O'Bannon halts spending

INDIANAPOLIS -- Gov. Frank O'Bannon announced Thursday a moratorium on grants from the Build Indiana Fund, which lawmakers use for capital projects in their districts.\nCreated in 1989 to hold down local property taxes, the fund taps into gambling and lottery revenues to pay for town halls, fire trucks, sewers and other projects. It's recently come under fire for alleged misuse.\nThe Indianapolis Star published an investigative report last week alleging that state money has been funneled into projects that might not exist or have close ties to legislators. In one instance, the funds were allegedly used to pay for a trip to Georgia. The Star also reports that at least $40 million distributed by legislators went to nonprofit groups in violation of state law.\nThe report follows a lawsuit the Indiana Civil Liberties Union filed in May. The watchdog group alleges that hundreds of thousands of dollars from the fund have been sent to churches and private schools in violation of Indiana's constitution.\nMarion County Prosecutor Scott Newman, who has jurisdiction over the state capitol, said he intends to investigate the allegations. While the Governor said he supports Newman's investigation, he launched his own.\n"When the Governor sees a problem, he acts on it," said O'Bannon spokeswoman Mary Dieter. "He wants to make sure the process works."\nO'Bannon ordered the State Budget Office to review how the funds are spent, asking for a report by July 30. The Star reported there is little oversight of the distribution of the grants.\nThe 1989 statute that created the fund established a committee to review grant requests, but it hasn't actually met for years. Senate Finance Committee Chairman Larry Borst, R-Greenwood, blamed that on O'Bannon, who is supposed to appoint a majority of the panel's members.\nThe State Budget Office can only act in an advisory capacity, Director Betty Cockrum said. It's up to lawmakers to reach a final verdict on the fund. But she downplays the severity of the allegations being floated around.\n"Every budget passed has the weight of law," she said. "Any appropriation supercedes any previous laws."\nThe budget went into effect Sunday, and the hold on spending has left many local grant recipients reeling. Jonathon Coke, General Manager of WFHB, said he was disappointed by the governor's decision.\nThe community radio station had hoped to use a Build Indiana Fund grant to expand its signal to the Ellettsville and Nashville areas. The station had also planned to use some of the $54,000 to renovate its downtown facility. \nCoke and many other volunteer station members spent the spring lobbying local lawmakers for what they call much-needed funding.\nDuring the two-year budget process, each lawmaker gets a share of the annual outlay and decides how to distribute it in his or her district. The budget approved in April allots $74 million -- up to $900,000 in some districts.\nLawmakers have distributed more than $420 million from the fund in its 11-year lifespan. State law already requires applicants to outline costs and explain the need for the project.\nWhile lawmakers defend the fund as a boon to many communities, there are already rumblings for reform in the next session. \nSenate Majority Leader Robert Garton, R-Columbus, has appointed a bipartisan task force to review Build Indiana Fund appropriations in the 2001-2002 state budget. House Speaker John Gregg, D-Sandborn, and Sen. Vi Simpson, D-Ellettsville, have called for stricter guidelines.\n"The program is good," Gregg said in a letter to the State Budget Agency. "But obviously, there are some questions about accountability"