Gary approves temporary loans to make pension payments
By Michelle L. Quinn Post-Tribune correspondent May 14, 2013 10:18PM
Updated: June 20, 2013 6:15AM
GARY — The city will meet its police and fire pension obligations per temporary loans from the bond bank.
The Common Council at a special Tuesday night meeting unanimously approved ordinances that allow the city to borrow $4 million in tax anticipation warrants and take a $3.5 million loan from the Hammond Bond Bank to cover the next couple months of pension payments for the departments. The loans will be paid back as the city receives its tax draws in June and December, Controller Celita Green said.
The $4 million in tax anticipation warrants are an extension to the $14 million the city drew on last year for 2013, Green said, and equal the $18 million the city borrowed in 2012. At the time the city went to approve tax anticipation warrants for 2013, it could borrow only $14 million because it was at its borrowing capacity with the bank.
Per city planning, the tax collection rate has been estimated at 75 percent for the city, Green said, and its assessed value is estimated at 80 percent.
For the $3.5 million — $2 million of which goes to the Police Department and $1.5 million to the Fire Department — pension relief monies from the state arrive in June, Green said, and will be enough to pay back the loan.
The city pays $50,000 per month in pension costs, or $10 million per year, she said.
“We’ve not received our tax draw, just like no other municipality in the county has,” Council President Kyle Allen said. “When the tax draw comes in, the loans are paid. This has nothing to do with a lack of planning or any malfeasance.”