2012 Watchdog Indiana Legislative Agenda

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SUMMARY

1. K-12 Education Reform
Homework Enhances Learning Potential.
Third Grade Best Practices Inventory Report.
2. Local Government Reform
House Bill 1005 Nepotism and Conflict Of Interest: Taxpayer Friendly. SIGNED BY GOVERNOR
House Bill 1254 Township Reorganization: Taxpayer Friendly. FAILED IN COMMITTEE
Senate Bill 110 County Government Issues: Taxpayer UNfriendly. FAILED IN SENATE
Senate Bill 170 Nepotism and Conflict Of Interest: Taxpayer Friendly. WITHDRAWN IN HOUSE
Township Government Reform.
3. State Budget
House Bill 1199 Inheritance Tax Phase-Out: Taxpayer Neutral. FAILED IN COMMITTEE
House Bill 1376 Automatic Refundable Taxpayer Credit: Taxpayer UNfriendly. SIGNED BY GOVERNOR
Senate Bill 143 Automatic Taxpayer Refund: Taxpayer UNfriendly. SEE HB 1376
Senate Bill 293 Inheritance Tax Changes: Taxpayer Neutral. SIGNED BY GOVERNOR
Indiana Gas Tax Reform Plan to Better Use Indiana Gasoline Tax Dollars.
4. Other Significant Legislation
House Bill 1001 Employee's Right to Work: Taxpayer Neutral. SIGNED BY GOVERNOR
House Bill 1003 Public Access Improvements: Taxpayer Friendly. SIGNED BY GOVERNOR
House Bill 1073 Public Mass Transportation: Taxpayer UNfriendly. DEFEATED IN COMMITTEE
House Bill 1093 Public Access Improvements: Taxpayer Friendly. SEE HB 1003
House Bill 1132 Controlled Projects: Taxpayer UNfriendly. FAILED IN COMMITTEE
Senate Bill 25 Redevelopment Commissions and Authorities: Taxpayer Friendly. FAILED IN COMMITTEE
Senate Bill 92 Public Access Improvements: Taxpayer Friendly. SEE HB 1003
Senate Bill 98 County Excise Surtax and Wheel Tax: Taxpayer Neutral. SIGNED BY GOVERNOR

Watchdog Indiana identifies those 2012 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, Taxpayer 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 can get full consideration.

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.

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 1005 Nepotism and Conflict Of Interest: Taxpayer Friendly

STATUS: Passed the Senate 30-19 with amendments, the House concurred 62-19 in Senate amendments, and signed by the Governor.

The following Watchdog Indiana E-mail was sent to all State Senators on February 24:

Please Vote YES for the Taxpayer Friendly Conflict Of Interest and Nepotism provisions in House Bill 1005.

The Taxpayer Friendly Conflict Of Interest provisions in HB 1005 include those listed next.

(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 the elected executive office of the unit or becomes an elected member of the unit's legislative or fiscal body.

(2) An individual who is serving as a volunteer firefighter may not assume the office of executive or become a member of the executive, legislative, or fiscal body of the unit that oversees the budget and operations of the fire department in which the volunteer firefighter serves.

(3) An employee or a volunteer firefighter is not restricted from holding an elected office of another unit.

(4) A volunteer firefighter for a volunteer fire department or a fire department that provides fire protection services to a unit under a contract (excluding a mutual aid agreement) or as the unit's fire department may not assume or hold an elected office of a unit that receives services from the department in which the volunteer firefighter serves.

(5) A full-time paid firefighter or a volunteer firefighter in a department that provides fire protection services to more than one unit (excluding fire protection services provided under mutual aid agreements) may not assume or hold an elected office of any unit that receives fire protection services from the department.

(6) An employee or a volunteer firefighter who assumes or holds an elected office on January 1, 2013, is allowed to continue to hold the office and be employed by the unit or serve as a volunteer firefighter until the expiration of the term of office.

The Taxpayer Friendly Nepotism provisions in HB 1005 include those listed next.

(7) Relatives may not be employed by a unit in positions that result in one relative being in the direct line of supervision of the other relative.

(8) An individual who is employed by a unit on July 1, 2012, is not subject to the nepotism provisions unless the individual has a break in employment with the unit.

(9) For purposes of the nepotism law, the performance of the duties of a precinct election officer or a volunteer firefighter is not considered employment by a unit.

(10) An individual who is employed by a unit on the date the individual's relative begins serving a term of an elected office of the unit may remain employed by the unit and maintain the individual's position or rank even if the individual would be in the direct line of supervision of the individual's relative.

(11) An individual who is employed by a unit on the date the individual's relative begins serving a term of an elected office of the unit may not be promoted to a position or, in the case of an individual who is a member of a merit police department or merit fire department, promoted to a position that is not within the merit ranks if the new position would place the individual in the direct line of supervision of the individual's relative.

(12) A township trustee whose office is located in the trustee's personal residence is allowed to employ only one relative to work in the township trustee's office and be in the trustee's line of supervision; however, the total compensation of the township trustee's employed relative may not exceed $5,000 per year.

(13) A coroner who is ineligible for another term of office due to term limits is allowed to be hired by the coroner's successor, even though the successor is a relative and will result in the coroner working in the successor's direct line of supervision.

(14) A sheriff is allowed to hire the sheriff's spouse as prison matron for the county and work in the sheriff's direct line of supervision.

(15) Provisions concerning nepotism apply to a person who is a party to an employment contract with a unit.

(16) A unit can enter into or renew a contract for the procurement of goods, procurement of services, or 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 (Indiana Code 35-44-1-3), makes full written disclosure, and satisfies any other requirements of the public purchasing law (Indiana Code 5-22) or the public works law (Indiana Code 36-1-12).

(17) In order to enter or renew a contract with a relative of an elected official of the unit, the official must file with the unit, the SBOA, and the county clerk’s office a written description of the contract or purchase made by the unit and the relationship with the person or entity being contracted with. The written description must be accepted by the legislative body of the unit in a public meeting.

(18) Each elected official of the unit is required to annually certify in writing, subject to the penalties for perjury (a Class D felony), that the official is in compliance with the nepotism and contracting law and to submit the certification to the executive of the local unit.

(19) A unit must implement a policy that complies with the nepotism law and contracting law

(20) A unit is allowed to adopt a policy that is more stringent and detailed and applies to individuals who are exempted or excluded from HB 1005.

(21) The executive of the local unit must include with the annual personnel report filed with the State Board of Accounts (SBOA) a statement regarding whether the unit has implemented a policy that complies with the nepotism law and contracting law.

(22) A local unit failing to file a statement with the SBOA confirming adoption of a policy that complies with the nepotism law and contracting law will not have their budget nor any additional appropriations approved by the Department of Local Government Finance in the following year until notified by the SBOA that compliance has occurred.

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.

Furthermore, it is good public policy to control nepotism in local government units. While the nepotism exceptions in HB 1005 might appear to be "disturbing" in their scope, HB 1005 represents a big step forward on the topic of local government nepotism and provides a helpful framework should further improvements be deemed necessary.

A YES vote for HB 1005 is Taxpayer Friendly.

A NO vote against HB 1005 is Taxpayer UNfriendly.

Should HB 1005 pass the General Assembly and be signed into law by the Governor, the HB 1005 vote of each General Assembly member will be recorded on his or her individual Watchdog Indiana Legislator Rating web page: see http://www.finplaneducation.net/general_assembly_ratings.htm.

House Bill 1254 Township Reorganization: Taxpayer Friendly

STATUS: Failed to receive a vote in the House Government and Regulatory Reform Committee.

Indiana House Bill 1254 proposes significant local government reforms. General Assembly legislation is Taxpayer Friendly if it is results-oriented, compassionate, and fiscally conservative. Listed next are 49 Taxpayer Friendly HB 1254 provisions categorized by Conflict Of Interest, Township Government Elimination, Township Boards Elimination, Fire Protection and Emergency Services, Township Assistance, and Township Schools.

Conflict Of Interest

The HB 1254 conflict-of-interest provisions would keep public employees from benefiting from their actions as elected officials by keeping a political subdivision employee from assuming the elected executive office of the political subdivision or becoming a member of the political subdivision's legislative or fiscal body. Also, the chain of command and procedures for discipline would be upheld when employees of a government unit do not serve as elected policymakers for that government unit.

1. An employee of a political subdivision is considered to have resigned from employment with the political subdivision if the employee assumes the elected executive office of the political subdivision or becomes a member of the political subdivision's legislative or fiscal body.

2. This resignation provision applies to an employee of a political subdivision who assumes an elected office after June 30, 2013.

3. This provision does not prohibit an employee of a political subdivision from holding an elected office of a political subdivision other than the political subdivision that employs the government employee.

Township Government Elimination

HB 1254 would put a public question regarding the elimination of township government on the November 2012 ballot in each county asking if all the duties of the township governments within the county should be transferred to the county effective January 1, 2015. Many Hoosiers have strong opinions – both pro and con – regarding their township government, and voters in each county should be able to exercise their collective wisdom to decide the fate of their long-standing township governments in the same way they decide if the candidates on their ballot are sufficiently good public servants to justify election. Letting the voters in each county decide whether or not to keep their township governments would not result in an unworkable patchwork quilt of different local governments because we already have at least 160 years of legal precedence in the joint operation of our county and township governments. The November 2012 township government public question would have an added benefit in that the decision on the effectiveness of township government would be made objectively by the voters and taken out of the hands of politicians who may be reluctant to act because of local political considerations. In short, it is good public policy to let ALL the voters statewide decide for themselves whether or not township government is good in their county because it is closest to the people.

4. A public question regarding the elimination of township government must be placed on the November 2012 general election ballot in all counties asking "Shall all duties of township government be transferred to ________ (insert the name of the county)?"

5. In all counties other than Marion County, if a majority of the voters in a county vote "Yes" on the public question, all township powers and responsibilities are transferred to the county (including township assistance, fire protection, cemetery maintenance, weed control, parks, fence viewing, and any township libraries). A designee of the county executive will begin meeting with township trustees beginning January 1, 2013, concerning the transfer of powers and duties for cemeteries, high weeds and grass, detrimental plants, and parks. As well, a designee of the county executive will meet with the township trustees to prepare a plan for the delivery of township assistance on a countywide basis.

6. Provides that in Marion County, if a majority of the voters in the county vote "Yes" on the public question, all township government is to be abolished effective January 1, 2015, and (a) each township will retain its name and geographic boundaries; (b) the county executive will begin meeting with each township trustee, constable, and small claims court judge to plan the transfer of the powers, duties, obligations, and responsibilities of the township to the county and consolidated city (including township assistance, cemetery maintenance, weed control, parks, and fence viewing); (c) any remaining township fire departments or fire protection territories in the county are consolidated into the fire department of the consolidated city; (d) the responsibilities of the township trustee concerning township small claims court are transferred to the mayor and city-county council of the consolidated city; (e) the small claims courts operate independently from the circuit and superior courts; (f) except for adopting the budget and approving salaries, the city-county council does not have authority over a small claims court judge and the operations of a small claims court; (g) the operations of the township constables and township small claims courts are accounted for in the county budget beginning January 1, 2015, and the employees of the constable and small claims court become employees of the county; and (h) Marion County Small Claims Court Fees will remain unchanged, but will be paid to the county general fund, township small claims courts account.

