Thursday, May 7, 2009

Indy is Lucky to Have Him

Sometimes it seems that the right person is in the right place at the right time to make a difference. So it is, in my humble opinion, with David Reynolds, Controller of the City of Indianapolis.

Among the duties of Controller, is to craft a budget for the City-County; a nightmare for even the most geeky bean counters among us. In addition, Reynolds is a point person trying to grind out numbers and come up with a solution to meet the CIB bailout. Even if you disagree with a bailout, somebody needs to be in there coming up with possibilities that are reliable options for consideration.

What makes the CIB debacle particularly onerous to me, is the enormous challenge the City and County Government is going to have to meet in the 2010 budget -- without the huge bump in new taxes that the CIB wants for itself.

The 'perfect storm' analogy has been used considerably in the last few years - beginning with the taxpayer revolt over substantial increases in property taxes. That revolt led to the property tax caps that take full effect in 2010. I think it is appropriate to use 'perfect storm' to describe the challenge facing Indianapolis in crafting a budget for 2010.

The residential, commercial, and industrial property tax caps will be down to 1, 2, and 3% of assessed value, respectively, in 2010. I have heard that it could mean a reduction of up to $50M in the City-County budget. The full budget was $1.1B in 2009, so it might not seem like much cutting. That would be a false illusion, as the City-County operates on other income besides taxes. Activities that collect fees are the only activities which can be funded by those fees. That leaves things like Public Safety and Parks susceptible to the tax cuts, while Code Compliance, for instance, could like remain little touched.

In 2009, expected tax revenue was $640M, with property tax revenue comprising $303M of that total.

Add the economic downturn to the tax caps impact. Monthly revenues collected by the State have been down 15% year to year recently. Extrapolating that barometer, fairly or not I don't know, would suggest up to another $45M decrease in tax revenues other than property taxes. Layoffs affect income tax revenues, decreased travel affects innkeepers tax revenues, and lower new car sales affect wheel tax revenues.

Add also the decreasing value of residential property that will begin to show up in assessed value in 2010. Assessed values decline 1-2 years after the real price decline has occurred. So, 2010 is when we shall begin to see the housing market fallout in the assessed value. Combined with tax caps, this means even fewer tax revenues for the City and County.

Although the Controller does not have direct authority over the budgets of the Municipal Corporations, he will be involved in finding solutions. In addition to the CIB drama, the Public Library also has a shortfall affecting debt payments to the tune of $25M. We have no word on the effect of the failing economy on IndyGo or Health & Hospitals budgets. Certainly for all these Municipal Corporations, the lower tax revenues mentioned above should be expected, maybe to the tune of 15%.

Controller is an unenviable position to hold in our City right now. We are lucky to have David Reynolds in that post because he is quite capable, smart, and honest.

All this does not remove responsibility from the public to pay attention to the budget process this coming August. The cuts will be real and it is up to the public to weigh in on how the cuts are allocated throughout City-County government and its attendant services.


Paul K. Ogden said...

Not to be disagreeable, Pat, but I think Reynolds was in the middle of the bungled self-funding of insurance for the city employees that is destined to come back and blow up the budget.

There is some question regarding whether the city's budget numbers are honest numbers or whether the city is in much deeper debt than what is being told. I don't know if that is Reynolds doing or whether he's just carrying the water for someone else.

Even if Reynolds is the honest public servant you suggest that he is, he's in a very bad situation with the Ballard/Grand adminstration and he's going to end up tarnished as a result.

Had Enough Indy? said...

I don't see a difference of opinion as being disagreeable. I trust that you, too, would want to sort out the better folks from the 'not so much' in this and other administrations.

I'd be interested in knowing more about 'self-funding of insurance' as I had not heard of that before now.

As for the debt, are you referring to the bonds or other debt sources?

The budget is a thicket, there is no doubt. I have sat in on most of the hearings and sat down a number of times with different folks in this and the last administration over the last two budget cycles. Most folks have been forthcoming and not evasive (except for the CIB) when I have asked questions.

More civilian eyes on the budget is only to the benefit of all. If only to make statements of interest - cut here, not there sort of comments -- is a good thing. I hope that the number of people attending the budget hearings this year rises over last year.

But, back to Reynolds, I do think he is that honest public servant.

Strangely enough, Ballard has chosen a couple of department heads that I have great confidence in. I think very highly of Maury Plambeck and Dave Sherman (DMD & DPW). Kevin Taylor of the Bond Bank as well, although it is not in my skill set to really evaluate the job he does. Hopefully they will stay on through the strain of the next couple of years. I'd hate to see this City try to go through all the troubles it faces without them.