The sunset may be longer in coming for the $1 fee that was tacked onto civil legal filings to help shore up pro bono and legal services programs.
Sen. Ron Grooms, R-Jeffersonville, is planning to introduce a bill during the 2017 Indiana General Assembly session which would extend the surcharge for another five years to 2022. Grooms, along with Sen. Brent Steele, R-Bedford, authored the original bill in the 2012 Legislature that instituted the $1 fee but also set a time for when the added charge would end.
The extra funds were targeted to cover the drop in the return from the Interest on Lawyers Trust Accounts. Money from the IOLTA is funneled through the Indiana Bar Foundation to the pro bono districts across the state, but as interest rates flat-lined during the Great Recession, the proceeds from IOLTA dwindled, leaving the pro bono offices struggling at a time when more and more Hoosiers were asking for help.
Legislators expected interest rates would rise within the next five years, so the final compromise measure sunset the $1 filing fee in 2017.
However, interest rates have remained at historically low levels and IOLTA is bringing less than $300,000 annually. Just before the economic downturn, the IOLTA return was topping $3 million each year.
“It’s unfortunate, but there’s just not enough money there to serve as a potential revenue source other than the filing fee to keep this program going,” Grooms said. “Money is so critical to providing help.”
In 2012, the Legislative Services Agency estimated the filing fee would generate $450,000 a year but that turned out to be an overly optimistic prediction. The extra charge has reaped an average of $370,000 annually.
Still the money has become a “crucial part of funding for the pro bono districts,” said Charles Dunlap, executive director of the Indiana Bar Foundation. The revenue from the filing fee is used to help the statewide pro bono network cover administrative costs, screen clients and provide malpractice insurance for the attorney volunteers.
Dunlap said the upcoming legislation would be seeking to extend the filing fee and not try to get any increase in the amount.
Grooms is expecting his extension bill will encounter opposition in the Statehouse. The main problem, he explained, is the perception that the filing fee is a tax and many legislators are reluctant to support anything that looks like a tax.
The Jeffersonville Republican will argue the surcharge is a user fee. Only the people who use the judicial system to file a civil legal case will have to pay the extra $1.
“I have a lot of work to do,” Grooms said.
During the 2012 session, the Grooms-Steele measure, Senate Bill 235, passed the Senate on a 50-0 vote but died in the House of Representatives’ Ways and Means Committee. The fee language was then inserted into House Bill 1049 which passed both chambers and took effect July 1, 2012.
Grooms noted getting his new bill through the Senate may be difficult since, by his counting, he will have to convince 20 new senators who were not there in 2012 to support the filing-fee extension.
A retired pharmacist, Grooms said he saw the need for legal aid from his own experience running a small business and serving customers. People would often turn to him for help and advice and while every conversation centered on health, there always seemed to be a legal component. Part of the solution included contacting an attorney but many could not afford to pay for the legal assistance.
He hopes to be able to show his legislative colleagues that bolstering support for legal aid can help make Hoosiers more self-sufficient. This, in turn, will save the state money by reducing the need for public assistance, he said.