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Crafting Solutions

Evansville city government adjusts amid unfamiliar territory

The 2021 Evansville city budget, similar to every city across the country, has taken a hit in a tough year where COVID-19 has decimated tax revenues and affected processes.

The Evansville City Council voted 6-3 in October to approve Mayor Lloyd Winnecke’s proposal for the 2021 city budget in its entirety. Totaling $427 million, the city planned for an expected loss of $4.3 million from tax revenue sources, including a 7.91 percent decrease in the Motor Vehicle Highway fund and an approximately $4 million loss in the Casino fund with the city projecting to take in a little more than $9 million for the fund, largely from gaming taxes and property rental. Comprising about two percent of the total budget, the fund itself is a key revenue source for the city that suffered immensely from the pandemic with decreasing funds representing nearly all of the total losses to the 2021 budget.

Initially, the city was expecting a 12 percent decrease in the Local Income Tax (LIT), but after receiving further state guidance, they expect a six percent increase in 2020.

“With the uncertainty COVID has brought, we’ve really had to adjust and think about how we were going to plan this year out,” says Evansville City Council President Alex Burton.

While Burton, D-Fourth Ward, says he was ultimately satisfied with the budget that was passed, he would have liked to see more money allotted to the Affordable Housing Trust Fund. Burton had proposed an amendment that would have moved $250,000 to Affordable Housing from the Public Safety Local Income Tax fund. He withdrew the amendment prior to the council’s final vote.

“In the middle of the pandemic, there were so many people who were unable to pay their rent and were in the process of getting evicted and housing was already an issue of concern in our community,” says Burton. “This was the perfect time to put additional funds toward that cause, but it became super politicized, so it didn’t pass.”

Only city police officers and firefighters received pay raises. Burton says this puts the police department on par with other departments around the state to have a competitive salary to attract officers in the future.

Only two nonprofit organizations, United Neighborhoods of Evansville and the I-69 BridgeLink, received funding as part of the budget. Because of the revenue decreases this year, LIT grants, which are usually available to nonprofits, were reduced substantially.

Evansville Deputy Mayor Steve Schaefer says the city was still very involved with the local United Way campaigns and supplemented some of the nonprofits who lost out on funding through the COVID-19 Crisis Response Fund of the Greater Evansville Region.

Though the city could not contribute funds to local nonprofits, the state government offered these organizations a grant program through the federal CARES Act in which they could apply for.

“Even though the city funding wasn’t there, we were able to raise money in the community from corporate and individual contributions and through state grants to try and help them maintain operations,” says Schaefer. “We’re just trying to help everybody as best we can.”

The city received about $3.8 million from the CARES Act, with the majority of those dollars being used for public safety compensation. This was in line with the restrictions and limitations put on fund distribution by the federal government. The money also had to be spent by the end of 2020.

“The good news is that a lot of these revenues are coming back,” says Schaefer. “As we reopened the local economy, money is being spent and there’s more activity. We’re hoping that we won’t have another shutdown.”

City departments start the process for annual budget funding requests in April or May. Internal meetings with staff are held to determine priorities for the year and in the summer, the mayor and controller’s office meets with each department head to go through the proposed department budgets. It’s at this point they start making cuts, recommendations, and changes.

During this time nonprofits can apply for the LIT grants as well, though it was not included in this year’s process. The City Council then has budget hearings in which every department head is called to go through the same process. Negotiations start in the fall and the council can propose amendments and approve a final budget.

“It’s a long, painful process, especially this year when we had to make so many adjustments and modifications when you are dealing with significantly less revenue,” says Schaefer. “It’s a good time to re-evaluate your programs, your operations, and how you are doing business.”

He adds the process wasn’t made any easier when they didn’t receive new projections from the state until late in the year. The state government will give projections to local government a few times each year in terms of how much revenue they expect to collect.

Another difficulty with the budget is that a large majority of revenue comes from property taxes, which is funneled through the state, and then comes back to local communities. The city only receives property tax revenue two to three times a year and some city funds will go negative because money won’t be received until later.

“It’s difficult because you wouldn’t manage your checkbook like that, because you get a regular paycheck,” says Schaefer. “Try doing it with getting paid only two or three times a year.”

With revenues being down, future budgets also are expected to be significantly impacted. Experts tell Schaefer that 2022 or 2023 is when to anticipate budget challenges, as they expect a hit to LIT in the coming years. He adds that once the city gets behind it is difficult for them to adjust and make decisions for several years out.

He says working with the current Evansville City Council has been good as they understood the situation and worked with the mayor’s office on many issues.

“I’m grateful to work with a council that is really focused on solving issues,” says Burton.
“We’re not in a space where we’re panicking. Everybody is just kind of watching to see how long this really goes on.”

[evansvillegov.org/city]
 

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