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October 14, 2012

Budget concerns prompt second meeting

City Council, mayor, city controller to discuss general fund deficit

TERRE HAUTE — Enough questions have been raised about the city’s financial health that another special meeting is planned this month to review the 2013 Terre Haute budget.

The City Council will discuss the budget with Mayor Duke Bennett and Leslie Ellis, city controller, at a special meeting at 6 p.m. Oct. 22 in City Hall.

In recent months, some members of the council have questioned how the city plans to eliminate a deficit in its general fund, which is the city’s main fund for paying day-to-day operating expenses. That deficit was about $4.5 million at the start of 2012 and some council members expect it to be larger than that at the start of 2013.

To get the general fund out of the red, city officials have been discussing several “options,” including a new solid waste disposal fee on city residents. No specific figures have been given, but Mayor Duke Bennett has said such fees, which will pay for trash, limb and leaf removal, are becoming common across Indiana since property tax caps started taking effect in 2009.

“There’s 119 cities in Indiana and 70 of them have a [solid waste] fee,” Bennett said at Thursday night’s council meeting. “In Sullivan they pay $12 a month for trash pick up … Everybody’s doing it but us.”

The mayor has not specified a proposed rate for a solid waste fee. The city’s trash removal contract with Republic Services will cost about $2.6 million in 2013, Ellis said. There are about 25,000 households in Terre Haute, according to 2010 Census figures. Therefore, each household would have to pay about $8.67 per month to cover the Republic contract alone.

The Elkhart City Council recently voted down a trash pickup fee of $11.35. Mayor Dick Moore said that vote would result in unpaid furlough days for Elkhart city employees, including police officers and firefighters.

Speaking to the Tribune-Star in July, Kokomo Mayor Greg Goodnight said his city has laid off dozens of employees in the wake of the state’s property tax caps. In 2008, Kokomo, which is approximately the size of Terre Haute, had 521 employees, he said. It now has about 442. However, Kokomo is no longer considering a trash pickup fee, Goodnight said.

Last Thursday, at a public hearing on the city’s budget, Terre Haute certified public accountant Earl Elliott told council members he became concerned about the city’s financial health after learning city officials were seeking a short-term, $5 million loan to help cover daily cash-flow earlier this year.

“That raised a red flag in my mind,” Elliott said Thursday night at the hearing. He also said he wondered how deep the city’s deficit will be if the council rejects a solid waste fee and other options presented by the mayor.

Mayor Bennett, in response to questions about the budget, reminded the council of the city’s loss of property tax revenue since Indiana’s tax caps took effect. The city’s budget in 2008 was about $73 million, Bennett said. “We got that down to $65 million a year,” he said. “We have cut the budget tremendously.”

A solid waste fee alone will not cover the $4.5 million deficit, Bennett added. Other “one-time investments” will also be needed. According to City Council members, Bennett has proposed using the city’s “rainy day” fund and Economic Development Income Tax dollars — among other funds — to help balance the general fund.

“Many other communities are going through the same thing,” Bennett said at the public hearing. “So this isn’t anything new. It’s the result of the property tax caps … It’s changed the way we do business.”

Reporter Arthur Foulkes can be reached at (812) 231-4232 or arthur.foulkes@tribstar.com.

Dwindling Income

n Net Terre Haute property tax income since 2008:

2008    $27,348,936

2009    $24,240,369

2010    $21,423,547

2011    $22,532,835

2012    $20,818,666

Source: City of Terre Haute

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