the Indiana State Board of Accounts, with the results given to the community’s leaders — both legislative and executive. If one of these officials is failing to perform their statutory duties, the SBOA has authority to initiate removal procedures or criminal proceedings, Wright said.

There are also already laws in place to address when a fiscal officer fails to do their lawful duties, so the bill is unnecessary in that regard, he said.

“It is a blatant attempt to circumvent the balance of power between elected offices — which exists for a reason. … Maintaining the independence of the clerk-treasurer or controller is essential to the integrity of local government finances, and these individuals are held accountable by both the voters and the State Board of Accounts — making the provisions of HB 1381 unnecessary,” Wright said.

DeVoss added that there are also internal controls to address issues, along with elections to take care of the “very rare circumstances.”

Roberts says Whiteland needs consistency, which she intends to provide personally. However, a bill like HB 1381 will make her rethink her decision to remain in local government “if a power is given to another elected official to decide whether I am fulfilling the job.”

”The position is outlined in state statute, and I intend to do my absolute best to represent our town and the constituents for the role I was voted in to fulfill,” she said.

Ultimately, Wright believes HB 1381 is “poorly-designed” and violates the basic principles of separation of powers, he said.

“It’s my hope that the State Senate will recognize the many problems this bill creates and prevent it from moving forward,” Wright said.

Daily Journal reporter Erika Malone contributed to this report.