Watchdog Indiana is keeping an eye on those 2009 Indiana General Assembly bills that have the potential to significantly impact good government from the standpoint of the state and local tax burden of Hoosier working families. These important bills are in four categories: (1) Constitutional Property Tax Caps, (2) State Budget (3) Local Government Reform, (4) Other Significant Legislation.

STATUS: The Senate passed the constitutional property tax caps in SJR 1 by a 34 to 16 vote on February 9! The House must now pass SJR 1 so We The People can vote on the constitutional property tax caps in 2010. B. Patrick Bauer has blocked passage of the constitutional property tax caps in Senate Joint Resolution 1 by NOT faithfully and impartially discharging his duties as Speaker of the House.

STATUS: On April 29, a conference committee version of HB 1001 passed the Senate 37-13 but failed to pass the House 27-71. The Governor will call a special session of the General Assembly to complete the budget for the next biennium.

The 2009-2011 state budget in the version of House Bill 1001 passed by the State Senate on April 14 was Taxpayer Friendly IF the $336.5 million structural deficit is accurate. Hoosier working families, who ultimately bear Indiana’s tax burden, are protected from tax increases by a two-year budget that leaves a combined $1.4698 billion in reserve on June 30, 2011 (using the April 17 revenue forecast). Sufficient reserve dollars are needed so the $336.5 million structural deficit created by using federal stimulus funds in this budget can be offset in the next budget without tax increases.

Single-interest tax spenders would like to spend down the budget reserves on a long wish list of programs, all of which they passionately deem to be of overriding importance. Every General Assembly member who cares as much for tax payers as they do for tax spenders is urged to maintain the reserves in the Senate version of HB 1001 – UNLESS a Taxpayer Friendly Compromise can be reached!

Working families welcome a Taxpayer Friendly Compromise where up to $300 million of the state’s reserve funds are judiciously used in return for the House leadership allowing a vote on the exact same version of Senate Joint Resolution 1 that passed in 2008. The constitutional property tax caps in SJR 1 will do more to permanently make the tax burden of working families more fair and affordable than any other legislative effort in our state’s history.

The Senate version of HB 1001 has done a really good job of balancing the needs of tax payers on one hand with the needs of tax spenders on the other hand. Tax payers have sufficient reserve funds to avoid future tax increases. Tax spenders have 1.9% more K-12 education spending in 2010, 2.1% more K-12 education spending in 2011, increased Medicaid spending for enrollment growth due to high unemployment, 0.6% more higher education spending in 2010, 1.4% more higher education spending in 2011, reauthorization of 2009 higher education capital projects, and added prison capacity at Miami and Wabash Valley. This balance between tax payers and tax spenders must not be disturbed by spending down the reserves unless there is a Taxpayer Friendly Compromise where SJR 1 gets a House vote. Governor Daniels and every Taxpayer Friendly General Assembly member must not let one word or one dollar figure be changed in the Senate version of HB 1001 unless there is a House vote on SJR 1.

IT MUST BE NOTED that the $336.5 million structural budget deficit estimate from the Senate Republicans is about $400 million less than estimates from the Governor and House Republicans. Watchdog Indiana is researching the structural deficit estimates to identify which estimate is more accurate. Education or other spending cuts will likely be needed in the special session budget to build up reserves to about $1.5 billion if the use of federal stimulus funds creates more than a $500 million structural deficit.

Working families will reward those legislators and governor candidates who responsibly maintain the state’s reserve funds, or carefully use them to reach a Taxpayer Friendly Compromise.

STATUS: HB 1656 was passed by the House 88-11 on February 10. The Senate Appropriations Committee held a public hearing on March 19, but no vote was taken. A few provisions of HB 1656 were included in the HB 1001 budget bill.

(1) Annual 2009 through 2015 non-reverting appropriations of money totaling $7.5 billion from the Major Moves Construction Fund, federal funds, and other Indiana Department of Transportation (INDOT) revenues for numerous listed state Major New Highway and Major Pavement Preservation projects.

(2) Federal stimulus funds appropriation of $40 million, if allowed by federal guidelines, to higher education institutions to carry out eight building, repair, and rehabilitation projects.

(3) Establishment and enforcement of a goal that contractors and subcontractors employ at least 90% Indiana residents on state-funded and local-funded public works projects awarded by the Public Works Division of the Department of Administration, any state agency or commission entering into a public works contract, the Ports of Indiana Commission, INDOT, or a unit of local government. Contracts awarded to a contractor or subcontractor that fail to maintain the required proportions of Indiana residents may be terminated without cause. The Department of Administration Commissioner must prepare annual reports on the percentage of Indiana residents employed by contractors and subcontractors on public works projects.

(4) The requirement that a public works contract must include only Indiana-produced steel or foundry products, materials, equipment, and durable goods unless the Indiana-only price is 15% or 25% more than the outside-Indiana price. The Department of Administration is required to maintain on its website a list of Indiana businesses and products.

(5) Establishment of the Adult Workforce Training Grant Program using federal stimulus funds to provide $3,000 annual scholarships for two years to Indiana residents who have become unemployed as a result of a reduction in the workforce of an Indiana employer.

(6) Prohibition of tolling and public-private agreements for the extension of I-69 between Indianapolis and Evansville.

