2011 Watchdog Indiana Legislative Agenda

Watchdog Indiana Home Page Indiana General Assembly & Governor Ratings Legislative Voting Record

SUMMARY

1. K-12 Education Reform
Homework Enhances Learning Potential.
House Bill 1002 Charter Schools: Taxpayer Friendly. SIGNED BY THE GOVERNOR.
House Bill 1003 Public Scholarships For Nonpublic Schools: Taxpayer UNfriendly. SIGNED BY THE GOVERNOR.
K-12 Education Research Compilation & Summaries.
Third Grade Best Practices Inventory Report.
2. Local Government Reform
House Bill 1022 Officeholder Qualifications And Nepotism: Taxpayer Friendly. DID NOT PASS THE HOUSE.
House Bill 1074 School Board Elections At General Election Time: Taxpayer Friendly. SIGNED BY THE GOVERNOR.
House Bill 1225 Approval of Library Budgets and Tax Levies: Taxpayer Friendly. DID NOT GET A HOUSE COMMITTEE VOTE.
House Bill 1357 Local Government Matters: Taxpayer Friendly. DID NOT GET A SENATE VOTE.
Senate Bill 61 School Board Elections: Taxpayer Friendly. DID NOT GET A HOUSE COMMITTEE HEARING.
Senate Bill 166 Local Government Employment: Taxpayer Friendly. DID NOT GET A HOUSE COMMITTEE VOTE.
Senate Bill 302 Local Government Nepotism: Taxpayer Friendly. DID NOT GET A HOUSE COMMITTEE VOTE.
Senate Bill 405 Township Government: Taxpayer Friendly. DID NOT PASS THE SENATE.
Township Government Reform.
3. State Budget
House Bill 1001 Budget Bill: Taxpayer Friendly. SIGNED BY THE GOVERNOR.
House Bill 1001 K-12 State Tuition Support Formula (analysis of current formula compared to HB 1001 changes).
4. Other Significant Legislation
House Bill 1056 Variable Local Option Income Taxes: Taxpayer Friendly. DID NOT GET A HOUSE COMMITTEE HEARING.
House Bill 1244 Redevelopment Commissions Oversight: Taxpayer Friendly. DID NOT GET REPORTED OUT OF CONFERENCE COMMITTEE.
House Bill 1583 Exempt Property Eligibility For Deductions: Taxpayer Friendly. HB 1004 SIGNED BY THE GOVERNOR.
Senate Bill 221 Explanation of Proposed Constitutional Amendments: Taxpayer UNfriendly. DID NOT GET A SENATE COMMITTEE VOTE.
Senate Bill 473 Toll Roads: Taxpayer Neutral. SIGNED BY THE GOVERNOR.
Senate Bill 550 Redevelopment Commissions And Authorities: Taxpayer Friendly. DID NOT GET A HOUSE COMMITTEE HEARING.
Senate Bill 561 Corrections and Sentencing: Taxpayer Friendly. DID NOT GET A HOUSE COMMITTEE VOTE.
Senate Bill 589 Economic Development And State Tax Matters: Taxpayer Neutral. HB 1004 SIGNED BY THE GOVERNOR.

Watchdog Indiana identifies those 2011 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. When these identified bills are scheduled for committee hearings, Watchdog Indiana analyzes them to determine if they are Taxpayer Friendly, Neutral, or Taxpayer UNfriendly. Legislation is Taxpayer Friendly if it is results-oriented, compassionate, and fiscally conservative. These important bills are grouped in the following categories: (1) K-12 Education Reform, (2) Local Government Reform, (3) State Budget, (4) Other Significant Legislation.

1. K-12 Education Reform

Homework Enhances Learning Potential

STATUS: A Preliminary Draft of the preferred Homework Enhances Learning Potential (H.E.L.P.) legislation has been prepared by the Legislative Services Agency. None of the 150 General Assembly legislators responded to a Watchdog Indiana request to author the preferred H.E.L.P. legislation so the evidence-based H.E.L.P. concepts could get full consideration during the ongoing K-12 education reform debate. The preferred Preliminary Draft legal language is available for amendment into other education reform bills if H.E.L.P. gains the necessary General Assembly support. House Bill 1381 proposes an Academic Helpers Program intended to accomplish some of the desired H.E.L.P. results. HB 1381 was referred to the House Education Committee on January 18.

Watchdog Indiana Position: The willingness of parents and other concerned community members to form effective partnerships with their public school professionals can be identified by tabulating weekly the percent of students in every Indiana Grade 1, 2 and 3 public school whose meaningful homework was effectively supervised by a homework partner every day they attended school. When a community uses all its resources to provide homework partners, the community sends a clear message every day to its First, Second, and Third Grade Students that education is highly valued. These Students are more likely to receive a good education with a minimal reliance on costly and ineffective remediation. The importance of the preferred H.E.L.P. legislation is emphasized when one realizes that almost 25,000 Hoosier children every year are condemned to a second-class education before they reach the fourth grade. Principals from the elementary schools that were among the Third Grade Spring 2010 ISTEP+ Results Leaders have identified their Best Practices to provide some helpful improvement ideas for those Hoosiers concerned about public education. There are many evidence-based reasons to support the preferred H.E.L.P. legiusaltion.

House Bill 1002 Charter Schools: Taxpayer Friendly

STATUS: HB 1002 passed the House Education Committee 8-5 on January 24, passed the House 59-37 on February 8, passed the Senate Education and Career Development Committee 8-2 on March 16, passed the Senate Appropriations Committee 8-2 on March 24, passed the Senate 29-20 on April 12, the House concurred with Senate amendments 61-37 on April 27, and the Governor signed on May 5.

Legislation is Taxpayer Friendly if it is results-oriented, compassionate, and fiscally conservative. HB 1002 was prudently amended to the point where it became Taxpayer Friendly for the reasons listed next.

(1) Charter schools have the potential to help attain the third-tier education reform goal of increasing the academic growth of lower socioeconomic students so there are more Indiana high school graduates (whether with or without a Core 40 diploma). The Spring 2010 ISTEP test results show that only 50% of charter school third graders scored at or above the Pass level on both the English/Language Arts and Math tests compared to 70% for traditional public schools. Just 4% of charter school third graders scored at or above the Pass+ level on both tests compared to 9% for traditional public schools. However, evidence-based research concludes that Indiana charter school students show more academic growth than a control group of students in traditional public schools who were matched for demographic characteristics and initial academic ability. It would be helpful if more attention was given to implementing best practices and improving partnerships between communities and their public schools to help achieve the high-priority goals of increasing the percentages of our high school graduates with academic honors diplomas and Core 40 diplomas.

(2) The number of Indiana nonprofit private colleges and universities authorized to create charter schools is limited to those thirty that offer a four-year educational program for which a baccalaureate or more advanced degree is awarded. Of Indiana’s current 61 charter schools, 35 are authorized by Ball State University and 23 are authorized by the Indianapolis mayor. The success thus far realized by Indiana charter schools are the direct result of Ball State University and the Indianapolis mayor’s office (a) carefully selecting charter school operators (only one-fourth of applicants are approved) and (b) providing effective ongoing evaluation of the education outcomes of those charter schools that are approved. The HB 1002 provision that permits the State Board of Education to suspend the authority of a sponsor if at least 25% of the sponsor's charter schools have been subject to an accountability action will help make certain that nonprofit private colleges and or universities authorizing charter schools are committed to effective charter school selection and evaluation procedures.

(3) The Indianapolis mayor is the only Indiana mayor who may authorize charter schools. It is not prudent to add the specialized and demanding duties of effective charter school selection and oversight to the workload of Indiana mayors outside Indianapolis.

(4) The version of HB 1002 passed in the Senate allows conversion from a public school to a charter school if all of the following apply: (a) the school has been placed in the lowest two accountability categories for two consecutive years and is not scheduled for closure, (b) 51% of the parents of students at the school sign a petition within 90 days from the first signature requesting the conversion, and (c) the school board votes to convert an existing school within the school corporation. If the school has been in the lowest two categories for four consecutive years the school corporation may not be the charter school sponsor. These conversion provisions, which are more stringent than those in the House version of HB 1002, will offset the eruption of public passions that might result from the dissemination of misinformation and innuendo. A small number of school families will not be able to use any perceived shortcomings to influence by themselves the conversion of a public school to a charter school.

(5) Property taxes are NOT improperly used to support the transportation needs of charter schools. At the current time NO local property taxes are used to support charter schools. As passed by the Indiana House, HB 1002 would have required school corporations to transport charter school students without charge or diverted a portion of a school corporation’s property tax transportation fund to charter schools within its boundaries. Property tax in Indiana is a LOCAL tax. It is good public policy when LOCAL property taxes are approved by a directly elected LOCAL public body, and LOCAL property tax revenue is expended using a budget approved by a directly elected LOCAL public body. The House-passed HB 1002 transportation funding provisions would have resulted in school property tax increases or the imposition of school transportation fees AND allowed diverted transportation property tax funds to be spent by unelected charter school personnel with no school board oversight. HB 1002 has been responsibly amended in the Senate so school corporation transportation fund property taxes will not be expended by UNELECTED charter school administrators. The amended HB 1002 keeps the property tax Pandora’s box closed so charter school advocates cannot find ever more inventive ways to justify one property tax increase after another.

House Bill 1003 Public Scholarships For Nonpublic Schools: Taxpayer UNfriendly

STATUS: HB 1003 passed the House Education Committee 8-5 on February 16, passed the House 56-42 on March 30, passed the Senate Education and Career Development Committee 7-3 on April 13, passed the Senate 28-22 on April 21, the House concurred with Senate amendments 56-43 on April 27, and the Governor signed on May 5.

It is Taxpayer Friendly for a K-12 school to receive public tax money if the school is equally open to all children, the public tax money is approved by a directly elected public body, and the public tax money is expended using a budget approved by a directly elected public body.

House Bill 1003 is Taxpayer UNfriendly because (1) nonpublic private and parochial schools are not equally open to all children, (2) nonpublic school budgets are not approved by a directly elected public body, (3) evidence-based research does not support greater school choice as a means to achieve overall educational improvement, (4) it is very likely unconstitutional, and (5) state tuition support dollars would go to nonpublic schools that are not uniformly distributed throughout the state

(1) Article 8 Section 1 of the Indiana Constitution establishes the duty of the General Assembly to provide schools that are "equally open to all," and Indiana Code 20-26-5-1(a) requires a public school corporation to "conduct an educational program for all children who reside within the school corporation in kindergarten and in grades 1 through 12." Indiana Code 20-24-5-1 provides that a charter school "must be open to any student who resides in Indiana." Unlike public school corporations and charter schools, nonpublic schools may establish admission policies that limit student admissions and are NOT required to be equally open to all children.

