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Annual city budget battle begins

Laurie Wink
The News-Dispatch

MICHIGAN CITY - The annual battle between the City Council and the city administration over next year's budget has begun.

Opposing views of how to spend, or not spend, the city's revenue played out Tuesday in a council finance committee meeting, followed by the actual council meeting.

Unlike previous years, the council's finance committee members are now reviewing the 2010 budget proposed by Mayor Chuck Oberlie and recommending changes to the full council. The city council already has challenged Oberlie and Controller John Schaefer to use riverboat funding for no more than 35 percent of city operating expenses.

Riverboat funds are received as a share of Blue Chip Casino revenue and are intended to fund special city projects. In the past few years, the city has used these funds to cover revenue shortfalls while waiting for the county property tax assessments for 2005-pay-06 to be approved.

Oberlie and Schaefer have proposed a $38.8 million city budget for 2010, an amount substantially less than the 2009 budget of $46 million. Most of the reduction is the result of no capital projects proposed in the budget for next year. Instead, these projects will be approved on a case-by-case basis, as they are ready to be funded.

City administrators have recommended no changes in salaries and wages, because of expected reductions in property tax revenue. In addition, the city plans to eliminate: one full-time and one part-time custodian position in city hall; a full-time secretary in the human rights department; one part-time custodian in the police department; and a full-time mechanic in central maintenance.

Oberlie said these cuts came from recommendations made by the taskforce of government efficiency in a report issued June 24.

Council members Ron Meer, D-3rd Ward, and Rich Murphy,D-1st Ward, said after the council meeting they think the mayor hasn't included enough of the taskforce's cost-cutting recommendations. Meer also suggested the city consider voluntary furloughs for city employees, as a way to further reduce salary and wage expenses.

Finance committee chairman Marc Espar, D-2nd Ward, agreed to call several committee meetings next week to discuss ways to further cut operating expenses. The recommendations will be provided to the mayor and council members prior to the Sept. 15 council meeting.

Council president Bob McKee, D-at-Large, said the five budget-related ordinances the council considered on first reading Tuesday will have a second reading on Sept. 15. McKee plans to call a special council meeting on Sept. 22 for the third and final readings of the ordinances to allow time for a final budget to be prepared.

Oberlie's 2009 proposed budget was $3 million lower than the city's budget in 2008. The council trimmed another $3 million before giving final approval.

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Contact Laurie Wink at lwink@thenewsdispatch.com.

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Officials working on lowering city budget

Laurie Wink
The News-Dispatch

MICHIGAN CITY - City Council President Bob McKee, D-at-Large, says both the council members and city administrators have the best interests of city residents in mind when developing a final budget. They just don't always agree on how to get there.

Budget negotiations began Aug. 11, when Mayor Chuck Oberlie and John Schaeffer, city controller, presented the council with a proposed $38.8 million 2010 budget.

Oberlie said the 2010 budget is lower than 2009's $46 million because it doesn't include $7.15 million in projects like roads, sewer systems and water service, for example. The city council wants to act separately on them as individual projects are ready to move forward, Oberlie said.

"Capital projects that are currently in various phases of design will be presented for construction appropriations once the design and bidding phases are complete," Oberlie said.

Among the projects he would like to move forward in 2010 are the Gateway Park at the former Harborside Homes site, redesigns of Adams and Patriot parks and plans for the new boat launch facilities adjacent to the NIPSCO plant.

The lower 2010 budget also takes into account an expected drop in property tax revenue in 2010, because of state property tax relief measures. The city also is planning to cut the equivalent of four positions, some part-time and some full-time. Other cost-saving measures were recommended by a city task force on governmental efficiency but are not all reflected in the 2010 budget.

McKee said the council, which is responsible for how the city spends its money, is requiring city administrators to use no more than 35 percent of the $11 million annual riverboat funds - a total of $3.85 million - to cover operating expenses. The limit on use of the riverboat fund drops to 25 percent in 2011 and 20 percent in 2012.

The council reasons the city shouldn't depend on uncertain casino revenues to operate, saving it instead for capital projects.

