Video: Midterm Evaluation of the Indiana General Assembly

Indiana Chamber President and CEO Kevin Brinegar provides a midterm evaluation of the 2018 Indiana General Assembly. Among the key bills that did not survive the first half of the session: raising the smoking age from 18 to 21 (a common-sense step for dealing with health care costs and lost productivity that causes more than $6 billion in annual impact). In addition, an effort to modernize the state’s local government system by consolidating the smallest townships was not brought for a vote.

Areas that are still a work in progress include reforming the state’s workforce development programs, incorporating computer science requirements into schools, clarifying tax treatment for Software-as-a-Service (SaaS) and continuing to move forward on long-term water resource management.

Short Session Starts With a Flurry of Activity

The Governor and General Assembly have continually heard from Hoosier employers on the need for a skilled workforce – and better aligning state programs with job demand. The good news is bills are being introduced to address those concerns. While only a handful of measures have been released to date, we are seeing legislation related to training tax credits and grants, as well as efforts to streamline current workforce programs. We anticipate a comprehensive workforce bill (1002) will be introduced in the House later next week.

The Governor’s computer science bill (SB 172) requires all public schools to offer a one-semester elective computer science course at least once each school year to high school students. We expect a hearing on this measure in the next two weeks. Both this and the workforce efforts are 2018 Indiana Chamber legislative priorities.

Senate Bill 257 has been introduced by Sen. Travis Holdman (R-Markle) to serve as the beginning of discussions on clarifying the exempt status of computer software sold as a service (SaaS) – a Chamber priority. Holdman is also authoring another major piece of tax legislation, SB 242, which contains a variety of tax matters. The House bills are coming in too, with a good number already filed addressing local tax issues.

Speaking of local matters, the Chamber is very pleased to see that the House Republican agenda includes a bill that will make township government more effective and efficient by the merging of townships (approximately 300) where less than 1,200 people reside. Such local government reform has been a longstanding Chamber goal.

In addition to SB 257, other technology-related bills include Rep. Ed Soliday’s (R-Valparaiso) autonomous vehicle (AV) proposal to position Indiana to safely test and implement AV technology with automobiles. The bill also will address truck platooning, which uses GPS and WiFi technology to allow trucks to more closely follow each other for greater efficiency, on Indiana roads.

Rural broadband, high-speed internet and small cell wireless structures technology all will be topics for the Legislature to debate. Certified technology parks also will be discussed with the idea to have an additional capture of sales and income tax revenue for those complexes that perform well.

In health care, enabling employers to ask prospective employees if they are smokers not only heads the Chamber’s wish list but also appears to be gaining traction this go-round. Eliminating the special protections (currently in state statute) for smokers is found in SB 23 and will be guided by Sen. Liz Brown (R-Fort Wayne). The bill has a pretty good chance of getting a hearing in the Senate – which would be a first. Previously, a measure was taken up in a joint hearing in the House.

Increasing the tobacco tax and raising the legal age for smokers to 21 are policies that likely will be included in a bill to be introduced by Rep. Charlie Brown (D-Gary). The Indiana Chamber is supportive of both.

Nine utility-related bills are on our radar screen at this point. They range from tweaks of last year’s big legislation (like SB 309, which addressed rising energy costs and a long-standing struggle between the investor-owned electric utilities and larger consumers of energy) to compulsory sewer connection, excavation for infrastructure, regulation of solar energy systems in homeowners’ associations and new water legislation. Separately, Sen. David Niezgodski (D-South Bend) has a proposed ban on coal tar pavement sealer, which we oppose.

There are also a number of bills proposing changes to Indiana’s alcohol laws including: Sunday sales, cold beer sales by grocery and convenience stores, and increases in fees and penalties.

The Chamber will be providing more details on all of these bills as the session progresses.

For anyone who wants a refresher about how legislation becomes law, the Chamber has a handy guide free of charge. It includes a diagram of the bill process, a glossary of often-used terms and a look at where bills commonly get tripped up.

Additionally, the Chamber will be providing updates and issuing pertinent documents throughout the session at www.indianachamber.com/legislative.

Reactions to Local Government Reform Progress Mixed

It’s no secret the Indiana Chamber is a strong proponent of local government reform, and we’re directly involved with MySmartGov. Although we’re encouraged that legislation curbing nepotism in local government passed this year, to this point the going has been rather slow in getting Indiana legislators to eliminate duplication at the township level. The Indiana Economic Digest has an interesting article on the topic, relaying how the gentlemen who created the Kernan-Shepard Report — the document that initially stated the case for reform — don’t see the progress thus far as being entirely negative.

Getting property tax bills out on time may not seem like a headline-grabber, but for supporters of a sweeping government reform effort, it’s big news.

Four years ago, not a single county in Indiana hit the deadline for sending out tax bills that generate revenues needed to keep the gears of local government moving. The following year, only two did.

Last year, 90 of Indiana’s 92 counties made the deadline.

