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March 6, 2013

State set to approve city’s 2013 budget

But questions remain about health of finances ahead of report by independent firm hired by City Council

Arthur Foulkes The Tribune-Star

TERRE HAUTE — The City of Terre Haute’s 2013 budget is expected to be approved by state overseers later this week, a city official said Tuesday.

The Indiana Department of Local Government Finance, which gives final approval to all city and county budgets, is expected to approve Terre Haute’s approximately $79-million budget Thursday, said Leslie Ellis, City Controller.

However, the approved version of the budget is “just a starting point” and will need to be adjusted as the year moves along, Ellis said Tuesday.

Assessed property values in Vigo County were down by more than $300 million – or 7.5 percent – in 2012. The biggest drop came in the City of Terre Haute and could result in a loss of between $2 and 3 million dollars in property tax revenue for the city government this year. As a result, individual property tax rates will likely rise, meaning more local taxpayers will hit their 1- 2- or 3 percent property tax cap. That will cost the city an unknown amount in lost revenue, Ellis said, adding it’s still unclear how much revenue the city will actually receive in 2013.

“We will definitely make some more cuts” as 2013 rolls along, Ellis said. “This [approved budget] is just the starting point.”

The city, like other local government entities, receives tax revenue from the state of Indiana in two payments each year. The city’s net payment in December – after deductions were made for the tax caps – was $9.8 million. The payment to the Terre Haute Sanitary District was $3.1 million, Ellis said.

In a voice vote without opposition, the City Council last month decided to transfer $20,000 from the City Controller’s budget to the City Council budget to hire a financial consultant to help the Council better understand the city’s budget, which has shown a negative balance in its general fund the past two years. Neil Garrison, D-5th, the sponsoring councilman, said the move is necessary to provide another source of budget information, since most now comes from the mayor, the controller or the city’s independent consultant.

“To be safe I believe it is in the best interest of a city council to seek an independent source to assemble a more complete and non-political picture [of city finances],” Garrison said Tuesday. “In recent years, myself and, I believe, other members of [the] council have had doubts about our true financial condition.”

Mayor Duke Bennett, reached late Tuesday, said the entire effort to hire an independent consultant is “politically motivated.” He also defended the consulting firms hired by the city, such as H.J. Umbaugh & Associates of Indianapolis, who help the city with its budget.

The two consulting firms most used by the city have been employed by several different administrations and work for multiple cities, Bennett said.

“They are not political at all,” the mayor said. “They help us ensure that the data is accurate. If they became political, they’d lose business all over the state.”

Reporter Arthur Foulkes can be reached at 812-231-4232 or arthur.foulkes@tribstar.com

 

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