The regular 2009 session of the Indiana General Assembly adjourned on April 29.  Although legislators were not able to agree on a budget for the next two years, the session was marked by several successes from Farm Bureau’s perspective.  In the following discussion, the designation of legislation as SEA or HEA (Senate Enrolled Act or House Enrolled Act) indicates that it has passed both houses; SB or HB (Senate Bill or House Bill) is a bill that failed to make it through both houses. 

The Governor has signed all but four of the enrolled acts forwarded to him by the General Assembly.  One, HEA 1037 (Rep. Trent Van Haaften, D-Mount Vernon), he allowed to become law without his signature and the other three he vetoed.  The vetoed bills were HEA 1348, HEA 209, both of which are discussed in this issue of the Dispatch, and HEA 1491 (Rep. Craig Fry, D-Mishawaka), which dealt with the selection of judges in St. Joseph County and the expansion of the Indiana Court of Appeals.

RURAL CAUCUS

Thanks to the initiative of Sen. Richard Young (D-Milltown) and Sen. Jean Leising (R-Oldenburg), the General Assembly established a viable rural caucus for the first time.  The caucus is non-partisan and brings together legislators from both houses and both parties to discuss issues of concern to their constituents across rural Indiana.  Although Farm Bureau and other agricultural organizations in the state welcome the establishment of this group, it is entirely independent of Farm Bureau or any other lobbying organization.  Staff support for the Rural Caucus – which involved about 50 members of the General Assembly – is being provided by Dr. Carolyn Orr of the Midwestern Legislative Conference.

TAX AND FINANCE

PROCEDURE FOR SPECIAL SESSION ANNOUNCED  Leaders of the Indiana General Assembly have announced a tentative calendar and process for coming up with a state budget before the June 30 deadline.  Senate President Pro Tempore David Long (R-Fort Wayne) and House Speaker Pat Bauer (D-South Bend) said a special legislative committee will handle deliberations on a budget plan, which will be based on a proposal to be presented by Governor Daniels' administration around June 1.

The process began on May 12 when the State Budget Committee received a report from the administration on the state's financial status, including a review of April revenue numbers, early projections for the month of May and a forecast for the rest of 2009.  On May 26, the Revenue Forecast Technical Committee, a group of fiscal experts that regularly prepares the state’s revenue forecasts, will present a revised revenue forecast to the State Budget Committee.  These numbers will be used by the administration to prepare a complete, new budget that includes a school funding formula.

On June 1, the administration's budget will be presented to a 12-member special budget subcommittee, co-chaired by Senate Appropriations Committee Chairman Luke Kenley (R-Noblesville) and House Ways & Means Committee Chairman Bill Crawford (D-Indianapolis).  This subcommittee will work to craft a budget, based on the administration's proposal, to present to the full General Assembly about June 15.

CONSTITUTIONAL AMENDMENT FOR 1-2-3 CAPS FAILS TO MOVE  SJR 1 (Sen. Luke Kenley, R-Noblesville), the resolution to amend the Indiana Constitution to legitimize the 1-2-3 property tax caps died when Speaker of the House Pat Bauer (D-South Bend) refused to allow it to be heard this year.  In spite of Republican demands to consider the resolution this year, the process to amend the Constitution was not delayed at all.  The earliest the voters can ratify the amendment is November 2010.  The delay will give legislators an additional year’s worth of information to evaluate when they consider the resolution next year.

SOME FARMSTEADS MAY LOSE HOMESTEAD STATUS  HEA 1344 (Rep. Cherish Pryor, D-Indianapolis) will tighten the procedures for filing for the Homestead Deduction and Credit beginning with taxes in 2010.  Since the Homestead Deduction is so valuable (removing $45,000 plus 35% of value up to $600,000 and 25% after $600,000), HEA 1344 will also prevent fraud by property owners trying to claim the deduction on more than one homestead.  Another provision was added to prevent developers from claiming the Homestead Deduction.  According to HEA 1344, the homestead will not be allowed on homes owned by a regular corporation or LLC.  Farmers whose home is in the name of their farm corporation will be affected by this change.  If this will affect you and your home, please email Katrina Hall at khall@infarmbureau.org so we can assess the impact and work on changes.

