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Counties press for flexibility to invest public funds outside borders; banks warn of local deposit loss
Summary
Senate Bill 289 would let counties invest public funds in depositories located outside county borders. County officials testified that flexibility can increase interest income for local projects; bankers and credit unions warned that loosening territorial limits risks deposit flight and harms local lending. The chair held the bill to seek compromise language.
Senate Bill 289 would allow counties to invest public funds in depositories located outside their county boundaries. Supporters, including county commissioners and county finance advisors, said the change would give treasurers tools to maximize returns and generate local revenue for projects when county banking markets are thin. "Those additional dollars didn't sit idle. They helped fund a full reconstruction of a county courthouse and downtown enhancements," a Morgan County representative told the committee.
Bankers and state‑chartered credit unions opposed the bill as drafted. Dax Denton of the Indiana Bankers Association said the territorial rules evolved to prioritize local deposits as drivers of local lending and economic development. "There is significant value in keeping your money local," Denton said, warning of deposit flight and concentration risk if funds flowed statewide.
Committee members explored middle ground options during questioning, including indexed floors or a mandatory minimum spread above a treasury benchmark that would preserve local leverage while guarding taxpayer returns. The chair said he would hold the bill for additional stakeholder negotiation and encouraged parties to return with compromise language.