7. In all counties other than Marion County, if a majority of the voters in the county vote "No" on the public question, township powers and responsibilities are transferred as follows: (a) a county board of trustees is created consisting of all trustees in the county; (b) beginning January 1, 2015, the responsibility for funding and providing township assistance is transferred to the county, with administration of township assistance by the township trustee in each township subject to the supervision of the county board of trustees; (c) the county board of trustees must prepare an annual county plan, approved by the county legislative body, for providing township assistance in the county; (d) the county board of trustees must appoint advisors, including at least one person employed by a faith-based human services provider agency, at least one person employed by a government-funded human services provider agency, and at least one person employed by a nonprofit human services provider agency; (e) the county board of trustees must consider contracting with a service provider for township assistance, and recognize and coordinate with other providers of relief for indigent persons; (f) the compensation for township assistance personnel (hired by the county board of trustees) will be fixed by the county fiscal body; (g) the responsibility for cemetery maintenance and weed control is transferred to the county executive or county executive's designee; (h) the township and township trustee must maintain responsibility for parks and recreation, fence viewing, and libraries (if any).

8. Provides that in Marion County, if a majority of the voters of the county vote "No" on the public question, township powers and duties are not transferred to the county and consolidated city.

9. In counties outside of Marion County, if township government is eliminated, the county (within the county’s maximum permissible property tax levy) may levy taxes for payment of certain pension benefits.

10. In counties outside of Marion County, if township government is eliminated, the balances in the township general fund and the township assistance fund attributable to the duties of the township trustee transfer to the county.

11. After township government functions are transferred, the territory of the township comprises a taxing district for the payment of township indebtedness existing at the time of the transfer. Marion County taxing districts will be abolished when the indebtedness for which they were created is paid.

12. The balances in Marion County township debt service funds will transfer to the county and be used to pay the indebtedness or lease rentals for which the fund was created.

13. Funds in the Marion County township general funds attributable to the duties of the township trustee, other than fire protection funds, transfer to the county.

14. Marion County’s maximum permissible property tax levy for taxes first due and payable in 2015 will increase by an amount equal to the amount for all the townships for fire protection and for township assistance and the maximum permissible property tax levy for other governmental functions assumed by the county.

15. The distributive share of a public safety local option income tax that would have been paid to the township will instead be paid to the county beginning in 2015.

16. The Marion County townships' portions of certified local option income tax shares will be transferred to the city/county.

Township Boards Elimination

It is good public policy that (regardless of the November 2012 township government elimination votes) HB 1254 would eliminate township boards in all counties effective January 1, 2015, and the county fiscal body becomes the fiscal body and legislative body of the townships. Township board members often aren’t actively engaged and serve as little more than rubber stamps to township trustee decisions, resulting in inadequate township government oversight, excessive township fund balances without corresponding decreases in property tax rates, and inconsistent township assistance standards.

17. Township boards are eliminated in all counties effective January 1, 2015.

18. In all counties after December 31, 2014, the county fiscal body is the fiscal body and legislative body of the township and will exercise the legislative and fiscal powers assigned in the Indiana Code to township boards (including the authority to adopt the township's annual budget and to levy township property taxes for township funds).

19. Provisions concerning a distressed township expire on January 1, 2015.

Fire Protection and Emergency Services

HB 1254 would require every county to propose a fire protection and emergency services plan throughout the county that is adopted by the county legislative body. After December 31, 2014, the county executive (except for Marion County) would be responsible for providing fire protection and emergency services in the unincorporated areas of the county as provided in the county fire plan. The powers and duties of township government and the township trustee related to providing fire protection and emergency services in the unincorporated areas of the county would be transferred to the county. Consolidating and better coordinating county fire protection services would save tax dollars. As an example, five township fire departments have merged with the Indianapolis Fire Department under current law provisions for voluntary consolidation. According to an audit of the merger, for the five-year period 2006 to 2010, fire protection costs increased 9.8% in the consolidated townships while costs in the other townships increased 18.9%. Combined staffing levels for the consolidated townships are 2.7% less than prior to consolidation and seventeen (27%) of the management positions have been eliminated.

(See also Taxpayer Friendly Provisions 5, 6, and 14.)

20. Every county must propose a fire protection and emergency services plan (that includes specified required elements) throughout the county that is reviewed at two public meetings and adopted by the county legislative body.

21. If voters eliminate township government, the county legislative body will establish the county safety board (with members appointed by the county executive) that will be responsible for developing the county fire protection and emergency services plan.

22. If voters do not eliminate township government, the county board of trustees (consisting of all trustees in the county) will serve as the county safety board and will be responsible for developing the county fire protection and emergency services plan.

23. In counties other than Marion County: (a) the county legislative body must adopt the county fire protection and emergency services plan; (b) in counties with a county board of trustees, the county board of trustees adopts the initial plan and submits it to the county legislative body for review and approval; (c) the state’s Division of Fire and Building Safety must prepare a county plan for fire protection and emergency services for a county whose legislative body does not approve a plan submitted by the county board of trustees.

24. After December 31, 2014, the county executive (except for Marion County) is responsible for providing fire protection and emergency services in the unincorporated areas of the county as provided in the county fire plan, and the powers and duties of township government and the township trustee related to providing fire protection and emergency services in the unincorporated areas of the county are transferred to the county.

25. The county executive (except for Marion County) will be responsible for fire protection in the unincorporated areas of the county using any combination of (1) establishing a county fire department; (2) contracting with or otherwise cooperating with any municipality, county, fire protection district, volunteer fire department, fire protection territory, or (3) other entity; or entering into mutual aid agreements to provide fire protection and emergency services in the unincorporated areas.

26. For a municipality without a full-time paid fire department, the county (except for Marion County) may provide fire protection or emergency services without contract if the county approves a resolution and the municipality approves an ordinance allowing it.

27. On January 1, 2015, all assets, debts, and contracts of a township connected with firefighting operations are transferred to the county (except for Marion County).

28. The county (except for Marion County) must assume all township indebtedness related to fire protection and emergency service, and the county may levy property taxes to pay township indebtedness or lease rental obligations incurred by a township only in the geographic area of the township that originally issued the debt or entered into the lease rental agreement.

29. The county (except for Marion County) will establish a county firefighting fund to pay the costs of providing fire protection and emergency services. The county may levy a property tax on all real and personal property outside the corporate boundaries of municipalities. The township fire maximum levies will be transferred to the county.

30. A township in a county other than Marion County may not enter into a contract related to fire protection or emergency services with a term that extends beyond December 31, 2014, unless the contract has been approved by the county legislative body.

31. An excluded city's fire department within Marion County is authorized to consolidate into the Indianapolis Fire Department if (1) the legislative body of the excluded city, after approval by the executive of the excluded city, adopts an ordinance approving the consolidation and (2) the city-county council adopts an ordinance, approved by the Indianapolis mayor, approving the consolidation.

32. For a three-year period, the Marion County consolidated city may levy a tax above the maximum permissible property tax levy for the fire special service district in each township or excluded city that is necessary to phase out any borrowing for fire and emergency services.

33. The Department of Local Government Finance will hold hearings in counties where ten or more taxpayers have disagreed with a decision of the county executive and fiscal body to borrow money to purchase firefighting apparatus.

34. If the county provides services directly, the county will give preference in hiring to honorably discharged war veterans and then to persons whose parent died in the line of duty while serving as a firefighter of a unit, municipal police officer, or county police officer.

35. A transfer of duties between the townships and the county results in the transfer of property, equipment, personnel, records, rights, contracts, and indebtedness. The Department of Local Government Finance must adjust maximum permissible property tax levies and property tax rates as necessary to account for transfers of duties, powers, and obligations.

36. In the case of a county to which firefighting duties and responsibilities are transferred from townships to the county after December 31, 2014, the county may establish a merit system for the county fire department.

37. A county (except for Marion County) may not contain more than one public safety answering point (PSAP) after December 31, 2014.

38. In a county other than Marion County, PSAP operators must adopt an interlocal agreement (a) specifying the funding and staffing of the PSAP that after December 31, 2014, will serve the county; (b) providing that to the extent property taxes are used to fund the PSAP, those property taxes beginning with property taxes first due and payable after December 31, 2014, must be imposed at a uniform rate throughout the county; and (c) specifying the protocols to be followed by the PSAP.

Township Assistance

HB 1254 would require every county to establish uniform standards for the provision of township assistance throughout the county, and a uniform township assistance tax rate would be applied throughout the county beginning January 1, 2015. In Marion County and in other counties where the voters eliminate township government, the county executive would appoint an administrator for township assistance. If a majority of Marion County voters vote "No" on the township elimination question, township powers and duties would not transferred to the county and consolidated city. In other counties voting "No" on the township elimination question, the responsibility for funding and providing township assistance would be transferred to the county with administration of township assistance by the township trustee in each township subject to the supervision of a county board of trustees. These HB 1254 provisions would result in a more consistent and professional delivery of township assistance.

(See also Taxpayer Friendly Provisions 5, 6, 10, and 14.)

39. An interim study committee is established to provide recommendations on making the statutes concerning township assistance standards clear, concise, and easy to interpret and apply.

40. All counties are required to establish uniform standards for the provision of township assistance throughout the county.

41. In all counties after December 31, 2014, a uniform township assistance tax rate is applied throughout the county. A county township assistance fund is established under the bill for Marion County if voters eliminate township government, and in all other counties regardless of any vote. Drugs and vaccines provided to indigents are to be paid through the county assistance fund. Money in the fund at the end of the year does not revert to the county general fund.

42. In Marion County and in other counties where the voters eliminate township government, the county executive will appoint an administrator for township assistance.

43. Balances in the Marion County township assistance funds attributable to the township trustee transfer to the county township assistance fund.

44. A township in a county other than Marion County may not enter into a contract related to township assistance with a term that extends beyond December 31, 2014, unless the contract has been approved by the county legislative body.

45. The township assistance administrator will file an annual statistical report concerning township assistance with the county auditor.

46. The State Board of Accounts (SBOA) must summarize data concerning county budgets, levies, and tax rates in an annual statewide township assistance statistical report.

47. The Department of Local Government Finance may not approve a county budget, if the county does not provide township assistance data to the SBOA.

48. The Marion County legislative body will adopt the county plan for township assistance. This legislative body must appoint advisors (and determine any compensation for them), including at least one person employed by a faith-based human services provider agency, at least one person employed by a government-funded human services provider agency, and at least one person employed by a nonprofit human services provider agency. The legislative body will hold two meetings concerning the plan with an opportunity for the public and interested party to comment.

Township Schools

49. If a school township exists in a county in which a public question to eliminate township government is approved, the school township shall reorganize under the school reorganization statutes before July 1, 2015.

Senate Bill 110 County Government Issues: Taxpayer UNfriendly.

STATUS: Failed to get a third reading vote in the Senate.