TAX RELEIF FOR FLOODED FARMLAND  Farm Bureau supported HEA 1365 (Rep. Trent Van Haaften, D-Mount Vernon), a measure that allows for the reassessment of land that cannot be farmed because of flooding.  The bill is retroactive to March to provide relief to landowners affected by the flood of 2008.

Property tax assessments and notices  HEA 1094 (Rep. Dale Grubb, D-Covington) moves the valuation date of real property to the date on which the property is assessed.  This will make assessments more in-line with property owners’ idea of what their property is worth.  Another provision of the bill is the elimination of the "Auditor's Statement," which was scheduled to begin in 2010 and has not yet been implemented.

COMPREHENSIVE TAX BILL DIES AT END OF SESSION  A major bill addressing a number of property tax matters died in the final moments of the regular session on April 29.  HB 1447 (Rep. Peggy Welch, D-Bloomington) was the final agreement on measures included in several other bills, including SB 561 and SB 541 (both authored by Sen. Brandt Hershman, R-Wheatfield).  HB 1447 began as a clean-up bill for the property tax reforms enacted in 2008 and included measures requested by the Department of Local Government Finance and the Department of Revenue.  The original bill included changes to the local government budget timeline, technical changes to the referenda process, and a major change in the process for reassessment.  Rather than do the periodic reassessment of all property in a county, the DLGF is pushing for a “rolling reassessment” where 20% of the property in a county would be reassessed each year.  This issue was not in the final version of HB 1447 because the policy and tax equity implications had not been fully vetted by legislative fiscal leadership.  Because no change was adopted for reassessment, counties will begin the work of the 2011 reassessment on July 1, 2009. 

AGRICULTURE 

GOOD CHARACTER FOR LIVESTOCK OPERATORS  Applicants for permits to construct confined feeding operations will now be required to meet a “good character” test.  The provision in SEA 221 (Sen. Beverly Gard, R-Greenfield) will give IDEM a reasonable opportunity to review the past history of applicants for confined feeding permits and deny permits to operators who have a history of environmental violations.  The new law will also require that a good-faith attempt be made to notify the owners and occupants of all property within a half-mile of the footprint of a new or expanded permitted livestock operation.  Farm Bureau supported this measure.

LIVESTOCK MORITORIUM, SETBACK BILLS DIE  In spite of efforts to curtail livestock operations in the state, the General Assembly rejected several attempts to impose limits on livestock operations.  SB 50 (Sen. Allen Paul, R-Richmond) would have established a 3-year moratorium on the start of construction of new confined feeding operations and HB 1075 (Rep. Dave Cheatham, D-North Vernon) would have established a requirement that no new confined feeding operation could be constructed or that manure could be applied to fields within 2 miles of a state park or DNR reservoir.  Both of these bills died when Senate Environment Committee Chair Beverly Gard (R-Greenfield) refused to hear them in her committee.

FERTILIZER EDUCATION AND CERTIFICATION  Farm Bureau supported HEA 1191 (Rep. Joe Pearson, D-Hartford City), which will require the State Chemist to establish an education and certification program for commercial applicators and transporters of fertilizer material or for those who apply or transport manure from a regulated livestock facility.  The bill will also allow the State Chemist to impose civil penalties for violations of the commercial fertilizer law.  Farm Bureau policy favors this type of legislation.

GRAIN INDEMNITY FUND  Farm Bureau supported HB 1218 (Rep. Joe Pearson, D-Hartford City), a measure that authorizes the Grain Indemnity Fund to reinstate producer premiums when the balance in the fund falls below $10 million.  If premiums are reinstated, the bill provides that they be collected through June 30 in the year in which the fund reaches $15 million.  The Grain Indemnity Fund was established in 1996 to protect grain producers in the event of a grain buyer's financial failure.

Grain Buyers and Warehouse Licensing Agency  Farm Bureau supported changes in the law concerning the Grain Buyers and Warehouse Licensing Agency to make a number of administrative changes but also to allow the agency’s director to disclose the names and counties of licensed grain buyers.  These changes were made by HEA 1219 (Rep. Joe Pearson, D-Hartford City).

