While issues like Right to Work have dominated the headlines and the fight for mass transit hits close to home in Central Indiana, another important debate in the General Assembly has the potential to contribute to Indiana's economic competitiveness - local government reform.  As we've written about extensively here, CICP believes that streamlining local government - particularly the outdated layer of township offices - can lead to a leaner, more effective, 'customer-friendly' public sector to serve individual taxpayers and businesses.

Here is an excellent editorial from the Anderson Herald-Tribune describing the state of reform in this session of the legislature and calling for much-needed progress on the issue.

Over the last few years, the voters have been called on to decide a number of important issues – whether to do away with township assessors, to put property tax caps in the state constitution, and to allow school districts to exceed those same caps on a case by case basis.

Mass transit legislation being considered by Indiana’s House Ways and Means Committee empowers voters in Marion and Hamilton Counties to similarly make their own decision on an expanded, multi-modal transit system (based on the proposal advanced by CICP’s Central Indiana Transit Task Force). The bill doesn’t ask lawmakers to support a tax increase or even declare their support for transit. It simply allows local officials (many of whom support the plan) to put the question before the voters this fall in a referendum.

Most surveys suggest widespread support for such a ballot question, for a number of reasons:

The current IndyGo system, underfunded and limited to Marion County, doesn’t meet the needs of our citizens or our economy. Nearly 20% of households in the region have either no car to get to work or have multiple workers in the household but only one vehicle. For these Hoosiers, access to job opportunities is limited to IndyGo routes, and a simple cross-town commute can take hours with multiple transfers.

Our mass transit plan recognizes that employment centers have shifted across the region. By doubling bus service in Marion County and extending it to Hamilton County, it helps employees and employers by connecting the two. But the economic benefits of transit go beyond helping Hoosiers get to work.

The construction and operation of a multi-modal system with light rail and bus rapid transit (BRT) routes will create a significant number of jobs. Mass transit has also been shown to attract private investment and build a broader tax base, as commercial and residential development grows along the transit lines. In Cleveland, more than $4 billion in private development is planned or in progress along the Euclid Avenue light rail corridor. In Dallas, another $4.2 billion in business and new housing sprang up around the Dallas Area Rapid Transit system between 1999 and 2007.

We see the same kind of potential to revitalize the neighborhoods along the proposed northeast corridor rail line, and along the BRT lines that may transition to light rail as demand and finances allow. 

Finally, mass transit is the kind of ‘quality of life’ infrastructure that helps the Indianapolis region compete for talent and business opportunities. The availability of a young educated workforce is a critical driver of economic development. The convenience of effective public transportation and the attraction of ‘walkable’ neighborhoods served by transit helps lure these workers. 

The arguments for regional transit are numerous and compelling. But the current debate at the Statehouse isn’t really about the merits of mass transit itself – it’s about trusting the elected officials and voters of Marion and Hamilton Counties to look at both sides of the issue and make their own choice.

This position is summed up nicely by this letter to the editor by CICP co-chair Denny Oklak in the Indianapolis Star, as well as the Star’s own editorial plea to legislators.

The 2011 session of the Indiana General Assembly will likely be remembered best for the passage of far-reaching education reforms – more options for parents, the expansion of charter schools, and an emphasis on teacher quality and accountability. 

On a less positive note, however, local government reform again stalled at the Statehouse – another defeat for taxpayers and the cause of accountability at the expense of entrenched political interests.  Legislators refused to take any significant steps towards streamlining an outdated system of local government (designed during the Civil War-era) that includes a layer of township offices that provide services in an inefficient patchwork while making taxing-and-spending decisions largely outside of public scrutiny.

Proposals to eliminate township advisory boards (and providing for the complete elimination of township government by countywide referenda) were derailed by the vehement opposition of rural lawmakers and ultimately sidelined by the month-long legislative walkout. 