The following Watchdog Indiana E-mail was sent to all State Senators on January 23:

Hello State Senators,

As written, Senate Bill 110 would allow two county government changes in most counties: (a) replace the three-member county board of commissioners with a single county commissioner that would perform executive duties only, (b) remove the legislative powers and duties from the county board of commissioners and assign them to the seven-member county council so the county council could carry out both the legislative and fiscal powers and duties of the county. Some key provisions of SB 110 as presently written include those listed next.

(1) In counties other than Marion County, the county executive (board of county commissioners) could adopt an ordinance during an odd-numbered year or before July 1 of an even-numbered year to change the executive and legislative structure of county government.

(2) If the ordinance is adopted by a unanimous vote of all the county commissioners, the voters of the county cannot elect a board of county commissioners but must instead elect (a) a single county commissioner to serve as the county executive and (b) a county council that has the legislative and fiscal powers and duties of the county.

(3) If the ordinance is adopted by less than a unanimous vote of all the county commissioners, a public question must be put on the county-wide ballot asking whether the executive and legislative structure of county government should be changed: "Shall the county government of (insert the name of the county) County be reorganized to place all executive powers in a single county commissioner and to place all legislative and fiscal powers in the county council?".

(4) At least 5% of the voters of a county (other than Marion County) may file a petition with the county auditor to place on the ballot in the county a public question on whether the executive and legislative structure of county government should be changed.

(5) If the public question is approved after it is placed on the ballot, the voters of the county cannot elect a board of county commissioners, but must instead elect a single county commissioner to serve as the county executive and a county council that has the legislative and fiscal powers and duties of the county.

(6) In a county with a single county commissioner, (a) the initial single county commissioner is elected in the second general election after the ordinance or public question to change the structure of county government is approved, (b) the board of county commissioners is abolished when the first single county commissioner takes office, and (c) the county council must (except in Lake County or St. Joseph County) be elected from seven single-member districts.

(7) The term of office of a single county commissioner would be four years (beginning January 1 after election), and a person is not eligible to serve as the single county commissioner more than 8 years in any 12-year period.

(8) If the office of single county commissioner becomes vacant, the county council must appoint an individual to serve as interim single county commissioner until the office is filled.

(9) The single county commissioner would have approval and veto powers on ordinances passed by the county council, and a two-thirds vote of the county council (at least 5 of the 7 members) could override the ordinance veto of the single county commissioner.

(10) In a county that has abolished the board of county commissioners and has elected a single county commissioner, the county council may adopt an ordinance changing the county government structure back to a structure that includes the election of a board of county commissioners (instead of a single county commissioner).

(11) If the ordinance is adopted unanimously by all the county council members, the county government structure is changed back to a structure that includes the election of a board of county commissioners.

(12) If the ordinance is adopted by less than a unanimous vote of all the county council members or if 5% of the voters of the county file a petition, a public question must be placed on the county-wide ballot asking whether the county government structure must be changed back to a structure that includes the election of a board of county commissioners.

SB 110 is Taxpayer UNfriendly as written because a single county commissioner would be improperly allowed to exercise powerful executive duties.

It would be easier for out-of-county single-interest groups to influence the election of a single county commissioner than it would be to manipulate the election of three county commissioners. Because the three county commissioners must presently reside in three separate districts within the county, the interests of the entire county are better represented than they would be by a single county commissioner that would likely be elected from the most populous area of the county.

Please improve SB 110 to allow the following two changes in county government: (a) retain the three-member board of commissioners as the county executive only and (b) remove the legislative powers and duties from the county board of commissioners and assign them to the seven-member county council so the county council could carry out both the legislative and fiscal powers and duties of the county.

Indiana is the only state that divides the fiscal and legislative powers and duties between separate elected county bodies. Establishing the county council as both the fiscal and legislative body of the county will be better understood by the citizens and businesses that interact with county government, as well as making the county government more nimble in responding to today’s policy challenges.

Some key provisions of an improved SB 110 should include those listed next.

(2) If the ordinance is adopted by a unanimous vote of all the county commissioners, the voters of the county must elect a county council that has the legislative and fiscal powers and duties of the county.

(3) If the ordinance is adopted by less than a unanimous vote of all the county commissioners, a public question must be put on the county-wide ballot asking whether the legislative structure of county government should be changed: "Shall the county government of (insert the name of the county) County be reorganized to place all legislative and fiscal powers in the county council?".

(4) At least 5% of the voters of a county (other than Marion County) may file a petition with the county auditor to place on the ballot in the county a public question on whether the legislative structure of county government should be changed.

(5) If the public question is approved after it is placed on the ballot, the voters of the county must elect a county council that has the legislative and fiscal powers and duties of the county.

(6) In a county where the county council assumes both the legislative and fiscal powers and duties as the result of a county commissioners ordinance or approved public question, the county council must (except in Lake County or St. Joseph County) be elected from seven single-member districts in the second general election after the ordinance or public question is approved.

(7) The county commissioners would have approval and veto powers on ordinances passed by the county council, and a two-thirds vote of the county council (at least 5 of the 7 members) could override the ordinance veto of the county commissioners.

(8) In a county where the county council assumes both the legislative and fiscal powers and duties, the county council may adopt an ordinance changing the county government structure back to a structure where the board of county commissioners has the legislative powers and duties of the county.

(9) If the ordinance is adopted unanimously by all the county council members, the county government structure is changed back to a structure where the board of county commissioners has the legislative powers and duties of the county.

(10) If the ordinance is adopted by less than a unanimous vote of all the county council members or if 5% of the voters of the county file a petition, a public question shall be placed on the county-wide ballot asking whether the county government structure must be changed back to a structure where the board of county commissioners has the legislative powers and duties of the county.

Senate Bill 170 Nepotism and Conflict Of Interest: Taxpayer Friendly

STATUS: Passed by the Senate 39-11 and not called down in the House for passage in favor of a concurrence vote on House Bill 1005.

The following Watchdog Indiana E-mail was sent to all State Representatives on February 22:

Please Vote YES for the Taxpayer Friendly Conflict Of Interest and Nepotism provisions in Senate Bill 170.

The Taxpayer Friendly Conflict Of Interest provisions in SB 170 include those listed next.

(3) An employee or volunteer firefighter is not restricted from holding an elected office of another unit.

(4) An employee or volunteer firefighter who assumes or holds an elected office on January 1, 2013, is allowed to continue to hold the office and be employed by the unit or serve as a volunteer firefighter until the expiration of the term of office.

The Taxpayer Friendly Nepotism provisions in SB 170 include those listed next.

(5) Relatives may not be employed by a unit in positions that result in one relative being in the direct line of supervision of the other relative.

(6) An individual who is employed by a unit on July 1, 2012, is not subject to the nepotism provisions unless the individual has a break in employment with the unit.

(7) For purposes of the nepotism law, the performance of the duties of a precinct election officer or a volunteer firefighter is not considered employment by a unit.

(8) An individual who is employed by a unit on the date the individual's relative begins serving a term of an elected office of the unit may remain employed by the unit and maintain the individual's position or rank even if the individual would be in the direct line of supervision of the individual's relative.

(9) An individual who is employed by a unit on the date the individual's relative begins serving a term of an elected office of the unit may not be promoted to a position or, in the case of an individual who is a member of a merit police department or merit fire department, promoted to a position that is not within the merit ranks if the new position would place the individual in the direct line of supervision of the individual's relative.

(10) A township trustee whose office is located in the trustee's personal residence is allowed to employ only one relative to work in the township trustee's office and be in the trustee's line of supervision; however, the total compensation of the township trustee's employed relative may not exceed $5,000 per year.

(11) A coroner who is ineligible for another term of office due to term limits is allowed to be hired by the coroner's successor, even though the successor is a relative and will result in the coroner working in the successor's direct line of supervision.

(12) A sheriff is allowed to hire the sheriff's spouse as prison matron for the county and work in the sheriff's direct line of supervision.

(13) Provisions concerning nepotism apply to a person who is a party to an employment contract with a unit.

(14) A unit can enter into or renew a contract for the procurement of goods, procurement of services, or 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 (Indiana Code 35-44-1-3), makes full written disclosure, and satisfies any other requirements of the public purchasing law (Indiana Code 5-22) or the public works law (Indiana Code 36-1-12).

(15) In order to enter or renew a contract with a relative of an elected official of the unit, the official must file with the unit, the SBOA, and the county clerk’s office a written description of the contract or purchase made by the unit and the relationship with the person or entity being contracted with. The written description must be accepted by the legislative body of the unit in a public meeting.

(16) Each elected official of the unit is required to annually certify in writing, subject to the penalties for perjury (a Class D felony), that the official is in compliance with the nepotism and contracting law and to submit the certification to the executive of the local unit.

(17) A unit must implement a policy that complies with the nepotism law and contracting law and is allowed to adopt a policy that is more stringent and detailed.

(18) The executive of the local unit must include with the annual personnel report filed with the State Board of Accounts (SBOA) a statement regarding whether the unit has implemented a policy that complies with the nepotism law and contracting law.

(19) A local unit failing to file a statement with the SBOA confirming adoption of a policy that complies with the nepotism law and contracting law will not have their budget nor any additional appropriations approved by the Department of Local Government Finance in the following year until notified by the SBOA that compliance has occurred.

While the nepotism exceptions in SB 170 might appear to be "disturbing" in their scope, SB 170 represents a big step forward on the topic of local government nepotism and provides a helpful framework should further improvements be deemed necessary.

A YES vote for SB 170 is Taxpayer Friendly.

A NO vote against SB 170 is Taxpayer UNfriendly.

Should SB 170 pass the General Assembly and be signed into law by the Governor, the SB 170 vote of each General Assembly member will be recorded on his or her individual Watchdog Indiana Legislator Rating web page: see http://www.finplaneducation.net/general_assembly_ratings.htm.

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 1199 Inheritance Tax Phase-Out: Taxpayer Neutral

STATUS: Passed the House 78-17 and did not get a public hearing in the Senate Tax and Fiscal Policy Committee.

HB 1199 would phase out the Inheritance Tax by providing an increasing credit against a beneficiary's Inheritance Tax liability. The credit would apply to transfers made by persons who die within the dates specified in the following table:

After June 30, 2013, and before July 1, 2014 – 9% Inheritance Tax Credit

After June 30, 2014, and before July 1, 2015 – 18% Inheritance Tax Credit

After June 30, 2015, and before July 1, 2016 – 27% Inheritance Tax Credit

After June 30, 2016, and before July 1, 2017 – 36% Inheritance Tax Credit

After June 30, 2017, and before July 1, 2018 – 45% Inheritance Tax Credit

After June 30, 2018, and before July 1, 2019 – 55% Inheritance Tax Credit

After June 30, 2019, and before July 1, 2020 – 64% Inheritance Tax Credit

After June 30, 2020, and before July 1, 2021 – 73% Inheritance Tax Credit

After June 30, 2021, and before July 1, 2022 – 82% Inheritance Tax Credit

After June 30, 2022, and before July 1, 2023 – 91% Inheritance Tax Credit

After June 30, 2023 – 100% Inheritance Tax Credit

HB 1199 would lead to progressively larger reductions in state revenues from the Inheritance Tax ranging from $14.9 million in Fiscal Year 2015 to $165.0 million in Fiscal Year 2025 when the Inheritance Tax would be eliminated and no longer generate revenue.