ANIMAL DISEASE DIAGNOSTIC LABORATORY  A change in the procedure for increasing fees for the Animal Disease Diagnostic Laboratory at Purdue was enacted by SEA 271 (Sen. Randy Head, R-Logansport).  Fee increase requests will still be initiated by the Board of Animal Health but will now require the approval of the Purdue treasurer rather than the Board of Trustees.  The act also prohibits the use of ADDL fees to pay faculty salaries but allows them to pay for temporary help in the event of an animal health emergency.

INDIANA EGG BOARD  HEA 1524 (Rep. Terry Goodin, D-Austin) updates the law regarding the Indiana Egg Board to allow the board to periodically set its fees rather than return to the General Assembly for legislative approval.

LANDLORDS MUST IDENTIFY BUILDINGS IN FLOOD PLAINS  If rented property has a building on it, including a building used for agricultural purposes, HEA 1473 (Rep. Milo Smith, R-Columbus) requires the landlord to advise the tenant if the building is in a floodplain.

STAND-ALONE Corn Market Development Fund Bill DIES  HB 1217 (Rep. Joe Pearson, D-Hartford City) would have made some technical changes in the administration of the Corn Market Development Fund that was authorized by the General Assembly in 2007.  The bill, which Farm Bureau supported, would not change either the purpose of the Corn Market Development Fund nor the amount of the voluntary contributions from producers which provide it with funding.  Although the bill did not receive a hearing in the Senate, most of its provisions were incorporated in HEA 1398 discussed in under the Energy and Renewable Fuels heading below.

FARM MARKETS

TANF TERMINALS AT FARMER’S MARKETS  The state’s Division of Family Resources must now provide at least 20 electronic terminals at farmer's markets.  HEA 1535 (Rep. Eric Koch, R-Bedford) requires these machines so that TANF welfare recipients can use their benefits at farmer’s markets.  TANF (Temporary Assistance for Needy Families) is the current official name for the food stamp program.

HOME PROCESSED FOOD AT FARMER’S MARKETS  HEA 1309 (Rep. Sandra Blanton, D-Orleans) will allow some home processed foods to be sold at farmer’s markets.  Anyone interested in taking advantage of this opportunity should check with health officials to see if their product falls under this law or if their product qualifies as “non-potentially hazardous.”

STATE AND LOCAL GOVERNMENT

Local Government Reform Efforts Die  None of the reforms called for by the Kernan-Shepard Report were enacted and it is unlikely that there will be emphasis on them in the Special Session.  The significant bills to implement the Kernan-Shepard recommendations this year were:

• County Executive  SB 506 (Sen. Phil Boots, R-Crawfordsville) which, as it passed the Senate, would require county commissioners to decide this year if they want to: (1) Have a single elected county executive accompanied by a seven-member county council with legislative and fiscal powers; (2) Have a seven-member board of supervisors with executive, legislative and fiscal powers that would appoint a county manager to handle administrative duties; or (3) Hold a referendum to let county voters decide if they wanted option 2 or to keep the three-member county commission.
• Elimination of County Officials  SJR 7 (Sen. Connie Lawson, R-Danville), which would have amended the Indiana Constitution to eliminate the offices of county treasurer, recorder, surveyor and coroner, was defeated in the Senate Local Government Committee.
• Eliminate Township Boards  SB 512 (Sen. Connie Lawson, R-Danville) passed out of the Senate Local Government Committee only after it was amended so that it no longer eliminated township boards.  As amended, it would have provided for greater fiscal oversight of townships by the County Council and the Department of Local Government Finance.
• County Library Service  SB 348 (Sen. Beverly Gard, R-Greenfield) would have required the Indiana library and historical board to adopt emergency rules not later than July 1, 2009, establishing statewide library standards for the delivery of library service to every resident of Indiana.  It also would have established in every county – except Marion – a public library service planning committee to prepare a library services plan for the county.