The following provisions should be deleted from HB 1656:

(1) The INDOT appropriations from designated federal funds of $250 million for county grants and $250 million for city and town grants are no longer needed. The $658 million in highway infrastructure federal stimulus projects, of which $218 million will go to local agencies, is sufficient. INDOT has done a good job of preparing statewide project lists that use the federal stimulus funds.

(2) The state’s Next Generation Trust Fund should not be spent on $500 million in local county, city, and town transportation projects. The Next Generation Trust Fund balance should be maintained to lessen the need for future state gas tax increases.

(3) Using $20 million of federal stimulus funds to establish a Community Infrastructure Assistance Program does not create sufficient jobs in the short term. INDOT should use existing resources to assist local units of government with qualifying for economic stimulus funds, other federal funds, or other funds for transportation purposes.

House Bill 1723 Elementary & Secondary Education Budget: Taxpayer Friendly Compromise

STATUS: HB 1723 was passed by the House 52-46 on February 10. The Senate Appropriations Committee held a public hearing on March 5, but no vote was taken. Elementary and secondary education provisions were part of the two-year budget included in HB 1001.

HB 1723 establishes a one-year 2010 formula for the distribution of state tuition support to school corporations and charter schools The 2010 school formula provides 2.2% more funding than the 2009 school formula. HB 1723 uses $200 million of the state reserves

A school corporation can continue to use money in a capital projects account to pay for utility and insurance costs.

Beginning in 2010, HB 1723 changes the formula that distributes the grants used to replace the school revenue lost to property tax caps. Instead of property tax cap losses of more than 2% of its total school property tax levy, a school corporation must only have losses over 0.15% to receive a replacement grant.

1. Allow House passage of the exact same version of SJR 1 that passed in 2008 in return for Senate passage of the 2010 elementary and secondary education budget in HB 1723.

2. Using $200 million of the $1.3 billion state reserves in the 2010 elementary and secondary education budget can be acceptable. The current recession is already the third longest since the Great Depression and is not likely to last beyond the next fiscal year.

3. The Taxpayer Friendly Compromise is fiscally responsible because $1.1 billion will be left in the state’s reserves for future contingencies.

4. The State Senate can decline to vote on HB 1723 until the House votes on SJR 1.

5. SJR 1 supporters should ask those constituents who will benefit to encourage Governor Mitch Daniels and Speaker Pat Bauer to accept the Taxpayer Friendly Compromise.

6. The Taxpayer Friendly Compromise will remove SJR 1 as an important partisan issue in the 2010 election.

7. The passage of constitutional property tax caps promises to be a legacy vote for which legislators will be lauded by generations of Hoosiers to come.

8. We The People will get to vote on the constitutional property tax caps in 2010. The collective wisdom of the voters will determine if the constitutional caps and the supporting legislation can be expected to provide a more fair and affordable tax burden while maintaining necessary government services. The SJR 1 decision is so important that it should properly be made by the voters.

9. Rigid political ideology must not get in the way - all SJR 1 supporters can accept the pragmatic Taxpayer Friendly Compromise. The FY 2010 elementary and secondary education budget compromise is a good way to get a 2009 vote on the exact same version of SJR 1 that passed the General Assembly in 2008!

STATUS: SB 348 was passed by the Senate 36-13 on February 24. SB 348 was amended with little public notice into SB 452, which was subsequently defeated by a rushed political maneuver in the House Government and Regulatory Reform Committee on March 10.

SB 348 is Taxpayer Friendly because a Library Services Plan developed and approved by a Public Library Service Planning Committee in every county (except Marion County) may result in more effective use of working family dollars currently spent on library services. Also Taxpayer Friendly are the "opt out" referendum provision and the option to equitably replace public library property taxes with a county economic development income tax.

SB 348 establishes a Public Library Service Planning Committee in every county (except Marion County) to prepare a Library Services Plan that provides library services to all areas of the county. The State Library and the Office of Management and Budget must assist counties in obtaining grants, funding, preparing and implementing their Library Services Plan. A Planning Committee must conduct a public hearing and consider public testimony when the Committee has prepared a Library Services Plan. A Planning Committee must submit its Library Services Plan to the State Library for review, but NOT approval, before February 1, 2010. The State Library must review the Library Services Plan and provide any recommendations to the Planning Committee before April 15, 2010. A Planning Committee may modify its Library Services Plan to address any State Library recommendations before taking final action on the Plan by May 15, 2010. Any reorganization or consolidation under a Library Services Plan takes effect January 1, 2012.

A Library Services Plan must adopt one of the following library service models: (a) a consolidated countywide system, (b) a consolidated system of two or more counties, (c) two or more independently governed library systems within a county, (d) any other library service model that the Public Library Service Planning Committee considers to be appropriate to meet the statewide standards for the delivery of consistent, quality library service (including a model that provides for a public library system that includes territory in more than one county). If a county is already served by a countywide public library system, the county's Planning Committee is not required to adopt a library service model. If a Planning Committee determines that a library service model other than a consolidated countywide public library system should be used, the Committee must include in the plan the Committee's specific findings and explanation concerning why the chosen library service model is preferable and will result in the delivery of better library services. If a Planning Committee determines that there are areas in the county that are underserved by the public library systems, the Committee must consider the option of having a public library enter into an interlocal agreement with one or more county school corporations to allow the public library to use school buildings. A Library Services Plan may not change the total number of appointments that may be made to a library board, or the persons or entities that make the appointments to a library board, but the distribution of appointments between the appointing persons or entities may be changed. If a Library Services Plan provides that two or more public library systems shall be consolidated into one remaining public library system, no library operated by any of the consolidated public library systems may be closed before January 1, 2015.

