From the Terre Haute Tribune Star:
Mayor Duke Bennett asked the Terre Haute City Council Thursday night to approve a “tax anticipation” loan of up to $5 million that must be repaid in up to three years.
This is the third year in a row the mayor has asked the council to OK a $5 million loan to help the city meet its general fund cash flow needs between its biannual property tax payments from the state.
In each of the past two years, the loan has been approved for a term of a year or less.
“I know we’re going to need to do this over the next three years,” Bennett told the council at its December “sunshine” meeting in City Hall. The revenue shortfalls are the fault of the state’s property tax caps, he said.
The loan approved by the council for 2013 had a 1-percent interest rate and is due and payable at the end of this month, Bennett said.
Approving a three-year loan would mean the payoff deadline would be after the next mayoral and city council election in 2015, something that seemed to bother at least one city councilman, Todd Nation, D-4th.
Nation said he believed the council should approve only loans that are payable within the same calendar year.
Bennett argued for a three-year loan, noting that it would eliminate the expenses associated with originating a loan each year.
That costs the city approximately $12,000 each time a loan is taken out, the mayor said. Also, interest rates should be around 2 percent now, but may be higher in a year, Bennett added.
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http://www.tribstar.com/news/x1566991031/Mayor-asks-for-5-million-tax-anticipation-loan
