Tuesday, September 9, 2014

Can We Just Stop With The Lying?

So the income taxes are going up.

Front and center in the IndyStar review of last night's vote of the Council, is this quote from Councillor Aaron Freeman:
"We have fewer officers than we should because we have been taking in less property taxes in this bad economy the last several years."
He makes it sound like the Council and the Mayor have had less money to work with and that is why they didn't support funding recruit classes for IMPD these past few years, as the Council Democrats had continued to try to do.

Freeman either knows he is lying to the public, or he is just passing along the meme offered by Ryan Vaughn.

Yes the City-County takes in less property tax revenues than they did before the tax caps came into effect.  They also have fewer bills to pay.  This actually left the City-County with about $50 Million MORE to spend than they had before the tax caps.  Add to that the increased revenue from Peterson's Public Safety Tax, and well - they had plenty of money to do any hiring they wanted.

But, they did not.

Even without the tax increase, the 2015 budget does fund a recruit class of 50.  With the tax increase, they are looking at 40 additional.

So, its not true that "we have fewer officers than we should because we have been taking in less property taxes in this bad economy the last several years".  We've had the money, just not the interest.

Suppose for a second that Freeman's statement were true - why would we need to raise income taxes when both property tax revenues and income tax revenues are climbing now that the economy has improved?

And if the Ballard Administration truly sees a need to increase the number of officers, why is Jason Dudich saying that only $4 M will go to IMPD's budget in 2015?  The tax increase is expected to bring in $29 M.  $2 M goes to the excluded cities and towns, by State mandated division of Public Safety Tax revenue.  Likewise, $10 M will go to County functions - but no discussion as to how that money will be spent has been done in public.  That leaves $13 M that Dudich wants to put into IMPD fund balance.  This would be overruled in a heartbeat if Vaughn wanted the money to be spent by IMPD.

That's right folks - you get to pay more in taxes so that the biggest chunk can fatten the year end balance.  And a whopping fourteen cents of every additional dollar will go to hiring more police officers.  Fourteen cents.

One cannot ignore the fact that this tax hike comes just before the proposed Criminal Justice Center gets crammed through.  Could be a coincidence.

So, we'll see if this Administration actually moves toward keeping interested in hiring more officers as the years go by, or if they'd rather spend this new money on something else.

Meanwhile, can we just stop all the lying?

Tuesday, August 19, 2014

Another Budget - Another Big Whopper

Why can't we get a budget introduced without some accompanying, outrageous, whopper made about our financial situation?

This time around, Chief of Staff (aka Mayor) Ryan Vaughn, is reported by John Tuohy of the IndyStar, as having said
Vaughn said tax collections have lagged since passage of property tax caps in 2008. Next year's property tax revenues will be $63 million less than in 2008 -- the homestead tax credit and the police tax were a couple of the only options the city has left to collect additional money, Vaughn said.
Come on Ryan.  Either you know you are pulling a fast one over the public, or you do not.  Neither option is adequate to transparency in government.

Vaughn specifically picked 2008 for a comparison because that was the last year before the tax caps program was fully implemented.  You don't have to talk to government officials very long before they are bemoaning tax caps.  I don't want to dismiss all of their claims out of hand.  But - and this is a big 'but' - they never seem to recall the massive amount of obligations that the State took over, funded by the 1 percent increase in State sales tax.

In the case of the City-County, the State of Indiana took over funding of specific obligations that used to cost the City-County over $113 M a year.  For instance, the famous pre-1977 police and fire pensions.  This pension had not had prudent payments made to it over the years and those public safety folks were beginning to retire in mass.  This is the financial cliff that Peterson was facing when he got the public safety tax raised.

So, when you subtract the $113 M a year from the 2008 property taxes, well then Mayor Ballard got quite a golden ticket from the State Legislature.  When you subtract that $113 M a year in obligations, AND account for tax cap penalties, the City-County collected just about $50 M more from property taxes in 2014 than in 2008.  Yes, I said MORE.

Tuohy's article also states
The city projects it will collect $574 million in property and income taxes this year, an increase of $34 million over last year.
Okay - there's the real numbers for 2015.  Not this flagrant misrepresentation of our financial resources compared to pre-property-tax-caps days.  Geez.