Two more modest bills passed both chambers but ultimately failed after conference committees.  HB1022, a proposal that curbed nepotism and conflicts of interest in local government offices, emerged from conference committee only to be rejected by the House of Representatives by a 31-64 vote.  SB526 focused on Marion County reforms, including the elimination of the county’s nine township advisory boards and transferring fiscal oversight to the City-County Council; the conference report passed the House but was defeated in the Senate by a narrow 24-26 margin.

The defeat of even these incremental reforms demonstrates the General Assembly’s continuing reluctance to disturb the status quo, which comprises a potent statewide network of local elected officials and patronage workers.  While some legislators may still believe the outdated trope that township government represents government ‘closest to the people,’ it has become clear to most (thanks to the tireless reporting of the Indianapolis Star and other media across the state) that these offices represent a drain on our tax base and an affront to transparency. 

Another member of our CICP Board of Directors, Collina Ventures’ Mark Hill, has penned a compelling piece on the need to reform local government – part of an ongoing editorial push on the part of the Indianapolis Star and a network of other Indiana newspapers to raise awareness of the need to streamline and consolidate the thousands of political offices that form a haphazard patchwork of bureaucracies across the state.

As someone who’s spent his career in the tech sector, Hill understands the power of technology to cut costs and enhance productivity.  A tech pundit once estimated that if progress in the rest of the economy matched progress in the computer sector, a Cadillac would cost $5.91, while ten minutes’ labor would buy a year’s worth of groceries.

Unfortunately, Indiana’s system of local government is anti-innovation – instead of becoming more efficient, it’s grown increasingly outdated and cumbersome.

Here is Hill’s op-ed:

Power of innovation can fix local government

Last week, the Indiana General Assembly convened at the statehouse to face the most daunting fiscal situation in a generation or more – a billion dollar deficit. 

But budget problems aren’t confined to the state level, and our lawmakers’ responsibilities don’t stop there either.  Across Indiana, local communities are dealing with the dual effects of the recession and property tax caps; Indianapolis alone faced a $50 million shortfall for its 2011 budget. 

The state legislature can help our cities and counties do more with less, by mustering the political courage to reform our broken system of local government. 

My career has been spent in the technology sector, a field that thrives on new ideas and change.  The power of high-tech innovation tends to cut costs and increase productivity.  My experience tells me that the big gains from technology actually come using the technology to change the process.

Unfortunately, our system of local government has not materially changed for more than a century-and-a-half; so instead of evolving to become more efficient and less costly, it’s done just the opposite.  It’s grown into a cumbersome and confusing maze of bureaucracy, notable for the quantity of political offices rather than the quality of public services provided.

An entire layer of government – the townships – exists to deliver services that could be more efficiently managed by counties.  And at the county level, too many elected officials perform purely administrative tasks – like coroner, recorder, or surveyor – that should have nothing to do with partisan politics. 

Township government is a perfect example of what’s wrong with the system.  The major responsibility of township trustees is delivering poor relief.  But there’s no common standard or procedure for doing so.  Half the townships report serving less than twenty households, and the average trustee spends eight times more in overhead to deliver every dollar in direct assistance than a typical private charity (using the United Way of Central Indiana as a baseline).  I know at United Way we work very hard to keep our overhead down so that we can deliver resources to those in need.

The situation cries out for change.  But the lack of visibility of these offices insulates them from public scrutiny – most township officials run unopposed in general elections, attracting little attention from the citizens they profess to serve. 

Township government should be abolished altogether, or at the very least have their budgets overseen and approved by county councils to bring some accountability to their taxing and spending decisions.  Counties should have the option to consolidate administrative offices and adopt a single executive form of government.

Defenders of the status quo have defeated these proposals during the last two legislative sessions.  But this year could be different.  Governor Daniels is a strong advocate of reform, and the new majority in the House of Representatives may be willing to put their belief in smaller government into action.

These changes represent their own kind of innovation, the kind of change that’s long-overdue for a system designed in an age of travel by horseback rather than broadband communications.