"The council unanimously felt the city should limit riverboat spending," said Rich Murphy, D-1st Ward, a member of the finance committee. "Every other community in Indiana seems to have to tightened their belts."

According to McKee, while the overall city budget, including projects, has declined, the general fund expenditures for the city's departments have gotten larger each year, growing from $18.5 million in 2006 to $23.8 million proposed in 2010.

The mayor states in his budget proposal his objective is "to keep as many city employees as possible with a minimum amount of loss to them." Council finance committee chair Marc Espar, D-2nd Ward, said the mayor and council have different philosophies about who they represent.

"I was elected by the people for the people," Espar said, "not by the government for the government. I feel my ward elected me to see that they get the biggest bang for their buck."

The council finance committee is meeting next Tuesday, Thursday and Friday to continue hashing over the 2010 budget before making recommendations to the full council. The final budget must be sent to the Indiana Department of Local Government Finance by Nov. 2.

Contact Laurie Wink at lwink@thenewsdispatch.com.

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$3.5M+ cut from 2010 city budget

Laurie Wink
The News-Dispatch

MICHIGAN CITY - The City Council on Tuesday night slashed more than $3.5 million from the city's proposed operating expenses for 2010.

Council members voted to approve three amendments to ordinances governing next year's budget. Four amendments were recommended by the council's finance committee, but one amendment failed by a 5-4 vote.

A special City Council meeting has been set for 6:30 p.m. Sept. 28 to hold the final reading of the budget ordinances, including amendments, and provide a formal public hearing. Once the council approves a final 2010 budget, Mayor Chuck Oberlie can veto it, but the veto can be overturned by a majority council vote.

Finance committee chair Marc Espar, D-2nd Ward, said the changes reduced the mayor's proposed $7.3 million expenditure from Riverboat funds to pay for about 65 percent of the city's operating expenses. The council limited Riverboat spending to fewer than 34 percent of the operating budget, in line with the council's ordinance mandating less reliance on Riverboat revenue to pay for operating the city.

The first amendment was approved unanimously, and called for reducing health insurance expenses by more than $200,000, saving $63,250 by eliminating a 27th pay period for salaried employees, cutting $175,000 from the education fund for the Early Learning Center and cutting out $120,000 designated for public access TV.

A second amendment reduced the park department's seasonal wages by $20,000. The council voted 5-4 in favor or a third amendment to remove $150,000 for a tree inventory. The close vote reflected a difference of opinion on the value of an inventory at this time. Councilman Ron Meer, D-3rd Ward, said the city couldn't afford to inventory trees at a time when it is thinking about possible employee layoffs. Pat Boy, D-4th Ward, favored the budget item because it would bring in a matching grant from the Great Lakes Stimulus Program to help the city manage that aspect of the city's infrastructure.

The council voted 5-4 against an amendment to remove $27,888 in salaries and wages in the city clerk's office. Espar explained the proposed funding cut was for clerical support for the Board of Public Works, which is outside the clerk's office. The finance committee had considered shifting the clerical support to the mayor's office.

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Ind. cities face stark budget realities for 2010

Workers in Elkhart, Loogootee and Knox County probably won't see pay raises next year. Some in Clark and Lake counties might not get paychecks at all. Michigan City is slashing millions from its proposed budget. And Anderson is looking for creative ways to dig out of a projected $8.2 million budget shortfall.

Communities across the state are facing stark budget realities as they look to 2010, with many saying General Assembly-approved state caps on property taxes and rising health insurance costs are putting the squeeze on local spending.

Lake County expects to cut more than 100 jobs to help fill a $19 million hole in its 2010 budget. That's on top of nearly 120 positions cut in 2009 to close budget gaps.

Council President Larry Blanchard said the job cuts aren't pleasant but, "unfortunately, it has to be done."

"You're touching people's lives, their livelihoods," he said.

Cuts could also come in southern Indiana's Clark County. The county council has asked department heads to voluntarily cut 22 percent of their budgets for 2010 in anticipation of a $4 million budget gap next year.