The comparison below of the Grades 3-8 public school and nonpublic school student populations that took the Spring 2010 ISTEP+ tests reveal that:

(1) public schools had 3.79 times more students than nonpublic schools who received free and reduced price lunches (48.17% to 12.72%),

(2) public schools had 2.71 times more students than nonpublic schools who had English as a second language or limited English proficiency (4.75% to 1.75%), and

(3) public schools had 2.29 times more students than nonpublic schools who were categorized as special education (13.81% to 6.04%).

Nonpublic School Students that took the Spring 2010 ISTEP+ Tests
http://www.doe.in.gov/assessment/2010/docs/Nonpublic_Disag_Report_State.xls

Grade 3: 135 Total ESL & LEP / 5,999 All Students Tested = 2.25%
Grade 3: 754 Free & Reduced Meals / 5,999 All Students Tested = 12.57%
Grade 3: 336 Total Special Ed / 5,999 All Students Tested = 5.60%

Grade 4: 128 Total ESL & LEP / 5,721 All Students Tested = 2.24%
Grade 4: 749 Free & Reduced Meals / 5,721 All Students Tested = 13.09%
Grade 4: 366 Total Special Ed / 5,721 All Students Tested = 6.40%

Grade 5: 91 Total ESL & LEP / 5,682 All Students Tested = 1.60%
Grade 5: 692 Free & Reduced Meals / 5,682 All Students Tested = 12.18%
Grade 5: 346 Total Special Ed / 5,682 All Students Tested = 6.09%

Grade 6: 77 Total ESL & LEP / 5,430 All Students Tested = 1.42%
Grade 6: 676 Free & Reduced Meals / 5,430 All Students Tested = 12.45%
Grade 6: 338 Total Special Ed / 5,430 All Students Tested = 6.22%

Grade 7: 84 Total ESL & LEP / 5,302 All Students Tested = 1.58%
Grade 7: 688 Free & Reduced Meals / 5,302 All Students Tested = 12.98%
Grade 7: 305 Total Special Ed / 5,302 All Students Tested = 5.75%

Grade 8: 68 Total ESL & LEP / 5,206 All Students Tested = 1.31%
Grade 8: 682 Free & Reduced Meals / 5,206 All Students Tested = 13.10%
Grade 8: 323 Total Special Ed / 5,206 All Students Tested = 6.20%

Total 3-8: 583 Total ESL & LEP / 33,340 All Students Tested = 1.75%
Total 3-8: 4,241 Free & Reduced Meals / 33,340 All Students Tested = 12.72%
Total 3-8: 2,014 Total Special Ed / 33,340 All Students Tested = 6.04%

Public School Students that took the Spring 2010 ISTEP+ Tests
http://www.doe.in.gov/assessment/2010/docs/Public_Disag_Report_State.xls

Grade 3: 5,357 Total ESL & LEP / 81,201 All Students Tested = 6.60%
Grade 3: 41,758 Free & Reduced Meals / 81,201 All Students Tested = 51.43%
Grade 3: 11,862 Total Special Ed / 81,201 All Students Tested = 14.61%

Grade 4: 4,348 Total ESL & LEP / 78,870 All Students Tested = 5.51%
Grade 4: 39,564 Free & Reduced Meals / 78,870 All Students Tested = 50.16%
Grade 4: 11,437 Total Special Ed / 78,870 All Students Tested = 14.50%

Grade 5: 3,812 Total ESL & LEP / 77,575 All Students Tested = 4.91%
Grade 5: 38,097 Free & Reduced Meals / 77,575 All Students Tested = 49.11%
Grade 5: 10,924 Total Special Ed / 77,575 All Students Tested = 14.08%

Grade 6: 3,252 Total ESL & LEP / 77,865 All Students Tested = 4.18%
Grade 6: 37,440 Free & Reduced Meals / 77,865 All Students Tested = 48.08%
Grade 6: 10,458 Total Special Ed / 77,865 All Students Tested = 13.43%

Grade 7: 2,971 Total ESL & LEP / 78,382 All Students Tested = 3.79%
Grade 7: 36,087 Free & Reduced Meals / 78,382 All Students Tested = 46.04%
Grade 7: 10,511 Total Special Ed / 78,382 All Students Tested = 13.41%

Grade 8: 2,714 Total ESL & LEP / 79,308 All Students Tested = 3.42%
Grade 8: 35,004 Free & Reduced Meals / 79,308 All Students Tested = 44.14%
Grade 8: 10,179 Total Special Ed / 79,308 All Students Tested = 12.83%

Total 3-8: 22,454 Total ESL & LEP / 473,201 All Students Tested = 4.75%
Total 3-8: 227,950 Free & Reduced Meals / 473,201 All Students Tested = 48.17%
Total 3-8: 65,371 Total Special Ed / 473,201 All Students Tested = 13.81%

Research clearly shows that it is more challenging to educate children who receive free and reduced price lunches, have English as a second language (limited English proficiency), and have special education needs. It is more challenging to educate these children partly because they come from homes that do not value education, have high absence and tardiness rates, are prone to behavioral outbursts, and do not complete homework. Public schools have significantly more students that present education challenges than nonpublic schools because public schools must admit all students while nonpublic schools can restrict the students they admit and retain.

The following Admissions Policy from the Holy Angels Catholic School in Indianapolis (see http://www.holyangelsindy.org/school/family_handbook_08-09.htm) is typical of how Indiana nonpublic schools restrict the students they admit and retain:

"Holy Angels Catholic School admits students of any race, color, and national or ethnic origins to all the rights, privileges, programs and activities generally made available to students of the school. We do not discriminate on the basis of race, color, national or ethnic origin in the administration of its educational policies, admissions policies, or other school-administered program. As openings become available, the following priorities will be used to admit students to Holy Angels Catholic School:

Active members of Holy Angels Parish
Active members of other Catholic parishes
Non-Catholic students

Children entering Pre-K must be four (4) years of age by August 1^st. All new students seeking admissions to Holy Angels Catholic School will be evaluated based upon current standardized testing and report cards. All students are taken on a probationary status for the first school year to ensure that Holy Angels Catholic School can meet the student’s educational needs. This period is also used for the student to prove him/herself socially, academically, and behaviorally. If during this period there are problems, a student may be asked to withdraw his/her attendance at Holy Angels Catholic School."

HB 1003 would establish a school scholarship program to provide public scholarships to eligible students in the first through twelfth grades to pay tuition at a nonpublic school or transfer tuition at an alternative public school that is not a charter school or a school in the school corporation where the student has legal settlement. The student must have been enrolled in a school corporation that did not charge the student transfer tuition for at least two semesters immediately preceding the first semester for which the student receives a scholarship. A scholarship under HB 1003 would be paid from state tuition support money that would otherwise go to the school corporation where the student attended before attending a nonpublic or alternative public school under the program. It is poor public policy to divert state tuition support dollars earmarked for public schools that must admit all children to nonpublic schools that restrict the children they admit and retain.

Article 8 Section 1 of the Indiana Constitution states, "Knowledge and learning, generally diffused throughout a community, being essential to the preservation of a free government; it shall be the duty of the General Assembly to encourage, by all suitable means, moral, intellectual, scientific, and agricultural improvement; and to provide, by law, for a general and uniform system of Common Schools, wherein tuition shall be without charge, and equally open to all."

The following Article 8 Section 1 phrases establish a fairness framework within which the General Assembly must fulfill its duty to encourage, and provide for, the education of Hoosier children: (1) ALL SUITABLE MEANS, (2) GENERAL AND UNIFORM SYSTEM, (3) TUITION SHALL BE WITHOUT CHARGE, (4) EQUALLY OPEN TO ALL.

HB 1003 is poor public policy because it would create a General Assembly program that fails to meet the fairness requirement where the expenditure of state tuition support dollars must be suitably general and uniform. It is Taxpayer UNfriendly to use the public's state tuition support money to provide scholarships for students who attend nonpublic schools with restrictive admissions policies.

2) The budgets of nonpublic private and parochial schools are NOT approved by a directly elected public body. HB 1003 would allow any public education dollars received by nonpublic schools to be spent by unelected administrators for any purpose including religious instruction.

(3) The Indiana University School of Education Center for Evaluation & Education Policy concludes that greater competition in public education is a POTENTIAL vehicle for overall educational improvement by giving parents more options and hence spurring reform. However, the research also points out that competition could lead to segregation, selection bias, and class stratification. In addition, students without the means to transfer or relocate could be trapped in schools without the resources to improve.

It has been reported that Indiana’s nonpublic school capacity for public scholarship students is expected to top out at about 20,000, which is just 1.9% of Indiana’s current public school enrollment of 1,047,145. It is illogical to think the potential migration of so few public school students to nonpublic schools will prompt some kind of helpful competition response.

(4) It is very likely that HB 1003 is unconstitutional. Article 8 Section 1 of the Indiana Constitution has two parts. One part states that "it shall be the duty of the General Assembly to encourage, by all suitable means, moral, intellectual, scientific, and agricultural improvement." The second part states that the General Assembly also has the duty "to provide, by law, for a general and uniform system of Common Schools, wherein tuition shall be without charge, and equally open to all." The constitutionality of HB 1003 depends on the interpretation that nonpublic scholarships are a suitable means of encouraging intellectual and scientific improvement. However, the HB 1003 nonpublic scholarships are funded with state tuition support dollars which are clearly dedicated to public schools so the General Assembly can fulfill its duty to provide "a general and uniform system of Common Schools." It is clearly not suitable for dedicated state tuition support dollars to be diverted to scholarships for nonpublic schools that are NOT equally open to all. The General Assembly would have to establish funding separate from state tuition support dollars for HB 1003 to be constitutional.

(5) HB 1003 is poor public policy because it would create a General Assembly program that fails to meet the fairness requirement where the expenditure of state tuition support dollars must be suitably general and uniform.

HB 1003 does not meet the fairness standard because state tuition support dollars would go to nonpublic schools that are not uniformly distributed throughout the state. Of the 293 nonpublic schools in Indiana, 225 (or 77%) are located in only those 30 counties identified in red below. The 30 counties (out of 92 total counties) that have 77% of the state’s nonpublic schools only contain 52% of the state’s population. There are NO nonpublic schools whatsoever in 34 counties.

