Navigating Uncertainty: City’s Budget Challenges

There’s an old joke that goes, “How do you eat an elephant?” “One bite at a time” is the punch line. No one seems to ask, “How do you make an elephant taste good?”

Some tasks are so big, they could seem as tough as an elephant steak. (Shudder to think anyone would want to eat elephant, I hope.) Running a manufacturing-based city in central Indiana and slowly growing its population and property assessment value, attracting and retaining businesses while upgrading its infrastructure and quality of life, that’s a bite to chew. For 13 years, Crawfordsville’s mayor, Todd Barton, has been focusing, bite by bite, goal by goal, to improve life for the city.

Each year, Barton sets goals, works with the city council and department heads and creates a budget to move the city forward. His approach to the city’s budget process stands out for how he’s disciplined it.

Now, as the last state property tax legislation, tariffs and cuts to federal funding threaten to reduce funding and upend the process, the League of Women Voters spoke with him to help readers understand the process. Barton offered a candid look into how the city’s budget comes together, the unpredictable pressures it faces, and the new uncertainties introduced by state and federal policy changes.

The city’s budget process kicks off in May or June. “We create a list of goals at the start of each year,” Barton says, “and we work through what’s working, what’s deficient and where changes are needed.”

Then, his team must estimate anticipated revenue for the coming year, relying on projections from financial advisors and the state’s “growth quotient.” With a clear sense of available funds, Barton then meets with department leaders – police, fire, parks and others – to review their proposed budgets and manage the top budget items that matter most to a well-functioning city staff. Some of those costs are the same that hit businesses – healthcare costs, salaries, energy.

Healthcare costs can swing by double digits from year to year. Barton has tackled this by moving the city into a healthcare trust and opening an employee clinic to control routine care costs, but volatility remains.

“A swing of a few percentage points is a lot of money,” he says.

Salaries, particularly for police officers, have been another major challenge. The tight labor market has led to aggressive recruiting by other communities, forcing Crawfordsville to continually adjust police officer pay to remain competitive.

“You’re always weighing what’s enough to keep people here, but not so much that it’s unsustainable,” Barton explains. The cost of replacing experienced officers – training, onboarding, and lost expertise – adds to the complexity.

Fuel and energy costs, as well as the price of public safety equipment, are equally unpredictable. Barton points to the cost of a fire engine: “Nine years ago, it was $880,000. Now, the same piece of equipment is over $1.3 million. That’s the reality we’re dealing with.” These big-ticket items make it nearly impossible to hold the line on expenditures year after year.

Barton’s approach streamlines what was once a chaotic process. Instead of every department presenting a “wish list” to the city council – leaving councilors to pit departments against each other as they hash it out – they create a “clean budget” that fits within projected revenues.

With a goal-centered process, “The council doesn’t have to make cuts,” Barton notes. “They can, but they don’t have to. It used to be two four-hour nights of haggling; now, our work session is usually two and a half hours.” This shift, he said, leads to better priorities and less turmoil in city government. They send the budget to the state for validation, and the city improves based on priorities year by year.

Except this year’s state and federal changes have upended the process. First of all, the city’s CPA (certified public accountant) team is still trying to detangle the extraordinarily complex formula in the legislation passed by Republican supermajority in the statehouse and signed by Gov. Mike Braun.

In addition to trying to forecast the usual uncertainties in the largest expenses – healthcare, salaries (especially for police and fire), and energy – the city council and mayor must also navigate uncertainty in what incoming funds will be.

Indiana’s new property tax law has thrown the largest amount of uncertainty into the budgeting process. Barton’s financial consultants are still calculating what the change will mean for Crawfordsville’s available funds.

“It’s incredibly complex,” he says. “When you change one thing, it affects four or five others. We still don’t know the impact, and neither do the legislators who voted for it.”

He recounts conversations with state representatives who admitted they didn’t fully understand the numbers but promised to “fix it next year” – a promise Barton said he has heard before, with little follow-through.

For Crawfordsville, the stakes are high because it’s a manufacturing community. Business property tax is a significant revenue source, and changes to how business personal property is taxed hit harder here than in cities dominated by residential or distribution properties.

“If you’re a city like Plainfield, it’s not a big deal. For us, it’s huge,” Barton says. The city’s ability to fund essential services matters to major employers who need reliable water, fire and safety, along with a dependable workforce.

The shift away from property taxes toward income taxes to fund local government leaves Barton skeptical.

“The argument is that income tax is more fair, but in reality, it puts a greater burden on households that are already struggling,” he says. Renters tend to be lower-income residents who cannot afford to buy a house and do not benefit from rising property values. They end up shouldering a disproportionate share of the tax load. Barton also points out the practical challenge: “We can’t accurately break out income just for city residents, so the numbers don’t add up. It’s going to be tough for cities to make up the difference.”

Federal funding is another area of concern. The city recently used federal grants provided through FEMA and the Department of Homeland Security to buy out homes along Sugar Creek that were threatened by erosion. Phases 2 and 3 of this program, intended to help more homeowners in Wayne Avenue and Sugar Cliff, were abruptly canceled, leaving residents in limbo.

“Imagine you’ve paid for your home your whole life, and now it’s worth zero because it’s going to fall into the creek,” Barton says. “We had hope for these families, and now the program is just gone.”

Meanwhile, the Market Street railroad crossing project, funded by a federal rail grant, is being “fast-tracked.” While this is good news for infrastructure, it puts pressure on the city to come up with matching funds much faster than planned. “We had our match planned over two or three years. Now we have to figure it out in one. That’s a challenge,” Barton notes.

Despite these challenges, Barton remains focused on keeping Crawfordsville on a steady course.

“We’ve invested heavily in infrastructure and are ready to grow,” he says. “The timing is awkward. We’re on the cusp, and now everything feels uncertain.” For now, Barton’s strategy is to stay calm, keep the city on track, and adapt as the financial picture becomes clearer.

Mayor Todd Barton provides regular updates via the city podcast. Tune in here. https://crawfordsvillemayortime.libsyn.com/

The League of Women Voters is a nonpartisan, multi-issue political organization which encourages informed and active participation in government. For information about the League, visit the website www.lwvmontcoin.org; or, visit the League of Women Voters of Montgomery County, Indiana Facebook page.