TERRE HAUTE — County and city government, schools, airport, library, a sanitary district and other taxing units in Vigo County will see total property tax revenues reduced by more than $15 million for 2010.
The Indiana Department of Local Government Finance on Monday approved final budget numbers that reveal property tax revenue reductions for Vigo County.
The City of Terre Haute will have revenues reduced more than $6.43 million, plus a reduction of more than $1.31 million in its sanitary district. Vigo County will have a reduction of more than $3.02 million and Vigo County School Corp. will see revenues cut more than $3.22 million.
The reductions come after the Indiana General Assembly moved to reduce property taxes, relying more heavily on income and sales taxes. Taxpayers will vote in November on whether property tax caps should be placed into the state’s constitution.
However, even with a property tax cap on residential homes, some taxpayers could still see property tax increases this year, within the cap limit, because of a reduction in a state homestead credit.
The property tax reduction for the Vigo County School Corp. is in addition to a state cut of $4.5 million in the corporation’s general fund in its 2010 budget, said Donna Wilson, chief financial officer for the school corporation.
However, the property tax revenue reduction is somewhat less than the Vigo County School Corp. had anticipated. “We were anticipating losing $3.4 million,” Wilson said.
Fortunately for schools, the state legislature appropriated money in a levy replacement grant, Wilson said. That grant offset about $1.1 million in property tax revenue reductions last year and will offset part of the reduction in property tax revenue this year.
“With the $3.2 million shortfall, I anticipate that we will probably realize about a $1.8 million loss in revenue for 2010,” Wilson said. “We are very fortunate here because we did have a cash balance in our capital projects funds. I would anticipate that most of that loss will be absorbed in capital projects because the transportation budget is a very tight budget.”
In addition, the school corporation will have to consider safety issues for bus replacements, Wilson said.
“With the loss of that revenue in capital projects, we will have to look at our projects that are planned forward. Obviously, the first priority will be to keep buildings open, safe and warm. We will probably look at equipment and deferral of projects such as carpeting.”
“I think initially we are going to be in pretty good shape,” Wilson said as the school corporation this year and next will pay off 10-year energy saving projects, which will result in a $1.5 million reduction in expenses.
The energy-saving projects included new windows, doors, chillers and boilers in schools. The corporation maintains 29 schools plus two other buildings, one for food and bus maintenance and another for business/curriculum offices.
Rainy Day funds could be tapped
Vigo County could dip into a Rainy Day Fund, which has about $11 million, as well as an operating balance of about $10 million to cover property tax revenue cuts. However, such measures will only be short-term, said Vigo County Auditor Tim Seprodi.
“It’s something we need to start working on for the long-term through a cooperative effort with other taxing units,” Seprodi said.
One option could be a local food and beverage tax, which would collect monies from more people than just Vigo County residents. The Indiana General Assembly would have to approve such a tax.
Terre Haute Mayor Duke Bennett said such a measure could be an option to discuss with state legislators next year, especially as the only other option is for the county to implement a local optional income tax.
“We will have to explore any new source of revenue, just to see if it makes any sense, but I am not going to be big on raising any taxes,” Bennett said “We will have to look at ways of reducing costs, too. We are not going to be able to hire more people to do anything. We have to look at ways to make ourselves more efficient.”
Bennett said the city has already combined its weights and measures department with Vigo County’s department. “We will have to look at other things like that,” he said.
“We cut about $4 million out of this year’s budget in anticipation of reduced revenues and we still will have to make more cuts throughout the year to put us in line with that loss of revenue,” Bennett said.
The city has about $4.7 million in its Rainy Day Fund, a fund the city “may have to tap into,” Bennett.
The mayor said the city will have to increase rates on at least one service – sanitary sewage disposal. The city, under federal law, must eliminate any combined stormwater and sewage discharges.
“There was a lot of debt taken out by the city over the past years. We still owe about $73 million in bonds,” the mayor said.
The city paid off one bond for about $1 million last year, the mayor said, which will offset the reduction in property tax revenues this year. However, to make required upgrades to the city’s sewer treatment plant, the city will have to raise new revenues, the mayor said.
“We have some of the lowest sewer bills in the state now and they are artificially low because of the sanitary district. The only way to raise new revenue is to raise the sewer bills, but we will try to do it in moderation and not just dump it on people all at once. It will be smaller increases over a 20-year period,” Bennett said.
The mayor said he expects to go before the City Council, possibly in May, to discuss higher sewer rates, which must be approved by the City Council.
Other reductions include the Terre Haute International Airport-Hulman Field, at $148,114. Last year, airport revenues from property taxes were cut $50,982. The Vigo County Public Library will see a reduction of $595,471 this year.
“We reduced our expenses in 2009 by closing three branches, knowing we would have this huge revenue reduction in 2010. The reduction is a little higher than a study conducted in 2008 that projected $565,000” in revenue reductions this year, said library Director Nancy Dowell.
However, Dowell said reduction projections for 2009 were about $40,000 higher than actual revenue cuts.
Howard Greninger can be reached at (812) 231-4204 or howard.greninger@tribstar.com
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