Hill, managing partner of Collina Ventures, chairs the Central Indiana Corporate Partnership's TechPoint technology and entrepreneurship initiative.

Let's shed a layer, join the 21st Century

Last fall, voters of Indiana approved an amendment to the Indiana Constitution “capping” the amount of property tax dollars that can be raised from individual properties. In effect, this placed a ceiling on the revenues available to local governments – a long-term limitation that’s even more severe now as local communities work through the aftermath of the national recession.  

It is now time to look for ways to provide the necessary services by local government in the most efficient manner. Local government structure was developed in a different age: Townships used to operate the schools, the roads, poor relief, care for cemeteries and other services closest to the citizens.  This role has changed over the decades, reducing the need for townships. 

Just a few examples from my home county of Monroe: a) the city (Bloomington), smaller surrounding towns and Monroe County all have park departments, b) city, towns and county have street departments, c) city, towns and county have planning and zoning departments, d) city, towns and townships have fire departments, e) city, towns, county have law enforcement agencies,  and f) county and townships both have roles assisting those in need.

In Orange County, we see two town police agencies within a mile of one another, plus two other towns and the county sheriff; two fire departments within one mile plus a township department; and two street departments plus the county highway department.  These examples are duplicated across Indiana.

We need a more streamlined system of local government at all functions. Some units – like townships – should be abolished altogether. In other cases, where many units are providing the same service, they should be combined to be operated without duplicating administrative overhead. Local governments have been given the authority to consolidate services. The leadership of all units should look at ways to consolidate the administration and delivery those services more effectively in the new era of limited resources. Historically local government had more freedom to raise revenue to provide services but this has now changed with the amendment to the Indiana Constitution.

Some changes have to be adopted by the Indiana General Assembly.  This subject has been debated since I was in the legislature (1966-‘74). It is now time to act.

Indiana has 1,008 townships that spend 400 million dollars a year. The Townships are also holding more than two hundred million in surpluses. The township should be eliminated, to avoid duplication of administration and the abuses we see across the state – more than two-thirds of the trustees hire employees with the same last name (nepotism), improper expenditure of funds, fights over who is in charge of the delivery of service, and over half of the townships providing poor relief to less than 20 families per year.

In the  latter part of the 1960’s when I was serving in the Indiana House of Representatives, UniGov was adopted for Indianapolis and Marion County. Changes in the township system were started, authority for local reorganization was given to local government from delivery of services to the consolidation of purchasing.  Recently, Vanderburgh County and Evansville have been leading discussions of about merging the delivery of city and county services. 

It is time to move forward with a long-overdue reorganization of a government whose structure was developed in the days before the Civil War.

Steve Ferguson

Chairman – Cook Group Inc.

While tough times are forcing state and local government generally to find ways to do more with less, township government is apparently doing less with more.  Townships continue to overtax their way to huge surpluses, despite serving fewer disadvantaged Hoosiers.

A feature in the Indianapolis Star over the weekend demonstrates yet again the pressing need for reform of township government:  The Star reports that the state’s 1,008 townships are holding collective budget surpluses close to (or exceeding) $300 million, as of the end of 2009 (the latest data available). 

That represents an increase of nearly $90 million since 2007, despite providing direct emergency relief (their primary responsibility) to 92,000 fewer Hoosiers.

This startling news comes as state lawmakers begin to struggle with a billion dollar deficit, and as city and county governments across Indiana contemplate deep cuts in public services – laying off police and firefighters, closing parks, deferring roadwork and other infrastructure improvements.  The effects of the recession, as well as the implementation of property tax caps, are forcing the public sector to tighten its belt.

But in the townships, it’s business as usual.  Indiana taxpayers can’t afford to allow such an inefficient and antiquated status quo continue – the time for reform is now.

