INDIANAPOLIS — More than 400 of Indiana's township trustees would be required to justify their seemingly hefty budget excesses under a bill that faced its first state legislative hearing Wednesday.

Budget surpluses for townships add up to hundreds of millions of unused tax dollars across the state.

Under House Bill 1177, Indiana townships would be required to submit a capital improvement plan to the state if the township ends a year with a surplus of at least 150 percent of its annual budget estimate. If those townships don’t submit a plan, they would not be allowed to collect property taxes. 

The bill is authored by State Rep. Cindy Ziemke, R-Batesville, who has sought township government reform during numerous sessions of the Indiana General Assembly.

"We're looking at this in order to bring more efficiencies to that level of government as we try to do with all levels of our state government," Ziemke told members of the House Government and Regulatory Reform Committee.

However, the co-author of the bill, Rep. Kevin Mahan, R-Hartford City, who chairs the committee, asked that a working group of township experts be formed "in the very near future" to look at aspects not in the bill, including whether surpluses could be rebated to taxpayers. As a result, the bill was not put to a committee vote Wednesday.

"I am doing nothing to blow up this capital improvement," Mahan said. "I will do everything I can to get this capital improvement bill out of here and become law this session."

Representatives of the Indiana Township Association, Indiana Farm Bureau and the Indiana Volunteer Firefighters Association said they support Ziemke's bill.

As proposed, 451 of Indiana's 1,005 townships would be required to submit a capital improvement plan.

Ziemke's bill is an attempt to force Indiana’s elected township trustees to explain to constituents how they intend to spend annual surpluses. Some trustees are saving up for capital purchases such as firefighting equipment or community projects, but some have no plan for leftover tax receipts.

By the end of fiscal year 2017, all townships in Indiana combined had $453.6 million in surpluses. Three townships had more than 10 times their budget sitting unused, according to a review by CNHI.

Ziemke’s bill also seeks a legislative study of volunteer fire departments; many serve township residents and are paid through trustee budgets.

Ziemke and Mahan have also introduced House Bill 1178 that would move the maintenance of abandoned cemeteries from the township trustee to a county office. Currently, 596 townships have cemetery budgets totaling $5.9 million; those expenditures would shift to counties.

Three of the main functions of township trustees include providing firefighting services, which often take up most of a township's budget, offering poor relief and maintaining cemeteries.

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