Inside Richmond: The City's Pulse

Episode 20 - Inside Richmond: The City’s Pulse | The 2026 Budget Breakdown with Mayor Oler and Beth Fields

• City of Richmond • Episode 20

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Want a clear view of how a city actually pays for people, projects, and progress? On Inside Richmond: The City’s Pulse, host Lindsay Darnell sits down with Mayor Ron Oler and Beth Fields, Director of Strategic Initiatives, to unpack Richmond’s 2026 budget. They explain what comes in, what goes out, and why some dollars cannot be moved even when needs feel urgent. If you have ever wondered why sewer funds cannot fix park trails or how a fire engine gets financed, this episode breaks it down clearly.

The conversation starts with the basics: revenue versus appropriations, and how a “balanced” budget differs from a “funded” one that taps reserves. They explore municipal bonds, which are low-interest, tax-exempt tools that allow the city to build now and repay over time. You will also learn about the five main spending categories: personnel, supplies, services, capital outlay, and debt service. The team explains how fund accounting legally restricts certain revenues, why the general fund remains the workhorse for police and fire, and how financial choices in one department ripple through 13 departments and 33 divisions.

Tax policy plays a huge role too. Indiana’s property tax caps (1% for homesteads, 2% for rental or agricultural, and 3% for commercial) protect homeowners but reduce city revenue. For Richmond, those caps have meant millions less each year and roughly $120 million foregone over 15 years, requiring careful prioritization and conservative forecasting. The comprehensive plan helps guide those priorities, aligning spending with long-term community goals. You can see every detail of Richmond’s budget, including revenue, expenditures, and tax rates, at https://gateway.ifionline.org/

Grants also shape progress. Hear how a $2.95 million READI grant helped kickstart the Six Main housing project, covering demolition and early site work through public bidding while keeping local subcontractors involved to maximize community impact. By the end, you will understand how the 2026 budget works, why protecting cash balances matters, and how patience with new revenue streams prevents midyear cuts.

To view Richmond’s full Comprehensive Plan, visit https://portal.laserfiche.com/Portal/DocView.aspx?id=220297&repo=r-979ae874&fbclid=IwY2xjawN6yHRleHRuA2FlbQIxMABicmlkETFyVUZPcDh1Y3Vkd0xKajFlc3J0YwZhcHBfaWQQMjIyMDM5MTc4ODIwMDg5MgABHldLbhFV4Y0UoP9KXxDBa6_zAGuFKYfjVQxj9bc39yMwIPGWcALI978XkQcJ_aem_l-hTzaKMBASNhaKxwHtR7Q 

SPEAKER_02:

Welcome back to another episode of Inside Richmond, the city's pulse. I'm Lindsay Darnell, your host, and today I have Mayor Ron Oler and Beth Fields, Director of Strategic Initiatives, joining us. Guys, thank you. Thanks for having us.

SPEAKER_00:

Yes, glad to be here again.

SPEAKER_02:

So I wanted to get you guys on here. Um, our 2026 city budget has just been adopted by council on October 30th. And so I really wanted to kind of talk about what is the city budget and how what does the city spend money on? So um would one of you guys like to kind of dive right in and let us know?

SPEAKER_00:

Yes, yes, I'll take off with it. So the the city budget is not unlike your household budget. You know, it's a document, and I have a copy of it right here. Of course, it's probably bigger than your household budget as it is much larger than mine, not just in pages, but in dollar amounts. So it's a document that shows all the money that the city receives and spends in a given year. So we we get our estimates on revenue from the state and other areas that we think we'll have revenue in. And revenue is the money that we receive. And there's a whole section of the budget called revenue, and it gives details of how the money the city receives from each revenue source. And then on the other end of the budget book are the appropriations, which are what the city spends its revenue on. And this makes up the majority of the budget document itself. So we call it revenue in your home, you may call it income or payroll, and we call it appropriations, and you may call it just expenses. And your expenses are not so different from ours. We have utility bills to pay. We we don't have a mortgage on a building, but we may have a bond on a project, which is similar.

SPEAKER_02:

And can you kind of explain to us what a bond is and how that works towards projects?

