HEA 1362 - Local Government Reorganization

With respect to broad local government reform, the 2006 legislative session should be considered a success. While IAR would have preferred to see property tax assessment consolidated at the county level and the rest of Mayor Bart Peterson’s IndianapolisWorks! program approved, we think that HEA 1362 can be a catalyst for discussion and action on reform across Indiana.

HEA 1362, authored by Representative Jim Buck (Kokomo), allows almost any local unit or school corporation to merge or reorganize. It is no coincidence that just weeks after the session ended, Fort Wayne Mayor Graham Richard has made news by endorsing a new consolidation plan. The Journal Gazette’s Benjamin Lanka reported on this development yesterday (full article here):

Backers of a consolidated local government collected a choice ally Tuesday as Mayor Graham Richard announced his support for a single countywide executive and a single countywide council.

Richard made the announcement as the Fort Wayne City Council and Allen County commissioners prepare to meet in joint session Monday to discuss House Bill 1362, which Gov. Mitch Daniels recently signed into law. The meeting is believed by many to be the first-ever joint meeting of the two legislative bodies.

The law allows local governments to restructure or consolidate without state approval. It requires the process to be started by resolution of a legislative body or a petition from residents.

More specifically, the bill states that a reorganization process may be initiated by the local legislative bodies (such as a county council and a city council) or by a petition from 5% of the voters in the units.

The entities that are seeking to reorganize would then form a committee to develop a final plan. If the legislative bodies of the affected units approve this plan, it would go before the voters as a referendum. But even if these bodies don’t approve the plan, it could still be placed on the ballot if 10% of the voters petition for it.

Some legislators insisted on a mechanism to prevent “hostile takeovers”. To address this concern, the reorganization plan could include a “rejection threshold” to ensure that one unit would not be absorbed by another even if the vast majority of the less populous unit were against the consolidation. The bill has other safeguards to ensure that pension liabilities or other debt incurred by one unit cannot be spread out to the other entity.

We expect HEA 1362 to begin or rekindle debates in other counties, and Indiana desperately needs robust discussion at the local level. It is very difficult for state legislators to craft one-size-fits-all approaches, but HEA 1362 gives communities the tools to begin drawing their own blueprints for local government in the 21^st century.

NOTE: One thing HEA 1362 does not allow is for a town or city to “move” to another county as is favored by at least one Hoosier (click here). However, upon re-reading the bill, it appears this town might be able to consolidate itself into a new county, but I don’t think that is what this gentleman had in mind.