The city of Jeffersonville will pay the Utica Township Fire Department approximately $240,000 — half this year and half next year — as a result of last year’s annexation.

The payment, which was agreed to late last summer, covers the income that the Utica department lost when Jeffersonville took most of its taxing district, according to Jamey Noel, Utica Fire Commissioner.

Jeffersonville will not receive any fire protection from Utica as a result of the deal. Instead, the money will be used to pay down debt that the department created to purchase a new truck and build a new firehouse prior to the annexation. Attorney Larry Wilder said the city had to agree to the payments or risk costly litigation and potentially scuttling the annexation all together.

He explained that Utica’s budget was substantially decreased when about 60 percent of its taxing district was brought into the city in January of last year. The city entered into an agreement where it would give the department the amount of money it was losing.

“The amount they requested to supplement was the exact amount they would lose,” he said.

Wilder also said it had to be done quickly: A Department of Local Government Finance attorney contacted the city 48 hours before it was to approve its budget.

Because Utica had made an objection to the annexation, there was a question as to whether Jeffersonville’s budget would be approved, Wilder said.

The DLGF could have decided to overturn the annexation based on the objection, he said.

“We would have lost the excess levy appeal,” Wilder said, alluding to the $3.1 million that the city was allowed to tax over the maximum levy in order to pay for annexation services.

Despite the hurriedness around the decision to make the payments, Councilman Ron Grooms said in an interview Thursday he was comfortable with it.

“I thought it was the best that we could hope for,” he said. “It was fair to everybody.”

Grooms is head of the city’s budget and finance committee.

Noel points out that state statute specifically notes that annexing cities are responsible for such payments.

Specifically, it says that if the fire protection district from which a municipality annexes territory is indebted at the time the annexation is effective, the municipality is liable for that indebtedness.

“We wanted to make sure the taxpayers in Utica that weren’t annexed weren’t unduly burdened,” Noel said.

The agreement will expire in two years, at which time, Noel said, the district’s debt will be paid.

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