The phase-out of the Inheritance Tax would result in an annual revenue loss to counties beginning with $1.3 million in Fiscal Year 2015 and increasing to $14.2 million in 2025.

HB 1199 would phase out replacement payments paid from the state General Fund to counties with the replacement payments ending in Fiscal Year 2024. Current law guarantees that each county must receive an amount of Inheritance Tax revenue at least equal to the five-year annual average amount of Inheritance Tax received by that county from Fiscal Year 1991 to Fiscal Year 1997, excluding the highest year and lowest year. Thirteen counties received less revenue than is guaranteed for Fiscal Year 2011, totaling about $108,000. Replacement payments have averaged about $113,000 since FY 2006.

HB 1199 also provides that the state’s Estate Tax and Generation Skipping Transfer Tax do not apply after June 30, 2023. The revenue loss from eliminating these taxes would be minimal.

If the Inheritance Tax is repealed, there could be a savings to the state from a reduction in staff of the Inheritance Tax Section of the Department of State Revenue. The November 1, 2011, state staffing table indicates that the Inheritance Tax Division pays about $300,000 in total annual salaries to 8 full-time employees.

HB 1199 is Taxpayer Neutral. HB 1199 would lead to progressively larger reductions in state revenues from the Inheritance Tax ranging from $14.9 million in Fiscal Year 2015 to $165.0 million in Fiscal Year 2025 when the Inheritance Tax would be eliminated and no longer generate revenue. HB 1199 would be paid for with future revenues and reserves without spending cuts. Because the Inheritance Tax phase-out would be funded from future revenues and reserves, the likelihood of per capita automatic taxpayer refunds would be lessened. In effect, most Hoosier working families would pay for eliminating the Inheritance Tax on large estates with a reduced possibility of receiving future automatic taxpayer refunds. HB 1199 would be Taxpayer Friendly if spending cuts were implemented that amount to about 40% of the total Inheritance Tax that is currently paid (about $65 million annually).

House Bill 1376 Automatic Refundable Taxpayer Credit: Taxpayer UNfriendly

STATUS: Conference Committee report passed the House 76-17, passed the Senate 40-10, and signed by the Governor.

The HB 1376 changes are summarized next.

1. AUTOMATIC TAXPAYER REFUND TRIGGER

Current State Law: The automatic taxpayer refund is triggered when the state’s General Fund, Rainy Day Fund, Medicaid Reserve Fund, and Tuition Reserve Fund have a combined balance at the end of the preceding fiscal year that is greater than 10% of the state’s General Fund budgeted appropriations for the current fiscal year.

Taxpayer UNfriendly HB 1376 Change: Effective January 1, 2013, individual Indiana resident taxpayers will automatically receive a refundable adjusted gross income tax credit every even-numbered year when the state’s General Fund, Rainy Day Fund, Medicaid Reserve Fund, and Tuition Reserve Fund have a combined balance at the end at the end of the second fiscal year of the preceding biennium that is greater than 12.5% of the state’s General Fund budgeted appropriations in the first fiscal year of a biennium.

2. ADJUSTED GROSS INCOME TAX CREDIT REFUNDABILITY

Current State Law: The automatic taxpayer refund is provided through a nonrefundable individual adjusted gross income tax credit that must be taken against the taxpayer’s tax liability in the tax year the credit is provided. Individuals who file a tax return but do not pay any individual adjusted gross income tax to the state are not entitled to a refund.

Taxpayer Neutral HB 1376: The automatic taxpayer refund is provided through a refundable individual adjusted gross income tax credit that must be taken against the taxpayer’s tax liability in the tax year the credit is provided. Individuals who file a resident tax return in the preceding year and have tax liability in the current year are entitled to a refund. The refund is a refundable credit that must first be applied as a credit against adjusted gross income tax liability in the taxpayer's taxable year in which the refund is provided. Any remaining unused credit shall be refunded to the taxpayer.

3. ADJUSTED GROSS INCOME TAX CREDIT SCHEDULE

Current State Law: The state’s combined reserves balance at the end of the preceding fiscal year is compared EVERY YEAR to the state’s General Fund budgeted appropriations for the current fiscal year to determine if there are enough excess reserves to trigger an automatic taxpayer refund. Hoosier working families can possibly receive an automatic taxpayer refund every year.

Taxpayer UNfriendly HB 1376 Change: Effective January 1, 2013, the schedule to determine if there are enough excess reserves to trigger an automatic taxpayer refund will change to EVERY OTHER YEAR where the state’s General Fund budgeted appropriations in the first fiscal year of a biennium is compared to the state’s combined reserves balance at the end of the second fiscal year of the preceding biennium. Hoosier working families will possibly receive an automatic taxpayer refund every even-numbered year only.

4. ADJUSTED GROSS INCOME TAX CREDIT ELIGIBILITY

Current State Law: To be eligible for an automatic taxpayer refund, an individual taxpayer must have filed a resident income tax return for the two taxable years preceding the tax year in which the adjusted gross income tax credit is made available and must have paid individual income tax for the preceding taxable year.

Taxpayer Neutral HB 1376: To be eligible for an automatic taxpayer refund, an individual taxpayer must have filed a resident tax return in the preceding year and have tax liability in the current year.

5. AUTOMATIC TAXPAYER REFUND DISTRIBUTION

Current State Law: Half of the automatic taxpayer refund must be refunded to taxpayers and half must be transferred to the Pension Stabilization Fund. The relative share of an eligible taxpayer’s adjusted gross income tax credit is based on each taxpayer’s relative share of the total overall tax liability for all eligible taxpayers.

Taxpayer Neutral HB 1376 Change: If the amount of the excess reserves is less than $50 million, the excess reserves must be carried over to the next year. If the excess reserves are $50 million or more, half of the excess reserves must be transferred to certain pension funds and half of the excess reserves must be used to provide an automatic taxpayer refund. Pension fund transfers in 2012 will go to the pension plans for the state police, conservation officers, judges, and prosecuting attorneys to increase the funded amount of each of these plans to eighty percent. Beginning 2013, pension fund transfers go to the Pension Stabilization Fund. The amount of the refundable tax credit for eligible taxpayers would be determined by dividing the amount of the state excess reserves available to provide automatic taxpayer refunds by the number of eligible resident individuals filing a single or joint Indiana tax return. The adjusted gross income tax credit would be distributed in an equal amount per taxpayer.

6. FULL-DAY KINDERGARTEN (Taxpayer Neutral): HB 1376 would provide a full-day kindergarten grant of $2,400 for each kindergarten student enrolled in a full-day program for the 2012-13 school year. The current $89.1 million appropriation would be augmented to fully fund the grant. The augmentation required would range between $78.3 million and $105.7 million. School corporations or charter schools that apply for the full-day kindergarten grants would be prohibited from charging fees for enrolling in or attending full-day kindergarten in the 2012-2013 school year. Parents would continue to have the choice whether or not to send their children to kindergarten.

7. SUPPLEMENTAL STATE FAIR AWARD FUND (Taxpayer Neutral): HB 1376 would appropriate $6 million to a newly established Supplemental State Fair Award Fund to provide relief to victims of the 2011 state fair disaster.

8. AUTOMATIC TAXPAYER REFUND FISCAL IMPACT (fiscal impacts beyond 2013 cannot be determined)

Current State Law: For the 2013 tax year, excess reserves could total $333.6 million resulting in pro-rata distributions of $166.8 million to eligible taxpayers in the form of adjusted gross income tax credits and a $166.8 million distribution to the Pension Stabilization Fund. The pro-rata distributions would average $42 per taxpayer with Indianapolis Colts owner Jim Irsay receiving much more than the everyday Hoosier working family. The June 30, 2013, total combined state reserve is estimated to total $1.7653 billion.

Taxpayer Neutral HB 1376 Change: For the 2013 tax year, excess reserves could range from $315.0 million to $317.7 million resulting in (a) per-capita distributions ranging from $157.5 million to $158.85 million to eligible taxpayers in the form of adjusted gross income tax credits and (b) a distribution to the Pension Stabilization Fund ranging from $157.5 million to $158.85 million. The per-capita distributions would be $40 per eligible taxpayer. The June 30, 2013, total combined state reserve is estimated to total from $1.6722 billion to $1.6969 billion.

HB 1376 is Taxpayer UNfriendly. HB 1376 would have been Taxpayer Neutral if the automatic taxpayer refund excess reserves trigger had remained 10%.

Senate Bill 143 Automatic Taxpayer Refund: Taxpayer UNfriendly

STATUS: Passed the Senate 36-14, passed the House 97-2 with amendments, the Senate dissented from the House amendments, and included in a Conference Committee report for HB 1376.

On February 16, the automatic taxpayer refund provisions in Indiana Senate Bill 143 were changed and passed out of the House Ways and Means Committee. The SB 143 changes are summarized next.

1. AUTOMATIC TAXPAYER REFUND TRIGGER

Taxpayer UNfriendly SB 143 Change: Beginning in 2013, individual Indiana resident taxpayers would automatically receive a refundable adjusted gross income tax credit every even-numbered year when the state’s General Fund, Rainy Day Fund, Medicaid Reserve Fund, and Tuition Reserve Fund have a combined balance at the end at the end of the second fiscal year of the preceding biennium that is at least $20 million greater than 12% of the state’s General Fund budgeted appropriations in the first fiscal year of a biennium.

2. ADJUSTED GROSS INCOME TAX CREDIT REFUNDABILITY

Taxpayer Neutral SB 143 Change: The automatic taxpayer refund is provided through a refundable individual adjusted gross income tax credit. Since the credit is refundable, a taxpayer without a tax liability would receive automatic taxpayer refund credit dollars.

3. ADJUSTED GROSS INCOME TAX CREDIT SCHEDULE

Taxpayer UNfriendly SB 143 Change: Beginning with the 2014 fiscal year, the schedule to determine if there are enough excess reserves to trigger an automatic taxpayer refund would change to EVERY OTHER YEAR where the state’s General Fund budgeted appropriations in the first fiscal year of a biennium is compared to the state’s combined reserves balance at the end of the second fiscal year of the preceding biennium. Hoosier working families would possibly receive an automatic taxpayer refund every even-numbered year only.

4. ADJUSTED GROSS INCOME TAX CREDIT ELIGIBILITY

Taxpayer Neutral SB 143 Change: To be eligible for an automatic taxpayer refund, an individual taxpayer must have filed a resident income tax return for only the tax year immediately preceding the tax year in which the adjusted gross income tax credit is made available.

5. AUTOMATIC TAXPAYER REFUND DISTRIBUTION

Taxpayer Friendly SB 143 Change: The amount of the refundable tax credit would be determined by dividing the amount of the state excess reserves by the number of resident individuals filing a single or joint Indiana tax return for the immediately preceding year. The adjusted gross income tax credit would be distributed in an equal amount per taxpayer. If the automatic refundable taxpayer credit reaches $50, any remaining state excess reserves up to the equivalent of a $100 credit would go to the Pension Stabilization Fund. What this equates to currently is that the first $200 million of excess reserves would go to the automatic refundable taxpayer credit and the next $200 million would go to the Pension Stabilization Fund. If the state excess reserves reach the equivalent of an automatic refundable taxpayer credit more than $100 ($400 million currently) half of the excess reserves above the $100 credit would go to the automatic refundable taxpayer credit and half would go to the Pension Stabilization Fund.