The lesser of 100 or 5% of the registered voters residing within a library district or an area that is not part of a library district within a particular township may initiate a petition process to place a public question on the November 2010 ballot asking whether the library district or area should be covered by a Library Services Plan. Separate vote totals must be certified for each library district and for each area in which a public question is held. The Library Services Plan does not apply to a library district or area if the public question is not approved by a majority of voters who vote in that library district or area. If a public question is on the ballot in more than one township for areas that are not part of a library district, the results of the vote on the public question are separate for each area. A Library Services Plan is considered to be modified to exclude any library district or area that, because of the results of the public question, is not covered by the Plan. A Planning Committee may adopt one or more subsequent Library Service Plans covering any library districts or areas that are not covered by an existing plan because of the results of a public question. However, not more than two final Library Service Plans may be adopted by a Planning Committee in any seven year period.

A county for which a Library Services Plan is in effect, and that does not contain more than two public library districts, may adopt an ordinance designating a maximum 0.15% county economic development income tax (CEDIT) rate for replacement of public library property taxes. A public library may receive the public library property tax replacement credits under this provision only if the library has entered into reciprocal borrowing agreements with all other public libraries in the county. Taxpayers receive a credit for public library CEDIT liability if they (a) do not reside in the territory of any library district in the county or (b) reside in a library district in the county that is not covered by a Library Services Plan.

Beginning January 1, 2013, the State Library must report annually to the General Assembly and the Governor on the implemented plans and the plan budgets.

STATUS: SB 452 was passed by the Senate 32-18 on February 16. SB 452 was defeated by a rushed political maneuver with little public notice in the House Government and Regulatory Reform Committee on March 10.

STATUS: SB 506 was passed by the Senate 30-19 on February 17. SB 506 was amended with little public notice into SB 452, which was subsequently defeated by a rushed political maneuver in the House Government and Regulatory Reform Committee on March 10.

The following provisions of SB 506 are Taxpayer Friendly: (1) allowing a single County Chief Executive Officer or County Manager, (2) allowing the County Council or the Board of County Supervisors to exercise both the fiscal and legislative powers of the county, (3) providing for voter initiated referendums on county government reorganization, (4) repealing the requirement that political subdivisions must approve local government reorganizations initiated by voters, (5) assigning the Advisory Commission on Intergovernmental Relations four responsibilities to identify and monitor good local government practices, (6) prohibiting County Manager nepotism, (7) repealing unproductive reporting requirements, (8) continuing to elect the County Assessor.

It is Taxpayer Friendly that, in counties other than Marion County and Lake County, the county executive body (Board of Commissioners) shall after October 31, 2009, and before November 15, 2009, adopt a resolution specifying that the voters of the county shall: (1) elect a single County Chief Executive Officer to serve as the county executive and a County Council (that continues to be elected under existing law) to exercise the legislative and fiscal powers and duties of the county; (2) elect a Board of County Supervisors that has the combined executive, legislative, and fiscal powers and duties of the county; or (3) provide that the voters shall choose the structure of county government in a 2010 referendum. If a 2010 referendum is held, the voters shall choose one of two options for the structure of county government: (1) the county shall elect a Board of County Supervisors that has the combined executive, legislative, and fiscal powers and duties of the county; or (2) the county shall not reorganize county government. A political subdivision cannot promote a referendum position on the structure of county government. T he government structure chosen by a majority of the voters voting in the 2010 referendum is effective January 1, 2013. In counties with a County Chief Executive Officer, the initial County Chief Executive Officer is elected at the November 2012 general election and takes office January 1, 2013. Counties with a Board of County Supervisors have the County Supervisors elected at the November 2012 general election (with staggered terms). A county that has a Board of County Supervisors will employ a County Manager who must attain Credentialed Manager Status from the International City/County Management Association not later than two years after employment.

Establishing a single County Chief Executive Officer or County Manager would be Taxpayer Friendly. The three-headed county Board of Commissioners should be eliminated. A single County CEO or County Manager would provide county government with a single point of leadership, contact and accountability. A streamlined executive structure under a single County CEO or County Manger would be more responsive to citizens and could more readily take the definitive actions necessary to address the complex nature of today’s economy and public services.

Requiring the County Council or the Board of County Supervisors to exercise both the fiscal and legislative powers of the county would be Taxpayer Friendly. Indiana is the only state that divides fiscal and other legislative policymaking between two separately elected bodies - the County Council and the County Commissioners. Combining the fiscal and legislative duties in one elected county body would be better understood by citizens and businesses and will minimize buck passing.

It is Taxpayer Friendly that in every general election after 2012, 5% of the voters of the county may petition the Circuit Court Clerk specifying a public question on reorganizing the county government. The petition must specify one of the following sets of choices for voters: (1) The county shall have the government structure with a single County Chief Executive Officer and a County Council or the county government shall not reorganize. (2) The county shall have the government structure with the Board of County Supervisors that is a combined county executive, legislative, and fiscal body or the county government shall not reorganize. The County Commissioners in a county that retains a Board of County Commisioners may in any general election after 2012 provide that the voters of the county shall vote on the reorganization of county governmen with the following voter choices: (1) to not reorganize county government; and (2) one of the following choices, as determined by the County Commissioners: (A) to have a single county executive and County Council; or (B) to have a County Board of Supervisors.

