Terre Haute Mayor Duke Bennett is proposing the city take out a $5 million tax anticipation loan.
Bennett says the city lost $9 million this year alone from the state’s property tax caps, forcing the city to look for alternative funding.
“Each year we keep losing more money, and we don’t have the cash reserves in our general fund to cover us, for the next sic months after we get our payment,” he says.
Bennett says a tax anticipation loan is not an unusual practice. This will be the fourth time in five years that the city has borrowed money to keep its general fund in the black.
However, this year the mayor proposed a three-year repayment period, instead of the usual one year. Each time the city takes out a tax anticipation loan, it costs between $10,000 and $12,000. Bennett says extending the repayment period will save the city between $20,000 and $24,000.
City Councilmember Todd Nation supports taking out the loan, but disagrees with the repayment timeframe.
He says it’s a problem because there’s an election before the loan is set to be repaid.
“So pushing this forward onto the next city council and even the next mayor is, I think, irresponsible.”
Mayor Bennett says the loan will not affect Terre Haute residents. The council plans to continue discussions about potential revenue sources to help build cash reserves.
The council is expected to vote on the loan Thursday.