Terre Haute City Council discusses plan for using 'transformational' money

Apr. 2—Terre Haute officials should "pause, analyze, develop" a plan on how to use $38.23 million the city will receive through the American Rescue Plan Act, said Paige Sansone, an accountant with Baker Tilly, the city's municipal financial advisor.

The city will receive half — $19.1 million — by May 11, with the second half paid in May of 2022.

"Pause, as this is a lot of money and you don't have to spend it right away," Sansone told the Terre Haute City Council on Thursday.

The city has until Dec. 31, 2024 to spend the funds.

"Think strategically and start developing a [spending] plan. Think about stakeholders and establish community priorities. This is transformational money," Sansone said.

Mayor Duke Bennett told the Council it must adopt an ordinance creating a fund for the money to be deposited, then all funds spent must be tracked in order to meet any federal requirements. The city cannot spend funds on street repair, the mayor said, which he called disappointing.

"We can spend it on wastewater improvements and broadband" and replacing revenue lost to COVID-19 expenses, Bennett said.

The mayor suggested a small panel, comprised of some city council representatives along with city administration, formulate a spending plan that can be presented to the full council for adoption. One idea, the mayor said, could be an $8 million wastewater project that may delay the need for a sewer rate increase for several years.

Councilman Todd Nation asked if the city could invest the money it receives in May while officials formulates a plan. Sansone said that is not yet known, but Baker Tilly will monitor any new federal requirements. Sansone said federal requirements could also change throughout 2024, as we done under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Councilwoman Martha Crossen questioned if the city could help fund a day care center for the homeless. Sansone said the city could provide some funding to non-profits that could then use money for such a purpose. Bennett said he wants to "tread lightly" on any such funding requests until an overall review of city financial needs has been reviewed and formulated into a plan.

Indiana is slated to get an estimated $5.8 billion from the $1.9 trillion included in the American Rescue Plan Act. More than $3 billion would go to the state, with counties receiving an estimated $1.3 billion and metropolitan cities about $853 million and towns about $435 million, according to Feb. 16 estimates from the federal House Committee on Oversight and Reform. Another $202 million would go into the state capital project fund.

Vigo County is slated to receive $20.76 million. In the three towns in Vigo County, West Terre Haute would get an estimated $460,000; Seelyville $210,000; and Riley $50,000.

Report on city finances

In an overview of the city's finances, Sansone said looking back, the city has seen growth since 2016, with the net assessed values of property increasing 15.4 percent — from $1.644 billion to $1.898 billion. "Growth helps keep the property tax rate impact down," Sansone said. "So tax rates have grown minimally over those past years, by 3.8 percent," she said.

The city has also been able to improve cash reserves, from a negative $7.2 million in 2016 into the positive with $5.1 million in 2020. "So that is quite an improvement and something you should be proud of frankly," she said.

The city's general fund improved from nearly a negative $8.1 million in 2016 into the positive with $2.1 million in 2020.

However, the COVID-19 pandemic will impact the city's revenues next year, Sansone said.

"Local income tax that you will get in 2022 is based on income that was earned in 2020, so obviously we do expect a decline," Sansone said. Gas taxes were also impacted in 2020, when motorist made few trips in March, April and May. Those revenues are returning, she said.

Some business closures in 2020 can also impact the city's assessed valuation next year, which in turn could impact property tax rates, she said.

The pandemic impacted the city by more than $3 million in 2020, Sansone said. Looking into this year, the city could see a 2.9 percent decrease, about $395,061 less, in local income tax revenue, Sansone said. However, that increases to an estimated 10 percent in 2022, or more than $1.3 million. That reduces to an estimated 3.7 percent decline in 2023, or about $464,206 and down to 1.7 percent in 2024, or about $222,985 less in local income tax revenue.

One positive for the city's budget is a new casino. The city in 2023 could start to receive funds the casino, estimated at $5 million. Sansone said the city should also develop a plan for those funds to support costs in the city's park and recreation budget, which runs deficits in city golf courses, as well as to support police and fire pensions as well as the city's general fund.

Reporter Howard Greninger can be reached 812-231-4204 or howard.greninger@tribstar.com. Follow on Twitter@TribStarHoward.