A southern Indiana town board is considering filing for bankruptcy protection over a potential $1.45 million debt even though officials say state law doesn’t allow that action.
The 3,000-person community of Georgetown faces the debt to a contractor and the nearby city of New Albany over stalled plans to build its own sewage treatment plant.
Georgetown council President Billy Stewart said the town doesn’t have the money to pay the debt.
The Department of Local Government Finance, however, said federal law requires that a municipality be specifically authorized by state law to file for bankruptcy. Agency spokeswoman Amanda Stanley said the town could raise taxes beyond state limits to pay a court judgment.
Town attorney David Andrews says he believes it could win a court challenge to the bankruptcy prohibition.