Here is what I wrote back in April for the Indiana Forefront blog - IBJ's blog.
Below is a graph showing the City-County total property tax levy and the net levy (total levy minus circuit breaker penalty) from 2008 through 2014. To simplify the jargon, the total levy is what they asked for, the net levy is what they got. The state took over City-County obligations in 2009 and the circuit breakers began to hit in 2010.
As you can see, the total property tax levy (what they asked for) and net levy (what they got) took a real jump in 2009 (The 2008 data is normalized for the $113M in City-County obligations taken over by the State in subsequent years so we can compare apples to apples.)  Without a doubt, the initial year of the tax caps was good for the resources of Indianapolis.
I look forward to finding out more about the 2015 budget.  But, please save all of us from the big whoppers.  Let's act like responsible adults.

Monday, August 18, 2014

Referendum is Required for Any Criminal Justice Center

I've come to the conclusion that the proposed Criminal Justice Center, should it get any further, be put to a vote of the public in the form of a referendum.

Project details are being withheld from the public by the Ballard administration - even details they have seen fit to divulge to the project bidders. 

The price tag noted in the press began as $200 M, but has hemmed and hawed its way to over $600 M.  For our purposes here, any of these price tags works.

The CJC would be built and run by an outside, private concern.  The City would lease-to-own the building over 35 years.

The administration keeps saying it will not result in a tax increase. They toss around an annual lease payment of less than $122 M. Taxes might go up or stay the same.  Either case works here.

Nonetheless, some of the payments would come from money normally appropriated to the Sheriff's Office and the Superior Courts, among others.  The Public Defender and Prosecutor won't actually be part of the CJC, despite its huge size.  Any accommodations for them nearby would have to be part of a separate public-private-partnership and add to the already huge price tag being hung on the CJC.

Between just the Sheriff and Courts budgets, nearly $100 M comes from the Consolidated County Fund.   This year, this Fund got about $165 M in revenues, 25 M, or 15%, of which came from property taxes.  It is impossible to imagine a repayment scheme that did not include a significant portion from property taxes.

By state law, any project costing $12 M or more in property taxes - whether it be through bond or lease payments - requires the consent of the voters through a referendum.

The little information so far let out by the project handlers in the administration clearly demonstrates that the CJC project qualifies as a project that meets the threshold for a referendum.

The public has deserved far greater transparency on the proposed CJC than it has received.  It also deserves a referendum, so that it has a real say in whether or not it wants to commit hundreds of billions of dollars over 35 years to a Criminal Justice Center.

Hold On To Your Wallets - Its Budget Time

Tonight's City County Council meeting will kick off the budget process for next year's spending and taxing.

Mayor Ballard will give his annual budget introductory remarks. 

Elimination of the local homestead credit is once again included - Prop 248.  Not to make ends meet anymore.  Not to contain the ballooning public safety budget 'deficit' anymore.  This time he wants to eliminate it to fund pre-K education.

I did not see increases in income taxes, but expect to see that appear soon enough.

Being introduced tonight is a second attempt to increase the stormwater user fee that appears on the property tax bill.  Prop 249 would automatically increase the fee each and every year going forward.  This feature was also included in the first attempt and drew speculation that the Ballard administration was just sweetening the pot so that he could sell off this utility to a private concern.

We are being treated again to a lobbyist-drafted ordinance sponsored by Councillor Mary Moriarty Adams.  Prop 250 would allow digital billboards in Marion County.

Prop 254 is offered in reaction to Ballard-Vaughn's recently inked agreement with Covanta for 'recycling', which contained a 70% tax abatement that was not called a tax abatement.  Prop 254 urges the State Legislature to make any agreement containing a rebate on taxes or a forgiveness of taxes to be subject to Council approval, just like any other abatement in a TIF district is.

Coming before the Council for a vote this evening are a few items, including:

Prop 241 urges IPL to abandon coal as a fuel at its Harding Street plant.  Check this one off as completed.

Props 162 and 163 would allow $100,000 from the Mayor's Office budget be donated to United Way.  This brings up two questions - why is there so much fluff in the Mayor's Office budget and why should taxpayers be subsidizing any non-for-profit that brings in millions of dollars a year on its own?

