Mayor: South Bend ended 2024 with strong cash position but faces revenue risk if Senate Bill 1 passes

South Bend — Mayor James Mueller on Monday, Feb. 10, told the South Bend Common Council the city closed the 2024 calendar year in sound financial condition while flagging state and federal policy proposals that could sharply reduce local revenue.

Mueller said the city recorded about a $1.1 million surplus in the general-plus funds for 2024 and that cash on hand rose from about $419 million to roughly $510 million, a jump he attributed largely to recently issued bond proceeds and timing differences between when the city receives financing and when it spends those dollars.

The fiscal snapshot matters because those proceeds are tied to specific capital projects, the mayor said. "If you receive the funds in one calendar year ... but you don't spend it on the project till the next year or two years later, it'll look in the year that you received the funds like you have a surplus," Mueller said. He described deficits in certain special-revenue and capital-project accounts as expected results of grant timing and planned spending.

Why it matters: Mueller warned that Indiana Senate Bill 1, as introduced, would cut an estimated $11 million from South Bend's budget in the next calendar year and approach $18 million in three years, citing an analysis by the state Legislative Services agency. "If you see these types of cuts ... it would be irresponsible for us to try to replace those dollar for dollar with income tax," he told the council, saying any response would likely be a mix of spending reductions and new revenue.

Key details from the presentation:

- Debt and ratings: The city carries just more than $300 million in outstanding debt and holds a AA bond rating. Mueller said annual debt payments have been kept stable by design and that the per-capita debt level is comparable to peer cities.

- Redevelopment and bond proceeds: The mayor said recent redevelopment financing, including neighborhood bonds and a professional-sports development taxing area, produced large proceeds that inflate cash balances but are earmarked for infrastructure and stadium expansion work.

- Utilities and capital: Water and wastewater enterprise funds reflected apparent surpluses tied to bond proceeds for capital projects that have not yet been spent. Mueller said projects funded in 2024 are expected to be executed in 2025 and beyond.

- Grants at risk: Mueller described a temporary reversal at the Office of Management and Budget on federal grant awards that briefly raised questions about whether previously awarded grants could be frozen. He said several city awards could be at risk in the near term if restrictions return, naming as examples a $12 million recommended broadband award and a $7.5 million outdoor recreation grant for Kennedy Park improvements. On Kennedy Park specifically, he said procurement and federal contract timing mean construction would likely not begin until fall at the earliest and could be delayed into next year while federal contracting is finalized.

- South Shore relocation: Mueller outlined a proposed relocation estimated at $112 million and reiterated the city’s position that it would facilitate financing mechanisms but does not currently plan to contribute direct city operating dollars; local and regional partners would be expected to cover the nonfederal share.

- Philanthropic and state awards: The mayor described recent REDI and Lilly Endowment awards to support riverfront and West-side housing projects, the zoo and other initiatives.

Council and public questions: Youth Advisory Council members asked about revenue options and project timelines. When asked whether the city would pursue tax increases or cuts if SB 1 produced large reductions, Mueller said the response would be a combination of "cuts and new revenue," and emphasized the limits of relying solely on income-tax increases. On Kennedy Park timing, Mueller said, "realistically, fall would be the soonest" to start construction if federal contracting remains on schedule, and added it could be delayed into the following year if contract execution is slowed.

Mueller repeatedly cautioned that timing — when grants and bond proceeds are received and when projects are constructed — drives apparent surpluses or deficits in the budget. He concluded the presentation by urging continued attention to state legislative proposals and federal grant uncertainty and said council and administration will return to rate and budget conversations later this year.

The council did not take formal action on the financial report; the presentation was provided for information and to frame upcoming budget discussions and state legislative risks.