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Can Terre Haute Continue Operating As A Municipality?

By Associated Press

Posted August 22, 2017

Another state audit of Terre Haute's finances has raised doubts about the city's ability to continue to operate as a municipality.

The Tribune-Star reports State Examiner Paul Joyce on Monday expressed "substantial doubt" about the city's "ability to continue as a going concern" following the audit, which was for 2015. Joyce made a similar statement following the city's 2014 audit.

City Council President Karrum Nasser says the audit "should be a wakeup call" that the state is starting to hold cities and towns responsible for their budgets.

Mayor Duke Bennett's administration and City Council leaders are hoping the State Board of Accounts and Indiana Department of Local Government Finance can provide guidance on complying with a state mandate to reduce general fund spending by $7.9 million this year.

In a recent interview, Terre Haute Mayor Duke Bennet said the city's balanced budget from the past two years could translate to a reduction in the deficit by as much as $2 million.

Mark Levin, Clinical Associate Professor at Indiana University School of Public and Environmental Affairs,  says it's become increasingly common for cities to have substantial financial difficulties since 2008. That's the year Indiana capped property taxes at 1%. And although he can't comment specifically on Terre Haute, he points to factors that affect communities finances, like companies going out of business and costs associated with health and life insurance.

"[And] you couple that with Indiana's property tax caps, which is a constitutional limitation on how much you can actually raise from property tax increases, and so many communities in the state of Indiana have experienced some form of distress," Levin says.

Bennet has previously pointed to property tax caps as a source of financial stress on Terre Haute.

City Council will have a special meeting Tuesday night at 5:30 p.m.

Read the complete audit report below.

This story has been updated. James Gray contributed to this story.

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