In this case "townie" is a reference to a college-age person living in a college town who doesn't attend the school in that town. The song is definitely taking some elements from the movie "Breaking Away", which deals with friction between students at Indiana University and locals, referred to as "cutters" since historically, stone cutting at the local quarry was the main source of employment in the town.
The song seems to be describing an affair between a (presumably rich) college girl, and a (presumably lower-middle class) townie, in which the girl is wrapped up in a murder investigation when her beau kills another townie.
In this case "townie" is a reference to a college-age person living in a college town who doesn't attend the school in that town. The song is definitely taking some elements from the movie "Breaking Away", which deals with friction between students at Indiana University and locals, referred to as "cutters" since historically, stone cutting at the local quarry was the main source of employment in the town.
The song seems to be describing an affair between a (presumably rich) college girl, and a (presumably lower-middle class) townie, in which the girl is wrapped up in a murder investigation when her beau kills another townie.