In other business, members voted 4-0 to approve a loan of $400,000 to the Town of Chesterton, as requested last week by the Town Council. Member Jim Raffin was not in attendance.
The purpose of the loan: to make good on a shortfall in this year’s General Fund and Motor Vehicle Highway (MVH) fund.
That $400,000 shortfall is chiefly the result of cuts made earlier this year by the Indiana Department of Local Government Finance (DLGF) to the town’s 2012 budget. Some of those cuts were routine, but others were Draconian, the latter apparently because the Clerk-Treasurer’s Office missed the deadline in the fall of 2011 by which, under Indiana Code, municipalities are required to publish their advertised budgets.
About six years ago the Utility made a similar loan to the town, so there is precedent for the move, Associate Town Attorney Chuck Parkinson noted on Monday. Under state law, the town must re-pay the Utility no later than 30 days after the final 2013 property-tax draw.
Also under state law, the Utility may only make the loan if it has at least $400,000 in cash reserves over and above its anticipated needs and expenses. It does have those reserves, Parkinson said.
President Larry Brandt did emphasize that “in no way does the loan to the town impact the rate increase” of 6 percent which the council enacted earlier this month at the Service Board’s recommendation. That rate increase is intended solely to finance the $15 million which it will cost to implement the federally mandated long term control plan to reduce combined sewer overflows.
“It’s an entirely different issue,” Brandt said. “The loan has no impact on the rate increase whatsoever.”