Prop 349, 2013 would establish a TIF in the Avondale Meadows area.  This TIF is much needed, no doubt.  But specificity regarding its funding remain lacking and of concern.  Also of concern is a lack of resident control of or input on the projects that might get funded.

Prop 195 would establish a landlord registry.  It would cost local residential landlords $5 per year, but it would require out of state owners to establish an in-state manager responsible for any infractions that might beset the property.  Failure to register a property would result in fines ranging from $100 to $500.  This is a good one in my book.

Another good one is Prop 232, which would require defibrillators in all public buildings and buildings housing a department or agency of the City County government.

Budget hearings start this week.  Tuesday will see the introduction by Controller Jason Dudich as well as the budget presentation his office, the Office of Corporation Counsel, and two others.  Wednesday will be the budgets of the Public Defender, Community Corrections, and the Child Support division of the Prosecutor's office.  Both hearings will begin at 5:30 pm in Room 260 of the City-County Building.  Thursday will be the hearing for the Parks Department budget.  That will begin at 5:00 pm, same room.

Wednesday, August 13, 2014

Criminal Justice Center Contracts - Do They Violate the Law?

The beginning of August has been interesting in view of the massive amounts of money the City has contracted to pay for  work on the proposed criminal justice center - not the center itself, mind you - but just to gather proposals for it.

Now IBJ reporter Kathleen McLaughlin has an article where the City-County Council's CFO, Bart Brown, is saying the contracts may have been signed in violation of the law.

The contracts in question were brought to the attention of the public by the media over the last two weeks.

John Tuohy, IndyStar reporter, broke the news that the  Mayor contracted with the new employer of his former campaign manager / former counsel, John Cochran; Bose Public Affairs Group.  That was to the tune of $750,000 for PR work.

Then Mary Milz, WTHR reporter, had a blockbuster last night.  She reported that there are even more contracts, adding up to $9,945,376, were also let to a variety of legal and financial advisor firms.  One thing that caught my attention last night - as we happened to be watching Milz news broadcast - was the closing comments attributed to Marc Lotter, the Mayor's spokesman.

Milz had inquired as to how the nearly $10 M in newly revealed contracts would be paid.
Mayoral spokesman Marc Lotter said not all contracts need to be paid immediately.  He said some contracts are being phased in.
He also said the controller has "the ability to shift funds around or seek appropriations if necessary, so there are a lot of tools we can use."
Well, the Controller actually has limited ability to shift funds around.  The City-County Council is the fiscal body that sets the budget and appropriates the expenditure of funds.  No money can be spent beyond what the Council appropriated for any of 5 types of expenses in any one department or agency.  Service contracts fall in one of those types.

So, the Controller can spend money earmarked for contracts on any contract they desire, up to the limit set by the Council through the appropriation for that department. 

McLaughlin quotes Brown today
Brown contends that the contracts were signed in violation of state procurement law, which requires council approval for multi-year obligations that aren't already funded. He said the administration has only $2 million available for the contracts, and that money wasn't expressly appropriated for consultants' fees.
Brown called it a "bait-and-switch." Ballard spokesman Marc Lotter couldn't speak to the legality of the contracts, but he said the city won't be on the hook for the full amount. Lotter said the city's consultant fees will be reimbursed by whichever development team is chosen to build the justice center. That's assuming the deal goes forward.
The contracts in question are posted online.

There are 6 contracts in all.  The contract numbers are sequential; running from #12449 through #12454.  The start dates of the contracts, however, are not sequential.

Here are the highlights of the contracts in order of contract number.  Links to each contract are embedded in the number for those wishing to review them.  All are assigned to the Executive and Legislative department budgets (Mayor's Office and Council Office, among others).
#12449 -- Bickmore -- $50,000 -- start date 3/10/14 -- end date 1/1/15
#12450 -- John Klipsh Consulting -- $100,000 -- start date 11/15/13 -- end date 12/15/14
#12451 -- KPMG Corporate Finance -- $3,000,000 -- start date 12/10/13 -- end date 3/31/15
#12452 -- Bose Public Affairs Group -- $750,000 -- start date 12/20/13 -- end date 12/31/14
#12453 -- Hellmuth, Obata and Kassabaum -- $4,695,376 -- start date 2/26/14 -- end date 6/1/15
#12454 -- Nossaman / Bingham, Greenbaum Doll -- $4,000,000 -- start date 10/14/13 -- end date 6/30/15
The last contract is actually a contract with Bingham for $1.5 M and a subcontract through them to Nossaman for $2.5 M plus expenses.

