NEWS

Selling property one idea for plugging Floyd budget gap

Grace Schneider
The Courier-Journal;
  • State warns Floyd's %2412.4 million general fund would be at a mere %2418%2C000 at end of year
  • Floyd leaders broached the controversial idea of selling Floyd Memorial Hospital in New Albany

Faced with a worsening budget crisis and fears that its money may not last the year, officials inFloyd County, Ind., say they're considering boosting local income taxes and selling off chunks of county-owned property.

The state's Department of Local Government Finance has warned that by the end of year, Floyd's $12.4 million general fund would be at a mere $18,000, without money for emergencies or unexpected expenses.

Floyd's leaders, a group of county council members and county commissioners, have assembled a short list of land and buildings to put on the sale block — and have even broached the controversial idea of selling Floyd Memorial Hospital in New Albany.

"There are several things we could look at. None of it's pretty," said Brad Striegel, a Democratic county council member and candidate for county sheriff.

Without a casino or large tax-generating industries to fatten its coffers, the county of 75,200 residents has been hit with rapidly shrinking revenues thanks in part to the state of Indiana eliminating the inheritance tax and slashing road funds, which had previously paid hundreds of thousands of dollars annually.

Some elected leaders also openly question the county's move to buy the oldPine View Elementary School for $1.2 million in January 2011 and spend $1.8 million to create a new government center there that also houses a youth shelter, planning and zoning and other county offices.

At issue for critics is the fact that the county'sauditor, treasurer, assessor and recorder offices can't be moved there from the outmoded city-county building in New Albany because state law requires those offices to be located in the county seat. Pine View is outside the city limits.

"I'm not sure why we're out there in the first place," said Republican council president Jim Wathen, who was elected in 2012.

Another factor in Floyd's poor finances is themore than $2.6 million the county paidfor two high-profile murder trials — former Indiana State Trooper David Camm, who was acquitted of killing his wife and two children; and William Clyde Gibson, who's been sentenced to die for one woman's killing, pleaded guilty to another and faces a third capital murder trial in June.

Officials dug into economic-development income, or EDIT funds, and riverboat reserves to pay trial bills, but the county faced a projected $3.6 million deficit last fall when looking ahead to this year.

In response, the council, which handles the purse strings and sets the annual budget, at that timeslashed budgets by 25 percent of all departments receiving general fund money — from public defenders and courts to the county auditor and sheriff. It also cut the county's cost by $800,000 for health insurance, passing big premium increases to angry employees.

The state's Department for Local Government Finance approved the budget earlier this year, reporting that about $500,000 in additional property tax collections had helped ease the budget tension.

But the state agency sent a reminder to county officials about its tenuous cash position earlier this month when it rejected$116,000 in additional appropriations that the council had approved in January and February. That means that the county had just $12,156 left to spend.

Wathen said thecouncil shouldn't have approved the requests, which included restoring a portion of deputy public defender salaries that were cut last fall.

"It's almost like getting people to admit they have a problem. We don't have the money," he said.

The fact that the state rejected the appropriations "was a wake-up call. To get rejected is significant," added Auditor Scott Clark.

To fill the budget hole in the short-term, a committee of three councilmen and Commissioner Chuck Freiberger has discussed the possibility of selling assets.

That includes the 4H Fairgrounds off Green Valley Road; the North Annex, at 3005 Grant Line Road, located at the front of Sam Peden Community Park; and the Reisz building on Spring Street, west of Vincennes.

Also mentioned is the 26-acre O'Brien property west of Ind. 64, which the county received in a swap with Georgetown when the town decided to abandon plans for building a sewer treatment plant there.

Then there's the hospital, which county officials say Floyd owns because of taxpayer money used to start the facility 61 years ago. Any sale would need the approval of three commissioners who serve as the county's executive board, as well the seven-member council and the hospital board of directors.

Wathen acknowledged that getting broad support for a hospital sale would be difficult, but county government would receive several million dollars a year from having the property back on the tax rolls. It's tax-exempt now because it's government owned.

Also, after paying off debts, he said, the county could invest proceeds from the sale, and use the interest to supplement operating funds. Floyd Memorial spokeswoman Cindy Ferree said that no one in county government has approached the board so there have been no discussions.

Wathen said he'd oppose other property sales, but other council members see an upside. For instance, Reisz — which houses adult probation and community corrections — could be sold after its staff is moved to the city-county building, Striegel said, adding that the sale may bring less than $1 million.

The money could rebuild cash reserves, he said.

The commissioners entertained offers about eight years ago to sell the North Annex, but they pulled it off the market when the economy soured and it's been boarded up since offices and a youth shelter were moved out two years ago because of health concerns with mold and asbestos.

Councilman John Schellenberger said he's receptive to boosting the county's two income taxes, EDIT and CAGIT, which stands for county adjust gross income tax. The combined tax rate is 1.15 percent, but at 2 percent, which Clark County charges, Floyd would receive an estimated $4 million more each year.

He also favors exploring an increase emergency 911 funds, which are generated from charges on cell phone bills. The 911 funds now pay for equipment upgrades and communications expenses, but could also pay dispatchers' salaries, Schellenberger said.

He complained that the council has avoided tough decisions, but that can't go on. "You fight the same battle every year. Something's got to give."

The council has scheduled a 5 p.m. work session today to hash over its options.

"We need to make sure we prioritize," Striegel said. "The county has never been in this kind of shape before."

Reporter Grace Schneider can be reached at 812-949-4040 or follow her on Twitter @gesinfk.

What's next?

The county council will hold a public work session at 5 p.m. today at Pine View Government Center, 2524 Corydon Pike. A committee of council members and commissioners studying county-owned assets also is due to meet informally before the work session to exchange information each offered to research on properties Floyd government eventually could sell.