Click below for a helpful database from the Star on township surpluses and spending in Central Indiana:

Yesterday’s Evansville Courier & Press carries an interesting feature on city-county consolidation discussions that would merge Evansville – Indiana’s third-largest city – with Vanderburgh County – the state’s seventh most-populous county – in a ‘UniGov’-esque system.  A 12-member Evansville-Vanderburgh County Reorganization Committee was formed as a result of a petition drive led by the League of Women Voters of Southwestern Indiana.

The article acknowledges the political difficulties inherent in consolidation (this will be the fourth attempt since the mid-1970s to initiate local government merger in Evansville-Vanderburgh County), but emphasizes the potential payoffs in economic development and budgetary savings.

Such discussions are becoming more and more common around the state as communities grapple with the aftershocks of the economic recession coupled with the implementation of property tax caps limiting local revenues.  It’s become obvious to all but the most entrenched defenders of the status quo that local government reforms – like consolidation – are the only alternative to continued rounds of drastic budget cuts or local option tax increases.

Though the Evansville story doesn’t mention it, township government continues to be a prime target for reform efforts – the more than 1,000 townships across Indiana have overtaxed their way to hundreds of millions of dollars in unused surpluses as the fiscal crunch continues to plague city and county governments, while performing services that could be absorbed in county offices with greater efficiency and effectiveness.

Unfortunately, local government reform proposals based on the Kernan-Shepard Commission report have continued to stall before Indiana General Assembly (as chronicled ad nauseum on this blog), victim of political posturing and the furious lobbying of local officeholders defending their own fiefdoms.  The Central Indiana Corporate Partnership and our partners in the MySmartGov coalition remain committed to the cause of reform, and are prepared to push for progress again during the 2010 legislative session.

Francesca Jarosz’s feature in today’s Indianapolis Star ("Caps cut services along with taxes") details the budgetary struggles being faced by Indianapolis/Marion County as property tax caps place new limits on revenues, exacerbated by the lingering effects of the national recession.

Communities across Indiana are facing similar issues, as the ‘perfect storm’ created by the economic downturn and the implementation of the caps have left local governments hundreds of millions of dollars in the red.  It’s led to police and firefighter layoffs, roadwork deferred, hikes in local taxes and user fees, libraries and parks closed.  (The American Library Association says that Indiana reported more library branches closed last year than any other state.)  Cuts in public education have been well-chronicled.

However, it’s important that Indiana protect homeowners from skyrocketing property taxes, and ensure a fair and predictable tax system for business.  And economic downturns are inevitable – no economic strategy has yet conquered the business cycle.

The real culprit here is our stubborn resistance of local government reform, fixing a broken system that supports thousands of township governments, turns administrative offices into political fiefdoms and codifies a patchwork of overlapping bureaucracies that breeds inefficiency and ineffectiveness.  Until we are willing to restructure local government to allow it to do more with less, knee-jerk austerity measures or higher taxes are our only two options.

(Get a refresher on the common-sense government reforms recommended by the Kernan-Shepard Commission here.)

As detailed previously in this space, Indiana’s township offices have hoarded large surpluses, overtaxing homeowners and diverting revenues from city and county governments that face increasingly dire budget conditions.  Townships provide haphazard poor relief assistance, while in some cases administering fire protection and maintaining public cemeteries – duties that can be provided more effectively and efficiently at the municipal or county levels.

Today’s editorial from the Indianapolis Star confirms that Indiana townships continue to pad their coffers at taxpayer expense, as surpluses have actually grown.  Juxtapose this with another article in today’s Star assessing the fiscal impact of property tax caps on local governments (slashing $79 million from city-county budgets in Marion County alone) – can the state truly afford a Civil War-era layer of bureaucracy given today’s economic climate?

Today’s Indianapolis Star includes an interesting article on the latest antics from the world of township government – the Washington Township (Marion County) trustee racking up $20,000 in legal bills in a dispute over $758 in poor relief aid sought by a township resident for help with her rent and water bills.

Of the many troubling issues this story raises, two stand out.  First, the idea that these sorts of fiscally imprudent decisions are being made with little or no oversight by 1,008 separately-elected township officials is disheartening given the dire financial straits of state and local governments. 