It is Taxpayer Friendly that proposed local government reorganizations initiated by the voters do not need to be approved by the legislative bodies of the affected political subdivisions. Petulant and turf-protecting elected officials should not thwart the will of the voters to prepare a reorganization plan and place it on the ballot.

It is Taxpayer Friendly that the following four responsibilities have been assigned to the Advisory Commission on Intergovernmental Relations: (1) monitor the progress of local governments in implementing the recommendations made by the Commission on Local Government Reform and prepare an annual report of its findings, (2) create recommended minimum objective professional qualifications and performance standards for elected county officials, (3) create recommended best practices standards for the conduct of county government, and (4) conduct a performance audit of county government in Indiana and report the recommendations and results to the Office of Management and Budget and the Legislative Council before November 1, 2010.

It is Taxpayer Friendly that SB 506 prohibits nepotism in the appointment of the County Manager and the hiring of employees in the County Manager's office.

Repealing unproductive reporting requirements related to interlocal cooperation agreements, roads and streets, and county clerks is Taxpayer Friendly.

Many Hoosiers believe that county assessments can be arbitrarily completed to create winners and losers between classes of property tax payers. An elected County Assessor has the independence and autonomy needed to make certain that market values are properly used to assess all classes of property.

STATUS: SB 512 was passed by the Senate 28-22 on February 24. SB 512 was amended with little public notice into SB 452, which was subsequently defeated by a rushed political maneuver in the House Government and Regulatory Reform Committee on March 10.

It is Taxpayer Friendly that on January 1, 2013, the township board in every county other than Marion County is abolished. The county fiscal body becomes the fiscal body and legislative body of each township in the county. The county fiscal body also exercises the legislative and fiscal powers assigned in the Indiana Code to township boards, including the authority to adopt the township's annual budget and to levy township property taxes for township funds. An exception is provided until January 1, 2017, for a township that is involved in a reorganization under the government modernization statutes.

It is Taxpayer Friendly that when formulating an annual budget, a township must consider (1) the ending balance that will remain in each township fund relative to the budgeted expenditures from the fund and (2) whether the part of the balance in excess of 10% of budgeted expenditures should be used instead of imposing additional property taxes for the ensuing year. The Department of Local Government Finance must also consider these factors when reviewing a township's budget, tax rate, and tax levy.

It is Taxpayer Friendly that a relative of a township officer or employee cannot be employed by the township in a position that would put the relative in a direct supervisory or subordinate relationship with the officer or employee. A township employee who marries another township employee may not continue in the same position if the employee would have a direct supervisory or subordinate relationship with the employee's spouse. A township employee is not required to be terminated or reassigned until January 1, 2011, from any position held by that individual before July 1, 2009.

It is Taxpayer Friendly that a township trustee's annual report must list separately each expenditure to reimburse the trustee for the trustee's public business use of personal property, including any reimbursements made for the use of a private residence, personal telephone, or personal vehicle.

It is Taxpayer Friendly that each township office must include the address, phone number, and regular office hours (if any) of the township office in at least one local telephone directory.

It is Taxpayer Friendly that a public meeting or a public hearing of a township official or governing body may not be held in a private residence.

It is Taxpayer Friendly that the State Board of Accounts must submit an annual report to the executive director of the Legislative Services Agency and to county councils. Among other items, the report must include the balance in each township fund at the end of the preceding year, a summary of the township assistance information submitted by the township trustee under IC 12-20-28-3, a summary of any statutory compliance issues or exceptions noted by the State Board of Accounts in its township examination report for the preceding year, and a description of the property owned or leased by the township.

STATUS: SB 521 did not get passed out of the Senate Education and Career Development Committee.

No significant cost savings can be expected from merging smaller school corporations with other school corporations. The statewide ratio of student instructional expenditures to total school expenditures is 61.4%. The student instructional expenditures ratio is 85.9% for the 49 schools within school corporations that have an average daily membership of 500 to 1,000 students. The 68.2 % student instructional expenditures ratio for the 42 schools within school corporations that have an average daily membership of less than 500 also exceeds the statewide ratio. Smaller school corporations already exceed the statewide ratio for using the public funds entrusted to them for student instructional expenditures.

Education experts supposedly agree that school districts of less than 1,000 students are not able to provide the educational opportunities necessary to complete the Core 40 and Core 40 Honors requirements necessary for admission to the state’s four-year universities beginning in 2011. It has been reported that small school corporations offer far fewer advanced placement, foreign language, advanced math, and advanced science courses than corporations with more than 1,000 students.

SB 521 should not be passed out of the Senate Education and Career Development Committee unless it is certain that merging smaller school corporations with other school corporations will provide more educational opportunity. Only then will the following SB 521 provisions be Taxpayer Friendly:

(1) Requiring school corporations with an average daily membership of less than 500 students to merge with another school corporation or school corporations located in the same county;

(2) Providing for the preparation of a comprehensive reorganization plan by a county committee, public hearings on the plan, and approval by the State Board of Education;

(3) Providing for the development of a comprehensive reorganization plan by the State Board of Education for school corporations that fail to reorganize by 2013;

(4) Requiring the state Department of Education to develop standards for educational opportunity and an acceptable average percentage of classroom spending;

(5) Requiring a school corporation with an average daily membership of 500 to 1,000 students to demonstrate to the state Department of Education that it meets the standards, and, if unable to do so, to merge with another school corporation or school corporations in the same county;

(6) Allowing a reorganized school corporation to close school buildings, except that no high schools may be closed in the five-year period following the implementation of a comprehensive plan.