County: Population / Number of Nonpublic Schools = Citizens per Nonpublic School
(Sources: STATS Indiana and Indiana Nonpublic School Directory)
Adams: 34,256 / 3 = 11,419 Citizens per Nonpublic School
Allen: 353,888 / 33 = 10,724 Citizens per Nonpublic School
Bartholomew: 76,063 / 4 = 19,016 Citizens per Nonpublic School
Benton: 8,613 / 1 = 8,613 Citizens per Nonpublic School
Blackford: 13,051 / 0 = NO NONPUBLIC SCHOOLS
Boone: 56,287 / 2 = 28,144 Citizens per Nonpublic School
Brown: 14,548 / 0 = NO NONPUBLIC SCHOOLS
Carroll: 19,752 / 0 = NO NONPUBLIC SCHOOLS
Cass: 39,065 / 1 = 39,065 Citizens per Nonpublic School
Clark: 108,634 / 4 = 27,159 Citizens per Nonpublic School
Clay: 26,533 / 0 = NO NONPUBLIC SCHOOLS
Clinton: 34,367 / 0 = NO NONPUBLIC SCHOOLS
Crawford: 10,540 / 0 = NO NONPUBLIC SCHOOLS
Daviess: 30,620 / 2 = 15,310 Citizens per Nonpublic School
Dearborn: 50,502 / 5 = 10,100 Citizens per Nonpublic School
Decatur: 25,079 / 2 = 12,540 Citizens per Nonpublic School
DeKalb: 42,060 / 2 = 21,030 Citizens per Nonpublic School
Delaware: 115,192 / 2 = 57,596 Citizens per Nonpublic School
Dubois: 41,419 / 2 = 20,710 Citizens per Nonpublic School
Elkhart: 200,502 / 7 = 28,643 Citizens per Nonpublic School
Fayette: 24,101 / 1 = 24,101 Citizens per Nonpublic School
Floyd: 74,426 / 5 = 14,885 Citizens per Nonpublic School
Fountain: 16,852 / 0 = NO NONPUBLIC SCHOOLS
Franklin: 23,148 / 1 = 23,148 Citizens per Nonpublic School
Fulton: 20,265 / 0 = NO NONPUBLIC SCHOOLS
Gibson: 32,750 / 4 = 8,188 Citizens per Nonpublic School
Grant: 68,796 / 4 = 17,199 Citizens per Nonpublic School
Greene: 32,463 / 0 = NO NONPUBLIC SCHOOLS
Hamilton: 279,287 / 9 = 31,032 Citizens per Nonpublic School
Hancock: 68,334 / 1 = 68,334 Citizens per Nonpublic School
Harrison: 37,562 / 2 = 18,781 Citizens per Nonpublic School
Hendricks: 140,606 / 4 = 35,152 Citizens per Nonpublic School
Henry: 47,827 / 0 = NO NONPUBLIC SCHOOLS
Howard: 82,895 / 2 = 41,448 Citizens per Nonpublic School
Huntington: 37,777 / 1 = 37,777 Citizens per Nonpublic School
Jackson: 42,362 / 4 = 10,591 Citizens per Nonpublic School
Jasper: 32,816 / 3 = 10,939 Citizens per Nonpublic School
Jay: 21,117 / 0 = NO NONPUBLIC SCHOOLS
Jefferson: 33,010 / 3 = 11,003 Citizens per Nonpublic School
Jennings: 28,043 / 2 = 14,022 Citizens per Nonpublic School
Johnson: 141,501 / 4 = 35,375 Citizens per Nonpublic School
Knox: 37,907 / 3 = 12,636 Citizens per Nonpublic School
Kosciusko: 76,499 / 2 = 38,250 Citizens per Nonpublic School
LaGrange: 37,204 / 1 = 37,204 Citizens per Nonpublic School
Lake: 494,211 / 22 = 22,464 Citizens per Nonpublic School
LaPorte: 111,063 / 6 = 18,511 Citizens per Nonpublic School
Lawrence: 45,842 / 1 = 45,842 Citizens per Nonpublic School
Madison: 131,417 / 4 = 32,854 Citizens per Nonpublic School
Marion: 890,879 / 55 = 16,198 Citizens per Nonpublic School
Marshall: 46,903 / 2 = 23,452 Citizens per Nonpublic School
Martin: 9,946 / 0 = NO NONPUBLIC SCHOOLS
Miami: 36,001 / 0 = NO NONPUBLIC SCHOOLS
Monroe: 130,738 / 2 = 65,369 Citizens per Nonpublic School
Montgomery: 37,862 / 0 = NO NONPUBLIC SCHOOLS
Morgan: 70,876 / 1 = 70,876 Citizens per Nonpublic School
Newton: 13,736 / 0 = NO NONPUBLIC SCHOOLS
Noble: 48,028 / 2 = 24,014 Citizens per Nonpublic School
Ohio: 5,909 / 0 = NO NONPUBLIC SCHOOLS
Orange: 19,559 / 0 = NO NONPUBLIC SCHOOLS
Owen: 22,397 / 0 = NO NONPUBLIC SCHOOLS
Parke: 16,896 / 0 = NO NONPUBLIC SCHOOLS
Perry: 18,812 / 0 = NO NONPUBLIC SCHOOLS
Pike: 12,259 / 0 = NO NONPUBLIC SCHOOLS
Porter: 163,598 / 6 = 27,266 Citizens per Nonpublic School
Posey: 26,004 / 3 = 8,668 Citizens per Nonpublic School
Pulaski: 13,614 / 0 = NO NONPUBLIC SCHOOLS
Putnam: 36,837 / 0 = NO NONPUBLIC SCHOOLS
Randolph: 25,696 / 0 = NO NONPUBLIC SCHOOLS
Ripley: 27,421 / 2 = 13,711 Citizens per Nonpublic School
Rush: 17,175 / 1 = 17,175 Citizens per Nonpublic School
St. Joseph: 267,613 / 22 = 12,164 Citizens per Nonpublic School
Scott: 23,624 / 0 = NO NONPUBLIC SCHOOLS
Shelby: 44,503 / 1 = 44,503 Citizens per Nonpublic School
Spencer: 20,039 / 1 = 20,039 Citizens per Nonpublic School
Starke: 23,530 / 1 = 23,530 Citizens per Nonpublic School
Steuben: 33,579 / 0 = NO NONPUBLIC SCHOOLS
Sullivan: 21,153 / 0 = NO NONPUBLIC SCHOOLS
Switzerland: 9,675 / 0 = NO NONPUBLIC SCHOOLS
Tippecanoe: 167,964 / 8 = 20,996 Citizens per Nonpublic School
Tipton: 15,892 / 1 = 15,892 Citizens per Nonpublic School
Union: 7,040 / 0 = NO NONPUBLIC SCHOOLS
Vanderburgh: 175,434 / 16 = 10,965 Citizens per Nonpublic School
Vermillion: 16,172 / 0 = NO NONPUBLIC SCHOOLS
Vigo: 105,967 / 3 = 35,322 Citizens per Nonpublic School
Wabash: 32,558 / 1 = 32,558 Citizens per Nonpublic School
Warren: 8,491 / 0 = NO NONPUBLIC SCHOOLS
Warrick: 58,521 / 1 = 58,521 Citizens per Nonpublic School
Washington: 27,729 / 0 = NO NONPUBLIC SCHOOLS
Wayne: 67,552 / 4 = 16,888 Citizens per Nonpublic School
Wells: 27,566 / 1 = 27,566 Citizens per Nonpublic School
White: 23,452 / 0 = NO NONPUBLIC SCHOOLS
Whitley: 32,861 / 0 = NO NONPUBLIC SCHOOLS
TOTAL STATE: 6,423,113 / 293 = 21,922 Citizens per Nonpublic School

In conclusion, please VOTE NO against the Taxpayer UNfriendly House Bill 1003 provisions that use state K-12 tuition support money to fund scholarships for nonpublic school students because (1) nonpublic private and parochial schools are not equally open to all children, (2) nonpublic school budgets are not approved by a directly elected public body, (3) evidence-based research does not support greater school choice as a means to achieve overall educational improvement, (4) it is very likely unconstitutional, and (5) state tuition support dollars would go to nonpublic schools that are not uniformly distributed throughout the state.

K-12 Education Research Compilation & Summaries

An important K-12 education reform debate is underway in Indiana. There is a distressing trend where easily-manipulated political polls and well-meaning political rhetoric are crowding out evidence-based research in the K-12 education reform decision-making process.

The compilation and summaries of pertinent evidence-based K-12 education research contain online links where concerned persons can go to fully analyze a research topic. Please send an E-mail to taxless3@comcast.net if you have a source of K-12 education research to add to this compilation.

We all – from the Governor to legislators to education professionals to everyday parents and other concerned community members – must become "education experts." The future of Indiana depends on all of us working together effectively to improve K-12 education outcomes. One key to ongoing improvement is education reform established on a foundation of evidence-based research.

Third Grade Best Practices Inventory Report

Watchdog Indiana believes that evidence-based research should drive the K-12 education reform debate underway in the General Assembly. The Third Grade Best Practices Inventory Report is one evidence-based contribution to the debate.

2. Local Government Reform

House Bill 1022 Officeholder Qualifications And Nepotism: Taxpayer Friendly

STATUS: HB 1022 passed the House Government and Regulatory Reform Committee 10-0 on February 15, passed the House 79-21 on February 21, passed the Senate Local Government Committee 7-1 on March 31, passed the Senate 34-16 on April 11, went to a Conference Committee after the House dissented from Senate amendments on April 25, passed the Senate (Conference Committee report) 37-13 on April 29, and did not pass the House (Conference Committee report) 31-64 on April 29.

Watchdog Indiana E-mail sent to all State Representatives on April 23: Please Vote YES to concur with the amended local government nepotism and officeholder qualification provisions in House Bill 1022 that was passed by the Senate on April 11.

The amended HB 1022 local government nepotism provisions listed next are Taxpayer Friendly.

(1) A spouse, parent, stepparent, child, stepchild, brother, stepbrother, sister, stepsister, aunt, uncle, niece, nephew, son-in-law, and daughter-in-law (relative) of an executive, a legislative body member, or a fiscal body member (elected official) of a county, city, town, or township (local unit) cannot be employed by the local unit.

(2) Unit employees or elected officers of the unit cannot be placed in a direct supervisory-subordinate relationship.

(3) A person who has been employed in the same position with the local unit for at least 12 consecutive months on June 30, 2011, or for at least 12 consecutive months immediately preceding the date the relative assumes office, may remain employed by the unit and be in a direct subordinate-supervisory relationship with the relative unless the person is a merit police officer and is promoted after June 30, 2011, to a higher rank other than a merit rank.

(4) A police officer or a firefighter employed by a police or fire department on June 30, 2011, and serving a probationary period with the intent of becoming a merit employee of the department, is exempt unless the individual is promoted to a higher rank other than a merit rank.

(5) A township trustee whose office is located in the trustee's personal residence may employ not more than one relative to work in the township trustee's office and be in a direct subordinate-supervisory relationship with the relative.

(6) The total compensation of a township trustee's employed relative is limited to $5,000 per year.

(7) A sheriff may hire the sheriff's spouse as prison matron for the county and be in a direct subordinate-supervisory relationship with the relative.