The grand total comes to $12,595,376.

That is a goodly sum of money.  Jason Dudich, City Controller, signed off on every contract as "acknowledged and approved for funding purpose" or "approved as to availability of funding".

The type of expense under which service contracts, like these, are allowed is termed Character 3.  Other expenses also come from this Character.  But, it is the maximum appropriated.  The 2014 budget appropriated the following total Character 3 for each of these executive and legislative groups:
Office of the Mayor -- $968,488
Office of Minority 7 Women Business Development -- $105,040
Office of Audit and Performance -- $132,276
City County Council -- $470,885
Office of Corporation Counsel -- $816,722
Office of Finance and Management -- $3,847,576
Telecom and Video Services Agency -- $116,599
So, back to Brown's point.  Where did and will the money come from to pay these contracts?  The total appropriated funds, which bear in mind are needed for other things beyond service contracts, is $6,457,586 for all of 2014.  Brown says the administration delayed paying its December rent on the City-County building by a month, freeing up $2 M for calendar year 2013. 

McLaughlin's article drops more bombs.
Lotter said the size of the contracts shouldn't come as a surprise to council members, because Council President Maggie Lewis signed a memorandum of understanding in December which states that the city may incur costs up to 2 percent of the total project. 
With fees of $12.65 million, the construction cost could be as much as $632.5 million.
Now we are topping $600 Million for the cost?  Are they nuts?

The Ballard Administration has been particularly opaque on everything surrounding their proposed criminal justice center.  The fact that the contracts are sequential in number but not in start date demonstrate the administration had all this laid out before October 14, 2013.  Yet we are just hearing about this jaw-dropping amount of taxpayer money being spent on something that may not get built.  Now we hear from the Council's CFO, that the contracts may not be legal because the money to pay them has not been appropriated.

The public deserves full disclosure - and full disclosure now.


[edited to add - as I was typing this up, Gary Welsh posted about the same thing over at Advance Indiana - click here]

Slow Down the Criminal Justice Center Bullet Train

The Ballard Administration no longer pretends that it is transparent.

The behind closed doors decisions being made regarding the proposed criminal justice center is a prime example.

The administration is even blocking press access to the request for proposals it put out.  This comes AFTER the State's Public Access Counselor's opined against the City's position.

IBJ reporter, Kathleen McLaughlin wrote last Saturday in an article about funding the center
Director of Enterprise Development David Rosenberg declined to state the maximum annual fee, which the city already has shared with three pre-qualified bidders. The mayor’s office also refused to release the request for proposals, a type of document typically considered a public record.

Indiana Public Access Counselor Luke Britt said he couldn’t think of an exemption to open-records law that would apply to the RFP. The city still had not cited an exemption as IBJ went to press.
So, behind closed doors, Mayor Ballard's people are happy to share details with bidders, but not with the public who would pay for the deal.

While I'm on paying for the deal, McLaughlin's article extensively quotes past City Controller, Jeff Spaulding, and his skepticism that costs will really be confined to current budget expenditure levels for the services that would move into a justice center.
Former city controller Jeff Spalding said the administration’s unwillingness to walk through the math behind its conclusions makes him skeptical the new facility won’t end up requiring more public dollars.
“I want the criminal justice center to happen,” said Spalding, who left the Ballard administration in April 2013 to become director of fiscal policy and analysis at the Friedman Foundation. “There’s more potential downside if you don’t do it the right way.”
 Ballard is already spending significant amounts of cash that the City can't afford on the proposal.