The difference has saved cities and schools millions in interest payments on tax anticipation loans while waiting for their counties to collect and hand over tax dollars.

State finance officials credit the dollars saved to a recommendation made in December 2007 by the Indiana Commission on Local Government Reform.

The bipartisan commission spent months coming up with a road map to streamline local government. In a report that called for sweeping changes, it issued 27 recommendations — including the one that led to the consolidation of township assessors under the county and a shift to more professional assessment standards.

But only about one-third of those 27 recommendations have come to fruition since.

That’s not enough for Gov. Mitch Daniels, who created the commission. Talking to reporters Monday — just two days after the Indiana General Assembly closed Daniels’ last legislative session — the governor bemoaned the fact that much of the bipartisan commission’s recommendations have met a bipartisan wall in the Legislature.

“I continue to be disappointed that we didn’t get more than one-third done,” Daniels said.

That’s not how one of the men who headed the commission’s work sees it, though.

Retiring Indiana Supreme Court Chief Justice Randall Shepard is the Republican who co-chaired what became known as the “Kernan-Shepard commission” with former Gov. Joe Kernan, a Democrat.

He thinks progress on local government reform has been impressive, given the resistance to change a system put largely in place before Indiana became a state.

Shepard recalls a conversation with commission members just as they were getting ready to release the 2007 report that called for virtually eliminating township government while consolidating hundreds of school and library districts and imposing new rules for financial accountability.

One member said it would be a “miracle” if everything in the report got done. Shepard said the response from another commission member was: “‘It’ll be a miracle if anything gets done.’”

So in Shepard’s estimation, getting one-third done “is a pretty good outcome.”

In the session that just ended, lawmakers passed a bill with roots in the Kernan-Shepard recommendations: Aimed at eliminating conflicts of interest and reducing nepotism in local government, it bars a local government employee from taking office as an elected official of the government he or she works for. It also bans a local government employee from supervising a relative in a local government job.

Similar legislation failed in past sessions.
 

Township Trustee Paid $332,000 for….. Nothing?

This story is unfortunate, and I genuinely feel bad for the trustee who lost this money — and was subsequently ambushed at her home by a news crew. But a mistake was made — and it was a big one. It just simply points to yet another instance of township government in Indiana not using taxpayer resources very effectively.

A township trustee who paid up front for a fire truck that never showed up is now facing scrutiny from the State Board of Accounts and the Indiana Attorney General’s Office.

Pamela Crum, the trustee of Sheffield Township in Tippecanoe County, wrote a check for $332,970 to Elite Fire Apparatus of Wisconsin, but the company went bankrupt shortly after, according to an audit by the State Board of Accounts.

"The result was, they were just out the money and they were going to get no fire truck, and, according to the bankruptcy court, there were no assets to distribute," said Paul Joyce, deputy state examiner for the State Board of Accounts.

Indiana code states that public officials should not pay for goods or services up front, unless it’s a recurring expense, such as rent, 6News’ Kara Kenney reported.

"You’re not supposed to pay for anything in advance," Joyce said. "That’s because you might not get the goods and services you purchased."

Joyce called Sheffield Township’s $332,970 check the worst case the agency had ever seen of a public official paying for something that didn’t show up.

In an effort to recoup the money on behalf of taxpayers, the attorney general’s office sent out letters to Crum, the former board members who approved the expenditure, as well as Ohio Farmers Insurance and National Fire & Casualty.

National Fire & Casualty has a $500,000 policy on the township, and Ohio Farmers Insurance has a $15,000 surety bond on the township trustee, according to the attorney general’s office.

If they don’t pay within 30 days, the attorney general’s office may file a lawsuit to recover the public funds.

"I’m not happy, not happy," said Linda Gregory, a longtime Sheffield Township taxpayer. "For a small town like this, it’s surprising."

Township Numbers Not Adding Up

We revisit Al Hornaday, a Morgan County township trustee trying to inject some common sense into local government. In today’s brief video, Hornaday explains there are some major discrepancies between the small amount of poor relief provided in some townships and the high costs of simply running the township office. Visit www.MySmartGov.org for more.

Too Much Government in Too Many Places

Check out these words of New York Attorney General (and candidate for governor) Andrew Cuomo:

Our system of local government is broken … New York has more than 10,521 overlapping governments, including counties, towns, villages, school districts, special districts and public authorities. These entities impose layer upon layer of taxing structures — with citizens receiving multiple tax bills annually — resulting in the highest local property tax burden in the nation … To hold government to account the people must have a government they can understand. But what they have today instead at the local level is a ramshackle mess. The current local government system is the product of sheer historical accumulation — not logic, reason or common sense.

Well said. No, make that very well said. The Indiana Chamber and many, many others have put forth a strong case in recent years that township government in our state is beyond repair. Each new revelation of outlandish township reserves, unsightly administrative costs to deliver poor relief and outright criminal behavior further makes the point.