(8) A local unit can enter into or renew (1) a contract for the procurement of goods and services or (2) a contract for public works with a relative of an elected official or a business entity in which a relative has an ownership interest if the elected official does not violate the criminal conflict of interest statute, makes full written disclosure, and satisfies any other requirements of the public purchasing law or the public works law.

(9) Each elected official of the local unit must annually certify in writing, subject to the penalties for perjury, that the official is in compliance with the nepotism and contracting law and submit the certification to the executive of the local unit.

(10) The executive of the local unit must file with the annual State Board of Accounts (SBOA) personnel report a statement certified under the penalties for perjury regarding whether the unit has implemented a policy that complies with the nepotism law and contracting law.

(11) A local unit that does not file the SBOA statement that the unit has implemented a policy that complies with the nepotism law and contracting law will not have their budgets nor any additional appropriations approved by the Department of Local Government Finance in the following year until notified by the SBOA that the unit is in compliance.

The amended HB 1022 officeholder qualification provisions listed next are Taxpayer Friendly.

(1) An employee of a county, city, town, or township (unit) is considered to have resigned from employment with the unit if the employee assumes an elected office of the unit.

(2) The resignation restriction does not prohibit a unit employee from holding an elected office of a unit other than the unit that employs the unit employee.

(3) A unit employee who on December 31, 2011, holds an elected office of the unit that employs the individual, or on January 1, 2012, assumes an elected office of the unit that employs the individual, may serve the remainder of the employee's elected term of office without resigning as a government employee.

A weak officeholder qualification provision is the one where a police officer or firefighter who assumes an elected office of the unit that employs the police officer or firefighter does not resign from the police or fire department, but must be granted and take a leave of absence from the department for the entire period the police officer or firefighter serves in the elected office. A police officer or firefighter that is elected to an office in a unit would continue to be credited with time spent in full-time employment for all purposes, including retirement and pension benefits while in office. Therefore, elected police officers and firefighters would be in a position to benefit from unit decisions they help make regarding retirement and pension benefits.

The amended local government nepotism and officeholder qualification provisions passed by the Senate make a YES vote on House Bill 1022 Taxpayer Friendly.

House Bill 1074 School Board Elections At General Election Time: Taxpayer Friendly

STATUS: HB 1074 passed the House Elections and Apportionment Committee 9-3 on February 16, passed the House 73-24 on March 30, passed the Senate Elections Committee 8-1 on April 13, passed the Senate 39-9 on April 19, the House concurred in Senate amendments 69-28 on April 25, and was signed by the Governor on May 10.

Watchdog Indiana E-mail sent to all State Representatives on April 23: Please Vote YES to concur with the amended House Bill 1074 provisions passed by the Senate on April 19 which provide that, beginning in 2012, school board members selected by election must be elected at November general elections and take office the following January 1.

The greater voter turnout in general elections compared to primary elections will make it more difficult for local vested interests to unduly influence school board election outcomes.

The amended school board election provisions passed by the Senate make a YES vote on House Bill 1074 Taxpayer Friendly.

House Bill 1225 Approval of Library Budgets and Tax Levies: Taxpayer Friendly

STATUS: HB 1225 was referred to the House Government and Regulatory Reform Committee on January 12 where it did not get a vote.

Watchdog Indiana Testimony at the House Government and Regulatory Reform Committee Public Hearing on January 25: Legislation is Taxpayer Friendly if it is results-oriented, compassionate, and fiscally conservative. House Bill 1225 is Taxpayer Friendly because it requires the appropriate county or municipal fiscal body to approve a public library’s proposed budget and property tax levy if the library’s governing body is not comprised of a majority of elected officials.

Final taxing decisions should only be made by elected officials. Indiana public library board members are generally unelected, limited-interest advocates. Therefore, it is good public policy that a library board’s proposed budget and property tax levy must be approved by the appropriate ELECTED county or municipal fiscal body.

HB 1225 is also good public policy because of the effects of property tax caps. It is particularly important that county and municipal services are carefully coordinated and efficiently delivered wherever property tax caps have been triggered. Unnecessarily high public library budgets and taxes can improperly limit the property tax revenue available under the caps for the delivery of other essential county and municipal services. Therefore, it is Taxpayer Friendly that the appropriate county or municipal fiscal body is empowered to approve proposed library budgets and property tax levies. It is hoped that library boards will someday be eliminated, and that library operations will properly become a department within county and municipal governments.

In conclusion, House Bill 1225 is Taxpayer Friendly because public library budget and tax decisions will be made by elected county and municipal public servants who are better positioned to balance competing needs for limited property tax dollars.

House Bill 1357 Local Government Matters: Taxpayer Friendly

STATUS: HB 1357 passed the House Government and Regulatory Reform 8-0 on February 15, passed the House 99-0 on February 21, passed the Senate Local Government Committee 5-2 on March 30, and did not get a vote in the Senate.

Watchdog Indiana E-mail sent to all State Senators on April 10: If not fundamentally changed by floor amendment, please vote YES for House Bill 1357.

HB 1357 is Taxpayer Friendly because the provisions listed next enhance the professionalism and consistency of township government by effectively addressing the current shortcomings of inadequate township government oversight, excessive township fund balances, and inconsistent township assistance standards.

Inadequate Township Government Oversight

(1) A township in a county other than Marion County must have the township's budget, property tax levies, and rate reviewed and approved by the county fiscal body (County Council).

(2) The county fiscal body may reduce and modify but not increase the budget submitted by a township board in a county other than Marion County.

(3) Provides that if a township reorganizes after June 30, 2011, with at least one other township, and the resulting new political subdivision is not a city or town, the county fiscal body must approve the budget, property tax levies, and property tax rates of the new political subdivision.

(4) The Office of Management and Budget must annually prepare a report that includes the following information for every township: (a) the township population; (b) the budget, property tax levels and property tax rates; (c) the assessed valuation; (d) the balance in each township fund; (e) a summary of township assistance information; (f) a summary of any statutory compliance issues or exceptions; (g) a description of any interlocal agreements; (h) a description of any resolutions or petitions concerning the township; (i) a description of any government modernization resolutions or petitions concerning the township that were adopted or submitted during the preceding calendar year. (j) a description of the property owned or leased by the township.

(5) A township trustee's annual report filed with the State Board of Accounts must list separately each public business expenditure that is made to reimburse the trustee for the use of tangible (real and personal)property, including a private residence, personal telephone, or personal vehicle.

(6) The Department of Local Government Finance is prohibited from approving the budget or additional appropriation of a township in a county other than Marion County that fails to file an annual fiscal report or a personnel report with the State Board of Accounts.

(7) After December 31, 2011, the total compensation and benefits paid to a township board member of a township in a county other than Marion County may not exceed $2,000 per year and per diem may not exceed $100 for each day the board member is engaged in board activities.

(8) With regard to townships in counties other than Marion County, a township legislative body (a) may allow a claim only at a meeting of the township legislative body, (b) may adopt a resolution allowing for payment of certain claims by the township trustee in advance of township legislative body allowance, and (c) must review and allow the claims at its next regular or special meeting following the preapproved payment of the claim.

(9) A public meeting or a public hearing of a township official or governing body must be held in a public place.

Excessive Township Fund Balances

(10) In formulating an annual township budget for a township in a county other than Marion County, consideration must be given to the ending balance that will remain in each township fund relative to the budgeted expenditures from the fund, the fund balance that must be maintained by the township due to delayed property tax collections, and the amount of tax anticipation notes or warrants or other obligations incurred by the township due to delayed property tax collections.

(11) If the township board or the county fiscal body in a county other than Marion County determines that the ending balance in a township fund is excessive, the township board must transfer the excessive amount to the township's levy excess fund.

(12) For township budgets for 2012 and thereafter in a county other than Marion County, the total amount appropriated for a particular year may not exceed the total amount appropriated for the previous year multiplied by the assessed value growth quotient applicable to the township for the particular year (subject to appeal to the Department of Local Government Finance if determined by the township board and approved by the county fiscal body).

(13) After December 31, 2012, the township board and county fiscal body in a county other than Marion County must consider, with regard to collecting property taxes for a cumulative building fund or capital improvement fund, the township's capital improvement plan (which estimates the funds’ expenditures and revenues for at least three years after the plan is adopted).

(14) After December 31, 2012, with regard to a county other than Marion County, the Department of Local Government Finance must consider the capital improvement plan when reviewing a township's budget, tax rate, and tax levy.

Inconsistent Township Assistance Standards

(15) A township assistance planning board (which consists of the county township trustees with a County Commissioner as chairman) is established in each county other than Marion County to prepare and annually update a plan of countywide township assistance standards for adoption by the county legislative body (County Commissioners) not later than March 31 of each calendar year (with the initial standards adopted not later than July 1, 2012, and effective January 1, 2013).

(16) If a township assistance planning board fails to adopt township standards for the two calendar years preceding the ensuing calendar year, the Department of Local Government Finance may not approve the township budget and levy.

(17) The township assistance planning board is considered a public body for Open Door Law and access to public records purposes.

(18) If a trustee does not accept a completed township assistance application or grant or deny an application within the period required by statute; the application is considered denied and the denial may be appealed to the County Commissioners.

(19) 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.

(20) All township trustees must maintain a telephone answering service and respond to a telephone inquiry for township assistance services within than 24 hours, excluding Saturdays, Sundays, and legal holidays.

Senate Bill 61 School Board Elections: Taxpayer Friendly

STATUS: SB 61 passed the Senate Local Government Committee 7-3 on January 19, passed the Senate 37-12 on January 25, and was referred to the House Committee on Elections and Apportionment where it did not get a hearing.

Watchdog Indiana Testimony at the Senate Local Government Committee Public Hearing on January 19: Legislation is Taxpayer Friendly if it is results-oriented, compassionate, and fiscally conservative. Senate Bill 61 is Taxpayer Friendly for two reasons.

Requiring that all elected school board members be elected at general elections beginning with the 2012 general election would result in lower ballot costs in those counties that now conduct school board primary elections.

The greater voter turnout in general elections compared to primary elections will make it more difficult for local vested interests to unduly influence school board election outcomes.

In conclusion, SB 61 is Taxpayer Friendly because it lowers election costs and makes it harder for local vested interests to unduly influence school board election outcomes.

Senate Bill 166 Local Government Employment: Taxpayer Friendly

STATUS: SB 166 passed the Senate Local Government Committee 6-3 on February 9, passed the Senate 38-11 on February 15, and was referred to House Government and Regulatory Reform Committee on March 28 where it did not get a vote.

Watchdog Indiana Testimony planned for the House Government and Regulatory Reform Committee Public Hearing on March 30:

Legislation is Taxpayer Friendly if it is results-oriented, compassionate, and fiscally conservative. Senate Bill 166 IS Taxpayer Friendly for the reasons listed next.

