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Terre Haute Receives 2nd Notice From State To Reduce Spending

The state is once again telling the city of Terre Haute to reduce its spending. This marks the second year the city has gotten the notice.

The preliminary order is part of a process to approve the city's budget for 2018. Terre Haute submitted its proposed budget to the Department of Local Government Finance, and the department found that revenue won't meet expenditures in two of the ten fund proposals.

The order tells the city to reduce spending in the general fund and the motor vehicle and highway fund, for a total of about $2.5 million in cuts. The state issued the notice last week and the city has until Feb. 5 to respond.

Council member Earl Elliott says in that response, the city will be able to address whether revenue was better than expected at the end of 2017, and whether expenses were lower.

"If there were improvements in both of those numbers, that will reduce the amount of the budget cuts that we will be required to make," Elliott says.

From there, the DLGF will issue a final order with the total amount the city needs to cut from its budget.

The city received a similar notice last year, asking officials to reduce about $8.5 million in spending. The cuts were meant to eliminate a deficit carried over from previous years.

Elliott says the city and council succeeded in creating a plan to reduce that deficit, so he isn't worried about their ability to meet the DLGF's order for this year.

"I'm confident we'll be able to work through this one," Elliott says. "This is much smaller."

Last year, the city didn't respond to the preliminary order by the February deadline. City officials also didn't inform council members of the order until August.

The city and council now have a plan to completely eliminate the deficit by the end of 2018, a year later than the state's order. The plan mainly involves a controversial extension on a loan from the city redevelopment commission.

The plan also involves small budget cuts to several different funds and appropriation of funding from areas operating at a surplus. Elliott says the same methods might work to meet this new order.

"I would expect there would be money available in other funds to be able to meet some of those expenses," Elliott says.

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