MONROE CITY - State Rep. Bruce Borders, R-Jasonville, defended House Bill 1001 before members of the town council here Wednesday night, saying that while local governments may be having to cutback due to funding shortfalls, the legislation did provide property owners with tax relief, which was a good thing.

Good thing or not, Council President Bill Sampson said the reality of HB1001 is that services will have to be reduced. In fact, Sampson said, the town has already made cutbacks, eliminating a security program it had established with the Knox County Sheriff's Department and turning off street lights.

Sampson said he invited Borders to attend the council meeting because he wanted to hold Borders accountable for voting yes on HB 1001.

Sampson wanted to know why the town's budget was cut so severely in the first place.

"The assessed value of Sandborn is $4.4 million and ours is $6.4 million but their general fund was approved for $60,000 and ours was for only $32,000," he said. "I just don't understand the logic behind that."

Borders, who is facing a tough re-election challenge by Vincennes Democrat Rick Marshall, said he would review the town's budgets from 2007 and 2008 to see where the $14,000 discrepancy was and said he planned to contact Sheryl Muskgrave, the DLGF Finance Commissioner, for additional information on the town's budget.

Confusion over the bill escalated when Nancee Scott, the town clerk, explained that for the past two years she'd been transferring $14,000 from the motor vehicle highway tax fund to the town's general fund to cover the cost of town security.

"The $14,000 was cut when the Department of Local Government Finance cut our budget," Scott said. "When I appealed the cuts to the DLGF they told me that the town could raise revenues by encouraging industry or by annexing in some additional property."

Sampson said the town spent $2,000 two years ago to develop a plan for annexation, but determined that the action wouldn't generate tax money for 15 years and wouldn't pay for the initial expense of annexation.

Borders said the figures he'd received from the DLGF indicated that the $14,000 was still in the town's budget.

"Obviously, we are all working with different numbers," he said. "The figures I have indicate that your general fund budget was only cut by $5,303."

Borders said if the shortfall on the budget was only a little over $5,000 he had some ideas on how the town could make up the revenue, including stopping paying rental fees for the town's water hydrants.

"If you've paid for the hydrants for the past 60 years, the town has probably paid for those hydrants many times over," he explained. "That would save you about $4,576 a year."

Borders also said transferring the cost of water and sewer office supplies from the general fund budget to the water/sewer fund budget would save the town an additional $3,100.

Residents in attendance expressed concern about maintenance and upkeep of the town's hydrants if the rental fees were no longer paid. Others complained that shifting the debt for office supplies to another fund was just "robbing Peter to pay Paul."

"I'm not saying it's a perfect solution but the general fund is the one that is in most dire shape and I'm just offering suggestions on how to restore that," Borders said.

"This bill is killing the state," Sampson said. "It makes the government look - makes you guys look good - but it will kill the people of Indiana."

Borders said he didn't regret voting yes for the controversial piece of legislation and said if he had to do over again, he'd change nothing. Borders added that he didn't believe property owner's taxes would increase next year, which is what several other county officials have said.

"When the property tax caps drop from 1.5 percent on residential property to 1 percent next year that means less property tax for homeowners," Borders said. "It also means that next year could mean worse budget problems for local governments than this year has been."