From a lengthy story in the Terre Haute Tribune-Star:
It’s not always easy to know the financial health of a city. City budgets are complex, including many different revenue sources and many different line items and different accounts.
But, in May, Terre Haute borrowed $5.02 million to help the city cover its day-to-day expenses prior to its twice-a-year disbursement in June of property tax revenue from the State of Indiana. That loan has left at least two members of the City Council seriously concerned: Neil Garrison, D-5th, and John Mullican, D-6th.
They worry the loan is an early sign of financial trouble.
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Terre Haute Mayor Duke Bennett has a different take on the budget figures, including the Umbaugh document.
“It’s a planning tool,” Bennett said of the document showing a deficit of $4.5 million from January to March of this year. “It’s not our actual financial report … [Umbaugh] shows the same [$4.5 million] number at the end of the year. That report did not reflect any budget cuts or internal borrowing done by the city,” he said.
Bennett said the city will have no problem paying all of its bills at the end of the year, including repaying the loan. And there will be money left over, he said.
“We just needed a [short-term loan] to help us just keep paying the bills,” Bennett said. “That way, we don’t have to lay anybody off. We don’t have to delay any projects or expenditures. So for [borrowing costs of] $30,000, we are able to keep functioning as a city as we need to function, at a high level.”
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Terre Haute has not been alone in seeking short-term loans. Umbaugh & Associates provided the Tribune-Star with a list of 27 cities, towns, school districts and other taxing entities that have taken out such loans in recent years.
The list included the cities of Brazil, Indianapolis, Highland, Gary, Greenwood, Marion, Mt. Vernon, Porter, Portage and Valparaiso. Internet searches indicated those loans were taken out over the past several years, dating back to about 2005. Many took place more recently.
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Rather than make deep cuts in the city’s budget at this point, Bennett said he would prefer to borrow money in the short term and keep the city functioning at “a high level.” Hence the short-term loans.
Eventually, Bennett has said, more savings could be found or more revenues raised. In addition to a trash, limb and leaf pickup fee, he would like the community to at least consider some other revenue sources, such as a local income tax of 0.25 percent for police and fire services. A food and beverage tax could also be a possibility, he said, adding he would like these measure to be county-wide and placed before voters as ballot questions.
“As a community, we have to make decisions,” Bennett said. “I’m fine with living with a leaner budget. But, if you want more, you’re going to have to pay more.”
See the full story here:
http://tribstar.com/local/x453794994/Officials-at-odds-of-city-s-financial-health
