ANDERSON, Ind. — The recent economic recession, statewide property tax caps and a delayed property tax collection schedule combined in 2009 to create a budget nightmare for municipalities all over the state.

In Madison County, some local governments had to take drastic measures to balance their books, including laying off workers and transferring the costs of services to their citizens. Other municipalities have so far been able to escape the budget crunch relatively unscathed.

In Anderson, city officials had to cut millions from the city’s budget after an independent study concluded that property tax caps would have a greater effect on the city’s finances than originally thought. The result was the institution of a trash pick-up fee for residents and the elimination of 72 positions.

“The whole issue dominated local governments in 2009,” Anderson Deputy Mayor Greg Graham said. “With caps being lowered, it will still be a huge issue for local governments this year.”

Graham said Anderson’s drastic measures were necessary to balance the budget.

“If we hadn’t taken the strong measures we’d be in worse shape,” he said. “We’ll get through it, but it won’t be without its challenges again this year.”

Compounding the problem is the property tax collection process, which has been delayed for the last few years. Cities, towns and the county don’t know how much money they have to work with for a year until they see how many residents pay their property taxes.

“It’s very hard to run a business as big as this without knowing how much money you have,” Graham said.

The county government has been hit hard by budget cuts in recent months as well. In November, after several heated meetings between the County Council and county employees, the council mandated that all employees paid through the general fund take a four-day furlough by the end of 2009. The measure was aimed at helping the council cut $280,000 from its 2009 budget.

In the county’s second-largest city, Elwood, officials spent much of 2009 dealing with budget cuts as well. Elwood Mayor Merrill Taylor said that city had laid off five workers and now has about 100 employees.

“We have got it bad,” Taylor said. “All the department heads are told they are not to order anything they don’t absolutely need and they need to go through me before they order anything. We had to borrow money from our utility department, of course, to make ends meet until we got a (property tax) draw.

“We’re still at the point where everything has to be watched closely.”

Like Anderson, Elwood instituted a trash pick-up fee in 2009 and might have to charge for other services in the future, such as ambulance runs, Taylor said. Although the city has received some federal stimulus money to upgrade its utility departments, city officials still must tighten their belts, he said.

Alexandria Mayor Jack Woods said his city was holding its own during the budget crisis but that it had cut down on spending in the last year. Alexandria has not laid off any of its more than 50 employees, he said.

“We cut down on spending quite a bit, let our department heads know that we just have to watch what we’re buying,” he said. “It’s like you do your home budget.”

Alexandria has started charging its residents for large trash pick-ups instead of providing Dumpsters free of charge. That city also is looking into other alternatives for normal trash pick-up, such as a “pay as you throw” program, Woods said.

“We didn’t know exactly how much this was going to affect us,” he said. “We decided that we weren’t going to take any chances. We went ahead and started cutting down on our purchasing and began to see how we could do things differently in the city. This is a hard thing for the cities to do, but we’re making our way.”

Pendleton Town Manager Doug McGee said that town had been watching the budget situation closely for the last two or three years, preparing for the effects of property tax caps.

“We had planned ahead for that and we were able to make adjustments and relatively were able to do real well,” McGee said. “While it’s something that needs to be done, it’s just a matter of planning ahead and making it work.”

Pendleton has not laid off any of its 28 employees and has been focusing on budgeting first for its absolute necessities, such as safety concerns, which could lead to less focus on other items, such as paving. Town officials have frozen municipal raises and increased what employees pay for health insurance.

“There’s certain things that must get done,” McGee said. “To a certain extent you have to wait and see what falls apart during the winter. I think prioritization is the big key to getting through anything like that. It’s pretty much no different than handling your checkbook at home.”



Contact Aleasha Sandley: 640-4805, aleasha.sandley@heraldbulletin.com.