Across Indiana, local officials are debating cuts in education, infrastructure, public safety and more.  Counties and municipalities are making tough choices.  Our legislature has made these choices even tougher by not stepping to the plate and making its own difficult political decision to reform local government, at least by demanding more oversight and streamlining of township offices.  And so we continue to be burdened by another layer of government bureaucracy that consumes and squanders tax dollars.

As to the circumstances of the Washington Township case itself, it’s difficult to argue the merits of either side on the basis of any statewide or even countywide guidelines.  That’s the second issue – there are no common rules for the provision of poor relief in Indiana.  Each township sets its own, leading to a patchwork approach that’s unfair and inefficient.  More than half the state’s townships provide relief to 20 households or less, and spend three dollars in overhead for every one that actually reaches a disadvantaged family.   It’s no surprise that disputes such as the one in Washington Township arise.

While the General Assembly again failed to take action on local government reform this session, more and more communities are exploring consolidation themselves out of financial necessity.  As these efforts multiply across the state and the fiscal climate continues to worsen, let’s hope that common sense reform – starting with township government – begins to gain more converts among lawmakers.

I hope you will take a moment to read the Indianapolis Star’s excellent editorial  on the fight for local government reform in the General Assembly.

The Central Indiana Corporate Partnership strongly supports reform.  Though the last legislative session was disappointing in its lack of progress on the broader Kernan-Shepard Commission recommendations, we have an opportunity this year to take at least a few small steps in the right direction  – focusing specifically on Indiana’s 1,008 township governments.

There are obvious ethics reforms that top this scaled-back agenda.  As lawmakers debate tougher ethics standards at the state level, they should also correct notable abuses among the townships.  It’s time to end nepotism in these offices, the widespread practice of hiring family members (often at exorbitant salaries).  (A review of public records show that two-thirds of township trustees share a last name with at least one person on their township payroll).  It’s also a clear conflict of interest to allow township employees to serve on the local legislative bodies that determine their budgets and salaries. 

As the state’s fiscal climate continues to worsen and county and municipal governments face a “one-two punch” from the recession and property tax caps, it’s also time for binding oversight of township budgets by county councils. 

Township governments spend more than $400 million a year statewide, and have over-taxed their way to more than $230 million in unused surpluses.  We’ve heard story after story of blatant waste, even fraud, in township finances.  At best, the system is inexcusably inefficient – for example, spending an average of eight times more in overhead than the typical private charity in Indiana to deliver every dollar of poor relief to the disadvantaged.

At a time when government at all levels must make tough choices, we can’t allow townships to continue taxing and spending unchecked.  Just as the Department of Local Government Finance approves county budgets, counties should oversee and approve township budgets.

We’re pleased that the Star continues to be a strong voice for reform, along with other media across the state.  With enough public attention and outcry from their taxpaying constituents, the General Assembly will move to reform a 19^th century system of local government to serve Hoosiers more effectively and efficiently today.

As lawmakers gather at the Statehouse for Organization Day today, we urge them to forge ahead with the critical issue of local government reform.  As legislators ponder the growing gap between government collections and spending, and consider whether to include property tax caps in the Indiana Constitution, they can’t continue to ignore the fundamental need for structural reforms that would allow local government to do more with less. 

During the last session, the General Assembly rejected the common-sense government reforms recommended by the bipartisan Kernan-Shepard Commission, changes that could have saved taxpayers up to $600 million statewide (according to studies by Ball State economists).  This session, legislators should at least push for increased openness, oversight and accountability to ensure that tax dollars are used efficiently and effectively during these tough times.  As state-level lobbying reform and other government ethics proposals are in the headlines, transparency in local government (especially the oft-overlooked township offices) shouldn’t fall by the wayside.

We couldn’t make the case any better than this editorial from Gary Reiter – this version appeared in the Indianapolis Star a few weeks back.

