News From Terre Haute, Indiana

Local & Bistate

July 10, 2014

Mayor: City will not file bankruptcy

City Council mulls over finances

TERRE HAUTE — The Terre Haute City Council took well more than  an hour to ask questions and discuss the health of the city’s finances with top city officials in a special meeting Thursday night.

A few councilmen expressed grave concern about the financial picture, while Mayor Duke Bennett said things were improving.

Councilman Don Morris, D-at large, got right to the point and asked Bennett whether the city will ever file bankruptcy.

“Absolutely not,” Bennett said.

Morris asked whether the city was paying its bills on time, to which Bennett answered, “yes.”

Bennett also said he is “positive” the city will receive additional “miscellaneous” revenue before the end of the year to help meet expenses. The city will require another “tax anticipation warrant” (loan) for 2015, but that may be the final year, Bennett also said in the meeting.

Asked about a possible fee for trash removal, Bennett said that is something that the city will have to look at “down the road,” but not next year. There is no will on the council for such a fee right now, he said.

Councilman Todd Nation, summarizing a four-page report from Earl Elliott, the council’s financial consultant, said he believes the financial picture is worse than the mayor lets on. He also said the document provided by Elliott was “more helpful” than anything he learned in the first 45 minutes of the special meeting.

The Elliott report shows the city’s general fund had a positive balance of more than $8 million on Jan. 1, 2008, and a negative cash balance of more than $4.4 million on Dec. 31, 2013.

“This gives me a very good idea of what’s going on,” Nation said. “Now we’re spending money we do not have.” The city has been spending more than $2 million each year more than it received in revenue, Nation said.

Bennett asked for a copy of the Elliott document and said “the key that everyone needs to remember” is the impact of the state’s property tax caps on the city’s general fund. Those caps have cost the city about $45 million since taking effect about six years ago, he said. That’s $45 million that remained in the pockets of taxpayers that otherwise would have been in the general fund, he said.

Bennett said the city is working to eliminate a spending gap of roughly $2 million. Other Indiana cities are facing negative fund balances, he added. Those include Kokomo, Muncie and Indianapolis, he said.

Councilman Jim Chalos asked the mayor how a city with a deficit each year can be making progress. Bennett said there are new sources of revenue coming to the city. “I’ll be happy to share [those sources] with you once it’s in concrete,” Bennett said.

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

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