(1) An employee of a county, city, town, or township is considered to have resigned from employment with the unit if the employee assumes the elected executive office of the unit or becomes an elected member of the unit’s legislative or fiscal body.

(2) A unit employee who is elected in the November 2011 municipal election and assumes office on January 1, 2012, or who is serving in an elected office on December 31, 2011, may serve the remainder of the employee's elected term of office.

(3) The resignation restriction does not prohibit a unit employee from holding an elected office of a unit other than the unit that employs the unit employee.

House Bill 1022, which passed the House on February 21, contained a fourth Taxpayer Friendly local government employment provision that should be included in Senate Bill 166. This provision stipulates that a member of a county sheriff's department who is elected county sheriff does not resign as an employee of the sheriff's department when the member assumes the office of county sheriff, but may not be employed by the department in any other position while serving as sheriff.

HB 1022 did contain a weak local government employment provision that is properly omitted in SB 166. This Taxpayer UNfriendly provision stipulates that a police officer or firefighter who assumes an elected office of the unit that employs the police officer or firefighter does not resign from the police or fire department, but must be granted and take a leave of absence from the department for the entire period the police officer or firefighter serves in the elected office. A police officer or firefighter that is elected to an office in a unit would continue to be credited with time spent in full-time employment for all purposes, including retirement and pension benefits while in office. Therefore, elected police officers and firefighters would be in a position to benefit from unit decisions they help make regarding retirement and pension benefits.

In conclusion, it is a clear conflict of interest for public employees to benefit from their actions as elected officials. Also, the chain of command and procedures for discipline are upheld when employees of a government unit do not serve as elected policymakers for that government unit. For these reasons, the Taxpayer Friendly provisions referenced in this testimony should be retained in Senate Bill 166 and passed out of this Committee.

Senate Bill 302 Local Government Nepotism: Taxpayer Friendly

STATUS: SB 302 passed the Senate Local Government Committee 5-3 on February 9, passed the Senate 30-19 on February 22, and was referred to the House Government and Regulatory Reform Committee on March 28 where it did not get a vote.

Watchdog Indiana Testimony planned for the House Government and Regulatory Reform Committee Public Hearing on March 30:

Legislation is Taxpayer Friendly if it is results-oriented, compassionate, and fiscally conservative. Although it does not apply to individuals who provide mowing services, provide property maintenance services or are fire department members, Senate Bill 302 IS Taxpayer Friendly because of the provisions listed next.

(1) A relative of an executive, a member of the legislative body, or a member of the fiscal body of a county, city, town, or township (local unit) is prohibited from being employed by the local unit.

(2) An individual who is a relative of an employee of a local unit is prohibited from being employed by the local unit in a position that would put the employee in a direct line of supervision over the individual.

(3) An employee of a local unit is not required to be terminated or reassigned from any position held by the employee before July 1, 2011, but this grandfathering provision expires January 1, 2015.

(4) A local unit may contract for goods or services with an individual who is a relative of a public official, or a business entity in which a relative of a public official has an ownership interest, if (a) the local unit makes a finding in a public meeting that the individual or business entity is the only provider of goods and services meeting the specifications of the local unit located within the boundaries of the local unit and (b) the public official makes a public written disclosure.

(5) Every public official and elected officer of a local unit must annually certify in writing, subject to the penalties for perjury (a Class D felony), that the official or officer is in compliance with the nepotism law and submit the certification to the executive of the local unit.

(6) The executive of the local unit must file a statement (certified under the penalties for perjury) with the annual personnel report to the State Board of Accounts (SBOA) that the unit has implemented a policy that complies with the nepotism law.

(7) Local units that fail to file a nepotism compliance statement with the SBOA will not have their budgets nor any additional appropriations approved by the Department of Local Government Finance in the following year until notified by the SBOA that the subdivision is in compliance.

House Bill 1022, which passed the House on February 21, contained a couple of weak nepotism provisions.

One weak HB 1022 provision defines a "relative" as an individual who shares a residence with a unit’s elected official for a total of at least six months of the calendar year, and any other individual designated by ordinance or resolution of the local unit. SB 302 includes a properly expanded relatives definition without a residence-sharing requirement.

The other weak HB 1022 provision states that an elected official and relatives of the elected official are exempt if the sum of actual compensation and benefits from the local unit of the relatives of the elected official total not more than $10,000. This arbitrary compensation and benefits threshold is not included in SB 302.

In conclusion, please vote Senate Bill 302 out of this Committee because it is good public policy to control nepotism in local government units.

Senate Bill 405 Township Government: Taxpayer Friendly

STATUS: SB 405 passed the Senate Local Government Committee 7-1 on February 11 and was defeated in the Senate 21-28 on February 22.

Watchdog Indiana E-mail to all State Senators on February 22: Please Vote YES for Senate Bill 405.

SB 405 is Taxpayer Friendly because the provisions listed next enhance the professionalism and consistency of township government by effectively addressing the current shortcomings of inadequate township government oversight, excessive township fund balances, and inconsistent township assistance standards.

Inadequate Township Government Oversight

(1) In Marion County after December 31, 2011, and in all other counties after December 31, 2012, the county fiscal body (County Council) is the fiscal body of each township in the county and will exercise the 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.

(2) In Marion County after December 31, 2011, and in all other counties after December 31, 2012, the county legislative body (County Commissioners) is the legislative body of each township in the county and will exercise the legislative powers assigned in the Indiana Code to township boards.

(3) Township boards are abolished in Marion County on January 1, 2013, and in all other counties on January 1, 2015, and the township board's only responsibility after December 31, 2012 (December 31, 2011, in Marion County), is to submit to the county fiscal body a proposed annual budget, levies, and rate which the county fiscal body may reduce and modify but not increase. (Township trustees will remain in place.)

(4) If a township reorganizes after December 31, 2012, with at least one other township, and the resulting new political subdivision is not a city or town, the county fiscal body becomes the fiscal body of the new political subdivision.

(5) The Office of Management and Budget must annually prepare a report that includes the following information for every township: (a) the township population; (b) the budget, property tax levels and property tax rates; (c) the assessed valuation; (d) the balance in each township fund; (e) a summary of township assistance information; (f) a summary of any statutory compliance issues or exceptions; (g) a description of any interlocal agreements; (h) a description of any resolutions or petitions concerning the township; (i) a description of the property owned or leased by the township.

(6) The Department of Local Government Finance is prohibited from approving the budget or additional appropriation of a township that (a) fails to file an annual fiscal report with the State Board of Accounts or (b) fails to certify to the SBOA that the township is in compliance with provisions concerning the employment of relatives and contracting with relatives.

(7) A township trustee's annual report filed with the State Board of Accounts must list separately each public business expenditure that is made to reimburse the trustee for the use of tangible property, including a private residence, personal telephone, or personal vehicle.

(8) The county executive has the authority to allow and pay township claims in the same manner that county claims are allowed and paid.

(9) A public meeting or a public hearing of a township official or governing body must be held in a public place.

Excessive Township Fund Balances

(10) For township budgets adopted for 2012 for Marion County, and

2012 and 2013 for all other counties, the total amount appropriated for a particular year may not exceed the total amount appropriated for the previous year multiplied by the assessed value growth quotient applicable to the township for the particular year (subject to appeal to the Department of Local Government Finance).

(11) The appropriate fiscal body must identify excessive township fund balances and transfer them to the township's levy excess fund.

(12) After December 31, 2012 (December 31, 2011), a township may only collect property taxes for cumulative and capital projects funds in a particular year if the township trustee prepares, and the county fiscal body approves, a proposed or amended capital improvement plan in the immediately preceding year that estimates expenditures from, and revenues to, the various township cumulative funds for at least three years after the plan is adopted.

Inconsistent Township Assistance Standards

(13) The county executive of every county will appoint a nine-member township assistance planning board to prepare and annually update a plan of countywide township assistance standards for adoption by the county fiscal body.

(14) The township assistance planning board is considered a public body for Open Door Law and access to public records purposes.

(15) After December 31, 2012, the county legislative body must adopt township assistance standards for all townships in the county.

(16) If a trustee does not accept a completed township assistance application or grant or deny an application within the period required by statute; the application is considered denied and the denial may be appealed to the board of county commissioners.

(17) 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.

Township Government Reform

Watchdog Indiana has developed a position on township government reform that includes placing the public question "Shall the township government be retained?" on the ballot in every county.

3. State Budget

House Bill 1001 Budget Bill: Taxpayer Friendly

STATUS: HB 1001 passed the House Ways and Means Committee 15-8 on February 18, passed the House 60-37 on March 30, passed the Senate Appropriations Committee 8-3 on April 18, passed the Senate 36-14 on April 21, went to a Conference Committee after the House dissented from Senate amendments on April 21, passed the Senate (Conference Committee report) 37-13 on April 29, passed the House (Conference Committee report) 59-39 on April 29, and was signed by the Governor on May 10.

The 2011-2013 state budget in House Bill 1001 contains the Taxpayer Friendly provisions listed next.

(1) There are no tax increases.

(2) There is an operating surplus in both the 2012 and 2013 fiscal years.

(3) The total combined state fund reserve balance on June 30, 2013, is at least 5.0% but not more than 10.0% of the total net expenditures for the 2013 fiscal year. Because the Governor is empowered to reduce state spending if actual revenues are less than estimated, working families are protected against state tax increases IF the total combined state fund reserve balance is at least 5.0%. Conversely, the state is taking more revenue than needed from working families if the reserve balance is more than 10.0%.

(4) If the state’s General Fund, Rainy Day Fund, Medicaid Reserve Fund, and Tuition Reserve Fund combined balance at the end of the preceding fiscal year is greater than ten percent of the state’s General Fund budgeted appropriations for the current fiscal year, 50% of the excess revenues is used to (a) give individual Indiana resident taxpayers a refundable adjusted gross income tax credit and (b) transferred to the Pension Stabilization Fund.

(5) Increase the state's total K-12 education funding 0.5% in 2012 and 1.0% in 2013.

(6) Begin a transition plan to equitable K-12 Foundation Revenue levels over seven years with a starting point that is the lesser of (a) 120% of the current year foundation funding or (b) the previous year revenue. Prior legislative decisions based more on politics than evidence-based research have kept the Foundation Revenue per average daily membership artificially high for some school corporations.

(7) Maintain the K-12 Special Education Grant and Career and Technical Education Grant because they focus on desirable education outcomes in a sufficiently evidence-based manner.

(8) Extend the K-12 Academic Honors Diploma Grant program to include students who successfully complete a Core 40 diploma with technical honors.

(9) Eliminate the K-12 Restoration Grant and Small Schools Grant because they are not based on evidence-based research, but exist to disproportionably support rural and declining-enrollment school corporations because of past political "clout."

