TERRE HAUTE —
The City of Terre Haute is living on millions of dollars of borrowed money.
According to the city’s controller, Leslie Ellis, the city’s critical “general fund” had a cash balance of approximately $41,000 at the end of June, meaning the city must borrow to meet day-to-day expenses for the remainder of the year.
The actual June 30, 2013, general fund balance has not yet been calculated, but Ellis said it will be about the same as the balance last year on June 30, which was $40,417.
The city’s “general fund” covers most of the city’s day-to-day expenses, such as salaries for city workers. To have a cash balance of just $41,000 means the city has spent much of its June, bi-annual property tax distribution already. That distribution was $11.5 million, according to figures provided by the Vigo County Auditor’s Office.
This situation is not new and is why the city borrowed $5 million in “tax anticipation” loans this year and last year. Using these borrowed dollars, the city has been able to meet its salary and other daily expenses until its next big property tax distribution. That allows the city to avoid laying off large numbers of city workers, said Mayor Duke Bennett, in an interview last week in City Hall.
Indiana local governments receive property tax payments twice a year — in June and December. The June payment is typically the larger, because some people pay their May and November property tax payments all at once.
Not a perfect world
Borrowing money is not free — it involves interest and administrative costs — but it beats making “massive” layoffs, Bennett said.
Last year, the city’s first $5 million loan included just less than $50,000 in interest and administrative costs, City Controller Ellis told the Tribune-Star at the time the loan was approved by the City Council.
Larry DeBoer, a Purdue economist and local government finance expert, wrote in a 2006 essay that a city’s general fund balance on June 30 should equal about half of that city’s expected property tax levy. For Terre Haute in 2012, that would have been about $12 million. However, in a recent interview with the Tribune-Star, DeBoer noted that borrowing, as Terre Haute is doing, can also work, as long as a city receives enough in property taxes to pay back the loan.
Having such a large cash balance, Ellis told the Tribune-Star last week in a joint interview with Mayor Bennett, is possible only in a “perfect world.” She pointed to Indiana’s property tax caps, enacted in 2008, as the reason. Wealthier cities such as Fishers and Carmel may have such large cash balances, she said, but not Terre Haute.
Still, even compared with most other Indiana cities, Terre Haute had a very low cash balance in June 2012 as a percent of the city’s certified budget, according to state figures.
Among roughly 500 cities and towns listed on the Department of Local Government Finance “Gateway” website, only a handful — including Bloomington, New Albany, Greenfield and Hammond — had lower cash balances in relation to their certified budgets.
The Vigo County government, meanwhile, which is separate from the City of Terre Haute, had a June 2012 cash balance of $23 million — approximately half of what it spends in a year’s time and in line with what DeBoer recommended for cities and towns in his 2006 essay.
Where the tax caps hit hardest
When discussing the city’s budget, Bennett repeatedly states that the city’s general fund would be flush with cash if the tax caps did not exist. Indeed, Vigo County was among the hardest hit in the state from the caps, according to a recent Ball State University study.
That study shows Vigo was the fourth-hardest-hit county in the state in terms of the impact of the property tax caps. The three counties hit hardest were Madison, Delaware and Fayette.
Anderson, the biggest city in Madison County, has experienced painful cuts in its budget since the caps took effect, said Sam Pellegrino, the city controller. This year, the city was forced to cut eight positions from the fire department, he said. Other layoffs and attrition have also taken place in the most recent years, and the city is still scraping by. Anderson has had to use ambulance fees, which are supposed to pay for equipment, to pay salaries. It has also been forced to borrow from city-owned utilities, Pellegrino said.
Dealing with the tax caps has been “extremely painful,” Pellegrino told the Tribune-Star last week.
According to the “Gateway” website, Anderson’s general fund cash balance at the end of June 2012 was $6.2 million. Muncie, the biggest city in Delaware County, the second-hardest hit by the tax caps, had a cash balance of $8.9 million. Connersville, a small city of just 13,000 and the biggest city in Fayette County, had a balance of $3.2 million.
Each of those was far greater than Terre Haute’s $41,000 balance.
