The Indiana Supreme Court heard oral arguments Thursday in a case Bloomington Mayor Kerry Thomson says affects any entity that derives its power from the state.
The dispute is over a 2019 state law that retroactively invalidated annexation waivers.
The waivers are agreements in which property owners gave up their right to oppose annexation in exchange for city services, such as sewer and water.
Five of seven areas approved for annexation by the Bloomington City Council successfully filed petitions to stop annexation.
Counting all the waivers as valid would make a big difference. It would allow all but two areas to be annexed.
The city lost its case in Monroe Circuit Court in June 2024 and the state appeals court in February.
Read more: Bloomington's annexation quest: what's at stake
The judge said the state may withhold, grant or withdraw powers as it sees fit and that the city waited too long to act on the waivers.
Bloomington argues that violates the state’s contract clause. Attorney Andrew McNeil said the state can’t retroactively invalidate a city’s contractual rights once it provides services.
“We don't need to make it bigger or smaller than that, and I think the way the contract clause is written answers the question as to what exceptions the General Assembly can create with respect to these contracts,” he said
The state argues cities are part of the state and cannot cite constitutional protections that are meant for private contracts.
Attorney James Barta said previous decisions in similar cases are consistent with most courts nationwide.
“If we look to the structure, the contract clause is part of the Bill of Rights precisely because it exists to protect private orderings, not entrench the power of government,” he said.
Watch hearing stream: Oral Arguments Online
The five-justice panel pressed both sides on the limits of state power referring to home-rule authority. It’s an act that allows municipal governments to adopt laws to address local concerns not in state statute.
In another case, the state Court of Appeals ruled against the city in the annexation of western Areas 1A and 1B. The city is also seeking to transfer this case to the Indiana Supreme Court.