Times too tough to ignore township government

Gary Reiter

The recession has hit Hoosiers hard – we’ve seen it in our 401(K) statements, the family checkbook, the fortunes of the businesses that make up our economy.  Government isn’t immune; there’s been a lot of attention over the last two weeks to the state’s plummeting revenues, short more than $250 million over the last quarter.

But even closer to home, local government is facing the budget axe, too.  The recession and the property tax caps passed by the General Assembly last year are a one-two punch that have forced Indianapolis into cutting funding for parks, the arts, correctional facilities (raising the specter of early inmate releases) and other public services. 

During times like these, there can be no sacred cows.  As Governor Daniels recently said, everything has to be on the table – and that includes the operations and oversight of township government.

A few weeks ago, the Indianapolis City-County Council held a hearing on the financial practices of Marion County’s township offices.  I attended to learn more, and came away more convinced than ever that we desperately need reform.  Tough times demand an informed public, but when it comes to township officials, taxing and spending happens largely out of sight and out of mind.

I heard several troubling facts during the Council hearing that led me to do additional research:

Marion County township governments are hoarding more than $48 million in unused surpluses.  We’re being overtaxed, and townships are sitting on more than enough excess cash to plug the budget deficit for the entire county – instead of maintaining our parks, restoring arts programs and keeping criminals behind bars, we’re padding the bank accounts of township trustees. 

Washington Township, for one, holds a $5.4 million surplus, enough to operate for two years without taxing citizens another cent.  You may recall that the Washington Township advisory board voted itself a 69% raise last year.

In Franklin Township, the trustee’s office held a surplus of more than $5.5 million at the end of 2008.  Wayne Township has an amazing $12.7 million surplus!  Imagine if these funds could be spent on public safety, economic development or mass transit…or used to cut property taxes for homeowners.

The townships are also inefficient in administering the money they did spend.  In Center Township, less than half of spending related to poor relief went directly to those in need.  In Warren Township, the trustee’s office spent $12.20 in administrative expenses for every dollar dedicated to poor relief and fire protection.  In Washington Township, the figure was $9.44 in overhead for every dollar in services. 

It’s incredible that tens of millions of our tax dollars continue to be funneled through this largely-ignored layer of bureaucracy during a fiscal crisis, while the City-County Council has little authority except to hold hearings. 

It’s time to shine a light on township government.  It’s time to push for oversight and accountability, and a real public debate over whether townships have outlived their usefulness altogether in providing services that could be more efficiently and effectively provided at the county level. 

This debate starts with taxpayers getting informed and  speaking up – please don’t fail to make your voice heard.

Gary Reiter is the Chief Financial Officer of KERAMIDA Inc., a Global Environmental, Health, Safety, and Sustainability firm located in downtown Indianapolis and a resident of Center Township.

Indianapolis homeowners got some good news this week, as the Indianapolis Star reported that the second installment of Marion County’s 2008 property tax bills should be slightly less than the first – and significantly lower than 2007.  We can thank the property tax caps proposed by Governor Daniels and passed by the legislature last year for this relief…

But for every action, there’s an equal and opposite reaction – this law of physics also applies to lawmaking.  As property taxes go down, so do revenues for local governments.  Already, communities like Muncie have announced fire station closings and firefighter layoffs as they struggle with growing budget gaps; Indianapolis stands to lose $21 million when the caps are fully phased in next year (that’s enough to pay for more than 220 new IMPD officers with vehicles and full equipment, to put it into perspective).

It didn’t have to come to this.  During the last legislative session, the General Assembly had an opportunity to enact sweeping local government reforms – eliminating outdated, inefficient township governments and consolidating administrative county offices under an elected county executive and council.  These moves would have helped local governments do more with less, and avoid budget meltdowns.  I’ve talked about these reforms ad nauseum here and elsewhere, but the topic is worthy of more commentary – we need reminding again and again about those legislators who turned their backs on reform, killed the Kernan-Shepard recommendations and abandoned cities and towns to struggle with growing deficits.

