Indiana Economic Digest | Indiana
Advanced Search

• Most Recent

home : most recent : most recent October 23, 2017

10/8/2017 4:14:00 PM
EDITORIAL: Terre Haute continues to face deep financial crisis


If the city of Terre Haute's administration wants to lobby state legislators and the governor to repeal Indiana's property tax caps, then those caps are a relevant topic in discussions of the city's beleaguered budget.

Such a challenge would lend legitimacy to the administration's repeated and recent references to the tax caps' impact on the city's finances. It would show that Mayor Duke Bennett sees the 2008 enactment of those tax limitations — driven by his fellow Republicans in the Statehouse — and the caps' 2010 placement into Indiana's constitution — through Hoosiers' votes — as a policy that is more detrimental than positive. If the tax caps are indeed crippling local governments in the state's blue-collar towns, then a Terre Haute-led campaign to repeal the caps would make the administration's complaints meaningful.

If, however, the mayor's team supports the Republican stewardship of tax reform and has no interest in taking on its own party over tax caps, then the administration needs to drop the issue. Those limits of 1 percent for individual taxpayers, 2 percent for rental or farm property and 3 percent for businesses are part of daily reality for Indiana communities. Depending on your viewpoint, the caps either save property owners nearly $800 million (as in 2013, according to a report by the Indiana Fiscal Policy Institute), or cost local governments the same amount. 

Regardless of the half-full or half-empty outlook, the property tax caps are not going away anytime soon.

Thus, the caps are relevant only as a context for changes necessary to make up for a 30-plus-percent drop in Terre Haute's tax revenue. Adjustments, made years ago by most Hoosier cities, are imperative here. The city's general fund deficit dates back to 2011, and the Indiana Department of Local Government Finance in January called for Terre Haute to cut spending by $8 million by the end of the year.

The salient issue is the city's responsive action. Concerns over the city finances drew Gary Morris, CEO of downtown cornerstone business Clabber Girl, to address the City Council on Thursday. Morris said Clabber Girl is growing and "committed to this community, and I need to know that this city is doing everything it can to make sure that we can move forward in a responsible way." 

Mayor Bennett submitted a 2018 budget proposal, trimmed from his original $91.1 million overall figure to $88.3 million. A $5-million loan from Redevelopment Department funds was reduced to $2 million. A $500,000 allotment for work toward a new convention center was decreased to $250,000. The administration has estimated the general fund deficit, which stood at $8.1 million last December, will drop by $1 million by this year's end.

The legislature told cities and counties to impose local income taxes and user fees, and to cut expenses to cover the lost property tax revenue. Terre Haute avoided significant measures until recently, such as a trash collection fee approved last year. A local income tax increase for Vigo County from 1.25 percent to 2.25 percent — including a public-safety portion that would, in part, fund city police, fire and 911 dispatching — currently is under consideration by the County Council.

City Council members asked Bennett about progress on privatizing the two city golf courses, which had combined negative balances of $4.9 million at the end of 2016. The mayor said the City Council can cut the courses' budgets. When asked if the courses should be closed, the mayor said that's up to the Parks and Recreation Board.

The tax caps, local income tax, golf course allotments and possible closing may be decisions in the hands of others. Nonetheless, the city's financial recovery requires the mayor to lead those strategies.

Related Stories:
• Clabber Girl CEO expresses concern about Terre Haute's budget
• EDITORIAL: Vigo County Jail needs study should help restore trust in process

2017 Community Newspaper Holdings, Inc.

Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR

Software © 1998-2017 1up! Software, All Rights Reserved