Gov. Mitch Daniels, who had backed the overhaul as a move toward the complete elimination of township government, described his reaction to the Senate defeat of the bill last week as "disappointment, serious disappointment."
But legislators and township officials told The Indianapolis Star that the vote reflected a new understanding of the value of having local government close to the people, especially in rural areas.
"We feel justice was done," said Debbie Driskell, executive director of the Indiana Township Association and trustee of Delaware Township in Hamilton County.
Porter Township Trustee Ed Morales of Porter County said he is relieved to know he can still rely on his three township board members, who he said easily earn their $1,000-a-year salary by raising more than $5,000 a year for the township's food pantry and, once, $7,000 for an eye operation for an uninsured resident.
"I know there's problems, but in our particular area, it works well," he said.
The vote was a turnaround for the Senate, which twice has passed similar bills that later stalled in the House.
"I was disappointed and dismayed," said the bill's author Sen. Connie Lawson, R-Danville. "I guess the legislators were really of a different mind-set."
The township boards may not be safe yet, the Star reported, because Rep. Phil Hinkle, R-Indianapolis, plans to revive a similar measure in the House. But even if such a measure did pass the House, it still would need to clear the Senate.
Daniels has called for the complete elimination of township government, but the bill would not have done that. Townships would still have elected trustees to oversee such things as relief for the poor and fire protection. The bill would have eliminated township boards in 2015, and each county would have had to adopt standards for granting poor relief for trustees to follow.
Lawson, has said that township governments are inefficient -- many spend more on administrative costs than poor relief -- and often filled with nepotism. Township elections attract little competition or voter interest, she has said.
The Senate did pass a bill that would prevent local government workers, including township employees, from hiring relatives. It also passed a bill that would eliminate township boards in Marion County and require budget oversight of trustees by the Indianapolis City-County Council.
But Indiana Chamber of Commerce Vice President Mark Lawrance was disappointed they didn't do more.
"I think politics overruled common sense, and I think misperception overruled facts," Lawrance said.