Michigan City's $78.8M 2027 Budget Leans on $7.6M in Reserves as Costs Outrun Revenue

Michigan City City Hall. Photo by hakkun / Wikimedia Commons, CC BY-SA 3.0.

Michigan City City Hall. Photo by hakkun / Wikimedia Commons, CC BY-SA 3.0.

Michigan City's proposed 2027 budget spends $78.8 million and collects $71.2 million. The $7.6 million difference is not a mid-year tax levy on the draft sheets — it is a planned draw on cash and fund balances the city already holds.

Mayor Angie Nelson Deuitch's Controller/Mayor recommended presentation, posted on the city website, puts total expenses at $78,841,300 and revenue at $71,233,817. Officials call the reserve use a deliberate one-time bridge, not a permanent funding source. The same packet shows the 2026 adopted budget already planned a $1.3 million gap; the 2027 hole is nearly six times wider.

Spending climbed 12.4%. Revenue climbed 3.5.

Year-over-year, budgeted revenue rises about $2.4 million, or 3.5 percent, from the 2026 adopted total of $68.8 million. Budgeted expense jumps about $8.7 million, or 12.4 percent, from $70.1 million — more than three times the revenue growth rate. That mismatch is why the funding gap balloons from $1.3 million to $7.6 million, roughly 9.6 percent of total 2027 spending.

The city's own slides say costs are growing faster than revenue can keep up, and that cash balances close the difference this year while "the underlying trend is the real conversation for 2028."

Employee benefits help explain the pressure. The presentation shows the total benefits package rising from about $8.0 million in 2024 to a proposed $10.2 million in 2027 — a 27 percent climb — with 91 cents of every new dollar in that growth going to health insurance alone. Citywide INPRS employer pension contributions stay near flat for three years, then jump 17.6 percent in 2027, from about $4.67 million to $5.49 million. The packet budgets a 3.5 percent base raise across eligible employees and about $24,500 per employee for healthcare.

Where the cash draw lands

The largest single reserve draw sits in the General Fund: about $3.36 million against a projected Dec. 31, 2026 cash balance near $19.7 million. The Riverboat Fund is next, using about $1.44 million of a projected $4.0 million cash balance. Smaller draws hit Fire Pension, Sanitation Refuse, Police Pension, Golf, Local Road and Street, and LIT Economic Development.

Police and Fire remain the two largest operating departments in the departmental view the packet shows. Across funds, the General Fund accounts for about $33.5 million (42.5 percent) of proposed spending; the Riverboat Fund about $10.0 million (12.7 percent). LIT Public Safety and LIT Economic Development together add about $10.2 million more in dedicated local-income-tax pots.

Riverboat capital lines in the proposal include a fire truck structured as $1 million from riverboat and $500,000 from cumulative capital, $600,000 for police fleet rotation, $425,000 for "FLOCK — Safe City (Year 1)," and $413,000 for a street dump truck. About $6.5 million in riverboat operating transfers would still move into the General Fund, Motor Vehicle Highway, Park, and Cemetery funds.

Nearly $14 million in LIT — and a structure fight

At a Sept. 14, 2026, budget workshop covered in Oct. 1 Citizen Portal write-ups, City Controller Smith told members Michigan City now receives nearly $14 million at a 1.45 local income tax rate under the countywide structure. Smith warned that distributions could fall markedly if the city imposes its own LIT or if the county adopts a new allocation scheme, and urged work with the county and a state task force.

That is not abstract accounting for a lakeshore city whose proposed budget already leans on prior-year cash. A material LIT hit would land on top of a spending plan that already outruns current-year collections by $7.6 million.

Riverboat and data-center receipts left off the books

Workshop coverage also shows officials cautioning against booking uncertain riverboat distributions and a reported $5.5 million data-center payment into the 2027 plan. Smith said the city had started receiving related distributions — including a first state riverboat-related distribution of about $70,000 — but those receipts were not placed into the 2027 spending plan when the budget was originally printed.

The mayor's presentation markets the proposal as investing without abandoning services. The ledger underneath is plainer: expense growth at more than triple the revenue growth rate, a reserve bridge nearly six times last year's planned gap, LIT millions still tied to a countywide structure that officials say could move, and one-time riverboat and data-center money held off the revenue line until it clears. Council still has to adopt a final budget. Until then, the $7.6 million figure is the bridge — and the 2028 trend line the city itself put on the table.

Sources: City of Michigan City 2027 Proposed Budget Presentation (Controller/Mayor recommended); Citizen Portal workshop coverage, Oct. 1, 2026; LIT structure warning; riverboat/data-center caution. Photo: Wikimedia Commons.

Written by Hoosiers, for Hoosiers.