Thank you again for this opportunity to express my opinions regarding the school corporation reorganization provisions in Senate Bill 521. If it is appropriate, I welcome any questions.

STATUS: SB 525 was passed by the Senate 49-1 on February 24. SB 525 failed to pass the House 47-48 on April 15.

A bus contract entered into by a state agency may require the contractor to offer to political subdivisions the services, supplies, or transportation equipment (including buses) that are the subject of the contract under conditions specified in the contract.

Before making a procurement decision of $150,000 or more, a municipal corporation or special taxing district must consult at least two purchasing cooperatives (if at least two purchasing cooperatives exist) before purchasing a service, supply, or item of equipment. Records of the purchasing cooperatives consulted must be maintained.

HB 525 creates the Comer School Development Program to fund pilot programs at public urban schools with at least 50% of the students eligible for free or reduced lunch the prior year and at least 10% of the teachers that have a limited license or are teaching outside their licensed area. The pilot programs must include professional development for teachers, curriculum development, and other elements. The school development pilot program fund is established to provide grants to enable participating school corporations to establish and operate pilot programs. The Comer School Development Fund consists of gifts, appropriations by the legislature, and grants.

It is Taxpayer Friendly that the county recorder, county treasurer, county coroner, and county surveyor should cease to be elected officials. Indiana counties do not need these officials to be autonomous and independent. The duties of these officials are mainly administrative and should be transferred to the county executive. Transferring these duties to the county executive will (1) create clearer lines of accountability for local citizens and (2) enable unified policy-setting for general operation, staffing, purchasing, and other internal management issues.

Please pass SJR 7 out of this Committee so the next step can be taken to remove the county recorder, county treasurer, county coroner, and county surveyor as elected officials.

House Bill 1280 State Budget & Spending Information On Internet: Taxpayer Friendly

STATUS: HB 1280 was passed by the House 97-0 on February 24. Senator Brandt Hershman did not call HB 1280 for a Senate vote because an April 13 amendment was filed to include the language of SB 232 (which did not receive a hearing in the House Government and Regulatory Reform Committee).

It is Taxpayer Friendly that HB 1280 requires the State Auditor, working with the Information Technology Office, to develop and maintain an Internet website detailing all state agency expenditures and account balances.

The state agencies covered by HB 1280 include the legislative, administrative and judicial branches of government, and state educational institutions. Initially, the website will include the required information for all state agencies other than state educational institutions. HB 1280 requires the State Auditor and the Information Technology to provide a description of the data fields and data transfer standards and protocols developed during the initial phase to each state educational institution. The State Auditor is also required to submit a report to the Legislative Council that specifies the cost required for each state educational institution to comply with the requirements of HB 1280. Then, the Legislative Council will determine whether a state educational institution can provide the required information without expending resources.

The State Auditor must begin work to post the state expenditures and account balances on the Internet not later than July 1, 2009. State agencies must provide information to the State Auditor and develop links on agency Internet web sites to the Auditor's expenditure Internet web site.

The State Auditor must report the progress of posting state expenditures and account balances on the Internet to the State Board of Finance and the Legislative Council.

House Bill 1604 Marion County Capital Improvement Board Operating Deficit: Neutral

STATUS: The version of HB 1604 amended to include the CIB provisions passed the Senate 33-17 on April 15. A conference committee failed to reach agreement on HB 1604.

The Marion County Capital Improvement Board operates Lucas Oil Stadium, Conseco Fieldhouse, Victory Field, and the Indiana Convention Center. CIB mismanagement has resulted in a whopping $47.4 million annual operating deficit that is broken down as follows: $20 million more in Lucas Oil Stadium operating expenses than revenues, $15 million to assume from the Indiana Pacers the costs of running Conseco Fieldhouse, $5 million Indiana Convention Center operating deficit, $3 million more to market the expanded Indiana Convention Center, $3 million for debt service to replace a SWAP Termination Loan and AMBAC/MBIA surety policies, $1.4 million "other."

HB 1604 was amended in the Senate Appropriations Committee on April 2 to reflect the following plan to cover the CIB $47.4 million annual operating deficit: (1) $6 million CIB budget reduction announced on February 9; (2) $4 million CIB additional budget reduction; (3) $5 million Colts "potential contribution;" (4) $5 million Pacers "potential contribution;" (5) $6 million Marion County Admissions Tax increase from 6% to 10% on sporting and for-profit events at Conseco Fieldhouse, Lucas Oil Stadium, Victory Field, and the Indiana Convention Center; (6) $4 million Marion County Innkeepers Tax increase from 9% to 10%; (7) $6 million Professional Sports Development Area expansion to include the sales tax from the new Indianapolis Marriott Hotel; (8) $8 million Marion County share of 100% increase in alcohol taxes; (9) $5 million Marion County Food and Beverage Tax increase from 2% to 2.25%. The statewide alcohol tax increase would generate $32 million a year for cities and towns outside Marion County. The Marion County Food and Beverage Tax increase would have to be approved by the City-Council Council.

In a perfect world, the state would only use the hard-earned tax dollars of Hoosier working families to support the development of full-pay and full-benefit jobs in the health care and education industries. HB 1604 does not meet this perfect-world test.