SPEAKER_00:

That's a great question. So a lot of uh the industry calls them moonies, munis, municipal bonds. So cities, towns, counties, states, and even the federal government, we issue debt in the form of bonds. So a bond is an instrument that brings an immediate amount of cash. Say you have a million-dollar bond for 10 years. So the the city would immediately collect a million dollars minus a few fees from the bonding agency, and then if you use that for the project, you would pay it back over the course of 10 years with interest. And a lot of those bonds are around 3% interest. They're very low interest bonds because they're not taxable. So for investors who buy them, and typically banks buy them, um, other large financial companies buy them, and then individuals buy them from the banks and the financial companies, and they buy them because they that they get the money back tax-free. So, unlike your mortgage, you know, we get the money up front for the project like you do. We pay it back in typically annual installments instead of monthly. But the the interest that we pay goes back to the people who invested in the bond, which could be a lot of people, not just one bank. It can be one bank, but typically it's a lot. So a lot of retirees use these bonds to fund their retirement. So they'll take a large pile of cash, they'll put it in municipal bonds, and they'll get their quarterly or annual interest payments, and that's what they'll live off of, because the federal government makes those tax-free. Making them tax-free keeps the interest rate low. So our interest rates will always be lower than a traditional mortgage for several reasons. A, because it's tax-free, so we don't have to worry about taxes, and B, because bonds are issued from a taxable entity. So when a city, a town, a county issues a bond, the guarantee is we have tax revenue coming in to pay for it. We don't have to worry about income from payroll to make cover the cost of the mortgage, so to speak.

SPEAKER_02:

Okay. Um, and so what does a city spend the money on? Beth, would you mind answering?

SPEAKER_01:

I'd be happy to. Yeah, there are several different categories that are recognized that a city can spend money on. So the first one that is typically the largest bucket that we have, that is for personnel. That is for salaries and wages, benefits, all of those things that are associated with having employees. The second thing that we spend funds on are supplies. Obviously, we have to have supplies to do the jobs that we do. Another large category that we have is services and charges. This is where our contractual services come up. So if there are projects that city team members do not have the expertise to complete, we can do a request for proposal process and evaluate and interview consultants to fill that role for us if we need that. There are also different contracts that we do for technical services as far as maintenance on our equipment or some of the other items that we have. So that's a category. And then we have capital outlays. So these are items that we purchase that are$5,000 or more that are capital assets to the city. So think about your equipment for a fire department. You've got your fire engines, you've got your trucks, you've got your ambulances. For the police department, you have your vehicles. For the street department, you have a variety. You have street sweepers, you have different equipment for milling and paving the roads. And then the fifth category that we have is debt service, which the mayor already spoke about is that debt service that we have. And those are the bonds. Not necessarily all bonds. It could be leasing. Um, we do lease some things. For example, the golf courts, golf carts that we have out at Highland Lake Golf Course, those are a lease.

SPEAKER_02:

Okay. And then let's talk a little bit about roles and responsibilities for budget preparation. Um, how does that work? And I know it's a long process. You guys start early in the year, uh, the prior year to the budget. So I believe you guys started in June of this year to work on 2026 budget, correct?

SPEAKER_00:

Actually, it starts in April. In April. So it starts in April with department heads. The controller will set up in our enterprise-wide computer system or ERP. Uh, controller will set up 2020, we'll use 2027. So April of next year, the controller will set up lines for 2027, and department heads will look at what they're currently spending money on, what they previously spent money on, what they think they'll need to spend money on next year, and they start putting that in. And then the actual face-to-face meetings start in June, but department heads have a couple of months, those includes police chiefs and fire chiefs to think about what the next year is going to be like. Typically, we we we don't do a zero-based budget in Richmond. We look at the previous year, the current year, and decide what we're gonna change for the next year. We don't have the time really to start from zero every year. Now, an individual department head may, if it's a small department, go, well, what do I really have to have? But City of Richmond is our budget is divided into 13 different departments with 33 different divisions. So it's a lot of interdependent relationships. So when we look at the revenue coming in and how it gets split up, we'll talk about that some more in a minute, but it goes to different areas and we it takes a lot of time to get through the budget because if we make a tweak in one area of the budget, it might have an unintended consequence in another area. So when you have 13 departments, 33 divisions, all reusing this revenue, you have to be careful how you divide it up and spend it and what you you may, if you decide to not buy this piece of equipment here, it may affect another department there that was planning on sharing it as a good example.

SPEAKER_02:

Okay. Um, and then let's talk about um, I know that you kind of had previously talked to me about classes for cities. Um, so can you explain how the classes of cities work in Indiana?