However, cash balance figures can be misleading and don’t tell the whole story, warned Vigo County Treasurer Jim Bramble. A city or county may have a general fund balance of $1 million on June 30 and have $1.1 million in bills due the following day, he said.
However, when shown Terre Haute’s June 2012 general fund balance of just $41,000, Bramble indicated it was a possible cause for concern. “If it hasn’t improved [by June 2013], I would say they’ve probably got a problem,” Bramble said.
Another setback to a balanced budget
Terre Haute’s city finances suffered another big blow in 2013: A 7.5-percent drop in assessed land value. That cost the city about $1.7 million in revenue, Bennett said. That means the city will likely end 2013 with a negative balance in its general fund, once again.
Terre Haute ended 2012 with a negative general fund balance of $2.2 million. If not for the drop in assessed values, the city would have broken even by the end of 2013, Bennett said. Now, that may have to wait until the end of 2014, he said.
“We’re not going to be able to make up $2 million,” Bennett said.
To get to a “balanced” general fund budget by the end of 2014, budget cuts and new sources of revenue will be needed, Bennett said. Laying off city employees is “a last resort” and one he hopes to avoid. The city has 52 fewer positions now than it had in 2008, he said. One source of savings could be in opening a city employee health clinic, he said. Bennett also pointed out that the city will continue to receive payments “in lieu of taxes” from the waste water treatment plant to the tune of at least $2 million annually.
Also under consideration is implementing a $9 per month trash hauling fee in the city. That measure, however, would have to be enacted by the Terre Haute City Council.
Bennett said the city may also need to dip into its Rainy Day Fund at the end of 2013 and will need to borrow again in 2014 — although he estimates about $4.5 million, not $5 million the city borrowed each of the past two years.
“So, we made progress,” Bennett said. “We closed the gap.”
According to the “Gateway” website, the City of Terre Haute’s government expenses are in line with similar cities in the state. Government spending in Terre Haute is about $1,400 annually per person living in the city. That’s about the same as Elkhart and Anderson and less than Muncie, where the city government spends about $1,700 per capita.
Reporter Arthur Foulkes can be reached at 812-231-4232 or firstname.lastname@example.org
City must borrow to meet day-to-day expenses for the remainder of year
TERRE HAUTE —
The City of Terre Haute is living on millions of dollars of borrowed money.
- Local & Bistate
Purdue shooting leaves one person dead
A Purdue University engineering student opened fire inside a basement classroom Tuesday, killing a teaching assistant and prompting officials to put the campus on lockdown, police and the university said.
Tasting their way to a cure
People appeared to be in high spirits Friday inside the historic Indiana Theatre as they gathered for an evening of wine, food and conversation while supporting efforts to find a cure for breast cancer.
THS grad Miller among students in adjacent building when shooting occurs
Kris Miller and his roommate were in a computer lab of Purdue’s mechanical engineering building Tuesday when they received a call that a shooting had occurred next door.
Bosma moves gay marriage ban bill to friendlier committee
Republican House of Representatives Speaker Brian Bosma sent a bill that proposes a constitutional ban on gay marriage to a more conservative-leaning legislature committee Tuesday, because it lacked support on the first committee to which it was assigned.
We enter the deep freeze again
If you had to step outside to get your newspaper this morning, you might have noticed it’s painfully cold once again.
Levy redirects school funds
If the new “protected levy” legislation goes into effect later this year, it would mean “a substantial reduction” in revenue for Vigo County School Corp. bus transportation, capital projects and bus replacement funds, according to the district’s chief financial officer.
School debt levy redirects funds across Indiana
School officials and state legislators from around the state are searching for ways to keep the school buses running — and children safe on the streets — pending the loss of millions of dollars for school transportation.
More than 50 school districts in Indiana stand to lose at least 20 percent of their revenues for transportation, new buses and other big-ticket projects under a new law that requires them to first pay off their debts.
VIDEO: Sen. Donnelly updates T-S editorial board
Passage of a long overdue U.S. farm bill could be completed by the end of this month, Sen. Joe Donnelly, D-Ind., said Tuesday.
Vigo coroner tries again for salary increase
After being denied last year, Vigo County Coroner Dr. Susan Amos is again seeking to have her county salary increased to match that of several other county office holders.
