News From Terre Haute, Indiana

March 31, 2013

City must cut $1M from 2013 budget

Department of Local Government Finance calls for $836K reduction from transit department

Arthur Foulkes
The Tribune-Star

TERRE HAUTE — The City of Terre Haute has got to find about $1 million to cut from its proposed 2013 budget, according to the Indiana Department of Local Government Finance, which approves city budgets.

The DLGF, after reviewing this year’s budget, has told the city to make about $1.2 million in cuts – the lion’s share of which fall on the transit department and fire department pensions.

However, the firefighter pensions are guaranteed, so the proposed $270,000 cut in the pensions will have to come from other parts of the budget, said Mayor Duke Bennett, speaking last week.

“We will have to find [the fire pension money] somewhere else in the budget,” he said, adding he is unsure why the DLGF targeted pensions for cuts when they must be covered by the city. “There’s no fluff in there,” Bennett said of proposed pension spending.

Overall, the state approved about $47 million in city government spending, including $33 million in the critical general fund, which covers day-to-day expenses. The DLGF made no cuts in the general fund, something Bennett said surprised him given the big drop – about 7.5 percent – in assessed property value in Vigo County in 2012.

Most dramatically, the DLGF is calling for a whopping $836,000 cut from the city’s transit department, which is the city’s bus system. That amounts to a cut of about 37 percent, although the actual cut is expected to be less.

“We will have to go in and reduce expenses or find some other revenues,” Bennett said of the transit department budget, adding about $300,000 in revenues were overlooked in the transit budget review, meaning the overall cuts will be smaller, about $500,000 – but that’s still about 22 percent of the transit budget that must be either cut or funded from other parts of the budget, Bennett said.

The DLGF is also calling for an approximately 12 percent cut in the city’s cemetery budget. The city proposed spending about $625,000 on cemeteries in 2013. The state called for that to be reduced by $74,000. Bennett said it is not yet clear where those savings will be found.

The state also called for a $10,000 reduction in the city’s approximately $2.6 million park budget – a tiny cut of less than 1 percent.

Perhaps the biggest surprise is that the state didn’t demand the city make even larger cuts in 2013. Assessed property values in Terre Haute dropped more than 7 percent in 2012, meaning the City of Terre Haute can expect to receive several million dollars less in property tax revenues this year. The lower assessed values also mean higher tax rates will be charged to taxpayers, which means more of them will benefit from the state’s tax caps, further reducing funding to the city.

The next big event in the on-going budget saga will come in about a month when the city learns how much property tax revenue to expect in July. The city receives its property tax payments from the state in two big, multi-million-dollar chunks, one in July and the second in December.

Learning how much property tax revenue to expect in July will help the city move forward with its spending plans for the rest of 2013, Bennett said. In the meantime, “We have to be very, very conservative,” he said. “We’re trying not to spend any more money than we have to spend.”

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