All the so-called Marion County CIB "revenue enhancements" benefit the low-pay and low-benefit hospitality industry and deep-pocketed sports team owners. The hospitality and sports team industries spawn government costs that offset the perceived economic benefit.

One example of the government costs created by the low-pay and low-benefit hospitality industry is the explosion of English as a Second Language students in our K-12 schools. Indiana has experienced a 409% growth of ESL students the last 10 years. The Indianapolis Public School system has more ESL students than any other Indiana school district. Lawrence Township in Marion County has experienced a 329% increase in ESL students the last 10 years.

It is not immigration-phobic to make these observations. ESL students often outperform other categories of students. The United States has a long history of immigrant families using entry-level jobs to better themselves and the country. However, the growth of immigration in Marion County does create education and other public costs. Some of this immigration growth is the result of job increases in the CIB-subsidized hospitality industry. In the perfect world that I spoke of earlier, costly entry-level hospitality jobs would not receive CIB subsidies.

Damage control has to be the order of the day to be a pragmatic advocate for working families in today’s General Assembly. It must be recognized that lawyers and lobbyists for two single-interest groups – the gaming industry and developers – generally get their way. The developers are here today to get their way with HB 1604.

Working family damage control in the context of HB 1604 consists of limiting further CIB tax increases for the benefit of the hospitality industry and sports team owners to the users of the sports facilities and to "sin" taxes. One improvement is needed in HB 1604 to control the damage to working families.

The Marion County Food and Beverage Tax must NOT be increased 0.25%. Taxing yet more what families eat to benefit developers and sports millionaires is reprehensible and abhorrent.

The Food and Beverage Tax has been rationalized by the Indiana Association of Cities and Towns as a tax that is primarily paid by non-resident visitors. The truth of the matter is that the Food and Beverage Tax is a Family Meals Tax because, according to the Restaurant & Hospitality Association of Indiana, the great majority of this tax is actually paid by county residents.

Some have called the Family Meals Tax a voluntary tax. Eating food prepared outside the home has become a necessity for most families who work multiple jobs just to make ends meet. The Restaurant & Hospitality Association of Indiana reports that 25% of food dollars were spent dining out in 1955 compared to 47% in 2005. It is obvious that the luxury of eating out in 1955 has become today's necessity.

The Family Meals Tax hits low-income families hardest because it excessively taxes a basic necessity of life that everyone, regardless of income, must find some way to include in their budget. The percentage of household income used to purchase prepared food away from home increases as household income decreases.

The $5 million that would be raised by the Family Meals Tax increase should be shared by the Colts and additional CIB budget cuts.

If the Marion County family meals tax is removed, HB 1604 is palatable in this imperfect world of today’s General Assembly. However, HB 1604 is Taxpayer Unfriendly and should not be passed out of this Committee if the family meals tax is included. NOTE: Each version of HB 1604 after April 2 did NOT include a Marion County Food and Beverage Tax increase.

House Bill 1607 Northern Indiana Regional Transportation District: Taxpayer Friendly

STATUS: The version of HB 1607 amended to include the NIRTD referendum passed the Senate 43-7 on April 15. A conference committee failed to reach agreement on HB 1607.

HB 1607 is Taxpayer Friendly because a referendum is required before establishing a new tax-imposing level of Indiana government controlled by a board with unrestricted powers where most board members have no real connection to the taxpayers' community.

HB 1607 requires a May 2010 referendum in Lake, Porter, LaPorte, and St. Joseph counties on the creation of the Northern Indiana Regional Transportation District (NIRTD) to plan, provide, and oversee a regional rail and bus transportation system that has the authority to acquire capital assets, to impose a district income tax in each member county at a rate not to exceed 0.25%, to approve rates and charges, and to issue bonds, notes, or other evidence of indebtedness for making capital improvements. The NIRTD is created if a majority of those voting on the referendum in at least two counties vote YES to create the NIRTD. If a majority of those voting on the referendum in a county vote NO to create the NIRTD, the county is not a NIRTD member.

The NIRTD would be a body corporate and politic, separate from the state and other political subdivisions. The NIRTD powers to govern would be vested in a Board that has one county council member from each of the member counties, one county commissioner from each of the member counties, and one member appointed by the Governor who is an elected official in one of the member counties.

The NIRTD Board would be empowered to impose a Regional Public Transportation Improvement Tax on the adjusted gross income of individuals who are residents within one of the member counties. The maximum Regional Public Transportation Improvement Tax rate in any of the member counties would be 0.25%. The Regional Public Transportation Improvement Tax rate for capital would be based on the NIRTD capital improvement needs as determined by the Board. The Regional Public Transportation Improvement Tax rate for operating would be based on the number of passengers and passenger miles. The State Budget Agency would assist the NIRTD Board in computing the Regional Public Transportation Improvement Tax rates for each member county. Each county's Tax rate must be sufficient to pay the capital and operating costs allocated to that county by the NIRTD Board. The Regional Public Transportation Improvement Tax rates of the member counties would be imposed, increased, decreased, or rescinded annually by the NIRTD Board.

The NIRTD would be given 24 general powers, including matters of internal organization, operating procedures, and the employment of staff. The NIRTD may issue 25-year bonds through the Indiana Finance Authority; acquire real, personal, and mixed property; receive gifts, donations, bequests, public trusts, federal aid, and state aid; comply with federal statutes and rules concerning expenditure of federal money; use money not otherwise pledged for a local match of federal funds; and set and collect charges and rents. The NIRTD may also procure a condemnation of property if it has adopted a resolution that describes the property, declares the public interest and necessity for the acquisition, and sets out any other facts considered necessary or pertinent.