SPEAKER_01:

Sure. And that really guides your budget process and how you budget because each different municipality or city type has a different process and a different set of things that they go through in order to approve a budget. So in the state of Indiana, you have both cities and towns, and cities fall into three classifications. There are first class cities, and those are cities that have a population of 600,000 or more. We only have one of those, that's Indianapolis. And then you have second-class cities that have populations of 35,000 up to the 600,000, and that's where Richmond falls. We are a second class city.

SPEAKER_00:

And there are 11 of those, I believe, in the state.

SPEAKER_01:

And then you have the third-class cities which have the population under, and then you have your towns. Those are communities that have up to 2,000 individuals in their community. So those processes are a little different for each of those. In a second class city, your fiscal officer, which is commonly referred to as your controller, is the one that really guides that budget process. And as the mayor indicated, the way that we go through that process. And it's it's a collaborative process with our common council. Common council has a finance committee made up of four members from council, and they have a chairman of that, and that chairman is the chair of the budget process. So they oversee this past year, it was Justin Burkhart that was the chair of the finance committee. And there's a lot of collaboration with that committee, and then that committee shares information back with the full council for feedback, and then that comes back to us and the controller as we work through that process of coming up with a balanced budget.

SPEAKER_02:

And what are the financial goals while preparing a budget?

SPEAKER_00:

So our goals this year were to present a balanced budget as much as possible. You have you can have two types of budgets. You can have a balanced budget or a funded budget. So a balanced budget looks on January 1st that you have zero carryover, and everything you spend in that year comes from what you received that year. A funded budget would use carryover or cash reserves, just like you would use savings at your house. So there's two different approaches to a budget. And people talk about and want a balanced budget. A balanced budget is desired with an ending cash balance that grows the cash balance. Um, but we also have to recognize there's there's there's lean years in a in the economy, and then there's not so lean years. I don't want to say fat years, but I probably need to use that term. So that there's good years and not so good years. So uh we worked really hard. Our first pass at our budget this year was funded but not balanced, and council intimated that they really wanted to see it balanced. So we went back to the drawing board and worked really hard. And a lot of good people, Beth and Tracy and myself, we put in a lot of evenings and weekends and worked really hard to balance the budget. And we came up with um if you looked at the budget and you heard the presentation last week, that all 24 of the city operations budgets are balanced, which means that they'll end 26 with more money than to begin with. But two of the budgets, two of the funds are not. And there's the reason behind that is because they have some different opportunities next year. So the parks department was slightly unbalanced, and so is the street department, but they have some new tax revenue potentially coming in next year that will help them out. But we really couldn't put those exact numbers into the budget because until you receive them for a year or two, you really don't know exactly how much you're getting. You have an estimate, but we're conservative. We don't want to assume we're getting a million dollars from this one tax revenue and suddenly only get$500,000 and you've planned for appropriations of a million dollars and then you've got a cut in the middle of the year. So we don't we try to not do that.

SPEAKER_02:

And where can the general public find our 2026 budget or previous budgets?

SPEAKER_01:

Sure. So the state of Indiana has what's called gateway. It is the state's transparency portal. And on that transparency portal that was launched in 2010. So since then, all municipalities through the state of Indiana, they put their line item budgets on there in a the technical term is a Form One, which is what we do that has all of those line items. So that is on there, that is up year-round. We have to advertise our budget at least 10 days before we have a public hearing. And so that advertisement is done through Gateway, and then we have a public hearing on that information that has been placed in Gateway. And then once it's adopted, whatever amounts are adopted by council, then that goes into another column there on Gateway so that the public can see that at any time. Gateway also has a lot of other tools for taxpayers where they can look at what our tax rates are. They can look to see what our annual financial report is. So every year we do an annual financial report which overviews all of the expenditures and revenue and all of the debt through the city, and that is there that is available at all times to the public. And then that is what the state board of accounts is the auditing agency. So every year, the city of Richmond, there's a team of auditors that come and they audit us based on what we said we were going to do. Did we do it? Did we spend the funds appropriately? And that happens every year. And I'm happy to report that we have had great audit reports these past few years. And as we continue to move forward, we'll ensure that that continues.

SPEAKER_02:

So another thing that I kind of wanted to touch base on was I believe many residents might not realize that certain funds are restricted for specific purposes. Um, can you give us a brief explanation about why and how that operation works?