Here’s the math at the highest level.  The property tax caps are expected to cost local governments a collective $400 million in 2010.  An analysis conducted by the Ball State Bureau of Business and Economic Research estimates that $600 million could be saved by implementing all of the Kernan-Shepard reforms.

At the township level, it’s simple common sense.  There’s little accountability in this relic of Civil War-era bureaucracy:  Around 70% of township trustees and advisory board members run unopposed, and get elected by less than 15% of the population they serve.  More than half of Indiana’s township provide poor relief (their major responsibility) to 20 households or less.  There’s little question that county governments could absorb these duties more efficiently. 

Townships across the state are also currently hoarding more than $230 million in unused surplus funds – money that could help communities avoid tax increases or budget cuts as they adapt to the dire fiscal realities.

At the county level, accountability is also the issue.  County government is fragmented into a host of administrative offices, operating with little public oversight.  These aren’t policymaking roles – ask yourself if there’s really a Republican or Democratic way to file a marriage license or record a deed.  Consolidating these offices under a single county executive and an expanded county council would provide a simpler system with checks and balances – just like the President and Congress, or the Governor and the General Assembly.

These reforms would make local government more transparent and accountable, less costly and more efficient.  But the status quo is protected by entrenched interests, thousands of local politicians who get jobs and support from the current system.

During the last session, the status quo won.  But the problem isn’t going away – and the campaign for local government reform isn’t either.  We’ll be back, for the next legislative session and beyond, fighting for the taxpayers to overhaul a 19^th century system of government that’s given birth to 21^st century cronyism.

Yesterday, there was even more bad news about Indiana’s fiscal plight, with state tax revenues falling $142 million below expectations for January.  As lawmakers struggle with the state’s budget in this climate, local officials face a daunting challenge as well: An estimated $400 million budget shortfall next year, as caps on property taxes are fully phased in.

In these tough economic times, it’s even harder to justify Indiana’s 1850’s-vintage government structure, featuring nearly 3,000 units of local government (including more than 2,000 with the power to levy taxes) and 10,000+ elected politicians.  This bloated structure means multiple layers of government and overlapping bureaucracies siphoning off tax dollars.

Take township government, with its collective operating budgets of approximately $400 million a year.  Imagine eliminating township offices altogether, as recommended by the Kernan-Shepard Commission.  It’s reasonable to assume county government could shoulder the duties of the townships (primarily poor relief and fire protection) for at least 25% less, by merging offices and consolidating budgets while at the same time maintaining and even improving services.

That’s $100 million a year that could help local governments face a looming budget gap.  The property tax caps passed by the General Assembly in 2008 are expected to hit some localities with significant revenue shortfalls in 2010, estimated at approximately $400 million statewide.  Reducing these anticipated deficits by 25% or more would help city and county governments avoid more dramatic cuts in services or local tax increases as they face the new reality of lower property tax revenues.

Indeed, consolidating township government would also free up significant surplus funds that could help localities in their transition to capped property taxes.  The state’s 1,008 townships hoard hundreds of millions of tax dollars they don’t even use, holding $230 million in cash balances (excluding cumulative funds) as well as millions more in unused assets like buildings and land).  That these surpluses are padding the coffers of township offices while dire budget forecasts are looming at the state and local levels is certainly a compelling argument for local government reform.

To look at one notable example: Marion County’s nine township governments held a collective fund balance of nearly $40 million at the end of 2007.  The property tax caps are expected to hit Marion County government to the tune of $63 million in 2010; tapping the township surplus would close two-thirds of this gap and allow Indianapolis to address critical priorities. 

In the private sector, tough times force successful companies to work smarter, to look for opportunities to cut waste without slashing budgets in ways that are counterproductive.  While state government can’t ever truly be ‘run like a business,’ the analogy certainly applies in this case:  As legislators debate budget priorities as revenues dwindle, it’s ludicrous to ignore the hundreds of millions of tax dollars being funneled into a patchwork of township governments that persist as relics of the Civil War era.