• Mandatory School Consolidation  SB 521 (Sen. Gary Dillon, R-Pierceton), which would have required that any school corporation with an average enrollment of less than 500 students to consolidate with another school, was discussed but never voted on in the Senate Education Committee.
• Election Reform  SB 452 (Sen. Connie Lawson, R-Danville) passed the Senate 32-18.  The passed bill does not vary much from the Kernan-Shepard proposal.  It would have prohibited employees of a political subdivision from serving on the legislative body of the unit unless they already do; moved municipal elections to even-numbered non-presidential years; moved school board elections to the fall; and would have allowed all counties to use vote centers rather than precincts polling places.

Except for SB 521 which died in committee in the Senate, these bills all floundered once they got to the House.  An effort was made in the House Government & Regulatory Reform Committee to amend several of the Kernan-Shepard recommendations into SB 452 but this effort failed amid procedural confusion, and the bill failed to get out of committee.  Farm Bureau’s concern regarding all these bills was that consolidation of local government should not result in the voice of the state’s rural residents being overwhelmed by that of the residents of cities and towns.  The enactment of the Kernan-Shepard Report recommendations was a high priority for Governor Mitch Daniels this session. 

Claim Notices No Longer Require Publication  HEA 1230 (Rep. Phil Hinkle, R-Indianapolis) represents the culmination 20 years of legislative efforts to eliminate county government's obligation to publish claims prior to payment.  A compromise to remove this obligation, which did not apply to other units of government, was reached with the Hoosier Press Association.  That agreement increases the publication rate for other legal notices by 2.75% per year.

County recorder and County surveyor training  As a result of HEA 1243 (Rep. Scott Reske, D-Pendleton), county recorders and county surveyors must now receive specified specialized training provided by the Association of Indiana Counties within a certain time after taking office.  There is an exception for elected surveyors who meet certain professional qualification standards. 

LOCAL income tax distributions to units   County auditors are now required to distribute local option income taxes collected by the State within 10 days of their receipt.  HEA 1432 (Rep. Nancy Dembowski, D-Knox) addresses the practice of some counties holding on to distributions because the criteria for distributing the local option tax were not available or to improve their temporary cash flow.

ELECTIONS

Even though SB 452, the election reform recommendations of the Kernan-Shepard report, failed to move in the House, there was one significant bill dealing with elections in Indiana.

GOVERNOR VETOES VOTE CENTER BILL  Governor Mitch Daniels has vetoed SEA 209 (Sen. Mike Young, R-Speedway), a bill that would have expanded the use of central vote centers in Indiana counties.  In his veto message, the Governor said, “While this bill contains a provision that would make the act of voting more convenient, it does not contain sufficient safeguards against fraud and removes long-standing bipartisan checks and balances in the conduct of elections.”  The state’s top election official, Secretary of State Todd Rokita, like the Governor a Republican, has been a champion of vote centers. He is quoted in Howey Politics Indiana as saying, “How ironic it is that the one local government reform that actually passes the legislature ends up getting vetoed.  Vote Centers is perhaps the only local government reform that so far has been proven unequivocally to save taxpayers money.  I would expect, given the serious fiscal condition of the state, that the concept is important enough to find its way into the budget bill so that all 92 counties be given the opportunity to realize the unquestionable taxpayer benefits and savings.”

ROADS AND TRANSPORTATION 

MOTORIZED FARM WAGONS  A new law legalizes the operation of motorized farm wagons on county roads to move from field to field.  HEA 1483 (Rep. Don Lehe, R-Brookston) prohibits the operation of these wagons on interstates and allows them to cross, but not travel along, state highways.

SCHOOL ZONE DESIGNATION  HEA 1123 (Rep. Bob Cherry, R-Greenfield) provides that, beginning in July 2011, the end of school speed limit zones must be marked as well as their beginning.  This will advise motorists when they can resume travelling at the non-school zone speed limit.

Local Road Funding  Additional local road funding remained unaddressed at the end of the regular session and prospects are not too promising in the Special Session.  Although funding for local roads gained repeated exposure from the efforts of Rep. Terri Austin (D-Anderson) and persistent testimony by Katrina Hall of Indiana Farm Bureau, none was provided by the General Assembly. 