SPEAKER_00:

So, yeah, government accounting, we call it fund accounting. So different revenue can only be used for different things. But let me back up to one more thing. As we work through the budget this year, our focus again was on prioritizing public safety. I think that's paramount. But we also use the comprehensive plan, which we talked about here a couple times. The comprehensive plan also drives some of the budget decisions of where to put some money that's flexible. So back to your question. Some of the money is not flexible. So this the state of Indiana collects fuel tax from every gas station in Richmond, and then they pull that into a fund and then you send it back to us. And we can only use that for things related to transportation, local roads and street, motor vehicle, highway. We can't spend it on, I don't know, painting the city hall. So terrible example, but okay. So fund accounting is when you get revenue from a certain area, you can only spend it on that area. So the parks department gets some money because of the little bit of a tax they get, and we can't spend that outside the parks. The the sanitary district gets some money for the underground sewer waters, sewer lines, and stormwaters, and they can only spend it on that. We can't spend it on golf carts at the golf course. So fund accounting says you get this revenue, you spend it in this area. Now, the biggest fund, of course, is the general fund, and that is um roughly 24 million, I think, for 2026. So the general fund covers a lot of the operations, covers police, fire, um, just city operations administration. General fund goes into quite a few different areas. So it's it's really less restrictive, but a lot of it is restrictive depending on where it comes from.

SPEAKER_02:

Okay. And then what is the numbers uh for 2026? Do you guys have those right off the top of your head?

SPEAKER_01:

So the total budget for the city of Richmond is 61,499,485. Knew you were gonna answer that, so wanted to be sure to have that number ready. Um so as we think about um the property tax levy, that is what a lot of people think about as funding um city budgets and city operations. That only actually accounts for 42.8% of our budget. So when you look at that 61 million, only 28 million, or I'm sorry, 26 million of that actually is coming from property tax revenue. The other is from revenue that the city generates through permit fees, other user fees. There are some other taxes that go into that as well. But property tax actually only makes up 42.8 percent of our budget.

SPEAKER_02:

And now um I know a lot of people have been talking about property taxes, and that was capped in 2010, I believe, correct?

SPEAKER_00:

Yeah, the one, two, and three percent property tax caps went into effect in 2010 as a constitutional amendment. So if you have your owner-occupied home, that's the homestead exemption, you'll never pay more than 1% of your assessed value for all your taxes, which will include the the city, the county, the school, the library, everything that comes out of that is capped at 1%. And back on that DLGF website, they used to have a portal there where you could calculate yours how much how much your taxes would have to drop before you're you're not affected by it, because most houses in Richmond are affected by it, so they're they're capped. Uh the 2% is for non-owner occupied, say it's rental properties or your second home or vacation home. And then 3% are the commercial properties.

SPEAKER_01:

And 2% is also agriculture.

SPEAKER_00:

I was going to say about 2% also agriculture. And there's a little bit of agriculture in the city, there's a lot more in the county. So one of the one of the challenges the cities like Richmond has, when that was enacted in 2010, the first year we lost$3.5 million, or we did not receive$3.5 million that we otherwise would, because we were averaging 1.57% property tax on the homestead properties owner-occupied. And that first year, that 1.57 was immediately cut to 1%. So this year or 2026, that's grown to six million dollars. So over the course of the last 15 years, we've we've not received$120 million. And that's for a city our size, that's common statewide. You know, a lot of our revenue does come from owner-occupied housing. Commercial industrial parks help too at the two and three percent. But uh if you if you were just an industrial area, you probably wouldn't be hit as much on the caps as you would be a large residential city like Richmond.

SPEAKER_02:

Now you mentioned the comprehensive plan, and I know we've talked about this numerous times to kind of explain what the comprehensive plan is. So um on October 29th, the Plan Commission did adopt the uh comprehensive plan, um, and that will be going up to count the common council on November 17th at 7 p.m. Um we do have it posted on our website if anybody would be interested in taking a look at it. Uh, I believe it's around 80 pages long. There's a lot of good information on there. Um, now this wasn't a full redoing of the comprehensive plan. It was just an update or a refresh to just kind of see what needs to be changed in the previous comprehensive plan that was done in 2019. Um, I'm really proud of this new comprehensive plan. I think we really hit a lot of goals that just Oh, yes, we did.