Same-sex marriage: 4 couples sue state over ban
Four gay couples from southern Indiana sued the state Friday, seeking to force Indiana to recognize same-sex marriages from out of state and issue licenses to same-sex couples.
Time to check smoke alarms
Three years after a house fire on South Nine Street in Terre Haute resulted in the death of three people, a Terre Haute grandmother still wonders if the outcome of that fire would have been different if smoke detectors in the home had been working.
Indiana State Board extends president’s contract
Indiana State University has signed up Dan Bradley, the school’s president, for an additional three years of service.
New animal shelter gets welcome boost
The aging Terre Haute Humane Society shelter is not a place for the faint of heart.
4 couples sue Indiana over same-sex marriage ban
LOUISVILLE, Ky. (AP) — Four couples from southern Indiana are asking a federal judge to force the state to recognize same-sex marriages from other states and issue marriage licenses to gay couples.
Vigo County Jail Log: March 7, 2014
The following individuals were booked into the Vigo County Jail by area law enforcement on Thursday and Friday, based on jail records.
Bill for welfare drug testing in negotiation
INDIANAPOLIS (AP) — Two Indiana lawmakers trying to pass a bill requiring drug tests for some welfare recipients say they have passed voluntary drug tests.
Book signing March 7 in Crossroads Café to benefit Success By 6
The book “One Day I Could Be ... Careers in the Wabash Valley,” is on sale now and will be available at a book signing today, March 7, during a First Friday event in downtown Terre Haute.
Groups ask regulators to probe plant’s power woes
INDIANAPOLIS (AP) — Environmental and citizens’ groups are asking Indiana regulators to launch a formal investigation into problems and delays that have sharply limited the power output of Duke Energy’s $3.5 billion coal-gasification plant near Edwardsport.
Nature trust expands Owen-Putnam State Forest
POLAND, Ind. (AP) — State officials say funding from the Bicentennial Nature Trust has helped the Indiana Department of Natural Resources expand a central Indiana state forest by 84 acres.
Vigo County high school team in FIRST Robotics’ Crossroads Regional
Drivers of remote-controlled robots will match skills, similar to those used in basketball and soccer, to score in the FIRST Robotics’ Crossroads Regional on the campus of Rose-Hulman Institute of Technology.
Benefit planned for daycare fire victim
Veronica Gray never met 19-month-old Emma Lloyd, but when she learned about the child’s tragic death in a Sullivan day care fire, she had to do something.
Winter’s costs add up for Vigo
While still within county and city budgets, the snowstorms of January and February were more costly than a year ago.
Mayor Bennett threatens veto of consultant funding
Mayor Duke Bennett is threatening to veto a measure before the Terre Haute City Council that would transfer money into the council’s budget allowing the body to again hire a financial consultant.
Semitrailer fire slows eastbound traffic on Interstate 70
Traffic on Interstate 70 was slowed Thursday afternoon by a semitrailer fire just east of Terre Haute.
Tests show Skittles had no unusual chemicals
The Indiana State Health Department has given Skittles a clean bill of health.
No problems reported in early 10-digit phone dialing
Just be grateful you (probably) aren’t using a rotary telephone these days.
Cloverdale woman sentenced to 10 years in molestation/neglect case
A Cloverdale woman received a 10-year prison sentence Thursday after pleading guilty to child molesting and neglect of a defendant in Vigo Superior Court 3.
Youth orchestra performs March 9
Crossroads of America Youth Orchestra will present its "Spring" concert from 3 to 5 p.m. Sunday, March 9, in Central Presbyterian Church at 125 N. Seventh St.
Gun stolen by Dillinger gang returning to Nortern Indiana
AUBURN, Ind. (AP) — The FBI plans to return a .45-caliber Thompson submachine gun stolen by members of the John Dillinger gang from a northeastern Indiana police station to the department.
Indiana workplace safety agency addressing issues
INDIANAPOLIS (AP) — An Indiana Occupational Safety and Health Administration spokesman says the agency has cooperated fully with federal investigators who found the agency mishandled complaints, put its inspectors under strict time constraints and didn’t help whistleblowers.
- More Local & Bistate Headlines
- Purdue shooting leaves one person dead