It was revealed last week, to the shock of most, that a $750,000 no-bid contract had been awarded to the new employer of former campaign manager and special counsel to the Mayor, John Cochran.  Bose Public Affairs Group is in charge of public relations for the justice center by this contract.  John Tuohy, IndyStar reporter who broke the story, quoted Republican City-County Councillor Jeff Miller as saying
Miller said he was not aware of the $750,000 contract Cochran signed.
"That is a big number. Now I know why he's so easy to get a hold of," Miller said. "I knew he was not doing it for free, but I did not know (his firm) was getting that much."
Fellow blogger, Gary Welsh, has written extensively on the justice center and the money being thrown at it over at Advance Indiana.  About the $750,000 contract with Bose, Welsh writes
Does anyone else see the irony in Ballard throwing away $750,000 of our taxpayer dollars on a politically-connected firm which has just hired his likely Democratic opponent next year, Joe Hogsett, and which will in turn invest that money in doing all within its power to ensure that Hogsett defeats Ballard in next year's election?
As I recall, Ballard did the same thing when Melina Kennedy ran against him - awarded her law firm a fat contract on the deal that sold the water and sewer utilities to Citizens Energy.   That may have been one reason she never really had an opinion against it - in public at least.  So, with this one $750,000 contract, Ballard is sweetening his old pal's value to his new employer and potentially tying Hogsett's hands as far as being too vocal and too against a justice center.  Of course, who knows if Kennedy personally liked the Citizens deal and if Hogsett will really like or dislike the justice center proposal.

The latest stunner was broken by Mary Milz of WTHR.  Welsh summarized the nearly $10 Million of of additional no-bid contracts uncovered by Milz this way:
WTHR's Mary Milz has now uncovered millions more spent by Mayor Ballard on no-bid contracts. Those include:
  • $1.5 million to Bingham, Greenebaum Doll for legal services, the former law firm of Ballard's likely Democratic opponent in next year's mayoral election, Joe Hogsett;
  • $4.7 million to Hellmuth, Obata & Kassabaum, Inc. ("HOK") for project development services; and
  • $3 million to KPMG Corporate Finance for financial services
Keep in mind that this boondoggle of a project still requires the approval of the City-County Council. If for some reason the council decides against the project, that $10 million is just flushed down the drain. Imagine how many new cops could have been hired with the money Ballard has blown on these no-bid contracts.
Exactly.  This is serious money that we need for other things right now.  But Ballard and his people are going to push this through if its the last thing they do.  And it very well might be.

The public is on the hook for the excessive contracts already let on this deal.  They are being kept in the dark about any details, made all the worse by the Ballard Administration's violation of the Open Records laws in order to keep secret from the public, what it is happy to share with bidders.

Today's IBJ has another article by McLaughlin.  This one deals with the potential impact moving all of the Prosecutor, Sheriff, and Court offices out of the heart of downtown.  Office vacancy rates still have not recovered from the Great Recession.  McLaughlin writes
At a time some large downtown law firms are cutting back on space, the proposed criminal justice center will gut the downtown office market.
Moving the Marion County prosecutor and public defender to the new center at the former GM Stamping Plant southwest of downtown will alone shift 130,000 square feet.
Add in the 590,000 square feet occupied by jails, traffic court and arrestee processing center and the downtown core is on track to empty a total of 720,000 square feet—roughly equivalent to the entire OneAmerica tower.
and
City officials claim the moves to the new justice center will add only about 1 percentage point to the existing 20-percent downtown vacancy rate. But Jon Owens, an office broker at Cassidy Turley, isn’t buying it. He said the vacancies could account for three times the amount city officials predict.
With a total of 10.5 million square feet of downtown office space, the removal of the prosecutor and public defender offices alone will move the needle 1 percentage point, Owens said.
“It has the potential to take a big chunk of that southeast quadrant, kind of like what the state government center did in the early 1990s,” he said. “It took forever to backfill that space.”
While the proposed justice center is being sold as a complete consolidation of criminal justice services, it is not.  Back in April, McLaughlin reported
Fullbeck [Ballard's senior policy advisor for economic development] said the request for proposals from developers, due out this month, will not include office space for the Marion County prosecutor and public defender. That space will be built under a separate procurement process, which he said will allow the developer to decide whether to build additional leasable space for other users, such as jail-service providers.
The price tag just keeps getting bigger and bigger.

The public deserves details and time for discussion.  The current trajectory is for the bids to be back just as the budget for 2015 is being finalized.  If they follow former practices, they'll put out information around the holiday season when most of the public's attention is elsewhere.