(10) Move the minimum guarantee dollars from the K-12 Prime Time Grant to Basic Tuition Support because the minimum guarantee dollars are artificially high as a result of political action rather than evidence-based research.

(11) The Medicaid forecast has been satisfactorily funded.

(12) Necessary contributions are made to protect the Pension Stabilization Fund and the Retiree Medical Benefits Plan.

(13) The existing moratorium on certification of new nursing facility beds for participation in the Medicaid program is extended until June 30, 2014, and a certificate of need for a comprehensive care bed license is established until July 1, 2016, that allows the State Department of Health to grant a license for a bed only if the county in which the beds are to be located has an occupancy rate of at least 90%. Limiting the number of licensed nursing facility beds that may be added to the system should, by limiting growth in allowable fixed cost that may be reimbursed under the rate-setting rules, result in some long-term savings to the Medicaid program.

(14) The Higher Education Commission sets a mandatory student fee schedule for high school courses that receive postsecondary credit.

(15) State education institutions must participate in the state aggregate prescription drug purchasing program unless the Budget Agency determines participation would not result in a savings.

(16) A permanent statutory cap is established where the cost of healthcare services provided by jails to persons who are under the custody of county sheriffs is 4% above federal Medicare rates or 65% of listed charges if there is no federal Medicare rate.

K-12 State Tuition Support

Using a spreadsheet to present the calculation steps, the 2012 K-12 state tuition support formula in House Bill 1001 is analyzed and compared to the 2011 K-12 state tuition support formula.

4. Other Significant Legislation

House Bill 1056 Variable Local Option Income Taxes: Taxpayer Friendly

STATUS: HB 1056 was referred to the House Ways and Means Committee on January 5 where it did not receive a public hearing.

Watchdog Indiana Position: Local taxing units are given an alternate source of tax revenue that equitably replaces the revenue lost to property tax caps. HB 1056 also gives local taxing units the option to provide a 100% real property tax credit to the payers of individual income taxes residing within their boundaries. A full explanation of the HB 1056 provisions can be found at http://www.finplaneducation.net/property_tax_replacement.htm.

House Bill 1244 Redevelopment Commissions Oversight: Taxpayer Friendly

STATUS: HB 1244 passed the House Local Government Committee 10-0 on January 27, passed the House 95-0 on February 8, passed the Senate Appropriations Committee 12-0 on April 14, passed the Senate 43-7 on April 21, and did not get reported out of a Conference Committee after the House dissented from Senate amendments on April 25.

Watchdog Indiana E-mail to all General Assembly members on April 26: Please Vote YES for the Conference Committee version of House Bill 1244 if it contains Taxpayer Friendly redevelopment commission oversight provisions similar to those listed next.

(1) The legislative body of a unit that establishes a redevelopment commission or redevelopment authority must approve the budget, tax levy, spending, bond and debt financing, leases pertaining to bonds or debt financing, payment of capitalized interest, and selling of property.

(2) The treasurer of a redevelopment commission outside Indianapolis and the secretary-treasurer of a redevelopment authority outside Indianapolis must report quarterly to the fiscal officer of the unit that established the commission or authority.

(3) The legislative body of the unit must approve a redevelopment commission's purchase of property if payments for the purchase will be made over more than three years or the purchase price of the property exceeds $5,000,000.

(4) A redevelopment commission must obtain the approval of the legislative body of the unit if the amount of excess assessed value determined by the commission is expected to generate more than 200% of the amount of allocated tax proceeds necessary to carry out the redevelopment or economic development plan. The legislative body of the unit may modify the commission's determination with respect to the amount of excess assessed value that exceeds 200% of the amount of allocated tax proceeds necessary to carry out the redevelopment or economic development plan.

The importance of HB 1244 is demonstrated by the Lebanon Redevelopment Commission that operates the Lebanon Business Park tax increment financing district. The Lebanon RDC members are appointed by Lebanon’s Mayor. There are sufficient TIF funds to retire the remaining TIF debt and terminate the TIF district. The release of the TIF assessed value from terminating the TIF district would lower Lebanon property taxes by 5 to 11 percent. The Lebanon RDC refuses to terminate the TIF district to benefit Lebanon’s property tax payers. Instead, the TIF district proceeds are used to fund the pro-developer dreams and schemes of Lebanon’s Mayor. The RDC oversight requirements in HB 1244 would better expose the Lebanon RDC operations to the light of day and improve the chance of taxpayer benefit instead of continued developer enrichment.

A YES vote will be Taxpayer Friendly if the Conference Committee version of House Bill 1244 includes meaningful redevelopment commission oversight provisions.

House Bill 1583 Exempt Property Eligibility For Deductions: Taxpayer Friendly

STATUS: HB 1583 passed the House Ways and Means Committee 20-0 on February 16, passed the House 97-1 on March 28, was referred to the Senate Tax and Fiscal Policy Committee on March 31 where it did not get a public hearing, passed the Senate 40-10 and the House 66-32 on April 29 as part of House Bill 1004, and HB 1004 was signed by the Governor on May 10.

Watchdog Indiana E-mail to all State Representatives on February 22: Please VOTE YES for House Bill 1583.

HB 1583 is Taxpayer Friendly because the 1% circuit breaker cap for homeowners and the following property tax deductions are to be allowed in the year of a property transfer if the property is determined to be exempt in the year following the transfer year: (1) Homestead standard deduction; (2) Homestead supplemental deduction; (3) Mortgage deduction; (4) Deduction for persons 65 or older; (5) Deduction for veterans with a partial disability; (6) Deduction for totally disabled veterans or veterans age 62 and partially disabled; (7) Deduction for surviving spouses of WWI veterans; (8) Deduction for World War I veterans; (9) Deduction for rehabilitated residential real property; and (10) Deduction for rehabilitated property.

Under current law, a homeowner’s property tax deductions do not apply to taxes payable in the following year if the property is sold after March 1 and by December 31. Beginning with taxes payable in 2012, HB 1583 would continue the deductions and 1% circuit breaker cap that belonged to the seller for property taxes payable in the following year if the property is sold to a buyer that is granted a property tax exemption for the next assessment date.

Senate Bill 221 Explanation of Proposed Constitutional Amendments: Taxpayer UNfriendly

STATUS: SB 221 was referred to the Senate Elections Committee on January 5 where it did not get a vote.

Watchdog Indiana Testimony at the Senate Elections Committee Public Hearing on January 23:

Legislation is Taxpayer Friendly if is results-oriented, compassionate, and fiscally conservative. Senate Bill 221 is Taxpayer UNfriendly because it (1) allows an unelected state agency to improperly define the meaning of Indiana constitutional amendments, (2) gives that state agency unlimited authority to publish and post the improper definitions, and (3) makes that state agency immune to proper legal challenge.

SB 221 requires the Legislative Services Agency, an unelected Indiana state agency, to prepare a summary of any proposed state constitutional amendment approved by the General Assembly for statewide vote. This summary must not contain more than 200 words and must be stated in so-called "neutral" language.

All written summaries necessarily create bias, whether intentional or unintentional, and cannot be considered "neutral." This bias is created when decisions are made about what should be summarized, how it should be summarized, and how the summary should be presented. The arbitrary 200-word limit in SB 221 makes the inherent bias more pronounced for constitutional amendment summaries. It is improper for the state to influence the interpretation of constitutional amendments by granting preferential consideration to biased summaries.

SB 221 requires an LSA-prepared constitutional amendment summary to be submitted to the Legislative Council for approval not later than 105 days before the election. The Legislative Council is composed of 16 of the 150 elected members of the General Assembly, 8 of which come from the House and 8 from the Senate. The Indiana Code allows 5 of the 8 members from each chamber to come from the chamber’s majority party.

If the Legislative Council does NOT approve a proposed or amended summary in a timely manner, SB 221 gives the unelected Legislative Services Agency unlimited authority to distribute and post its prepared summary not later than 60 days before the election. The bill also requires the posting of the LSA-prepared summary at each polling place.

A particularly disturbing SB 221 provision prevents a person from bringing an action in any court based on the absolute discretion of LSA to determine the contents of a constitutional amendment summary. NO unelected state agency should have the authority to define the meaning of Indiana constitutional amendments and be immune to proper legal challenge.

It is ironic that SB 221 recognizes the primacy of elected General Assembly members while at the same time granting the unelected Legislative Services Agency unlimited authority to improperly define the meaning of Indiana constitutional amendments. The bill specifies that SB 221 provisions do not apply if the General Assembly acts to specify the ballot language for a proposed constitutional amendment.

In conclusion, Senate Bill 221 is Taxpayer UNfriendly in its current form because it allows an unelected state agency to improperly define the meaning of Indiana constitutional amendments, and gives that state agency unlimited authority to publish and post the improper definitions.

SB 221 would improve to Taxpayer Neutral if constitutional amendment summaries prepared by the Legislative Services Agency were REQUIRED to be approved or amended by the Legislative Council. Those bill provisions should be deleted that grant LSA the unlimited and unchallenged authority to distribute and post its prepared summaries if the Legislative Council fails to act.

It would be Taxpayer Friendly if this committee voted NO on Senate Bill 221. A NO vote would properly reserve for ALL the elected members of the General Assembly the sole right to influence how voters understand constitutional amendments by specifying ballot language.

Senate Bill 473 Toll Roads: Taxpayer Neutral

STATUS: SB 473 passed the Senate Appropriations Committee 9-3 on February 17, passed the Senate 37-12 on February 22, passed the House Roads and Transportation Committee 7-5 on April 6, passed the House 73-19 on April 15, went to a Conference Committee after the Senate dissented from House amendments on April 25, passed the House (Conference Committee report) 61-15 on April 28, and passed the Senate (Conference Committee report) 31-18 on April 29, and was signed by the Governor on May 10.

The major toll road provisions in Senate Bill 473 have undergone a remarkable transformation!

SB 473 has progressed through a series of changes that have improved its rating from Taxpayer Horrible to Taxpayer UNfriendly to its current rating of Taxpayer Neutral. Listed next is an analysis of the major SB 473 toll road provisions included in the Conference Committee report passed by the House on April 28 and scheduled for a vote today in the Senate.

1. (Taxpayer Friendly) General Assembly approval is required to impose tolls on a nontolled highway, roadway, or other facility (including nontolled interstate highways, U.S. routes, and state routes) in existence or under construction on July 1, 2011.

2. (Taxpayer Friendly) General Assembly approval is required to impose tolls on I-69. The Governor may no longer approve without General Assembly consent the imposition of public-private tolls on I-69 between Martinsville and Evansville.

3. (Taxpayer Friendly) General Assembly approval is required for I-69 construction in Perry Township within Marion County.

4. (Taxpayer Friendly) For a public-private agreement entered into after June 30, 2011, the Indiana Department of Transportation may not use a methodology based on toll collection success rates or other factors internal to the operator that could result in increases of the maximum amounts due to actual toll collection rates that are below estimated or anticipated toll collection rates.