6. FULL-DAY KINDERGARTEN (Taxpayer Neutral): SB 143 would provide a full-day kindergarten grant of $2,400 for each kindergarten student enrolled in a full-day program for the 2012-13 school year. The current $89.1 million appropriation would be augmented to fully fund the grant. The augmentation required would range between $78.3 million and $105.7 million. School corporations or charter schools that apply for the full-day kindergarten grants would be prohibited from charging fees for enrolling in or attending full-day kindergarten in the 2012-2013 school year. Parents would continue to have the choice whether or not to send their children to kindergarten.

7. AUTOMATIC TAXPAYER REFUND IMPACT

Taxpayer Friendly SB 143 Change: For the 2013 tax year, excess reserves could range from $321.0 million to $323.7 million. Per-capita distributions of $50 per eligible individual income taxpayer would total $200 million. The remaining $121.0 million to $123.7 million would be transferred to the Pension Stabilization Fund. The June 30, 2013, total combined state reserve would be $1,672.2 million to $1,696.9 million.

As currently written, SB 143 is Taxpayer UNfriendly. SB 143 would be improved to Taxpayer Neutral if the automatic taxpayer refund excess reserves trigger were to be changed from the Taxpayer UNfriendly 12% back to the Taxpayer Friendly 10%.

Senate Bill 293 Inheritance Tax Changes: Taxpayer Neutral

STATUS: Conference Committee report passed the Senate 48-0, passed the House 78-17, and signed by the Governor.

The Conference Committee Report would make the Inheritance Tax law changes listed next.

(1) A 9 year phase-out of the Inheritance Tax would begin in 2013. The Inheritance Tax would be phased out by providing an increasing credit against a beneficiary's Inheritance Tax liability ranging from 10% for 2013 to 100% for 2022 and thereafter.

(2) A spouse, widow, or widower of a child of the transferor would be reclassified as a Class A transferee instead of a Class B transferee after December 31, 2011.

(3) A spouse, widow, or widower of a stepchild of the transferor would be reclassified as a Class A transferee instead of a Class C transferee after December 31, 2011.

(4) The Inheritance Tax exemption amounts with respect to taxable transfers resulting from the deaths of individuals dying after December 31, 2011, would be increased from $100,000 to $250,000 for Class A transferees.

The Indiana Inheritance Tax revenue loss to the state from SB 293 would increase each year beginning with $56.8 million to $65.8 million in Fiscal Year 2014 and reaching $165.0 million in Fiscal Year 2024 and thereafter. Inheritance Tax revenue to the state would end in Fiscal Year 2024.

SB 293 would phase out replacement payments paid from the state General Fund to counties for any shortage of Inheritance Tax revenue. Thirteen counties received less revenue than is guaranteed by statute for Fiscal Year 2011, totaling about $108,000. Replacement payments have averaged about $113,000 since Fiscal Year 2006. The state’s replacement payments to counties would decrease each year beginning with $10,000 less in Fiscal Year 2013 and reaching $113,000 less in Fiscal Year 2023 and thereafter. Replacement payments would end in Fiscal Year 2023.

The Indiana Inheritance Tax revenue loss to counties from SB 293 would increase each year beginning with $4.9 million to $5.7 million in Fiscal Year 2014 and reaching $14.2 million in Fiscal Year 2024 and thereafter. Inheritance Tax revenue to the counties would end in Fiscal Year 2024.

SB 293 could result in a savings to the state from a reduction in staff of the Inheritance Tax Section of the Department of State Revenue. The November 1, 2011, state staffing table indicates that the Inheritance Tax Division pays about $300,000 in total annual salaries to 8 full-time employees.

SB 293 is Taxpayer Neutral. SB 293 would be paid for with future revenues and reserves without spending cuts. It would cost the state and counties about $100 million in lost revenue to eliminate the Inheritance Tax on estates valued under $1 million, and about another $65 million to eliminate the Inheritance Tax on estates valued $1 million and above. Because the Inheritance Tax phase-out would be funded from future revenues and reserves, the likelihood of per capita automatic taxpayer refunds would be lessened. In effect, most Hoosier working families would pay for eliminating the Inheritance Tax on large estates with a reduced possibility of receiving future automatic taxpayer refunds. SB 293 would be Taxpayer Friendly if spending cuts were implemented that amount to about 40%, or about $65 million annually, of the total Inheritance Tax that is currently paid.

Indiana Gas Tax Reform Plan to Better Use Indiana Gasoline Tax Dollars

The state’s General Fund has ample enough reserves so that State Police funding can be properly moved from the state’s Motor Vehicle Highway Account to the General Fund. Implementing the remainder of the Gas Tax Reform Plan would significantly increase transportation funding to counties, cities, and towns. There would be no logical need for an Indiana Gasoline Tax increase and for any more counties to impose a Wheel Tax. Indeed, some counties might decide to stop imposing their regressive Wheel Taxes!

4. Other Significant Legislation

House Bill 1001 Employee's Right to Work: Taxpayer Neutral

STATUS: Passed the House 54-44, passed the Senate 28-22, and signed by the Governor.

House Bill 1001 makes it a Class A misdemeanor (the maximum fine for a Class A misdemeanor is $5,000) to require an individual as a condition of employment or continuation of employment to (1) become or remain a member of a labor organization, (2) pay dues, fees, or other charges to a labor organization, or (3) pay to a charity or another third party an amount that represents dues, fees, or other charges required of members of a labor organization. HB 1001 does not apply to federal employees, employees subject to certain federal laws, certain employees over whom the federal government has jurisdiction, state employees, and employees of a political subdivision.

A website supporting RTW can be found at http://www.moreindianajobs.com/.

A website opposing RTW can be found at http://indianarighttowork.com/.

Legislation is Taxpayer Friendly if it significantly impacts the state and local tax burden of Hoosier working families, and is results-oriented, compassionate, and fiscally conservative. HB 1001 is Taxpayer Neutral because it would not significantly impact Hoosier working families and is not results-oriented.

RTW supporters proclaim that Hoosiers should have the freedom to decide whether or not to financially support a union and that Indiana private sector job growth will increase if HB 1001 passes.

Hoosiers today have the freedom to decide whether or not to join a union. If an employer chooses to negotiate a contract with a union that requires its employees to be dues-paying union members, those employees are free to seek employment elsewhere. Some unions feel that their negotiated contracts benefit all affected employees and that all these employees should pay dues to the union that represents them.

Various officials already proclaim that Indiana’s tax and regulatory environment ranks as the fourth best in the nation for job creation and economic growth without RTW. When making decisions on whether or not to locate or grow a business in Indiana, employers look first to workforce education, then to location proximity to customers, and thirdly to the tax and regulatory environment. RTW would at best minimally improve the perception that Indiana has a desirable tax and regulatory environment. RTW would have almost no impact on job growth because employer conclusions regarding Indiana workforce education and ease of customer access will continue to be much more important than the minor question of whether or not a union contract requires employees to be dues paying members. The great majority of any new businesses that move to Indiana will choose to not have a union shop in the first place. Currently unionized Indiana businesses will not suddenly hire more employees if RTW passes.

RTW opponents proclaim that RTW would lower wages and benefits for all workers. First of all, there are not enough union members in Indiana to significantly impact wages. Indiana wages are already lower than the national average. A reality of working life today is that America has changed from a manufacturing-and-construction-dominated economy to a service-dominated economy. A reality of working life in Indiana is that work ethic no longer trumps education. Even if RTW failed to pass, wage erosion is not guaranteed to lessen. The key to better wages and benefits is a better educated workforce that fills and attracts better service economy jobs.

RTW is just another skirmish in the battle for political advantage where both sides inflate the supposed virtues of their positions while denigrating the motives of the other side. The RTW turmoil is an unwelcome distraction that interferes with the collaborative problem solving needed to develop effective public policy solutions that can actually make life better for working families. Neither maintaining the status quo nor making RTW changes are results-oriented outcomes that will significantly impact Hoosier working families.

House Bill 1003 Public Access Improvements: Taxpayer Friendly

STATUS: Conference Committee report passed the House 74-20, passed the Senate 41-9, and signed by the Governor.

Access to public records and public meetings is the lifeblood of civic activism. Civic activism is the lifeblood of democracy. HB 1093 is Taxpayer Friendly because it improves public access and makes our democracy stronger.

The Taxpayer Friendly public access improvements in HB 1093 include those listed next.

(1) A public agency must allow inspection or copying, or make copies, of a public record within a reasonable time after the request is received by the agency.

(2) Excluding the General Assembly and Legislative Services Agency, a court may impose a civil penalty against an officer of a public agency, an individual employed in a management-level position with a public agency, or the public agency for violating the Open Door Law with specific intent to violate the law if the plaintiff obtained an advisory opinion from the Public Access Counselor before filing an action.

(3) A court may impose a civil penalty against an officer, management-level employee, or the public agency for violating the Public Records Law if the officer, management-level employee, or agency (a) continues to deny a request for a public record after the Public Access Counselor has issued an advisory opinion that instructs the agency to allow access to the public record and (b) denies the request with the specific intent to unlawfully withhold a public record that is subject to disclosure.

(4) An individual or agency could be subject to a civil penalty if the individual intentionally charges a copying fee that the individual knows exceeds the amount set by statute, fee schedule, ordinance, or court order.

(5) A court may not impose a civil penalty unless the Public Access Counselor has issued an advisory opinion that instructs the public agency to allow access to the public record before the lawsuit is filed.

(6) It is a defense to the imposition of a civil penalty for a violation of the Open Door Law or Public Records Law if the individual acted in reliance on an opinion of the public agency's legal counsel or an opinion of the Attorney General.

(7) A court may impose a civil penalty of not more than $100 for the first violation and not more than $500 for any additional violations.

(8) If an officer of a state or local government agency orders a management-level employee to not give proper notice of a public meeting or executive session or deny or interfere with a person's request to inspect or copy a public document, the employee is not subject to a civil penalty for violating the statute.

(9) A public agency has discretion as to whether to disclose a public record requested by an offender containing personal information relating to a judge, law enforcement officer, or family member of a judge or law enforcement officer.

(10) If a local government agency adopts a policy and has the capacity to send electronic mail or has an Internet web site, the agency must provide notice to anyone (other than news media) that makes an annual request for notice by (a) transmitting the notice by electronic mail or (b) posting the notice on the agency's Internet web site.

(11) A court may not declare a governmental action void for failure to give notice by electronic mail or posting on the local government agency's web site if the agency made a good faith effort to comply with the statute.

(12) A court is required to (rather than allowed to) review public records in camera (in chambers) to determine whether redaction of the records violates the Public Records Act.

(13) An Education Fund for a program administered by the Public Access Counselor is created to train public officials and educate the public on the rights of the public and the responsibilities of public agencies under the Public Access Laws.

(14) Revenues from a public agency and/or individual violating the provisions of HB 1093 will be distributed into the Public Access Counselor’s Education Fund.