But like most challenges, it’s not just an Indiana problem. The Governing magazine article that featured the Cuomo quote also included the following. Maybe, just maybe, the momentum will grow, lawmakers will step up to the plate and all Hoosiers will benefit.

Rich Pahls, a Nebraska state senator from Omaha, has proposed merging many of his state’s 93 counties. The jurisdictions were designed for the days of the horse and buggy, he pointed out to the New York Times, not an era when “people will drive 100 miles to the grocery store.”

New Jersey, meanwhile, has some of the highest property taxes in the country, thanks in part to its 567 municipalities, a third of them with fewer than 5,000 residents, along with 611 school districts and 486 local authorities. Bergen County alone has 70 school districts and 76 superintendents.

New York State has more than 10,500 governmental entities that levy taxes and fees, and that depend on state largesse for any number of needs. This includes towns, villages and a multiplicity of water, sewer, lighting, school, 911 and other districts. Erie County, which is where Buffalo is located, has over 1,000 such local governing entities alone.

But while political leaders in the U.S. have been talking about local government rationalization, in Denmark, they’ve actually done it.

In 2007, Denmark shrunk the number of municipalities from 271 to 98. County government was completely eliminated. Fully 455,000 local government employees were involved in the restructuring; and 30,000 physically relocated to a new site. The government projects $274 million (1.6 billion DKK) in savings from the restructuring.

The implementation of this massive reform, which began in 2002, offers important lessons as other governments look to achieve big cost savings through rationalizing local government.

Anyone hoping to rationalize the delivery of services from the state level on down must first understand where the opportunities lie to eliminate duplication and inefficiency. Then, you need to lay the groundwork for public acceptance of the change. Both of these goals can be served by gathering hard data on what every unit of government does, how much it spends and what it gets for its money. Only after these goals have been achieved can you make that information readily available to the public.

This is not an easy task. The collection of data alone is enormous. But data gives you the ability to shine a light on what is taking place under the status quo, making the tough task of driving change a little easier.

Centralizing the Vote: Why Isn’t It Happening?

As I made my way to the polls (a lovely golf course that had more people on the driving range at that early hour than doing their part for democracy) just after 7 a.m. today, I couldn’t help but wonder why vote centers haven’t been given more of a chance. Yes, a few Indiana counties were allowed to experiment in recent years and the results were positive, but legislative attempts to expand the concept have not gained traction.

Instead of numerous golf courses, schools, churches, fire stations and other polling places throughout a county, voting would take place at fewer but more centralized locations (think closer to work and play). More flexibility for the voters (I would not have made it back to the scenic golf course by 6 p.m. if I had not been able to make it there before work) and signficant financial benefits for counties (less machines, fewer poll workers and undoubtedly a reduction in problems that inevitably occur at far-flung precincts where the number of voters in 12 hours barely equals the age of one of the poll workers; OK, a cheap shot, but thank goodness for those willing to work the polls election after election after election).

Vote centers are one of those ideas that simply makes sense. Kind of like township reform. With both, you would do away with an antiquated system, save money (lots of money in many cases) and more effectively serve citizens.

Established political forces don’t want local government to change, no matter the cost to taxpayers. Is it the same with vote centers? If so, why? Help me, help all of us understand.

Township Budgets and Expenditures Receive Local Scrutiny

When things get lean, it is even more important to use limited resources as wisely as possible. And so it goes with local government.

This is the first year that each of the 92 county councils in Indiana are doing a non-binding review of the 2010 budgets of all civil units of government (including townships) within that county. The goal is to get a better handle on other budgets within the county by a single fiscal body and how the tax caps will affect these budgets. This kind of review is important, especially with the impact of property tax caps on local budgets. However, with the review being non-binding, the county councils can only make recommendations, not decisions. 

To add context about township government expenditures and activities to those budget discussions, analysis was done from the 2008 financial reports that township trustees are legally required to file with the Indiana State Board of Accounts. That analysis was done for townships in 29 Indiana counties and summarized for each county.

The information from these reports shows incredible variances in standards and expenditures. For example, average poor relief per person ranges from $56 to $826 from one township to another in the same county. In another county, administrative costs to deliver $1 in direct services (both poor relief and public safety) ranged from 30 cents in one township to $12.20 in another.

It was hoped that as the county councils and the public saw the great differentials among expenditures, taxes and services by township, there will be a realization that more consistency is needed. We need discussions about how to provide more consistent services to the poor – not just among townships, though that is very important, but also in cooperation with all other human services agencies in the county.  We need like discussions in regard to fire and emergency services. 

Many county councils expressed frustration that the only power they had was to make a non-binding recommendation and thought it was a waste of time. Other county councils didn’t spend much time on it and simply rubber-stamped the township budgets. Because of property tax caps, local governments will have more than $400 million less to spend this year.  While the county budget officials do not have the authority to prioritize among taxing units, we hope their recent deliberations will inform the public and legislators of the need to simplify local government.