STATUS: HB 1660 was passed by the House 66-34 on February 25. HB 1660 did not receive a hearing in the Senate Tax and Fiscal Policy Committee.

It is Taxpayer UNfriendly that HB 1660 allows regional transportation districts to be new governmental entities, separate from the state and other political subdivisions. The fiscal bodies of counties may establish by resolution a regional transportation district that is given 25 general powers to support public transportation systems. These powers include matters of internal organization, operating procedures and employment with the authority to issue 40-year bonds and leases. A county must be a member of a regional transportation district at least ten years. Other public transportation agencies may merge into a regional transportation district. It makes no sense to establish yet another level of local government during a time when the Kernan-Shepard local government reform proposals recommend the consolidation of local government units to achieve taxpayer savings.

It is Taxpayer UNfriendly that the power to govern a regional transportation district is vested in a regional transportation board that is comprised of one member from the fiscal body of each participating county, one member of the county executive of each participating county, and one member from each city in each participating county. Regional transportation boards have the power to levy and receive taxes. Taxpayers will be sending their tax revenue to a government entity controlled by a board where most members may have no real connection to the taxpayers' community. This is taxation without sufficient representation.

It is Taxpayer UNfriendly that the general powers of a regional transportation district are unrestricted, including eminent domain use, tax abatements, federal grant applications, and bond issues. Some decisions made by a regional transportation district should be approved by the fiscal body of each county that established the district. The regional transportation district decisions that should be approved are those same decisions that the Indiana Code requires a redevelopment commission to have approved by the elected fiscal or legislative body that established the commission.

It is Taxpayer UNfriendly that a regional transportation board may establish a TIF-like allocation area that cannot overlap any existing TIF allocation area and must expire within 25 years. Property taxes paid on the allocated assessed value would be captured and transferred to the regional transportation district. Property taxes imposed for a fire protection district or on rail car company property would not be captured. The total amount of taxes captured from allocated personal property may not exceed 25% (or a lower amount adopted by the board), but there is no limit on the taxes that may be captured from allocated real property.

It is Taxpayer UNfriendly that a regional transportation district is able to undertake a capital project that is not subject to the referendum and petition and remonstrance provisions required of all local government entities (other than tax increment financing districts). Section 5 on page 5 of HB 1660 unwisely exempts regional transportation districts from the referendum and petition and remonstrance processes provided by Indiana Code 6-1.1-20.

Any regional transportation district capital project should be subject to referendum if it will cost more than the lesser of $12 million or an amount equal to 1% of the total gross assessed value of property within the district (if that amount is at least one million dollars). It should be clearly stated in HB 1660 that all voters in the counties comprising the regional transportation district should be included in the referendum, and that a majority vote of those voting is required for the capital project to proceed.

It should also be clearly stated in HB 1660 that 100 persons may initiate the petition and remonstrance process if they are either owners of real property or registered voters within the counties that established the regional transportation district. A capital project should be subject to petition and remonstrance if it will cost the regional transportation district more than the lesser of $2 million or an amount equal to 1% of the total gross assessed value of property within the allocation area (if that amount is at least $1 million). The petition and remonstrance process should take place in all counties that established the regional transportation district.

Regional transportation district capital projects will have too great an impact on taxpayers for the projects to be greatly influenced by tax-abatement-manipulating developers and good-hearted zealots without voter input. The collect wisdom of all the voters is needed to properly determine the public utility and benefit of any proposed capital project.

It is Taxpayer UNfriendly that a regional transportation board would be permitted to levy a special tax on all property in an allocation area to pay debt.

It is Taxpayer UNfriendly that a county within a regional transportation district may establish a special allocation of county adjusted gross income taxes or county option income taxes. A special allocation would reduce CAGIT and COIT distributions to the local governing bodies in the county.

It is Taxpayer UNfriendly that a county within a regional transportation district may impose a county economic development income tax of 0.25% or 0.05% on the adjusted gross income of county taxpayers. This is no time to soak working families with yet another tax.

It is Taxpayer UNfriendly that each public transportation agency, participating county, and city or town in a participating county may transfer funds to a regional transportation district. If these funds are allowed to leave the localities where they were raised, working family taxes will go up to replace them.

It is Taxpayer UNfriendly that the Governor is authorized to appoint a Deputy Commissioner for the Indiana Department of Transportation to assist the Commissioner with the public transportation responsibilities of the Department. The Department's public transportation responsibilities should be assigned to one of the existing eight Deputy Commissioners. Appointing another Deputy Commissioner would result in unnecessary cost increases from bureaucratic creep.

Indiana could receive $84 million in federal stimulus money for transit capital grants. It MAY be Taxpayer Friendly that HB 1660 appropriates $53 million to the following mass transportation projects (beginning July 1, 2008, and ending June 30, 2010): (a) $15 million to the Northern Indiana Commuter Transportation District to relocate rail lines to the west side of the South Bend airport, (b) $15 million to the Northern Indiana Commuter Transportation District to conduct preliminary engineering and environmental studies and other activities necessary or appropriate to construct phase 1 of the West Lake line, (c) $5 million to the Northern Indiana Commuter Transportation District to make railroad track safety and efficiency improvements in Michigan City, (d) $15 million to the Central Indiana Regional Transportation Authority to advance the proposed rail transit for the northeast corridor of central Indiana, (e) $3 million to the Indianapolis Public Transportation Corporation for the purposes authorized under IC 36-9-4.