In conclusion, HB 1093 is Taxpayer Friendly because public agencies will be less likely to intentionally violate the Public Access Laws by (a) failing to give proper notice of a regular meeting, special meeting, or executive session; (b) taking final action outside a regular meeting or special meeting; (c) participating in a secret ballot during a meeting; (d) discussing in an executive session subjects not eligible for discussion in an executive session; (e) failing to prepare a memorandum of a meeting required by IC 5-14-1.5-4; (f) participating in at least one gathering of a series of gatherings under IC 5-14-1.5-3.1; (g) denying a person's request for inspection or copying of a public record if the public record is subject to disclosure; and (h) charging a copying fee that exceeds the amount permitted.

A YES vote for HB 1093 is Taxpayer Friendly.

A NO vote against HB 1093 is Taxpayer UNfriendly.

House Bill 1073 Public Mass Transportation: Taxpayer UNfriendly

STATUS: Defeated 10-11 in the House Ways and Means Committee.

House Bill 1073 has been filed at the request of the Central Indiana Transit Task Force, which would like taxpayer money to double the Indianapolis bus service and add train service from Noblesville to downtown Indianapolis.

Some significant HB 1073 provisions include those listed next.

1. A county or city council (other than the city-county council of Marion County) may elect by ordinance to provide revenue to a public transportation corporation from the city's or the county's distributive share of county adjusted gross income taxes, county option income taxes, or county economic development income taxes.

2. The establishment of a Regional Transit Authority (RTA) and a Metropolitan Transit District (MTD) is authorized by specified eligible counties through local public questions (referendums).

3. Eligible authorizing counties include Marion, Boone, Hamilton, Hancock, Hendricks, Johnson, Madison, Morgan, and Shelby. Other counties that are adjacent to an authorizing county may become members if the executive committee of the RTA approves and a local public question (referendum) is passed.

4. The establishment of a MTD and a RTA are allowed if the authorizing body of an eligible county adopts an ordinance to place a local public question on the election ballot, the majority of county voters at the next general election vote yes on the ballot proposal, and Marion County is one of at least two counties that adopt the proposal. However, the MTD and RTA are not established if Marion County and Madison County are the only counties adopting the MTD. A local public question may not be placed on the ballot more than two times in any seven year period.

5. The territory of the RTA consists of all the incorporated and unincorporated territory of all of the eligible counties. The MTD consists of all of the authorizing counties in which a local public question is approved by the voters, but the territory of the MTD consists of all the incorporated and unincorporated territory of all of the authorizing counties.

6.. Each county that becomes a member of the MTD remains a member until (1) the county fiscal body adopts a resolution announcing the county's intent to withdraw its membership in the district and (2) the county's resolution of withdrawal is approved in resolutions adopted by the fiscal bodies of at least two-thirds of the MTD member counties.

7. A county that has passed the local public question may impose an additional county economic development income tax (CEDIT) rate to pay the county's contribution to the funding of the MTD. The CEDIT rate may not exceed what is needed to meet the county’s recommended MTD contribution and is limited to no more than 0.2%.

8. The metropolitan transit district may receive federal or state aid and administer that aid.

9. Both the MTD and the RTA are to be a bodies corporate and politic separate from the state and other political subdivisions, but they will exercise powers that are essential governmental functions.

10. The power to govern the RTA is vested in a regional transit authority board. If five or more counties authorize the RTA, two members each are to be appointed by the county executive of each authorizing county. If it is fewer than five, three members each are to be appointed. The county executive of a county that is a member of the RTA, but did not vote to authorize the MTD, will appoint one member. The director of the Indianapolis Metropolitan Planning Organization will be a member and so too will the Commissioner of the Indiana Department of Transportation or a designee. The full RTA board may vote and provide oversight on RTA matters that are not related to the MTD, with each RTA board member having one vote.

11. An RTA board member must have knowledge and at least five years professional work experience with a for-profit or nonprofit entity in business, finance, regional economic development, or transportation. An RTA board member serves at the pleasure of the appointing authority that appointed the member. None of the RTA board members are required to be elected officials. The RTA board may not levy any tax.

12. The governing body of the MTD is to be the RTA executive committee. The RTA executive committee consists of the RTA board members appointed from authorizing counties. There are a total of 100 votes among the members of the executive committee when voting on matters related to the MTD. The number of votes each member has is based on the financial contributions to the RTA by the authorizing counties.

13. The MTD is authorized to (1) construct or acquire any public transportation facility, (2) provide public transportation service by operating public transportation facilities, and (3) issue bonds and otherwise incur indebtedness. The MTD executive committee may issue debt to acquire real or personal property; acquire, construct, or improve projects; pay the cost of planning and development of equipment or facilities; or to fund or refund bonds or other indebtedness. All instruments of debt must mature within 25 years, and the total amount of bonds issued may not exceed 25% of the total financial contribution made by authorizing counties in the year preceding the bond issue. The MTD may not levy a tax.

14. The Indiana Finance Authority (IFA) is authorized to issue bonds to acquire any obligations issued by the MTD. The IFA is also authorized to issue bonds that the MTD can use to plan, design, acquire, construct, enlarge, improve, renovate, maintain, equip, finance, operate, and support public transportation systems.

15. If the MTD and RTA are established, the Central Indiana Regional Transportation Authority (CIRTA) will be abolished and its powers and duties transferred to the MTD for matters related to the MTD and to the RTA for matters not related to the MTD. All of CIRTA’s assets, debts, property rights, equipment, records, personnel, and contracts will transfer to the MTD. CIRTA’s goals include plans to connect Indianapolis with the areas that surround it and development of federal, state, and local funding sources for alternative transportation.

16. The Indianapolis Public Transportation Corporation (IPTC), which is known as IndyGo, will be abolished and its powers and duties transferred to the MTD if the MTD is established. The taxing district for the IPTC will continue to exist, and the revenue from any tax will transfer from Marion County to the RTA executive committee to pay costs for carrying out its powers and duties. Marion County will assume, defease, pay, or refund all indebtedness or lease rental obligations of the IPTC, and Marion County may levy property taxes tax in the IPTC’s taxing district to pay these costs. On December 31, 2010, IPTC had notes payable totaling $6.9 million, bonds payable totaling $9.3 million, and total assets valued at $118.5 million. The IPTC provides fixed-route bus services, direct-link bus services, and reservation-based bus services for the elderly and disabled.

17. Marion County would be able to issue bonds and levy taxes to pay the bonds for the MTD . This power currently is granted to the IPTC. The total amount of bonds issued and scheduled to be paid during any year may not exceed an amount equal to 10% of the total financial contribution to the MTD.

18. If the RTA is adopted, the RTA’s power to govern is vested in its board, and the executive committee of the board receives the powers and duties of the IPTC and CIRTA for matters that do not relate to the MTD. The executive committee is to submit its budget and proposed property tax levy to the Marion County fiscal body for the fiscal body to adopt. The RTA’s executive board may not exercise the power of a public transportation corporation to issue bonds.

19. The executive committee must make written findings on the value of facilities put into service within each authorizing county, the total amount of capital needs of the MTD, the annual amount of capital costs to be allocated to each authorizing county, the total amount of operating needs of the MTD, and the annual amount of operating cost to be allocated to each authorizing county.

20. Before adopting the annual budget of the MTD, the executive committee must submit a copy of its proposed budget to the fiscal body of each authorizing county for review. Each county fiscal body must review the proposed budget submitted by the executive committee. The executive committee may not take final action on the MTD budget until the proposed budget is approved by the county fiscal body.

21. If the MTD is unable to agree with the owners, lessees, or occupants of any real property necessary for a rail line, terminal, or other public transportation facility, the MTD may proceed to procure the condemnation of the property.

22. The RTA and the MTD are subject to the public access laws and audit by the State Board of Accounts.

Taxpayer Friendly legislation is results-oriented, compassionate, and fiscally conservative.

The Taxpayer Friendly HB 1073 provisions are listed next.

1. The voters in the specified eligible counties would decide through local public referendum questions whether or not to establish or join a Regional Transit Authority (RTA) and a Metropolitan Transit District (MTD). The importance of voter approval for costly transit initiatives is demonstrated by three recent proposed projects - an Indiana Commerce Connector east and south of Indianapolis; the Illiana Expressway east of I-65 in Northwest Indiana; a Northern Indiana Regional Transportation District in Lake, Porter, LaPorte, and St. Joseph counties. Most developer-influenced local elected officials extolled the economic development benefits of these three projects, while the great majority of local citizens did not see the benefit of low-wage and low-benefit hospitality jobs offsetting the toll and tax costs and destructive sprawl of new road and transit construction. The Governor withdrew the Commerce Connector and Illiana Expressway projects in response to widespread public opposition. Two counties soundly voted down the Northern Indiana Regional Transportation District, while two other counties ignored the General Assembly requirement that they conduct costly and futile referendums. The collective wisdom of the voters is necessary to confirm if the developer-supported RTA and MTD are good public policy.

2. A county that has passed the local public question may impose an additional county economic development income tax (CEDIT) rate not exceeding 0.2% to pay the county's contribution to the funding of the MTD. The income tax funding source, which is based on the ability to pay, is preferable to regressive funding sources such as the sales tax. The Hoosier working family already has a high cumulative sales tax burden that approaches immorality.

3. The RTA board and the MTD may not levy a tax.

4. The RTA executive committee, which would be the governing body of the MTD, would be composed of members who serve at the pleasure of the authorizing county executive that appointed them.

5. All instruments of MTD debt would mature within 25 years, and the total amount of bonds issued would not exceed 25% of the total financial contribution made by authorizing counties in the year preceding the bond issue.

6. The RTA executive committee would have to submit its budget and proposed property tax levy to the Marion County fiscal body for the fiscal body to adopt.

7. The RTA executive committee would not exercise the power of a public transportation corporation to issue bonds.

8. The RTA executive committee could not take final action on the MTD budget until the proposed budget is approved by the county fiscal body.

9. The RTA and the MTD would be subject to the public access laws.

10. The RTA and the MTD would be subject to audit by the State Board of Accounts.

The Taxpayer UNfriendly aspects of HB 1073 are listed next.

1. If a county fiscal body adopts a resolution announcing the county's intent to withdraw its membership in the MTD, the county's resolution of withdrawal must be approved in resolutions adopted by the fiscal bodies of at least two-thirds of the other MTD member counties. The approval of a county’s voters must be obtained by referendum without input from any other county before the county becomes an MTD member. It is not right for a county’s decision to withdraw from the MTD to be dependent on the fiscal bodies of other counties.

2. An RTA board member must have knowledge and at least five years professional work experience with a for-profit or nonprofit entity in business, finance, regional economic development, or transportation. One wonders why a teacher, farmer, tool and dye maker, labor union official, and other everyday Hoosiers who would be paying the bills are not suitable RTA board members. It appears that developers and their supporters want to dominate RTA and MTD decision-making.

3. The MTD may condemn property if it is unable to agree with the owners, lessees, or occupants of any real property necessary for a rail line, terminal, or other public transportation facility. It is not right for the unelected RTA executive committee, which is the MTD governing body, to have condemnation power.