ENERGY, UTILITIES AND ALTERNATIVE FUEL

SCHOOLS NOW ELIGIBLE FOR E85 PUMP GRANTS  School corporations, colleges and universities were added to the list of entities that may apply for a grant under the E85 Fueling Station Grant Program by HEA 1193 (Rep. Joe Pearson, D-Hartford City).

COLLEGES TO USE E85 WHEN THEY CAN  As a result of HEA 1398 (Rep. Dale Grubb, D-Covington), state educational institutions are now required to purchase mid-level blends of gasoline and ethanol, E85 and blended bio-diesel fuel to the extent possible.  This bill also requires the Indiana Corn Marketing Council's annual transfers to the retail merchant E85 deduction reimbursement fund to be in amounts calculated to restore a balance of $500,000.  The bill also adjusts the corn checkoff program’s refund and audit requirements.

High Speed Internet Service   HEA 1561 (Rep. Trent Van Haaften, D- Mount Vernon) requires the Indiana Economic Development Corporation to compile an inventory and develop a deployment initiative for high-speed Internet service in Indiana.  Farm Bureau is hopeful that this bill will speed the deployment of high-speed Internet service into rural Indiana.

RENEWABLE ENERGY TO BE CONSIDERED BY FORECASTING GROUP   Under the provisions of HEA 1033 (Rep. Dale Grubb, D-Covington), the State Utility Forecasting Group is charged to evaluate potential renewable energy generation opportunities from bio-mass and algae production systems in formulating suggestions concerning renewable energy resources for inclusion in its annual report.  The bill also requires the ISDA, in its administration of economic development efforts for agriculture, to facilitate the use of bio-mass and algae production systems to generate renewable energy.

GEOTHERMAL CONVERSION LOAN PROGRAM APPROVED   Rep. Nancy Michael (D-Greencastle) authored HEA 1669, which establishes a revolving fund to make loans to school corporations so they can install or convert to geothermal heating and cooling systems in their facilities.

ENERGY CONSERVATION CODE VETOED  Stating that the State Fire Prevention and Building Safety Commission was already updating the energy code to promote conservation and environmental protection, Governor Daniels has vetoed HEA 1348 (Rep. Ryan Dvorak, D-South Bend), which would have directed the commission to so by statute.  In his veto message, the Governor said, “The language in the bill would only serve to clutter the existing Indiana Code without adding in any way to our progress in these areas.”  Rep. Dvorak has indicated he will seek an override of the veto.

ENVIRONMENT AND NATURAL RESOURCES

NEW LAW REQUIRES ISSUANCE OF ALL REQUIRED STATE AND LOCAL PERMITS  A bill that requires all state and local permits be obtained before construction may start on a facility or operation that requires an IDEM permit was substantially amended on the floor of the Senate to become an environmental “Christmas tree” bill.  HEA 1162 (Rep. Dennis Tyler, D-Muncie) was amended on second reading by Senate Environment Committee Chair Beverly Gard (R-Greenfield) to include a number of provisions contained in other bills that passed her Environment Committee but were not moving in the House.  The added provisions deal with anti-degradation of the state’s waters (originally in SB 419) and environmental restrictive covenants (originally in SB 460).

EXTENSION OF MUNICIPAL REACH DENIED   When it became apparent that a number of Environmental Bills that passed the House would not be heard in the Senate, SB 461 (Sen. Beverly Gard, R-Greenfield) was amended to include a number of their provisions.  A new provision was introduced by Rep. Linda Lawson (D-Hammond) that would have given cities and towns the authority to regulate the discharge of odor and noise 4 miles beyond their municipal boundaries.  Sen. Gard chose not pursue the amended bill further and it died without further consideration.

Invasive Species CREATED  The General Assembly passed HEA 1203 (Rep. Bob Bischoff, D-Greendale) which will create an Invasive Species Council at the College of Agriculture at Purdue. The council, which will include two representatives of agriculture, will be chaired by the Dean of Agriculture or his/her designee and will oversee and coordinate the state’s activities to identify, inventory and control invasive species in Indiana.

