Terre Haute finances continue on the mend

At the end of November, the general fund deficit stood at $16.9 million, about $300,000 less than October, and the total cash balance grew by $1.1 million to $28.1 million.

“Everything is trending as it should,” City Controller Leslie Ellis said. Year-to-date spending in the general fund stood at 5 percent below budgeted amounts, she added.

November marked the second straight month of improvement, Ellis and Mayor Duke Bennett noted, adding that the December report is expected to reflect a continued positive trend. A projected year-end 2016 general fund deficit of $8.4 million would mark a $500,000 reduction from 2015.

“December will be the best reflection for the year and a truer picture of where we are financially, Ellis said. “Looking at every single month is not always telling because some months may have some lease payments or something else unusual that may happen one year and not others.”

The year-end report will reflect $8.6 million in property tax payments the city received Dec. 29 and a $5 million payment in lieu of taxes received Dec. 16 from sewer user fees.

“We’re right where we thought we’d be, so we’ve done a good job of managing through the year,” Bennett said. City Council approval during 2016 of a residential trash collection fee and a sewer rate increase put the city in a stronger financial picture headed into 2017, he added.

“Both of those things were very important to the community,” Bennett said. “We’ve been through the toughest parts.”

City revenues began to decline in 2008 following imposition of state property tax caps and the general fund first operated at a deficit in 2011. A 2015 report by the Indiana Fiscal Policy Institute said Terre Haute was impacted more heavily by the caps than other comparable cities. Other than a 2012 sever increase, City officials did not turn to additional revenue sources until recent adoptions of a trash fee and an additional sewer increase.

The administration projects the general fund deficit will be trimmed by another $500,000 to $1 million during the coming year. The financial picture will be even brighter if additional revenues become available, the mayor said, citing a local public safety income tax being considered by the Vigo County Council or revenue from a proposed casino that would be authorized by legislation before the Indiana General Assembly.

“Either one of those things would then close [the deficit] within about a year to a year and a half and we’ll be able to put money back into our rainy day fund, our savings account, if you will,” he said. “That will be an awesome position to be in.”

To meet the city’s cash flow needs, the administration has borrowed against future property taxes in four of the past five years and is seeking to continue the practice this year. Legal notices have been placed in the Tribune-Star seeking bids on up to $4 million in tax anticipation warrants even though the City Council has yet to sign off on the plan that would carry an estimated $100,000 to $125,000 in interest expenses.

“The administration is putting the cart before the horse,” Council President Karrum Nasser said.

Before moving forward on tax warrants, many council members want to await a decision from the Terre Haute Redevelopment Commission on an interest-free loan of tax increment financing funds, Nasser explained.

Ellis said she is following the same schedule the city’s legal department has prescribed in the past.

“No bids are awarded until the City Council approves the legislation,” she said. “This is general practice. We need to make sure we do everything timely in order that we get the warrant when it’s needed.”

The legal notices call for bids to be submitted by Jan. 24 with warrants to be issued on or about Jan. 30. However, Bennett said Wednesday the borrowing can be postponed until February if necessary.