4. The IndyGo bus service had $71.4 million in total 2010 revenues. Operating revenues from passenger fares and advertising totaled only $10.0 million, while taxpayers footed the bill for the remaining $61.4 million (or 86%) of total revenues. Operating expenses totaled $63.5 million, resulting in an operating loss of $53.5 million. The Central Indiana Transit Task Force wants to use the RTA and MTD to double the Indianapolis bus service from 122 to 232 vehicles, spending $667.8 million for capital improvements plus $110.4 million annually in operating expenses. Because of insufficient demand, doubling the bus service would worsen the IndyGo operating loss and result in a significantly higher annual taxpayer subsidy. On one level it may be compassionate to double the bus service for non-drivers, but isn’t the "compassion test" failed if at least $50 dollars a year is taken from the working poor to further subsidize a service that the great majority of them would never use?

5. The MTD could receive federal aid to add commuter train service from Noblesville to downtown Indianapolis. The Central Indiana Transit Task Force has a low-ball estimate that this rail service would cost $625.4 million to build and $16.8 million to operate annually.

A balanced perspective on rail service can be obtained by reading the March 24, 2010, Cato Institute Policy Analysis No. 663 "Defining Success: The Case against Rail Transit" (http://www.cato.org/pub_display.php?pub_id=11608) and the March 18, 2011, Victoria Transport Policy Institute paper "Contrasting Visions of Urban Transport" (http://www.vtpi.org/cont_vis.pdf). The Watchdog Indiana conclusions regarding the MTD provision of commuter train service from Noblesville to downtown Indianapolis are summarized next.

A. The MTD rail service would be like every other U.S. rail transit line and not come close to covering its operating costs, much less its total cost.

B. Few motorists would forego the convenience of their cars and use the MTD rail service. What little intermittent traffic congestion exists in the Indianapolis metropolitan area pales in comparison to Atlanta, Charlotte, Richmond, Washington, Philadelphia, New York City, Boston, Chicago, and San Francisco. Major Moves projects in Central Indiana will continue to be completed in the coming years to alleviate traffic congestion whether or not the MTD rail service is built. Because most families (especially those with young children) will continue to prefer single-family homes in a suburban environment, few motorists want to give up automobile travel to get to their place of employment. Factors such as an aging population, rising fuel prices, increasing urbanization, transit service improvements, and more transit-oriented development will do little to offset the "American Dream" of home ownership and its reliance on cars for transportation. While a few persons may prefer to ride trains instead of drive cars, huge taxpayer subsidies in response to a mere preference cannot be justified.

C. The MTD rail service would not be cost effective. Central Indiana Hoosiers do not live or work in environments dense enough to need any higher-capacity public transit than buses. Central Indiana is like the rest of the nation where jobs are so spread out that less than 10 percent are in central city downtowns and only another 20 to 30 percent are in suburban downtowns or other major job centers. Rail cars, track, and other rail infrastructure must be completely replaced about every thirty years. In January 2010, U.S. Transportation Secretary Ray LaHood abolished cost effectiveness rules for federal transit grants, saying, in effect, that he was willing to fund rail projects no matter how much money they waste. It is feared that the MTD would be like Denver where, soon after persuading voters to approve a tax increase to build 119 miles of new rail lines, it was admitted that rail costs were 68% higher higher than projected and, even if the lines could be built, there wasn’t enough money to operate them.

D. The MTD rail construction would not significantly stimulate unsubsidized economic development. Any high-density housing, retail shops, office development, and park-and-ride facilities along the MTD rail transit line would likely entail subsidies to developers, mostly in the form of tax increment financing (TIF). Land value increases near MTD transit stations might minimally increase property tax revenue to local governing bodies only if the land is not included in a TIF district. A literature review commissioned by the Federal Transportation Administration found that "urban rail transit investments rarely ‘create’ new growth"; at most, they "redistribute growth that would have taken place without the investment." The main beneficiaries of this subsidized redistribution from the MTD rail service would be downtown Indianapolis developers, which explains why they strongly support HB 1073. It is instructive to note that, to date, Portland has spent nearly $3 billion building light rail lines and nearly $2 billion subsidizing developments along the light rail and streetcar lines.

E. The MTD rail service would have a negligible impact on the community’s economic productivity. No jobs are going unfilled because there is no MTD rail line. The ongoing taxpayer subsidies needed to operate the MTD rail service would be more efficiently spent and respent in the private sector.

F. To a very, very small extent, the MTD rail service might provide benefits including congestion reductions, road and parking facility cost savings, consumer savings, reduced accident risk, improved mobility for non-drivers, reduced chauffeuring burdens for motorists, energy conservation, pollution emission reductions, improved public fitness and health, and the attainment of social equity objectives. However, these benefits would be dearly purchased. Over the past four decades, American cities have spent close to $100 billion constructing rail transit systems and many billions more operating those systems. The agencies that spend taxpayer dollars building these lines almost invariably call them successful even when they go an average of 40 percent over budget and, in many cases, carry an insignificant number of riders.

G. Federal funds would be needed to build the MTD rail service. This MTD federal funding would worsen the "Red Menace" threat to our way of life because it would increase our runaway federal debt. The federal government borrowed 36 cents of every dollar it spent in 2010. The federal debt is now more than $15 trillion. If any future federal funding is available for rail transit systems, it will need to be allocated based on legitimate need. The Indianapolis metropolitan area would be a low priority for scarce federal rail transit dollars because of limited traffic congestion. Therefore, the only source of MTD rail service funding would be budget-busting federal earmarks. This MTD rail service federal funding irresponsibility must be a concern to every Hoosier who values fiscal patriotism.

IN CONCLUSION: House Bill 1073 is Taxpayer UNfriendly because the Metropolitan Transit District could receive federal aid to build a commuter train service from Noblesville to downtown Indianapolis. If the MTD were not allowed to build a rail transit system, HB 1073 would be Taxpayer Neutral.

House Bill 1093 Public Access Improvements: Taxpayer Friendly

STATUS: Passed the House 90-4 and failed to receive a public hearing in the Senate Local Government Committee.

NOTE: Most of the HB 1093 Taxpayer Friendly provisions were inserted in the Conference Committee report for HB 1003.

The following Watchdog Indiana E-mail was sent to all State Representatives on January 26:

Please Vote YES for the Taxpayer Friendly public access improvements in House Bill 1093.

The Taxpayer Friendly public access improvements in HB 1093 include those listed next.

(1) A public agency must allow inspection or copying, or make copies, of a public record within a reasonable time after the request is received by the agency.

(2) A court may impose a civil penalty against an officer of a public agency, an individual employed in a management-level position with a public agency, or the public agency for violating the Open Door Law with specific intent to violate the law if the plaintiff obtained an advisory opinion from the Public Access Counselor before filing an action.

(7) A court may impose a civil penalty of not more than $100 for the first violation and not more than $500 for any additional violations.

(10) If a local government agency has the capacity to send electronic mail, the agency must provide notice to anyone (other than news media) that makes an annual request for notice by (a) transmitting the notice by electronic mail or (b) posting the notice on the agency's Internet web site (if the agency has an Internet web site).

(12) A court is required to (rather than allowed to) review public records in camera (in chambers) to determine whether redaction of the records violates the Public Records Act.

(14) Revenues from a public agency and/or individual violating the provisions of HB 1093 will be distributed into the Public Access Counselor’s Education Fund.

A YES vote for HB 1093 is Taxpayer Friendly.

A NO vote against HB 1093 is Taxpayer UNfriendly.

Should HB 1093 pass the General Assembly and be signed into law by the Governor, the HB 1093 vote of each General Assembly member will be recorded on his or her individual Watchdog Indiana Legislator Rating web page: see http://www.finplaneducation.net/general_assembly_ratings.htm.

House Bill 1132 Controlled Projects: Taxpayer UNfriendly

STATUS: Passed the House 79-15 and did not receive a vote in the Senate Tax and Fiscal Policy Committee after a public hearing.

The following Watchdog Indiana public hearing testimony was given before the Senate Tax and Fiscal Policy Committee on February 14:

Legislation is Taxpayer Friendly if it is results-oriented, compassionate, and fiscally responsible.

The current controlled projects statute is Taxpayer Friendly because local referendums are required to approve costly capital projects. A local referendum is triggered if the cost of a project exceeds an established threshold included in the current statute. Current law provides for the following Taxpayer Friendly direct public input regarding local government capital projects:

(a) A capital project is a controlled project if it will cost the political subdivision more than the lesser of $2 million or an amount equal to 1% of the total gross assessed value of property within the political subdivision on the last assessment date (if that amount is at least $1 million).

(b) A project that is in response to a natural disaster, emergency, or accident that makes a building or facility unavailable for its intended use and that is approved by the county council is not a controlled project for purposes of the referendum process.

(c) A controlled project for a school building for kindergarten through Grade 8 is subject to a referendum if the cost is more than $10 million.

(d) A controlled project for a school building for Grade 9 through Grade 12 is subject to a referendum if the cost is more than $20 million.

(e) Other controlled projects with a cost that exceeds the lesser of $12 million or 1% of assessed value (but at least $1 million) are also subject to a referendum.

(f) It takes the lesser of 100 persons who are either owners of real property within the political subdivision or registered voters residing within the political subdivision or 5% of the registered voters residing within the political subdivision to initiate a referendum.

(g) The referendum is to be held during a general or primary election unless there is no election within 6 months from when the county auditor certifies the public question; in that case, a special election would be held between 90 an 120 days after the public question is certified.

(h) A referendum for issuance of debt may be held in a municipal election.

(i) Controlled projects that are not subject to a referendum are subject to the petition and remonstrance process.

The controlled projects changes in HB 1132 are Taxpayer UNfriendly because a costly capital project could be manipulated to gain approval without a local referendum. This manipulation would be possible because HB 1132 would change the referendum threshold definition from the "cost of a project" to the "cost to be financed." The Taxpayer UNfriendly HB 1132 controlled projects changes include those listed next.

(1) A definition of "cost to be financed" would be added to the controlled projects statute.

(2) For a preliminary determination to issue bonds or enter into a lease made after June 30, 2012, the term "cost to be financed" would mean the cost of a project minus the sum of (a) the cash available to a political subdivision that was reserved exclusively for expenditure on the project's costs in a resolution or ordinance adopted by the proper officers of the political subdivision, (b) money received in the form of a donation or a grant for expenditure on the project's costs from an entity not controlled by the political subdivision, and (c) money for a project attributable to a grant commitment or similar instrument from an agency or affiliate of the federal government that reimburses the political subdivision for the political subdivision's expenditures on the project.

(3) The thresholds in current law differentiating between controlled projects that are subject to the petition and remonstrance process and those that are subject to the referendum process would be restated in terms of the controlled project's cost to be financed instead of the controlled project's cost.

(4) A political subdivision may reserve all or part of the cash available to the subdivision exclusively for expenditure on a controlled project in a resolution or ordinance making a preliminary determination to issue bonds or enter into a lease under this chapter only if (a) the amount reserved does not exceed the cash available to the political subdivision at the time the money is reserved, (b) none of the amount reserved has been designated for another purpose, and (c) the expenditure of the amount reserved for the controlled project is otherwise authorized by law.

(5) If the political subdivision reneges on its commitment to spend the cash reserved in the preliminary determination on the controlled project, its authority to levy property taxes for the project would be cancelled.

