INDIANAPOLIS — Township boards, criticized for holding millions of taxpayer dollars in surplus, could authorize a one-time transfer between funds in their budgets as a way to put those monies to use.

However, trustees would need to create a capital improvements plan by September 2020 designating what they intend to do with the money.

The provision to an Indiana House bill, which came as an amendment Wednesday, is seen by one legislator as a compromise between a call for township reform and a practical way to put surpluses to use. 

“I recognize that township trustees, not all, many but as a whole, they’re kind of getting beat up on because of all this money they’re quote-unquote sitting on,” State Rep. Kevin Mahan, R-Hartford City, said.

“In talking to some trustees I heard them say, 'Well, yeah, I've got this fund and I can’t use it for anything other than this so I’m not going to spend it,'” said Mahan, chairman of the House Committee on Government and Regulatory Reform.

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.

The transfer of funds concept came this week as an amendment to House Bill 1177 authored by Rep. Cindy Ziemke, R-Batesville. For years, Ziemke has sought stricter accountability for Indiana’s centuries-old system of township government.

In many cases, a government entity wishing to transfer funds must do so with an ordinance. Under Mahan's plan, a public hearing would be necessary.

For example, townships can establish rainy day funds, but they can't transfer money into funds designated for fire protection, parks or township assistance, which is also known as poor relief.

Ziemke said she favored Mahan's amendment because it allows townships to transfer funds to capital projects — notably to assist volunteer fire departments, which serve many rural townships. 

Under her bill as introduced, townships would be required to prepare a capital improvement plan for the ensuing three years if the balance in certain capital improvement funds exceeds 150% of the township's annual budget estimate. Without a plan, the township couldn’t collect property taxes.

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

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.

An amended bill with Mahan’s provisions added passed the Government and Regulatory Reform Committee and now heads to the House floor.

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