It is a travesty that sales tax revenue from vehicle fuel sales is not directly dedicated to Hoosier transportation needs. A portion of the sales tax revenue from vehicle fuel sales should be dedicated to existing transportation districts, authorities, and agencies. HB 1660 has so many Taxpayer UNfriendly provisions that it should not be passed.

STATUS: SB 232 was passed by the Senate 49-0 on February 24. SB 232 did not receive a hearing in the House Government and Regulatory Reform Committee.

(1) Any court of competent jurisdiction may impose a civil penalty against an officer or employee of a public agency, or the public agency (as defined by Indiana Code 5-14-1.5-2), for violating the public records law or the open door law. The civil penalty may not be more than $100 for the first violation and $500 for any additional violations. This possibility of civil penalty will dissuade public agencies, or any officer or employee of public agencies, from knowingly, intentionally, or recklessly doing any of the following: (a) improperly denying or interfering with a person's request for inspection or copying of a public record; (b) charging a copying fee that exceeds the permitted amount; (c) attending a meeting from which the public is excluded; (d) attending one or more of a series of gatherings in violation of IC 5-14-1.5-3.1; (e) discussing in an executive session subjects not eligible for an executive session; (f) taking final action outside a regular meeting or special meeting; (g) participating in a secret ballot during a meeting; (h) failing to prepare a memorandum of a meeting required by IC 5-14-1.5-4.

(2) Citizens may annually request direct notice of meetings from a public agency (excluding a state agency). The public agency must provide the notice at least 48 hours before the meeting by electronic mail (if the agency has the capacity to transmit electronic mail) or by posting the notice on the agency's web (if the agency has a website).

(3) Any court of competent jurisdiction is required to, rather than allowed to, review public records in camera to determine whether redaction of the records violates the public records act.

(4) If a formal complaint is filed, the public access counselor is required to review public records in camera without redaction (excluding redacted information that is the work product of an attorney) to determine whether the redaction of the records violated the access to public records act.

(5) A nonreverting education fund is created for a program administered by the public access counselor to train public officials and educate the public on the rights of the public and the responsibilities of public agencies under the public access laws. The penalties allowed by SB 232 are deposited in this education fund.

STATUS: The version of SB 374 amended to include Regional Transportation Districts passed the House 54-45 on April 15. A conference committee failed to reach agreement on SB 374.

SB 374 was amended in the House to include the Regional Transportation Districts language that originally appeared in HB 1660, which did not receive a hearing in the Senate. The Regional Transportation Districts language in SB 374 is Taxpayer UNfriendly because it establishes a new tax-imposing level of Indiana government controlled by a board with unrestricted powers where most board members have no real connection to the taxpayers' community. Taxpayer UNfriendly Regional Transportation Districts should NOT be established unless they are approved by affected voters in a referendum. Just such a referendum is part of the legislation being considered by the conference committee for the Northern Indiana Regional Transportation District in HB 1607.

IN SUMMARY, no Regional Transportation District legislation should move forward UNLESS it includes a referendum provision where the collective wisdom of the voters is required before a new and powerful form of Indiana regional government is permitted.

STATUS: SB 470 was passed by the Senate 34-16 on February 24. SB 470 did not receive a hearing in the House Government and Regulatory Reform Committee.

The original version of SB 470 was Taxpayer Friendly because it provided for a per capita refund to resident individual income tax payers of the amount by which the general revenue fund balances at the end of the preceding fiscal year are greater than 10% of the general revenue appropriations for the current fiscal year. "General revenue funds" were defined as the Counter-Cyclical Revenue and Economic Stabilization Fund (Rainy Day Fund), the state General Fund including the Medicaid Contingency and Reserve Account, and the State Tuition Reserve Fund.

SB 470 was amended in the Senate Tax and Fiscal Policy Committee to the point where it is no longer Taxpayer Friendly. SB 470 now provides for the return of a part of the state's year-end General Fund surplus to Indiana residents in the form of a refundable individual adjusted gross income tax credit based on income taxes paid for the previous taxable year. Also, the governor may now issue an executive order to specify that the taxpayer refund should not be granted.

Before SB 470 was amended, the 10% threshold that triggered an automatic taxpayer refund was computed using all the state's major reserve funds. The automatic taxpayer refund is now triggered if the state General Fund balance at the end of the preceding fiscal year is greater than 10% of the state General Fund budgeted appropriations for the current fiscal year. The "general fund” definition is limited to the state General Fund and excludes all the major reserve funds including the Medicaid Contingency and Reserve Account.

The 10% threshold in the amended SB 470 would have been last exceeded in fiscal year 2001, when the ending balance from FY 2000 was approximately 11% of the budgeted appropriations in FY 2001. However, there is no restriction in the amended SB 470 to prevent using end-of-the-year transfers from the General Fund balance to the various state reserve funds in order to avoid the 10% automatic taxpayer refund threshold.

The amended SB 470 is nothing more than window dressing because it is unlikely there will be future taxpayer refunds. The original version of SB 470 established a realistic threshold where the state government would stop taking money it does not need from working families who do need it.