(6) If a political subdivision has reserved cash for expenditure on a controlled project in a preliminary determination to issue bonds or enter into a lease and the political subdivision is (a) not authorized to proceed with the controlled project because the result of the petition and remonstrance process or the referendum process is negative or (b) withdraws its intention to proceed with the controlled project, the cash reserved for the controlled project would be released for other lawful uses by the political subdivision.

To demonstrate how the "cost to be financed" could be improperly manipulated, consider a local school corporation that wants to build a $10.4 million addition to its middle school. The current controlled projects statute provides that the middle school project is subject to local referendum because of the $10 million "cost of a project" threshold for kindergarten through Grade 8 school buildings.

Suppose the local school board has determined that the $10.4 million middle school project has no chance to be approved in a local referendum. Also suppose there is room under the local property tax caps to fund the project through a property tax increase. Further suppose the school corporation has $500,000 cash available that has not been designated for another purpose. HB 1132 would allow the school board to reserve the $500,000 in available cash for expenditure on the middle school addition. The "cost to be financed" would be reduced $500,000 from $10.4 million to $9.9 million allowing the school corporation to fall below the $10 million referendum threshold.

Suppose the local school board does not have $500,000 cash available. Also suppose a local business not controlled by the school corporation is willing to donate $500,000 to the school corporation in return for having the middle school addition named after the owner of the local business. HB 1132 would allow the school board to use the $500,000 donation to reduce the middle school addition "cost to be financed" from $10.4 million to $9.9 million, thereby avoiding the $10 million referendum threshold.

Suppose the local school board does not have $500,000 available in cash, donations, or federal government reimbursement grant commitments. Also suppose the local redevelopment commission wants to provide a $500,000 grant to the school corporation so the middle school addition can be used to help attract residential development in a new city annexation area that is failing to meet overly ambitious growth projections. HB 1132 would allow the school board to use the $500,000 grant to reduce the middle school addition "cost to be financed" from $10.4 million to $9.9 million, thereby avoiding the $10 million referendum threshold.

All these manipulation scenarios would result in significant property tax increases to fund a capital project that local citizens would deem unneeded at the ballot box. These scenarios point out that property tax caps are not meant to be a protection against unnecessary property tax increases, but are a protection against excessive property tax increases. Referendums are a protection against unnecessary property tax increases.

These manipulation scenarios are not strictly hypothetical. These are very real scenarios within the City of Lebanon. Indeed, the Lebanon Redevelopment Commission recently announced a $500,000 grant to the Lebanon Community Schools Corporation (without any community notice or debate whatsoever) to provide a "conference center" at the Lebanon High School. If desired, detailed information can be provided regarding the Lebanon situation that HB 1132 would worsen.

In conclusion, the manipulation scenarios in this testimony include just a few of the many ways that local political subdivisions could use the Taxpayer UNfriendly "cost to be financed" definition in HB 1132 to thwart the Taxpayer Friendly controlled projects referendum protections contained the current statute. Please do not pass the Taxpayer UNfriendly provisions in House Bill 1132 out of this Committee.

Senate Bill 25 Redevelopment Commissions and Authorities: Taxpayer Friendly

STATUS: Passed the Senate 39-8 and did not get a public hearing in the House Government and Regulatory Reform Committee.

Indiana Senate Bill 25 proposes significant reforms for redevelopment commissions and departments.

General Assembly legislation is Taxpayer Friendly if it is results-oriented, compassionate, and fiscally conservative. SB 25 is Taxpayer Friendly because it provides much improved oversight over redevelopment commissions and departments by (a) the legislative or fiscal body of the taxing unit that created a redevelopment commission or department, (b) the State Board of Accounts, and (c) everyday Hoosiers through the public meeting and public records laws.

Under SB 25, the legislative or fiscal body of the taxing unit that created a redevelopment commission or department would have improved oversight over the redevelopment commission or department.

(1) The annual budget and tax levies of the redevelopment commission or department would be subject to review by the legislative body of the unit.

(2) The redevelopment commission or department could not enter into any debt or lease obligation payable from public funds without first obtaining the approval of the legislative or fiscal body of the unit, with the exception if an obligation is for the acquisition of real property and the payments are for three years or less or the purchase price is less than $5 million. The legislative or fiscal body would be required to specifically approve the maximum payment or lease amounts as well as the maximum interest rate.

(3) The redevelopment commission or department would be required to provide to the legislative body of the unit at a public meeting all the information supporting the action the redevelopment commission proposes to take regarding the sale, transfer, or other disposition of property.

(4) If the amount of excess assessed value determined by the redevelopment commission or department is expected to generate more than 200% of the amount of allocated tax proceeds necessary to carry out the redevelopment or economic plans, the determination of the amount of the excess available to other taxing units would be approved by the legislative body of the unit. The legislative body of the unit would also be permitted to modify the redevelopment commission's determination with respect to the amount of excess assessed value.

(5) The redevelopment commission or department would be subject to the same laws, rules, and ordinances of a general nature that apply to all other commissions or departments of the creating unit.

(6) If outside Indianapolis, the treasurer of the redevelopment commission or department (or the secretary-treasurer of the redevelopment authority) would be required to report quarterly to the fiscal officer of the unit that established the commission or authority.

(7) The Indianapolis Controller would be the fiscal officer of the redevelopment commission and redevelopment authority in Indianapolis.

SB 25 also provides that a redevelopment commission, a department of redevelopment, and a redevelopment authority would be subject to audit by the State Board of Accounts.

In addition, a redevelopment commission, a department of redevelopment, and a redevelopment authority would be covered by the public meeting and public records laws.

The importance of SB 25 is demonstrated by the Lebanon Redevelopment Commission that operates the Lebanon Business Park tax increment financing (TIF) district. Three of the five voting members of the Lebanon RDC are appointed by the Lebanon Mayor, whose control of the commission outcomes is further enhanced by his legal authority to "summarily remove" his appointees at any time.

There are sufficient Lebanon Business Park 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 all Lebanon property taxes by at least 5.5 percent (and lower all Boone County property taxes by a lesser amount) by reducing those property tax rates computed by dividing budget requirements by $100 of assessed vale. Also, those Lebanon and Boone County property tax components computed by a fixed rate per $100 of assessed value could have their rates lowered because the computed revenues would increase due to the increased assessed value from the terminated TIF district.

The Lebanon Mayor refuses to let the Lebanon RDC terminate the TIF district to benefit the property tax payers of Lebanon and Boone County. Instead, the Lebanon Mayor has used TIF district proceeds the past five years for various outside-of-district expenditures that vary from a Lebanon Fire Department ladder truck, three Lebanon Police Department police cars, a Lebanon Street Department bucket truck, a new fire station, $1.5 million for agricultural-themed translucent panels on the Indiana 39 bridge over I-65, $500,000 to help fund a 9,600 square-foot "event center" at Lebanon High School, to $140,000 to pay back taxes so an abandoned motel can be demolished.

The improved oversight requirements in SB 25 would better expose the Lebanon RDC operations to the light of day and improve the chance of taxpayer benefit instead of continued discretionary spending by the Lebanon Mayor.

Senate Bill 92 Public Access Improvements: Taxpayer Friendly

STATUS: Failed to get a third reading vote in the Senate.

NOTE: Most of the HB 1093 Taxpayer Friendly provisions were inserted in the Conference Committee report for HB 1003.

The following Watchdog Indiana E-mail was sent to all State Senators on January 30:

Please Vote YES for the Taxpayer Friendly public access improvements in Senate Bill 92.

Access to public records and public meetings is the lifeblood of civic activism. Civic activism is the lifeblood of democracy. SB 92 is Taxpayer Friendly because it improves public access and makes our democracy stronger.

The Taxpayer Friendly public access improvements in SB 92 include those listed next.

(1) A court may impose a civil penalty against an officer of a public agency, an individual employed in a management-level position with a public agency, or the public agency for violating the Open Door Law with specific intent to violate the law if the plaintiff obtained an advisory opinion from the Public Access Counselor before filing an action.

(2) A public agency must provide copies of records within a reasonable time in consideration of the public agency's workload and difficulty in fulfilling the request.

(7) A court may impose a civil penalty of not more than $100 for the first violation and not more than $500 for any additional violations.

(8) A public agency has discretion as to whether to disclose a public record requested by an offender containing personal information relating to a judge, law enforcement officer, or family member of a judge or law enforcement officer.

(9) If a local government agency has the capacity to send electronic mail, the agency must provide notice to anyone (other than news media) that makes an annual request for notice by (a) transmitting the notice by electronic mail or (b) posting the notice on the agency's Internet web site (if the agency has an Internet web site).

(10) A court may not declare a governmental action void for failure to give notice by electronic mail or posting on the local government agency's web site if the agency made a good faith effort to comply with the statute.

(11) A court is required to (rather than allowed to) review public records in camera (in chambers) to determine whether redaction of the records violates the Public Records Act.

(12) An Education Fund for a program administered by the Public Access Counselor is created to train public officials and educate the public on the rights of the public and the responsibilities of public agencies under the Public Access Laws; revenues from a public agency and/or individual violating the provisions of SB 92 will be distributed into the Public Access Counselor’s Education Fund.

In conclusion, SB 92 is Taxpayer Friendly because public agencies will be less likely to intentionally violate the Public Access Laws by (a) failing to give proper notice of a regular meeting, special meeting, or executive session; (b) taking final action outside a regular meeting or special meeting; (c) participating in a secret ballot during a meeting; (d) discussing in an executive session subjects not eligible for discussion in an executive session; (e) failing to prepare a memorandum of a meeting required by IC 5-14-1.5-4; (f) participating in at least one gathering of a series of gatherings under IC 5-14-1.5-3.1; (g) denying a person's request for inspection or copying of a public record if the public record is subject to disclosure; and (h) charging a copying fee that exceeds the amount permitted.

A YES vote for SB 92 is Taxpayer Friendly.

A NO vote against SB 92 is Taxpayer UNfriendly.

Should SB 92 pass the General Assembly and be signed into law by the Governor, the HB 1093 vote of each General Assembly member will be recorded on his or her individual Watchdog Indiana Legislator Rating web page: see http://www.finplaneducation.net/general_assembly_ratings.htm.

Senate Bill 98 County Excise Surtax and Wheel Tax: Taxpayer Neutral

STATUS: Passed the Senate 50-0, passed the House 93-1 with amendments, the Senate concurred 46-1 in House amendments, and signed by the Governor.

SB 98 would allow a county to use property taxes and miscellaneous revenue deposited in the county general fund for the maintenance of county highways. Current law permits property taxes to be used for highway maintenance only in an emergency and by unanimous vote of the county fiscal body, and the county general fund to be used only for county highway department employees' personal services. To the extent that more money is spent for the maintenance of county highways from these sources of revenue than under current law, fewer funds from these sources would be available for other uses. SB 98 would also allow a city department, officer, or employee to obligate the city beyond the amount of money appropriated for that department, officer, or employee if the obligation is made under an interlocal cooperation agreement entered into by the city and one or more political subdivisions or governmental entities. SB 98 is Taxpayer Neutral.

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This page was last updated on 10/21/12 .