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 email@example.com
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.
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.
College students spend alternative spring break helping in Vigo County
Pruning in the orchard and preparing plants for the garden has been part of the experience for a group of Minnesota students who are spending this week as an alternative spring break at Saint Mary-of-the-Woods College.
MARK BENNETT: How you approach the day will influence if you are a ‘morning person’
I can still see the stacks of coins, 40 cents in each, arranged on the dining room table.
Area Plan Department considering raising fees
The Vigo County Area Planning Department is exploring the possibility of raising the fees for its services.
Tuesday night crash leads to arrest on drug charges
A Terre Haute man was arrested on drug-related charges after a one-car accident Tuesday night in Clay County.
Clock ticking on downtown TIF district
The sun is setting on Terre Haute’s downtown tax increment finance district, which city economic development officials say has been crucial to downtown revitalization, following action this week from the Indiana General Assembly.
Lay pastor files guilty plea in child sex case
A Terre Haute man has pleaded guilty to seven felonies in connection with a child molestation that allegedly involved the man’s wife as well.
Man gets 1 year probation for child, animal neglect
A Vigo County man has been sentenced to one year on formal probation after pleading guilty to housing children and animals in a filthy house.
Three-vehicle crash on U.S. 41 injures three
Three people received minor injuries and one motorist was cited following a three-vehicle crash on U.S. 41 at Springhill Drive at 9:59 a.m. Wednesday.
Sullivan daycare fire victim ID’d
Sullivan County authorities have released the name of a 1 1⁄2-year-old girl who died Tuesday morning in a Sullivan County daycare fire.
Sullivan Daycare fire: Broken hearts
A 11⁄2-year-old girl tragically died early Tuesday morning as the result of a fire at Waterman’s Wonderland Daycare on Sullivan’s south side.
Sony DADC cutting 34 distribution jobs here
Sony DADC is halting product distribution operations from its Terre Haute plant at a cost of 34 jobs, a company official said Tuesday.
Bill ends automatic license suspensions for many crimes
Unpaid parking fines, falling behind on child support, drunken driving: So many offenses trigger a suspended driver’s license in Indiana that more than a half-million Hoosiers have lost their driving privileges. In fact, driving on a suspended license is the most common charged offense, prosecutors say.
Indiana same-sex marriage tax benefits nixed by Senate
Gay rights advocates said they’re deeply concerned about a split in state policy from a new federal approach to taxes recognizing same-sex marriage that the Indiana Senate approved 41-6 on Tuesday.
‘Slow’ start to Illinois early voting
Early voting is “slow” in Clark and Edgar counties in Illinois, election officials said Tuesday, even with the first-time permitting of 17-year-olds to register and vote in the March 18 primary election.
Brazil girl badly burned in Monday fire
A 6-year-old girl suffered second- and third-degree burns to her lower extremities in a Monday morning fire at 313 S. Vine St. in Brazil.
Helping out Hoosiers: 181st Intelligence Wing launches first aerial domestic support mission
The roar of the jets is long gone but Airmen from the 181st Intelligence Wing Indiana Air National Guard still stand watch for the Hoosiers of Indiana.
Indiana Attorney General launches statewide food drive
Indiana Attorney General Greg Zoeller launched the statewide March Against Hunger food drive competition Tuesday in Terre Haute.
Shots fired in home invasion, robbery
Shots were fired early Tuesday morning in what police are calling a home invasion and armed robbery in Terre Haute.
Seminar covers college readiness for students with disabilities
Registrations are still being accepted for an upcoming seminar on college readiness and transition for students with disabilities and learning difficulties.
- Road closing: March 5, 2014
Ablond bundle of energy on four legs showed off his energy Monday afternoon at the Vigo County Annex.
Vigo Schools to have long days in April
The Vigo County School Corp. has announced its plan for snow makeup days.
- More News Headlines
- Vigo County high school team in FIRST Robotics’ Crossroads Regional