Huntington's financial problems simple: city spending more than it's taking in

Huntington County Auditor Kathy Juillerat speaks during the Huntington Common Council meeting on Tuesday, Nov. 10.
Huntington County Auditor Kathy Juillerat speaks during the Huntington Common Council meeting on Tuesday, Nov. 10. Photo by Cindy Klepper.

Huntington's financial problems can be stated simply: the city is spending more than it's taking in.

The city is headed toward insolvency, financial advisor Todd Samuelson said, a point where it can no longer pay its bills - or its employees.

The city's operating balance, which should be at about $1 million, was just $650,000 coming into 2009; it will sink to $200,000 at the end of 2009.

"Any one emergency can eat up $200,000 very quickly," said Samuelson, from the Indianapolis-based financial consultant company Umbaugh.

"The city will be out of money in 2010," Samuelson said - $500,000 in the red - if something doesn't change.

The question the city must answer to prevent that from happening, Samuelson said, is "how to raise additional revenues or how to operate differently to fit within a new level of resources."

Samuelson, speaking before a packed house at the Nov. 10 meeting of the Huntington Common Council, outlined three ways the city could begin climbing out of its financial bind:

• Collect more in property taxes in 2010.

This could be done through an appeal to the Indiana Department of Local Government Finance (DLGF) to raise the city's maximum levy - the maximum amount it can collect through property taxes - for 2010 to make up for the tax revenue the city lost when assessed values, and with them tax payments, were lowered on appeal.

The amount lost through appeals, originally estimated at $1.7 million, is now estimated at $1.39 million.

Samuelson said the increased levy, if granted, would be for one year only. The additional income would be raised by increasing the amount of taxes paid by city property owners for that year only.

A successful appeal would get money back into the city coffers, Umbaugh associate Paige Gregory said, but it's only "a very temporary fix."

Council members say they plan to pursue an appeal and asked Samuelson to provide them with a quote for assisting the city in filing and arguing the appeal. A public hearing must be conducted, Samuelson said, and community support for or opposition to the plan will play a role in the DLGF's decision.

• Find new revenue sources.

The $10-a-month trash pickup fee for city residents, which has been proposed by Mayor Steve Updike, is one possible new revenue source, Samuelson said, and one that many cities are instituting. Fees could be charged for other city services, Samuelson said, such as street lighting and snow removal.

The trash fee is the only such fee that has been proposed locally. A public hearing on that fee is set for Nov. 23, and the council may take a vote on the proposal at its Nov. 24 meeting.

• Cut services.

Samuelson said the city needs to conduct a long-term study of the efficiency of how each city department, and the city as a whole, is operated - a study Councilman Brooks Fetters said is desperately needed. At the end of the study, which could take six to eight months, city administrators could then decide where to make cuts.
What the administration needs to know, Samuelson said, is, "What's most important to the folks here in Huntington?"

Fetters asked Samuelson to provide the council with a quote for the cost of guiding the city through that evaluation process.

Steve McIntyre, who hosted an informal community meeting prior to the Nov. 10 council meeting, said those attending that session offered a variety of possible cost-cutting measures - including selling land the city purchased to build a north side fire station and to drill new wells, combining city positions, cutting city employees' salaries, selling the former fire station on South Jefferson Street, halting funding to animal control and all civic groups, canceling Christmas lights at Sunken Gardens, closing the parks and eliminating the park board, privatizing garbage pickup, discontinuing leaf pick-up, cutting overtime, cutting street lights, eliminating take-home vehicles for city employees, eliminating seasonal help and more.

A dozen city employees, including six firefighters, have already been laid off as the city attempts to cut expenses.

Fire Chief Matt Armstrong pointed out to council members that Huntington University has "taken almost $40 million (worth of property) off tax rolls," resulting in a loss of $900,000 in tax revenue. The university, he said, does pay taxes on a little more than $2 million worth of property.

In addition, he said, about half the fire department's runs are "medical assists" - medical calls in which firefighters assist Parkview Huntington Hospital medics.
Huntington resident Doug Henry told council that he believes Huntington firefighters saved his life when he suffered a heart attack in February 2004 and the PHH ambulance was stopped by a train.

"If it wasn't for the firefighters at the Etna station, I probably wouldn't be here today," he said.

"We make the scene quite often before Parkview Memorial Hospital gets an ambulance there," Armstrong said.

There is no payment from PHH for these runs, but Armstrong said he is negotiating with the hospital to provide free physicals and pulmonary testing to the firefighters.

"At least it's a start," he said.

Armstrong is also applying for a federal grant that could provide funding to rehire some of the laid-off firefighters.

Tom Hanify, an Indianapolis firefighter who serves as president of the Indiana Association of Firefighters, said his organization will assist in that grant application, but that the grant would provide funding for only two years.

Hanify urged the council to look toward an increased Local Option Income Tax (LOIT) to lessen the city's dependence on property taxes, as well as finding ways to get tax-exempt organizations - schools such as Huntington University, churches and fraternal organizations - to pay their fair share, possibly through user fees.

"The principle function of government ... is the public's safety," Hanify said, urging council to find a way to bring the laid-off firefighters back.

Huntington County Auditor Kathy Juillerat and Huntington County Assessor Teri Boone, who explained to council members how property tax appeals are decided and how payments to taxing units are figured, said they will institute a change in procedures to keep taxing units updated on the amount of income they can expect from property taxes.

"As soon as we have the figures, we will give them to all units," Juillerat said.

City officials say that this year's $1.39 million shortfall came as a surprise to them and that they learned of the problem only in mid-October.

Boone said the $1.39 million in lowered taxes came on approximately 700 appeals filed in 2006 and 2007. She added that the assessed values for 2010 are expected to be down by about 20 percent, which will result in either a higher tax rate or less income to taxing units.