SPEAKER_00:

I've said before, I'm super proud of our city for the last six years, even when I was just a council member. We worked that plan. We worked that plan. A lot of cities will get their comprehensive plan because you have to have it to apply for certain grants and it'll sit on a shelf and never look at it. We worked it so much, we eliminated goal number three. And we got to add a whole new goal and a new refresh. And doing a refresh every five to six years makes it more efficient, more accurate. You know, we had, as I mentioned before, we had this thing called COVID happen from 2020 and 21. So it changed a lot of people's behaviors. So that changed the comprehensive plan and the refresh, and it also informed our budget decision. So a lot of our budget decisions are based upon people's habits and people's wants and desires and how they're interacting with the built environment.

SPEAKER_02:

Yeah. So, and that's kind of what I was wanting to get to is that you know the comprehensive plan is important not only for uh economic development or land use within the city and so on, but also for driving the budget and what we use the budget money for. Do you think there is anything else that we might want the public to know about the city budget? Any last statements?

SPEAKER_01:

I think the only other thing I would love to share is we talked about the different revenue sources and another um opportunity that the city takes advantage of is grant funding. There are grant opportunities that come from the federal, state, local, philanthropic, and corporations. And those are great opportunities for the city to move forward. Projects that are in the comprehensive plan that we don't have the cash on hand to fund. So a great example of that would be we've had a lot of demand for additional housing and additional rental units for individuals that commute here or that are looking to not have a home to take care of, some maintenance-free. So, in working with developers for, I'll use the Six Main project, for example, um, looking at that, they were, this was a new market to them. This was a smaller market than they typically go. So they had a gap there. They needed some additional assistance with funding. Fortunately for us, during the time that we were going through that, the Indiana Economic Development Corporation had their ready grant program available, and that was to assist communities with getting projects off the ground and to completion in a shorter pace than typically would happen. So we were fortunate to receive$2.95 million from the state of Indiana through the Indian Economic Development Corporation for that project. So that funding we used for two different pieces of that project to help that project. We used it for the demolition of the former Elder Beerman. So whenever we get those funds that are public funds, we have to publicly bid that. So we write bid specifications for that. We advertise that online in the newspapers. We have what's called a pre-bid meeting. So we invite contractors, for example, for the demolition. We had 13 different companies that were represented in that pre-bid meeting, and three of those were local companies. Um, when we actually, those bids then are actually publicly opened at the Board of Works and read into the record. So we had seven bids that came in. Um none of those were from local companies, but we had seven really good bids, and we selected O'Rourke, who did a great job with the project. The other portion of that money that we used was for the early civil foundation infrastructure package for that project. And we again did the public bidding process. We went through the pre-bid meeting. We had three companies that were represented at the pre-bid meeting. None of those were local companies, and we only received one bid, um, which was not a local company, but um that, and I know that that company um Flarity and Collins, which is doing the project, they reached out to all of our local contractors um early in the first quarter of this year to request bids and proposals, and happy to report that they are using several of our local contractors on that project.

SPEAKER_00:

So for subcontracting work, I assume.

SPEAKER_01:

Absolutely. Yes. So it's it's much more economical and efficient for them to use local contractors than to have them drive in from Indianapolis or another location.

SPEAKER_02:

Yeah, and I think that's really great of them to be able to use our local contractors too to keep that here in Richmond. And so uh a lot of them can say, you know, hey, that live here, hey, I helped. Absolutely.

SPEAKER_01:

Absolutely.

SPEAKER_02:

So um, yeah, so I believe that's all the questions that I really had for you guys. I know this was a big conversation going on, and so I just really wanted to talk about the budget and how it works and the process.

SPEAKER_00:

Glad to be here. So hopefully a lot of people will listen to this and kind of understand how a city creates its budget and why we do what we do and a lot of the restrictions that come from the different fund sources that you can only use them for those purposes. You can't cross over to other funds.

SPEAKER_01:

Yeah, and I would just reiterate those that are interested in going um to Gateway, if they're just in their search engine, put Gateway Indiana, it will pop up and they'll be able to get to that dashboard and just be able to look around there and see all of the information that's available to them.

SPEAKER_00:

You can see the county budget, you can see other cities and towns and anything you want to know.

SPEAKER_02:

And we'll make sure that we put that in the description of this podcast, the website, and we'll have it pop up on the screen as well. Guys, thank you for joining me and talking about the city's budget. Thanks for having us. Thanks for having us. That's Inside Richmond, the city's pulse. Make sure to join us next time.