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> $3.4 million budget shortfall for 2020
Southsider2k12
post Feb 11 2020, 04:34 PM
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https://wsbt.com/news/local/michigan-city-b...of-future-funds

QUOTE
3.4 million in the hole. It's a staggering amount of money that Michigan City is facing in a budget shortfall. But how and why did it happen? That’s what WSBT wanted to know.

Mayor Duane Parry claims the previous administration in Michigan City mismanaged a lot of money — including millions of dollars that come from the casino.

City leaders say it’s a problem that can be fixed, but they’ll have to run a lean operation for quite a while.
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Southsider2k12
post Feb 11 2020, 04:35 PM
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In response to a recent News Dispatch article about the city budget shortfalls, I felt the need to write this to inform the public and be a voice of reason from the city council. There’s been inflammatory rhetoric stating, in my opinion, the city is in financial ruin. I agree we can always look for ways to be more efficient with city finances, but I feel this can be fixed with a few changes to some procedures. No, this is not a great situation, but these issues can and will be be fixed moving forward.

Regarding the $3.6 million shortfall reported by the News Dispatch, there are explanations I feel the public needs to be aware of. There was no stealing, fraud, or any embezzlement. It was simply overestimating the expected revenues which produced cash shortfalls. Departments did not overspend expenditures set forth by the city council and mayor approved budgets.

The first $1.6 million dollars transfer in December from the Riverboat and the (County Economic Development Income Tax) CEDIT funds into the general fund was needed because of the overestimating of tax dollars coming into the city, and not departments spending over what was actually budgeted for the 2019 year. The other $1,798,000 transferred from the Riverboat and CEDIT funds in January 2020 are broken down as follows.

Fund 2002 – Aviation Operating - $55,000 transfer - Due to lower than normal revenues generated from fuel sales, the aviation operation budget suffered a cash shortfall. It was not due to over-spending the budget. In fact, this budget was so tight regarding budgeting expenses there was no money elsewhere to be transferred to cover the shortage in fuel sales. Thus, the city needed to make a transfer to keep this fund from finishing 2019 in the red.

Fund 4002 - Cumulative Capital Development - $143,000 transfer – During 2019, there was a purchase of a pumper truck in the amount of $800,000. This purchase expended a huge amount of funds at one time. After this large purchase there was poor forecasting on the anticipated revenues to cover the expenditures.

Fund 5004 – MC Employee Medical Trust Fund - $600,000 transfer – This fund was budgeted too closely to past actual expenditures. When the expenditures increase at any point in any year the reserves in the fund are expended. This account started 2019 in the red due to rises in spending due to the city covering more catastrophic illnesses than usual. Now with the current transfer, this will make the account solvent, and provide a cushion to absorb any unforeseen expenditures.

Fund 7002 – Police Pension - $600,000 transfer & Fund 7003 – Fire Pension - $400,000 transfer – In 2008 the state passed a law where these accounts no longer received property taxes, and there were other miscellaneous expenses that were no longer reimbursed by the state. The city did not make the adjustments in 2008 to account for this lack of revenue, and over time the reserves in these funds were eaten away. Eventually these accounts ended up in the red. These transfers along with taking into account the changes in state funding, will make these accounts solvent again and provide some reserves going forward.

Finally, I am giving this report to tell the public this is not an ideal situation, but it is not the doom and gloom that has been allowed to get out into the public. As I stated before, there was no stealing, fraud, or embezzlement. There was not overspending of the council and mayor approved budgets, but rather an overestimation of revenues coming into the city coffers. This city is already making the proper adjustments, and I want everyone in the public to know this is a very fixable situation, and this city will continue to move forward in the future.


Bryant Dabney, MBA
1st Ward City Councilman


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