Terre Haute City Council takes hard look at budget demands

By Lucy Perry
Indiana Central News

The Terre Haute City Council met in special session tonight at City Hall to hear financial experts' recommendations for the next five years after the State Department of Local Government Finance outlined a need to slash the general fund by $8 million earlier in the year -- while only recently being made public.

Mayor Duke Bennett started the meeting off by saying he felt "really good" about the comprehensive plan to get out of the red in the budget. Meanwhile, he reminded the council that changes in the plans were likely.

A representative of Indianapolis accounting firm Umbaugh and Associates, Paige Sansone,  noted several areas of significant concern , explaining that the city had several negative governmental fund balances last year . The most significant included:

• The general fund -- with a negative balance of $8.1 million.
• Hulman Links golf course -- with a negative non-reverting fund of $3.8 million.
• Rea Park non - reverting fund --  with a negative balance of $1.1 million.

A big impact to the city's financial picture is due to property tax caps, as often discussed at previous meetings. It's suggested that the city will need new revenues of $3.8 million annually in order to restore cash reserves equal to 15 percent of annual expenditures for the next five year period.

Suggested means of revenue include:

• Implementing a wheel tax to generate around $1.4 million per year.
• Increasing user fees
• County Council establishing new income taxes.

Many other options were presented for consideration, such as establishing a Fire Territory with a neighboring township, which could result in $1.3 million annually in the general fund and/or having Indiana State University and non-profit organizations to pay for public services by establishing payment in lieu of taxes.

Councilwoman Martha Crossen asked about considering making spending cuts in the budget after not hearing it mentioned as an option.

Sansone responded, that in a case like this, there are only two solutions to the deficit problem: reduce spending or increase revenue. She said spending is not the issue, stressing the city has already significantly reduced spending in the past few years by several million dollars. 

"If you wanted to focus on not creating new revenues, you'd have to cut $3.8 million. Right now, at least in the general fund -- you're down to the bare bones," Sansone said, noting that would mean personnel and salary reductions of about 11 percent--  when the "heart of the issue" is in fact circuit breaker tax rates.

Councilmembers Earl Elliott, Todd Nation and Crossen  expressed concerns of short term borrowing from the Rainy Day Fund, Redevelopment Commission and use of  downtown Tax Increment Financing (TIF) district funds.

Bennett said their concerns were based on "bad information." He added that the administration would also like to reduce borrowing.

"This is a temporary situation for us to work through -- and it makes more sense to borrow money at a zero interest than it is to do the tax anticipation warrant. I think there needs to be a balance," he said."We could reduce and lay off a couple hundred people or we can see how some things play out with the revenues that are being discussed."  

Bennett also said he is not in favor of implementing a wheel tax after President Karrum Nasser said he would not vote in favor of one.