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Authors of controversial 2007 report still say townships must go

From the TOWNSHIPS: Antiquity or necessity? - A CNHI News Indiana Investigative Report series
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Authors of controversial 2007 report still say townships must go

The Associated PressIndiana Gov. Mitch Daniels, center, announced July 18, 2007, in Indianapolis that he had named former Indiana Gov. Joe Kernan, left, and Indiana Supreme Court Chief Justice Randall T. Shepard, right, to co-chair a bipartisan commission on local government reorganization. The Kernan-Shepard report ultimately called for townships to be dissolved.

INDIANAPOLIS – Former Indiana Gov. Joe Kernan still gets phone calls about a report he co-authored 11 years ago urging reforms, including the dismantling of townships, in Indiana government.

So does former Supreme Court Chief Justice Randall Shepard, the other co-author.

And when the two retired men talk to each other, they discuss their influential and controversial Kernan-Shepard report. Issued in December 2007 and titled “Streamlining Local Government," the report carried the mission-labeling subtitle, “We’ve got to stop governing like this.”

The report was developed by the Indiana Commission on Local Government Reform, which had been convened by then-Gov. Mitch Daniels. The commission recommended 27 changes, ranging from child welfare funding to reorganization of school districts.

The report resulted in just one major government shift: property tax assessment duties were moved from all but 13 of the state's 1,005 townships to county offices.

“The system as it existed then with 1,000 individual assessors was in many ways really harmful to the economy,” said Shepard, now living in his native Evansville and writing opinions for the state Supreme Court.

“On the one hand, you think of that as a government efficiency objective, but it really mattered to the economy. If you’re thinking of opening a business or you’re thinking about building new subdivisions, how do you predict what’s going to be the property tax consequences for this new business?"

Other than the assessor changes, no major consolidation or reorganization reforms resulted from the report. However, it did prompt about 10 modifications in government processes, including transfer of funding for child welfare from counties to the state and joint purchasing of materials and services by school districts to save money.

The report -- in what might still be its most controversial and debated measure -- urged each county to have a single chief executive to replace existing three-member boards of county commissioners. That office also would have taken over the duties of the county auditor, recorder, assessor, sheriff and coroner.

The current duties of township government, the Kernan-Shepard report suggested, would be reassigned to the county executive in part to eliminate townships.

"Townships often are too small, in terms of land area and population, to provide cost-effective public services," the report said. "This problem only becomes more pronounced with increasing administrative, staffing, training and equipment requirements, particularly for fire protection.

"Broad variations in resources among so many local governments create inequities in basic services and taxes, such as fire protection, emergency medical services and poor relief."

The report continued, "We believe that Indiana counties are large enough to allow economies of scale in services, but not so large that they preclude sufficient access and responsiveness for citizens."

The commission recommended that a county executive could set up districts for fire protection and that a countywide levy for poor relief could be established.

At the time of the Kernan-Shepard report and still today, townships provide poor relief as well as fire protection in many unincorporated areas across the state.

PIECEMEAL APPROACH

The absorption of township services into county government has been tried piecemeal in some areas over the past decade.

In November 2014, about 71 percent of the voters in Allen County shot down a referendum calling for a single county executive. Opponents said the plan would put too much power into the hands of one person and would slash county representation for residents by 70 percent.

At the time of the Kernan-Shepard report, 31 states had no form of township government, which was becoming increasingly expensive in Indiana. The report found that the levy for township government had risen from $63.8 million in 1984 to $219.7 million in 2005. By this year, the cost had soared to $389 million.

“We believe that we were doing the right thing by consolidating the townships,” Kernan said from his South Bend home. “You have more people in these little townships, which means more money that goes down the drain. It just doesn’t make any sense.”

Shepard’s argument in favor of township consolidation, which he finds as valid today as in 2007, rests on the impact of property tax restraints and caps that could limit funds for the increasing cost of government operations.

"The public will be led to renew the conversation about just how many layers of government do we want to pay for," he said.

In 2015, eight years after the Kernan-Shepard report was issued, Patrick M. Cline, then a law student at the Indiana University School of Law and former lobbyist for Metropolitan Indianapolis Board of Realtors, reviewed the report for his final class manuscript. In “The Quiet Crisis,” Cline addressed the large operating budgets in township coffers.

Among examples he cited, Boone County’s Sugar Creek Township had a balance of nearly 800 percent of its annual expenditures. Within the same county, two more townships had balances above 400 percent and six townships had balances of more than 200 percent of their annual expenditures.

Cline called such balances “obscene.”

He still thinks that township consolidation is a key reform for the state to undertake, compared to a currently circulating proposal that would cap the funds a trustee can hold in surplus.

Speaking from his Indianapolis law practice, Cline said, “I think the better option is obviously consolidation so that county fiscal bodies, the county council, can prioritize. …They can look at what they have for township services but also look at what they’ve got for roads and child support payments and planning and zoning, the sheriff’s department and those types.

“They can look more globally than trying to come up with an arbitrary cap for townships. Because there may be a scenario where one of the townships is saving up for a firetruck or something.”

'NOT ... TRAVELING ON HORSES'

Cline disputes the idea that townships, as proponents claim, offer a form of government that is closest to Hoosiers, particularly in a 21st century setting.

"I think at the county, you're still very close to the people. It's not like we're traveling on horses like we were when townships were established," he said.

Shepard points out that the 2007 report he co-authored wasn't suggesting that township services were unimportant. Instead, the report advocates shifting those services to counties.

Shepard notes that, back in the late 1800s when Indiana townships were formed, the concept was forward-thinking.

"This remarkable thing about Indiana in the wilderness, creating a welfare system at a moment when absolutely nothing else existed … God bless Indiana," he said.

But today, Shepard and other township critics maintain, emergency assistance for food, utilities and housing could be distributed more quickly through a county executive.

"If you were to compare the Salvation Army or organizations that try to help distressed people, homeless people, you wouldn't find an administrative expense of 50 percent," Shepard said, alluding to the overhead costs of township government.