The Indy Herald & Globe

Budget Crisis Deepens as Fee Revenue Blocked by Referendum.

By John Bruning.

A somber city public works crew began the task of closing Riverview Park the day after the Community Fiesta this Monday morning.

The city leadership, council and supporters have sounded the alarm all summer that the fee referendum initiated by former city manager Greg Ellis would force city services to close. The referendum’s signatures were certified last week by Polk County, which now places the issue on the November ballot.

The fiscal year budget the city passed in June of this year included the revenue from the $12.65 net fee increase. When the referendum was initiated, Independence could not collect the fee, leaving a growing budget shortfall estimated to be nearly half a million dollars by November.

With only a $212,000 reserve left in the General Fund, city manager Kenna West and Mayor Kate Schwarzler have repeatedly stated that the parks and museum must close so that the savings can be shifted to sustain the library, which by state law must remain open while it goes through a lengthy abolishment process.

The city services fee would have maintained the parks, the museum and the library at bare minimum funding levels. Without it, the city leadership says there is simply not enough money to continue operating the parks, museum or library.

The referendum has set up a November election showdown that will determine if the city reopens the parks, or extends the closures and further tightens its belt.

Opponents of the park closures have argued that the city has the funds to sustain operations until November, but is choosing not to use them. Earlier this month, Greg Ellis urged the city council to look at using an interfund loan from one or more of the Public Works Enterprise funds to keep the city services open.

Former city manager David Clyne also proposed several options to avoid the shutdowns. He’s outlined them at length in his op/ed piece to this newspaper. While he intends to vote to restore the fee in November, he argues it is unnecessary when other funding options remain available. He has suggested reducing our water bills to make the fee increase cost-neutral to our most economically vulnerable citizens. He has also suggested staff reductions and the use of contingency funds to maintain current services until two bonds are fully paid off in 2028, at which time almost $800,000 will be freed up for General Fund Use.

Kenna West and Mayor Schwarlzer have repeatedly stated that further interfund loan transfers are no longer an option. In fact, under Mayor John McArdle, the council directed staff in November 2023 to suspend use of interfund loans. It has been council and city policy since.

Interfund loans, by law, must be paid off the following year if used for operating expenses. They are a little like the municipal version of short-term payday loans, with the same trap many families have fallen into with such lifelines: when they come due, you need another loan to pay it off and another to plug your shortfall. The net result is a deepening debt spiral. The current council and city leadership is committed to ensuring that doesn’t happen to Independence again.

Additionally, the city leadership has stated that the interfund loans Independence relied on in the past to close the General Fund deficit caused infrastructure maintenance to be deferred, leading to a worsening condition of our water, sewer and storm drainage systems.

Over the summer, a pipe failure in the water system to one of our wells cost the city over $25,000 to repair. Such failures are becoming more common as the infrastructure ages and has not been replaced.

However, not everyone on the city council is in agreement. City Councilor Dawn Hedrick-Roden posted a lengthy editorial on her Facebook page last week, in which she said:

“Independence does have a financial problem. That fact should be taken seriously. But a financial problem does not automatically mean that the Library and Parks are the first places to look for reductions, nor does it establish that new fees are the only solution.

Before asking residents to pay more, the City should demonstrate that it has exhausted reasonable opportunities to reduce administrative overhead, control professional-service costs, verify interfund allocations, defer nonessential expenditures, and manage vacancies. The public deserves to see those calculations in enough detail that the numbers can be independently checked.”

For now, the closure of Riverview Park will save the city about $10,000/month which will be used to keep the library open through its state-mandated abolishment process.