It’s hard to find a silver lining in our cloudy economic forecast.  But if one good thing comes out of this downturn, it could be that budget challenges finally force the General Assembly to do what should have been done decades ago – eliminate township government, pass the other reforms outlined by the Kernan-Shepard Commission, and allow local government to do more with less.

This is a topic I’ve been meaning to write about for a while now (I’ve been woefully behind on my blogging), and was finally prompted by this excellent column by Marilyn Schultz (Executive Director of MySmartGov.org) in today’s Inside Edge e-newsletter from Inside Indiana Business.

Earlier this month, voters across Indiana sent a clear message to the General Assembly – they demand reform of the state’s antiquated system of local government.  In 70% of the townships where the measure to consolidate township assessing duties into county government was on the ballot, Hoosiers spoke overwhelmingly in favor of government consolidation. 

These results clearly put momentum on our side as we work towards more sweeping adoption of the Kernan-Shepard government reform recommendations in 2009.  Election Day showed that Hoosiers “get it,” and expect local government that’s effective and efficient, delivering fair, consistent service to the taxpayers.  These outcomes weren’t about the township assessors themselves, many of whom are dedicated public servants doing their best within a broken system – as Marilyn writes, it’s about a broader appetite for reform that our legislators shouldn’t ignore.

Among the many causes of the current economic crisis – and there’s plenty of blame to go around – is a lack of transparency and accountability in the markets.  Investors didn’t have the tools to properly evaluate the liabilities posed by sub-prime mortgage holdings and other complicated financial instruments, and financial institutions were encouraged to accumulate more and more risk.  Once the breadth of the problem became more clear, the resulting loss of confidence only accelerated the market’s decline.

I’d say the same can be true of government.  Without transparency, there’s no real accountability – voters can’t make informed decisions.

It’s another reason we need local government reform.  Our current multi-layered system doesn’t bring government closer to the people – it only serves to obscure and confuse.  Here in Marion County, we have more than 60 units of government, well over  a hundred elected officials and dozens of special districts with taxing power.  Statewide, Hoosiers are confronted by 3,000 units of local government, 10,000 elected politicians, and 2,700 special taxing authorities.

So when voters ask, “Who’s responsible for my tax bill?  Who’s in charge of public safety?  What are the standards for assessing my property?,” there’s no clear answer.  This lack of clarity leads to the same sort of excesses we’ve seen on Wall Street – local government spending has more than tripled over the last twenty years, growing at more than twice the rate of inflation.  Along with the inconsistent performance of Indiana’s 1,000+ township assessors, this is the culprit for unfair property tax bills.

I’ll close with a quote:  “The only effective check on bad government is public opinion, and therefore responsibility for government success or failure should be fixed and not diffused, so that the electors may deal intelligently with a clear cut issue.”

These words are as true today as when they were written – in 1935, from the report of the Indiana State Committee on Governmental Economy to Governor Paul V. McNutt.  Local government reform is long overdue, and it starts with transparency and accountability.  Voter can start this fall by eliminating the remaining township assessors, and encouraging their legislators to consolidate the rest of township government and administrative county offices during the next session of the General Assembly.

The Indianapolis Business Journal published an article this week by CICP co-chair Ann Murtlow on the need for local government reform in Indiana; check it out here. 

Indiana's system of local government was designed in the 1850s - clearly, reform is long overdue.  To paraphrase Ann, how can we expect a governmental structure created in the 19^th century to meet the challenges of the 21^st, especially at a time when revenues for local government are dwindling due to the property tax relief measures passed during the last legislative session?

The answer is consolidation and streamlining, making local government smaller and smarter.  CICP will be active on this issue, as voters in parts of Central Indiana and elsewhere have an opportunity to merge their township assessors’ offices into the county assessors by referenda this fall, and the legislature takes a look at the recommendations of the Kernan-Shepard Commission in 2009.