CLEAN WATER INDIANA  A clarification that unspent funds in the Clean Water Indiana soil and water conservation program do not revert to the state’s general fund, or any other fund, at the end of the fiscal year was enacted in HEA 1204 (Rep. Bob Bischoff, D-Greendale).  This is consistent with the purpose of the Clean Water Indiana program.

Common Enemy Rule  A bill that would have carved out some exceptions to the so-called “common enemy rule” regarding diffused storm water was changed to recommend that the common enemy rule be the topic of study by a legislative summer study committee.  As the Senate Judiciary Committee considered HB 1278 (Rep. Milo Smith, R-Columbus), they became leery about changing a long established common law principal without fully studying the consequences and ramifications of such a change.

EDUCATION

SCHOOL DISCIPLINE   HEA 1462 (Rep. Clyde Kersey, D-Terre Haute) addresses a number of school discipline issues.  Most significantly, it attempts to restore the ability of teachers to control disruptive students by giving teachers immunity for reasonable acts of discipline. 

SCHOOL BUSES USED BY CHURCHES  HB 1021 (Rep. Suzanne Crouch, D-Evansville) provides that a school bus that is used as a church bus may be equipped with red lamps, flashing lights or both, and a stop arm if the red lamps, flashing lights, and stop arm are rendered inoperable.

SCHOOL BUS INSPECTIONS AT THE END OF THE ROUTE  Under the terms of SEA 228 (Sen. Teresa Lubbers, R-Indianapolis), school bus drivers are now required to inspect every seat on the bus at the end of the route to make sure that there are no passengers left on the bus.

IMMIGRATION AND ILLEGAL ALIENS

NO IMMIGRATION LEGISLATION  A bill dealing with illegal aliens in Indiana, SB 580 (Sen. Dennis Kruse, R-Auburn, who replaced Sen. Mike Delph, R-Carmel as author) passed the Senate but died in the House Rules Committee.  There were a couple of other bills dealing with the subject that were never given a committee hearing.  As a result, there was no legislation addressing immigration or illegal aliens this year.  Farm Bureau argued that immigration is a federal issue and Indiana should not use its state resources to assume a federal responsibility.

OTHER BILLS OF INTEREST TO FARM BUREAU MEMBERS

DOG BREEDERS AND ANIMAL CRUELTY  This was one of the most contentious bills of the session and brought unanticipated criticism to Farm Bureau.  Throughout the legislative discussions on HB 1468 (Rep. Linda Lawson, D-Hammond), Farm Bureau’s Bob Kraft maintained that the State Board of Animal Health not be required to redirect resources from its traditional programs supporting agriculture to undertake any new responsibilities.  The final bill does establish stronger standards for dog breeders and gives BOAH registration and enforcement responsibilities but funds those new responsibilities through fees on the dog breeders themselves.  It also amends the state’s animal cruelty law by expanding the definition of neglect and creating new exceptions to the animal cruelty provisions for destroying an animal to prevent prolonged suffering, conduct incidental to exhibiting an animal for show, competition or display (county fairs), and humane destruction of an animal by its owner.  Farm Bureau especially appreciates the efforts of Sen. Brent Steele (R-Bedford) to protect the legitimate interests of agriculture in the final version of the bill. 

UNEMPLOYMENT INSURANCE   Many Statehouse regulars, including many legislators, predicted that coming up with a solution to the growing deficit in Indiana’s Unemployment Insurance Trust Fund would be the issue that would force the Governor to call a special session this year.  As it turned out, conferees came to an agreement on HEA 1379 (Rep. David Niezgodski, D-South Bend), and the bill passed on the final night of the session.  This fund, which is used to pay unemployment claims made by out-of-work Hoosiers, has been sustained by borrowing money from the federal government.  HEA 1379 will raise payroll taxes paid by employers with those in the top bracket seeing their taxes increased by nearly 50%.  The rates are graduated based on the number of employees and the employer’s history of layoffs.  Governor Daniels has signed the bill in spite of calls to veto it from some of the state’s most prominent business groups.