5. (Taxpayer Neutral) During the period beginning July 1, 2011, and ending June 30, 2021, the Governor may approve WITHOUT General Assembly consent the addition of public-private toll lanes, including high occupancy toll lanes, to a highway, roadway, or other facility in existence on July 1, 2011, if the number of nontolled lanes on the highway, roadway, or facility as of July 1, 2011, does not decrease due to the addition of the toll lanes.

6. (Taxpayer Neutral) The Budget Committee must review within 90 days any proposed public-private tollway. This review is basically worthless because Budget Committee APPROVAL is not required for new toll roads – the Budget Committee could vote unanimously that a proposed toll road project is not good public policy, and the Governor could "thumb his nose" and approve a public-private agreement for the proposed toll road in spite of the Budget Committee vote.

7. (Taxpayer Neutral) The common construction wage applies to the Illiana Expressway connecting I-65 with an interstate highway in Illinois and to projects that are subjects of public-private agreements entered into after June 30, 2011.

8. (Taxpayer Neutral) The owner of a motor vehicle that passes through a toll collection facility without paying the proper toll commits a moving violation, a Class C infraction.

9. (Taxpayer Neutral) The Bureau of Motor Vehicles is authorized to withhold the registration of a vehicle used in the commission of a violation related to a tollway until the owner pays any applicable fines and fees.

10. (Taxpayer UNfriendly) During the period beginning July 1, 2011, and ending June 30, 2021, the Governor may approve WITHOUT General Assembly consent the location of a public-private tollway that is constructed after June 30, 2011. This gives the Governor authority to revive the Indiana Commerce Connector east and south of Indianapolis and the Illiana Expressway east of I-65 in Northwest Indiana.

11. (Taxpayer UNfriendly) During the period beginning July 1, 2011, and ending June 30, 2021, the Governor may approve WITHOUT General Assembly consent the imposition of public-private tolls as part of any new bridge project connecting Indiana to Kentucky. This gives the Governor authority to impose tolls on the existing I-65 bridge over the Ohio River.

12. (Taxpayer UNfriendly) During the period beginning July 1, 2011, and ending June 30, 2021, the Governor may approve WITHOUT General Assembly consent the imposition of public-private tolls on the Illiana Expressway connecting I-65 with an interstate highway in Illinois.

Highway tolls are a significant expense to affected Hoosier working families. Road construction also permanently alters and affects communities. For these reasons, the authority to build new toll roads should remain with the General Assembly. It is not right for a single individual - the Governor - to have complete power over any toll road decision. The impact of toll roads on working families is so significant that all 150 of our elected General Assembly public servants should decide the fate of all toll road projects.

The importance of General Assembly approval for toll roads is demonstrated by two recent proposed projects - the Indiana Commerce Connector east and south of Indianapolis and the Illiana Expressway east of I-65 in Northwest Indiana. Many developer-influenced local elected officials extolled the economic development benefits of these toll road projects, while the great majority of local citizens did not see the benefit of low-wage and low-benefit hospitality jobs offsetting the toll costs and destructive sprawl of new toll road construction. The Governor withdrew these projects in response to widespread public opposition. Because General Assembly approval was required for these unpopular projects, the reelection prospects of the local General Assembly members were impacted. One wonders if the Governor would have responded to the opinion of local citizens and opposed the vested interests if he had the increased toll road powers included in SB 473.

House Bill 1371, which was signed by the Governor on March 22 after passing the House 98-0 and the Senate 43-6, establishes the Joint Study Committee on Transportation and Infrastructure Assessment and Solutions. This Joint Study Committee includes the members of the House of Representatives standing committee on Roads and Transportation and the Senate standing committee on Homeland Security, Transportation, and Veterans Affairs. The Joint Study Committee would study and report on (1) the condition of Indiana’s transportation infrastructure, (2) Indiana’s transportation demands through 2035 in conjunction with INDOT, (3) whether the existing infrastructure is capable of meeting the transportation demands, (4) the role of state, county, and municipal government and private sector in meeting the transportation demands, and (5) potential funding sources.

Testimony at the February 10 Senate Appropriations Committee public hearing indicated that $180 billion in public-private partnership money is available for "investment" in new U.S. toll roads. It is apparent that so much money creates a heightened possibility of corruption if SB 473 is passed and the approval of new toll roads is taken away from the General Assembly and given solely to the Governor.

There are no "pay to play" restrictions in Indiana. State contractors and other vested interests are free to make any "above the table" contributions to campaign and political action committees established by, or affiliated with, the Governor and General Assembly members. The tremendous dollar amounts associated with public-private toll roads also significantly increase the potential for illegal "under the table" payoffs to get favorable public-private approvals, particularly when Governor approval is the only required approval. The futile Budget Committee "review" provisions in SB 473 serve to also put the President Pro Tempore and Speaker in the corruption "bulls eye" because they appoint four of the five voting Budget Committee members.

SB 473 also heightens the possibility of bureaucratic corruption. Our Governor and part-time General Assembly legislators rely on the objective and honest opinions of the Indiana Department of Transportation as part of the decision making process for important transportation infrastructure decisions. INDOT is a vast bureaucracy whose proposed budget for the next biennium totals $4.1 billion. INDOT is already a "hot bed" for attempted manipulation by vested interests, and the infusion of a massive amount of public-private partnership money will just make it worse. There will be a great temptation for Agnew-like INDOT bribes to be offered and accepted to "influence" INDOT toll road opinions.

The present "cast of characters" on the state government stage may sincerely and honestly believe the mistaken notion that the ability for a Governor to promptly arrange public-private toll roads without General Assembly approval is "necessary for the growth of our state." This dubious position does NOT offset the heightened possibility of corruption should SB 473 pass the General Assembly.

The Joint Study Committee should have been given time to perform its duties in the full light of public scrutiny so a better informed decision could have made if it is good public policy for the General Assembly to negate the current separation of powers and cede increased toll roads authority to the Governor. There has been no public EVIDENCE submitted to support SB 473. Deep-pocketed single-interest groups such as the Indiana Chamber of Commerce, Build Indiana Council, and Indiana State Building & Construction Trades Council have used their behind-the-scenes access to "convince" key General Assembly members that the Governor needs increased toll roads authority. Everyday working families who would do the toll-paying get only a few public hearing minutes to express their concerns. Before letting the Governor succeed in increasing his toll roads power, the General Assembly should have insisted on a full PUBLIC discussion of the pertinent issues before the Joint Study Committee. ALL the facts should be subject to public review regarding the condition and needs of Indiana’s transportation infrastructure.

The Indiana Governor controls a vast transportation bureaucracy whose proposed budget for the next biennium totals $4.1 billion. To give the Governor any unfettered toll road authority is an assault on the proper separation of powers. It is poor public policy for the General Assembly to cede any toll road power to the office of Governor. Indeed, the General Assembly should properly reclaim the toll road authority on any new bridge project connecting Indiana to Kentucky.

Some contend that tolls are an acceptable "user fee." Whatever questionable validity this user-fee concept has is more than offset by the adverse economic impact of tolls. Money that consumers efficiently spend in the free market is diverted to a transportation bureaucracy in the form of highway tolls. The operation of the transportation bureaucracy grinds away at the toll dollar so that it is less efficiently spent on the limited mission to plan, build, maintain, and operate a transportation system.

Others point out that Indiana is one of only nine states that require legislative approval for toll road projects. No desirable public-private toll road agreement can or should proceed so quickly that it is difficult to get General Assembly approval in a timely fashion. If necessary, a special session of the General Assembly could be called to consider the merits of a multi-billion dollar toll road project. Hoosiers should be proud that our General Assembly does not give the Governor unfettered authority to approve toll roads.

In conclusion, because Senate Bill 473 has improved to a Taxpayer Neutral rating, the vote of each General Assembly member on Senate Bill 473 will NOT be included on his or her Watchdog Indiana Legislator Rating web page.

Senate Bill 550 Redevelopment Commissions And Authorities: Taxpayer Friendly

STATUS: SB 550 passed the Senate Appropriations Committee 9-0 on February 10, passed the Senate 49-1 on February 17, and was referred to the House Government and Regulatory Reform Committee on March 29 where it did not get a public hearing.

Watchdog Indiana E-mail to all State Senators on February 17: Please VOTE YES for Senate Bill 550 because the redevelopment commission and authority provisions listed next are Taxpayer Friendly.

(1) The legislative body of a unit that establishes a redevelopment commission or redevelopment authority must approve the budget, the tax levy, spending, bond and debt financing, a lease pertaining to bonds or debt financing, the payment of capitalized interest, selling of property, and allocation of excess tax revenue of the redevelopment commission and redevelopment authority.

(4) The legislative body of a unit must review, may modify, and must approve the redevelopment commission's annual determination of whether there will be assessed value in each allocation area that could be allocated to the base assessed value of all units having taxing authority in the allocation area without impacting the obligations of the redevelopment commission.

The importance of SB 550 is demonstrated by the Lebanon Redevelopment Commission that operates the Lebanon Business Park tax increment financing district. The Lebanon RDC members are appointed by Lebanon’s Mayor. There are sufficient TIF funds to retire the remaining TIF debt and terminate the TIF district. The release of the TIF assessed value from terminating the TIF district would lower Lebanon property taxes by 11 percent. The Lebanon RDC refuses to terminate the TIF district to benefit Lebanon’s property tax payers. Instead, the TIF district proceeds are used to fund the pro-developer dreams and schemes of Lebanon’s Mayor. The RDC oversight requirements in SB 550 would better expose the Lebanon RDC operations to the light of day and improve the chance of taxpayer benefit instead of continued developer enrichment.

Please VOTE YES for Senate Bill 550 because of the Taxpayer Friendly reasons listed above.

Senate Bill 561 Corrections and Sentencing: Taxpayer Friendly

STATUS: SB 561 passed the Senate Corrections, Criminal and Civil Matters Committee 8-2 on February 14, passed the Senate Appropriations Committee 13-0 on February 17, passed the Senate 46-3 on February 22, and was referred to the House Courts and Criminal Code Committee on March 28 where it did not get a vote.

Watchdog Indiana E-mail testimony sent to the Members of the House Courts and Criminal Code Committee for the April 6 public hearing: Senate Bill 561 is Taxpayer Friendly because it is results-oriented, compassionate, and fiscally conservative.

Most of the SB 561 provisions were drafted by the Indiana Criminal Code Evaluation Commission with technical assistance from the Pew Center on the States’ Public Safety Performance Project, who partnered with the Council of State Governments Justice Center to develop a data-driven Indiana criminal justice policy framework. Some of these Taxpayer Friendly provisions include those listed next.