"We hate to say it's going to come down to personnel, (but) there's not enough papers, pencils and pens you can cut," said council president David Abbott. "This is the last thing we'd want."

Layoffs might not help Anderson, which expects to be short nearly five times more money at the end of 2010 than it had originally thought.

City officials say the state's estimates of how much Anderson would lose with the tax caps had assumed a statewide increase in assessed valuation.

City financial consultant Jim Steele said Anderson's assessed valuation fell 25 percent from 2008 to 2009, and the county's fell 19 percent.

"It's the state's numbers that were off here," said Board of Works Chairman Greg Graham. "Our area is not growing. I don't know how they could not know that."

Anderson Mayor Kris Ockomon said job and program cuts might not work with a deficit so large. The city would have to lay off an estimated 25 workers to save just $1 million.

"You'd have to shut the place down," Graham said.

In Michigan City, officials hope to save more than $63,000 by eliminating a 27th pay period for salaried employees and cutting funding for an early learning center, public access television and seasonal employees.

Mayor Don Bowling of Loogootee said he recommended no pay raises for city workers because of an anticipated drop in tax revenue.

Council member Rick Norris opposed the freeze, which passed on a 3-2 vote.

"I don't think it's right to leave employees out when we are buying other things," Norris said.

In Knox County, employee pay will be frozen but departments will be spared significant cuts.

The county's proposed $7.9 million budget, which is about $300,000 higher than officials had hoped.

Council president Tim Ellerman said much of the increase is due to rising employee health care costs.

"Our provider is continually spending $1 million each of the last two years and we've paid a little over $500,000 each year," Ellerman said. "It's cost them $1 million extra, and they'll try to recoup that one way or another."

Community leaders say they don't expect to see improvement anytime soon.

Elkhart Mayor Dick Moore has proposed a $55 million spending plan, down from 2009's $55.5 million. He said he considers the city fortunate because it only had to trim small amounts in several areas and has savings to cover an expected drop in property tax revenue of $4.5 million to $6 million.

"We're very fortunate we didn't ignore what was coming," he said.

Moore said he will ask his directors to avoid spending as much as possible in 2010, just as they did in 2008 and 2009. Most departments were able to return 8 percent of their budgets to the general fund, which helped avert cuts for 2010, but he said that can't be permanent policy.

"You're doing without, thinking next year will be better, next year will be better," he said. "We can't do this forever."

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Tough decisions
Final public meeting held on budget

Laurie Wink
The News-Dispatch

MICHIGAN CITY - A special Monday meeting of the City Council provided a final public hearing on the 2010 city budget and a final vote by council members on budget ordinances.

The meeting didn't attract anyone from the public and the ordinances all passed on unanimous votes. The tough decisions had already been hashed out in numerous meetings between the council's finance committee, Mayor Chuck Oberlie and John Schaeffer, city controller.

The only new agenda item was a public announcement of the city's intention to file an appeal with the Indiana Department of Local Government Finance to recover a nearly $3 million shortfall in 2006-pay-07 property tax revenues. The shortfall was estimated by Schaeffer based on financial projections based on County Auditor Craig Hinchman's decision to use 2005 assessed values, rather than the contested 2006 figures.

Oberlie said the decision to appeal hinges on seeing the final numbers coming from the county, and would have to be approved by the city council. But the city wants to have the option of an appeal. Another alternative that might be considered is to file a suit with the Indiana Tax Court to force the use of trended 2006-pay-07 property values approved before Hinchman made his decision.

Following approval of the budget by the city council, Oberlie said he felt both sides had been able to reach a middle ground.

"I think we will continue to work together to implement the recommendations of the efficiency task force," Oberlie said.

The council had already cut more than $3.5 million from Oberlie's original operating budget for 2010. Finance committee chair Marc Espar, D-2nd Ward, said the 2011 budget will require even more cuts.

"Unfortunately, we still have a lot of work ahead of us," Espar said. "We're looking to have to make $2 million in cuts next year."

Contact Laurie Wink at lwink@thenewsdispatch.com.