But complete transparency is feasible at this point in time.  There is no excuse to keep from the public what the Ballard administration is willing to tell bidders.  There is no excuse to put $10 M of taxpayer money at risk through no-bid contracts for a justice center that may not happen.

There is no excuse.  Then again, I don't think Mayor Ballard and his Chief of Staff, Ryan Vaughn, care one wit, what you or I or the Council or the press thinks.  They see our money as their money.  They see our City as their City.  They have their goals and they don't care how much of our money it takes to reach them, nor how badly it could go for future taxpayers of Indianapolis.

Tuesday, August 12, 2014

Hallelujah !! Its Raining Cash Again at the CIB !!!

I've come to the conclusion that the CIB is manic-depressive.  But, I could be wrong.

The CIB engages in cycles where it says -
we're going broke, give us more taxes
thanks, now we're okay
wow ! we've got more money than we need ! let's throw some away !
we're going broke, give us more taxes......

We're Going Broke

The latest cycle began in 2012 when the CIB said they couldn't spare a dime to help fund public safety.  They had debts coming due for which there was no money.  You'll recall the drama played out with the CIB, the Mayor, and the Democrats on the Council back when Brian Mahern was VP.  The Council voted to tap the CIB for a $15 M payment in lieu of taxes.

Here's what I wrote about the contentious Council Muni Corp Committee meeting at the time:
On the actual meat of the reasons for this PILOT, Councillor Brian Mahern kept bringing it back to the fact that the Mayor's proposed budget would let police and fire numbers drop even further.  He said there are already 100 fewer police than at the time of the merger and by not holding recruit classes, the numbers would drop even further.  He noted as well, that the CIB relies heavily upon IFD and IMPD services for the many events that are held in their facilities.
While Councillor Lutz primarily discussed the legal aspects, Councillor Cardwell brought up all the trickle down taxes that he said were due to the CIB, indicating that was more than enough help to the City.
Ann Lathrop mentioned "I feel your pain" and later said she had a fiduciary responsibility to the CIB "not to run it into bankruptcy".  Oh pah-leez on both counts.
The PILOT was reversed.  Later a deal was struck between Council President, Maggie Lewis, and Acting Mayor, Ryan Vaughn, to increase the admissions tax and car rental taxes for the CIB, with the City getting a fraction of that new money back.  This deal netted the CIB an additional $5.6 M per year.

Thanks, Now We're Okay

At the CIB's 2014 budget hearing, Ann Lathrop laid out how the new money would be saved in a reserve fund so that upcoming debt could be paid off.  There are two debts due, for which no money has been put aside. 
 
First, there is an outstanding principle of $34 M due to the so-called "mall investors" who loaned the City money back when the Circle Centre Mall was just a hole in the ground.  That is due in 2017.  The Indy Star is part of that group, by the way.
 
Second, there are two $9 M loans that the State made to the CIB as part of the huge 2009 bailout.  Those are due in 2019 and 2020.
 
Lathrop testified that they needed to put this new $5.6 M away every year just to pay these outstanding loans.
 
Here is the shortest clip I could gather from the September 12, 2013, CIB budget hearing that lays out the need to use the new money to make ends meet.  They have capital improvements to make, like new carpeting for the Fieldhouse, as well as the two loans to repay in the near future.  No fluff, just necessary revenue.  Councillor Jason Holliday asks some follow-up questions of Lathrop, and Councillor Monroe Gray has some back and forth in between.  (click here to view the entire hearing and choose "Sep 12, 2013 Video")



Wow ! We've Got More Money Than We Need ! Let's Throw Some Away !

Fast forward to yesterday when the CIB board voted 4-2 to throw away $5 M on the IUPUI Natatorium project.  Yes, folks, the CIB had more money than it needed.  Go figure.

Councillor Lewis, who sits on the Board, was one of the two NO votes.

We're Broke, Give Us More Taxes

Just wait, its coming.  This pattern is the same one we have seen play out over and over and over again.

Some might accuse the CIB and its President, Ann Lathrop, of simply and continually lying about the true state of finances of the CIB.  Me, I think the organization is just manic-depressive.  But, I could be wrong.