(1) Community corrections boards must expand educational, mental health, drug or alcohol abuse counseling, housing, and supervision services for offenders sentenced to community supervision programs.

(2) The number of Class D felony offenders committed to the Indiana Department of Correction are reduced.

(3) Part of the sentence for Class D felonies is suspended.

(4) The adoption of certain best practices based on scientific research is promoted to improve probation administration and services and reduce probation revocations.

(5) Categories of theft are restructured.

(6) Forgery is made a Class D felony.

(7) Class C auto theft is changed to Class D.

(8) Some Class A drug offenders are resentenced as either Class B or C felons.

These important SB 561 provisions will result in more offenders being sentenced to community probation, corrections, and problem-solving court programs instead of being incarcerated. Some offenders will be sentenced to reduced lengths of incarceration. Also, more offenders will be released to community supervision programs rather than to parole.

Reducing lengths of incarceration and directing more offenders from incarceration and parole to community supervision programs will result in savings (up to $17.4 million in 2017) to the Department of Correction. A portion of these savings will be used to expand cognitive therapy programs for offenders committed to the DOC. Half of these savings will also be distributed to the County Council of each county committing fewer offenders to the DOC than a four-year baseline average. The County Council would then redistribute this money to local probation and community corrections programs as the first priority, and then to local problem-solving courts and local work release programs as a second priority. These local programs may need more probation officers to supervise offenders and expand the types of mental health and substance abuse treatment.

It is estimated that passage of SB 561 will result in the Department of Correction prison population being 5,345 lower in 2017 because fewer offenders are incarcerated from substance abuse crime and theft. This 2017 prison population reduction means that 3,562 new prison beds will not have to be provided. The state will not have to acquire land and build new prison facilities.

One SB 561 provision was NOT drafted by the Indiana Criminal Code Evaluation Commission. This provision would create a future need for new cells to house credit-restricted felons who will be staying in prison for extended periods of time. Because of the need for new cells due to longer stays, the DOC would have to build additional facilities. As an illustration of future costs, the DOC would likely need to have a facility the size of Miami Correctional Facility by 2035 to house these additional offenders.

Please remove the Taxpayer UNfriendly credit-restricted felon provision, and pass the other Taxpayer Friendly SB 561 provisions out of the House Courts and Criminal Code Committee. The logical data-driven Indiana criminal justice policy framework improvements will maintain the effectiveness of our law enforcement efforts.

Senate Bill 589 Income Tax Changes: Taxpayer Neutral

STATUS: SB 589 passed the Senate Tax and Fiscal Policy Committee 8-2 on February 15, passed the Senate 39-10 on February 22, passed the House Ways and Means Committee 18-4 on April 13, passed the House 62-34 on April 21, went to a Conference Committee after the Senate dissented from House amendments on April 25, passed the Senate 40-10 and the House 66-32 on April 29 as part of House Bill 1004, and HB 1004 was signed by the Governor on May 10.

As of April 21, the key provisions of SB 589 include those listed next.

(a) The Corporate Adjusted Gross Income Tax rate would be decreased from 8.5% to 6.5% in 0.5% increments over four years beginning in the 2013 fiscal year. This would reduce the state’s General Fund revenue (and increase corporate profits) by $18.4 million in the 2013 fiscal year, $37.9 million in 2014, $58.6 million in 2015, $80.4 million in 2016, and $81.4 million in 2017.

(b) Beginning in the 2012 calendar year, the exclusion of interest income from state and local bonds (except those issued by Indiana or Indiana local governments) would no longer be allowed from the (a) Individual Adjusted Gross Income Tax, (b) Corporate Adjusted Gross Income Tax, and (c) Financial Institutions Tax as it applies to credit unions and investment companies. This would increase the state’s General Fund revenue by $72.3 million in the 2013 fiscal year, $76.6 million in 2014, $77.9 million in 2015, $79.2 million in 2016, and $83.2 million in 2017. Based on the current average rate of about 1.3%, county Local Option Income Tax collections on a statewide basis would increase from $14.5 million in 2013 to $18.2 million in 2017. (It should be kept mind that payers of the Individual Adjusted Gross Income Tax include not only Hoosier working families but also partnerships, stockholders in subchapter S-corporations, trusts, estates, and nonresidents with income from sources in Indiana.) (Note: SB 589 would reduce the tax burden of some financial institutions because financial institutions other than credit unions and investment companies pay the Financial Institutions Tax under current law on interest from state and local bonds, including Indiana state and local bonds.)

(c) Business income and sales receipts from certain intangibles received by a non-Indiana pass through entity from its interest in an Indiana pass through entity would be attributable to Indiana and taxable under the adjusted gross. This provision could potentially prevent revenue loss under current income attribution rules.

Legislation is Taxpayer Friendly if it is results-oriented, compassionate, and fiscally conservative. Some Hoosiers have concluded SB 589 is Taxpayer Friendly for the reasons listed next.

(1) "The bill comprises many of the recommendations of the Economic Development Summer Study Committee, which had a few politicians and a host of business leaders on it. Our current combined federal and state corporate rate for Indiana is higher than that of Germany or Japan, and extensive testimony was taken from from Scott Hodges of the Tax Foundation, who strongly endorsed a corporate income tax rate cut." The corporate income tax rate cut is important "considering that we have the highest rate in the Midwest and at least 6 states nationally are looking to lower their rates right now." [It should be noted that the Tax Foundation’s 2011 Business Tax Climate Index ranks Indiana tenth best overall, but twenty-first best on corporate taxes (Indiana’s lowest score on any of the major taxes scored in the Index).] "As you know we pay all taxes directly or indirectly. Whenever I think of corporate taxes I remember the report on Dubai where it is a taxfree haven for corporations - and they are all there in response, in their tax free zone-state of the art. I want them to come back to Indiana to employ U.S. citizens." "This is an excellent policy response to states like Illinois and Minnesota which are raising their tax rates."

(2) "It was discovered Indiana is the only state in the nation to give a tax break for out-of-state municipal bond investments. An incentive is created for Hoosiers to invest in the poor spending decisions of other states. The impact on most Hoosiers is zero, and even those who do invest in bonds can avoid any tax liability by investing in Indiana-based debt. The review I've seen suggests that could lower Indiana's debt costs by 4 to 5 basis points, saving taxpayers money on debt service costs."

(3) "The other tax credits are little used, but their elimination supports the fundamental premise that a lower flatter rate is better than a higher one littered with tax credits causing the government to pick winners and losers." "I support simplification, assuming it is nearly revenue neutral." "Lowering corporate tax rates and simplifying the tax code (eliminating credits) are both good things for Hoosiers overall."

(4) "Of the 21,000 C-corporation corp tax filings in Indiana, 16,000 are Indiana businesses. "It's not just about attracting new business, it's about the tax burden on smaller existing businesses who don't have the ability to shift tax jurisdictions like Google and GE."

(5) Some research indicates that the incidence of the corporate tax falls heavily on the workers of a corporation in the form of lower wages.

SB 589 supporters also express the opinions listed next. "Efforts that can help the private sector create jobs leads to higher state tax revenues, which means all of us can pay less if the size of the budget stays the same." "Employed people=more money into the treasury." "Remember, just because you lower the tax rate does not necessarily mean you'll get lower revenue. If it helps businesses have more profits overall, the revenue from corporations may actually come in higher than before." These opinions reflect the philosophy that the size of the economic growth from reducing tax rates will be sufficient to compensate for the short-term costs of the tax cuts, and that reducing the tax rates would, in fact, cause overall revenue to increase. However, in 2003, the Wall Street Journal declared the debate over the ability of supply-side economics to reduce taxes without cost has ended "with a whimper," after extensive modeling performed by the Congressional Budget Office failed to support that possibility.

Other Hoosiers have concluded that SB 589 is Taxpayer UNfriendly for the reasons listed next.

(1) Cutting the Indiana Corporate Adjusted Gross Income Tax rate is not necessary to address "a particularly unattractive feature of our corporate tax system" because the Indiana Economic Development Corporation already touts the state’s tax and regulatory environments as the fourth best in the nation for job creation and economic growth. "The current tax rate does not appear to be a disincentive for companies considering to enter or leave Indiana. We are already better than most, and by a fair amount."

(2) "My idea of economic development has always centered around stimuli to small businesses with 10 or fewer employees, not on favors to large corporations. Big money begets favors and more money. That being said, I could support SB 589 if provisions were added to keep the increase in corporate profits in Indiana and funneled down to the working class in jobs, salary increases, and savings in the cost of goods and services - and definitely not into executive salaries or into factories out of state or out of the country." "Lower taxes will simply result in higher profits and higher executive compensation." [It should be noted that research findings on the AFL-CIO Executive Pay Watch website that reveal the 2009 average CEO pay at S&P 500 companies was 263 times greater than average worker pay - average CEO pay was 107 times more than average worker pay in 1990 and only 42 times greater in 1980.]

(3) "A qualified workforce, and quality of life issues (which again influence a company’s ability to attract and retain top talent) are more important factors. Also, I don’t believe this proposed legislation would have any impact on state and local efforts to provide a variety of economic incentives for targeted investment opportunities, which is the other major reason that companies select Indiana locations." A Brookings Institution survey of business leaders reveals that 72% cited workforce education as an important factor in site selection. Market access and tax structure followed in importance at 65% and 59% respectively. Corporate executive site selection emphasis has changed from "location, location, location" to "education, education, education."

(4) "I do not believe that lower tax rates (and the associated lower cost of doing business) in Indiana will result in lower costs of goods to Indiana residents. Corporations set pricing based on the supply and demand factors measured across a larger population."

(5) "This bill is simply another example of politicians trying to thump their chests about how they are making Indiana a more attractive place to do business, while having minimal impact on attracting more jobs, and they are paying for this by increasing the taxes of individuals. The fact that this revenue offset is entirely focused on an exclusion of state and local bond income will have a particular impact on older Hoosiers, who have moved their investments their as a more conservative option. This strategy could even have an unforeseen consequence of encouraging older Hoosiers to move out of the state and to localities that are less tax unfriendly to them, ultimately resulting in legislation with a negative revenue impact to the state." "This is Corporate Welfare; primarily at the expense of the INDIVIDUAL taxpayer!"

The Watchdog Indiana position is that Senate Bill 589 is Taxpayer Neutral. The following Watchdog comment expresses this opinion: "I believe this bill is 'taxpayer neutral.' It could be argued that it is taxpayer unfriendly because some tax burden is shifted to individuals, but the revenue numbers being discussed here are a very small percentage of total state tax revenue. And, the percentage of importance attributed to tax structure (59%) in the Brookings Institute survey is still a significant number, so this provision may provide a marginal increase in Indiana's ability to attract businesses. Education does rank higher in the survey, but I didn't see a link here between this bill and a reduction in funding for education."

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