INDIANAPOLIS | By April, Gary already had run through all but $100,000 of the $1.3 million budgeted for its 2009 utility bills.
The money set aside to buy gasoline for the year hadn't been touched, though city officials believed another fund was being tapped. And on top of it all stood $22.2 million in debts dating as far back as 2005.
In short, it was enough to schedule an intervention, which is exactly what the Indiana Distressed Unit Appeals Board did last week. The panel, a product of Indiana's new era of property-tax caps, commanded Gary to hire an outside consulting firm to serve as a "fiscal monitor."
"The city must concentrate on restoring lost credibility through transparency and strict lines of accountability," staff for the appeals board wrote in their final report. "There must be the courage to change long-standing, current practices and build the necessary capacity to sustain the changes."
That starts with the fiscal monitor, who will serve as both an adviser to the city and a watchdog for the distressed-unit board. The state panel granted the city and four sister agencies $23.5 million in relief this year but expects to see Gary officials again next year, when the revenue-stripping tax caps take full effect -- and a bigger bite out of local budgets.
Ryan Kitchell, chairman of the appeals board and director of the Indiana Office of Management and Budget, will assist city officials in hiring the outside consultant. He said bidders cannot have an existing relationship with the city and must be ready to deliver a preliminary report within 90 days of being hired.
It's not clear how much the consultant will cost. But the city must pick up the tab.
"This is really an investment in the city of Gary, and they need to make it," said Chris Johnston, a Gary native who runs the state Department of Government Efficiency and Financial Planning.
Johnston spent the past six months poring over thousands of pages of documents the city of Gary, its bus agency, sanitary and stormwater districts and airport turned over as part of the tax-cap petition. He briefed the appeals board on $958,000 in 2008 medical claims the city has yet to pay, $650,000 in outstanding utility bills and a glut of cash-flow loans siphoned from special taxing districts.
"That's a $22 million hole that they've got to dig themselves out of," Johnston said.
The so-called fiscal monitor will be asked to guide the shovel. Consolidating departments, privatizing the Genesis center and transferring the city health department to the county are among the options the state panel said should have been considered years ago -- as Gary's population and tax base began to decline.
As the head of the State Board of Accounts -- Indiana's auditing agency -- Bruce Hartman is no stranger to Gary's fiscal and management ills. But Hartman, a member of the distressed-unit board, said the public shouldn't expect an outside consultant to engineer an immediate turnaround.
"This didn't occur overnight," he said. "It's not going to be corrected overnight."