INDIANAPOLIS — Indiana townships with seemingly massive budget surpluses will need to submit plans to show the public how the money will be used under a bill signed into law Monday by Gov. Eric Holcomb.
The legislation authored by Rep. Cindy Ziemke, R-Batesville, requires townships to file a three-year capital improvement plan with the state if their surplus is 150 percent over the annual budget estimate and more than $200,000. The plan would affect 88 of Indiana's 1,005 townships.
"My goal has always been reform and accountability to the taxpayers," Ziemke said.
Without a capital improvement plan, a township wouldn’t receive property taxes. The bill allows a one-time transfer of funds inside their budget. Townships generally supply fire service, maintain cemeteries and provide poor relief to residents.
“After they complete the capital improvement plan it will allow them to transfer surpluses into another fund they can actually use. That’s been a big issue with a lot of these townships,” Ziemke said.
Holcomb said he wants to work with township government leaders in using their offices to fight the state's opioid crisis. Trustees often see residents in need of medical assistance that could be related to addictions.
"They're on the front lines and what we've seen is all the federal assistance, all the state assistance, it's making sure the rubber meets the road. ... So I want to forge a partnership there like we don't have right now," Holcomb said.
Last year, townships across the state ended with balances totaling $481.3 million. On average, township trustees end their year with a surplus of 111 percent over their adopted budgets.
Across the state, townships had budgets totaling $389.3 million in 2017. But they had a total cash balance of $453.6 million, more than 16% above their budgeted amounts. That was enough for 14 months of operating revenues, as much as seven times the generally accepted threshold for government units.
Last year, the number rose as townships recorded total budgets of $402 million and cash balances of $472 million, according to records kept by the Indiana Department of Local Government Finance.
"I don't think the general population realizes that our state was sitting on half-a-billion dollars in township money," Ziemke said. "So it's like, hey, prove to the taxpayers what you're doing with it."
Many townships save money for capital expenditures such as fire equipment or park amenities but some told CNHI, in a series on township government that ran in December, that they had no set plans for the money.
"There’s always been a little bit of concern about townships, what they have in their accounts and what they’re carrying in their balance. It's usually for a reason," state Sen. Rick Niemeyer, R-Lowell, who sponsored the bill in the Senate, said.
"Maybe they should show why they have that money in there in a capital plan so that taxpayers know it’s in there for a reason," Niemeyer said.
The bill received little opposition as it progressed through the General Assembly. The bill received support from the Indiana Township Association, which represents a majority of the state's townships.
“Our primary goal in this bill is transparency,” Indiana Township Association executive director Debbie Driskell said. “There’s been a lot of criticism, whether it’s right or wrong, that townships have high cash balances.”
The plan will affect townships that collect enough property taxes to set aside funds, said Sen. Jim Buck, R-Kokomo.
"It's almost like a pilot here in my mind, trying to make sure the people that are most apt to have a reserve that we'll be able to track them," Buck said.
In the separate House Bill 1001, the state's budget legislation, the DLGF would create a pilot program for township residents to apply for financial assistance when they need food, housing or medical help. Currently the process is conducted by personally filling out applications through township offices.
Ziemke's House Bill 1177 was one of 11 introduced this session to address township issues. The other bills died in committee, including one that sought a summer study of volunteer firefighting departments as many townships provide fire service through volunteer departments.
Ziemke's bill also extends a deadline to November 2020 for the town of Griffith to join another township. Last year, Griffith residents voted to leave Calumet Township over its high poor relief property tax rate.