There were no public comments Monday about how the City of New Castle plans to spend money in 2026.
The council accepted Ordinance 3961, the 2026 Budget, on first reading with a 6-0 vote; council member Mike Guffey was not at the Oct. 6 meeting.
Council President Rex Peckinpaugh started discussion about the 2026 budget by praising the work Clerk-Treasurer Ashley Huffman and her office put into crafting it.
“They fretted a lot about it,” Peckinpaugh said.
Mayor Greg York agreed that Huffman had put in a lot of work talking with each department head about their needs and limitations in 2026.
York told the council that after he and Huffman finalized the budget, she received a call from financial advising firm Baker-Tilly that changed the city’s bottom line.
Baker-Tilly had previously projected that New Castle would bring in $500,000 less than expected in 2026 due to Indiana’s new property tax cuts.
“For the city, it’s going to be more like $900,000 to $1 million,” York told the city council. “We haven’t changed the budget. We still think we can live within those parameters. We still think we can make that work ... We still feel good where we’re at right now.”
York said the city employees’ health insurance fund is still in a $4.5 million deficit, but that is an improvement from $9 million in the red in 2024. The 2026 budget includes a plan to continue paying down the insurance deficit, as well.
“I have all the confidence in the world in that plan ... Every payment’s been paid, and every bill’s been paid,” York said. “I feel very comfortable, financially, where we’re at right now. I feel good about the department heads working hard on their numbers. I feel like we’re at a good uncomfortable place.”
Huffman explained to the council that the 2026 budget looks a little different than previous budgets because Baker-Tilly and the Department of Local Government Finance offered some recommendations.
Part of the changes included combining some line items.
“While we do believe that things are going well, we just still have to prepare for our future and we do still have bills to pay,” Huffman said. For example, the 2026 budget includes 5 percent raises. “We’re hoping to take of our people who take care of our city.”
York told the council that it is confusing to see that New Castle’s overall assessed value went up, but the local tax revenues keep going down.
“I’ve got a lot of questions at the state level,” he said.
Council questions
Council member Mark Koger went on the record thanking Huffman for the way the budget was presented to the city council.
“Compared to the last budgets we had in the last four, five, six years, it was so much easier to read, so much easier to understand,” he said.
Koger asked about the Local Road and Street (LR&S) fund. Over a two year period, that budget item increased $155,000.
“Is there a reason that we’ve got so much?” he asked. “Are we going for some grants or something?”
York said those local funds are used as match money for the state’s Community Crossings Matching Grant. He said the city currently $250,000 in matching funds and will have another $250,000 next year.
He said that $500,000 will qualify New Castle for another $500,000 from the state, for $1 million total.
“That’s going to pave about a block-and-a-half,” York said. “Our stance is that we’re going to save up enough money over the next year to two years that when we do a project, we’ll get a better deal by how large the project is.”
York said he also has to take into account the ongoing construction work on State Road 3 that will continue through at least 2026.
He thanked the Street Department and Superintendent Lee Walker for keeping up on potholes throughout town, even when entire streets cannot be replaced.
“Do we have some roads that need some love? Yes we do... There are two main roads on my hit list that we need to improve,” York said. “One of them is a main artery in town. If we closed it down while we’ve got Road 3 closed down, it’d be a disaster. It just wouldn’t make sense.”
“I appreciate the grant funding match being built into LR&S,” Council member Aaron Dicken said.
Dicken asked about other cost-cutting measures, such as price shopping for city office phone service. He learned that those phone lines are tied to the county’s law enforcement communications system and cannot be easily changed.
New income taxes in 2028
York asked the council now to consider implementing new local income taxes (LITs) in 2028, when the current taxes expire. At that time, the city council will be able to raise those LIT rates within New Castle.
Those income taxes will be used to pay New Castle’s firefighter, police officers and EMS workers, York said.
The current contracts with city fire, police and EMS employees go through 2027.
“I made a commitment to fire, police and EMS... that they continue to get raises after 2027,” York said.
In order to meet that commitment, the city council will need to raise LIT rates.
Koger said he has contacted Henry County’s state legislators and told them that the new tax cuts are hurting emergency service workers.
“Our police, fire and EMS better stay on those people and they better make sure that they are doing their due diligence at the Statehouse,” Koger said. “Because if not, we won’t have the money to give them.”
Peckinpaugh added, “It not only will affect salaries, it’s going to affect their equipment and everything else.”
“I just want us to stay proactive,” York said, about possible LIT rate increases.
“Exactly,” Koger agreed. “The sooner, the better. When that’s changed, I’ll feel a lot better... We’re all together on that.”
The council also passed the 2026 salary ordinances, Ordinances #3962-3968, on first reading first reading.