Committee hears arguments for and against loosening local public‑funds territorial limits

House Bill 1523, which would allow certain local units of government to invest public deposits beyond current territorial limits, received testimony from county treasurers, school finance officials, banking and credit-union representatives, and the treasurer’s office. The committee heard arguments for wider competition and higher returns and also concerns that loosening territorial restrictions could reduce local reinvestment and community benefits.

Sponsor remarks: Representative Pierce described HB 1523 as a measure to extend investment options already available to cities and towns to counties, school corporations and libraries. Current law gives priority to depositories with a brick-and-mortar presence in the political subdivision; the bill would remove territorial limits and add a limited retroactive safe harbor for investments made since a 2018 statutory clarification.

Supporters’ case: County treasurers, school finance officials and associations such as the Association of Indiana Counties and the Indiana Association of School Business Officials said consolidation in the banking industry has reduced local options in many places. Witnesses said widening the pool of approved depositories would allow public entities to capture higher CD rates, increase interest revenue that offsets property taxes, and provide materially larger revenues in some districts. Brian Burdick (Indiana County Treasurers Association) and school officials gave examples of districts where constrained local competition produced lower yields; Burdick said every extra dollar of earned interest reduces the need to collect taxes.

Opponents’ case: The Indiana Credit Union League and the Indiana Bankers Association urged caution. Credit unions argued keeping public funds local supports community lending by institutions headquartered and operating within the locality. Bankers noted the territorial preference is intended to keep deposits available for local lending and economic development and suggested any change could erode that local credit supply. The treasurer’s office said it remained neutral while emphasizing its role in educating public officials about depository rules and deposit-insurance protections provided by the Board for Depositories.

Key technical points: Witnesses agreed the bill’s retroactive safe harbor (covering investments after a 2018 change in law) was intended to prevent audit exceptions. Multiple speakers said the policy tradeoff is between maximizing short-term interest revenue for taxpayers and preserving local reinvestment of deposits. Several school and county witnesses said the difference in available rates can translate to hundreds of thousands of dollars in additional interest in larger districts over multiple years.

Next steps: Representative Pierce said he will continue discussions over the next week to seek compromise language. The committee did not take a final vote and left the bill pending for amendment.