EVANSVILLE —Monday Evansville City Council gave its OK to borrowing $16 million to cover an expected revenue shortfall from late property tax payments.
The council voted 6-3 in favor of an ordinance to apply for a low-interest, short-term loan from the Indiana Bond Bank. The loan includes $15,139,000 for the city's general fund and $878,300 for the Park and Recreation Fund. It will be repaid with property tax revenues as they become available.
City Controller Russ Lloyd, Jr. said the money will make up for the expected delay in spring property tax payments normally due on May 11. Late payments are normally assessed a 10 percent penalty. However, local governments across the state are anticipating that at least some of those payments will arrive late as residents take advantage of Indiana Gov. Eric Holcomb's 60-day extension with no penalty.
The tax deadline extension was meant to help ease the economic strain from the COVID-19 pandemic caused by the coronavirus, which has caused massive nationwide unemployment.
Council members Justin Elpers, Missy Mosby and Jonathan Weaver cast the nay votes on the ordinance to borrow from the Indiana Bond Bank.
Lloyd said the loan option is available to all qualifying municipal and county governments. He said it is the first time Evansville has used the Indiana Bond Bank for such a loan.
The loan interest rate is expected to be around 1.67 percent, Lloyd said, which would equal an interest payment of about $45,000.
In March, City Council voted 9-0 to cut $2.8 million from the current city budget due to revenues lost from the coronavirus pandemic.
"It's literally going to be a bridge of two-to-three months. We are choosing this method rather than dipping into the rainy day fund," said Alex Burton, council president.
Council Finance Chair Ron Beane said using reserves in the city's $3 million rainy day fund, as well as casino gaming and local option income tax revenues, would deplete resources that will be needed to make up for expected shortfalls in those income sources in coming months.
"I don't see any way we are going to avoid that," Beane said.
Lloyd said the city receives about $23 million in combined annual revenue from the casino and local option income tax. However, the city administration is expecting significant shortfalls in those revenues for the 2021 budget year due to the casino's pandemic-related closure and the state's stay-at-home order.
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