This is the fifth year that I have spearheaded the budget review effort of the Marion County Alliance of Neighborhood Associations. Each year is different to some extent. This year there are some real anomalies and, frankly, I'm still trying to wrap my head around them. So, none of that in this post.
Mayor Ballard and his administration are focusing their comments, and hoping thereby to focus the public's attention, on decreased tax revenues and waving their hands about a $64 million shortfall in order to justify transferring $38.5 million from the consolidated downtown TIF to make ends meet. I cannot actually locate the $4.2 million transfer from the CIB in the 2012 budget, so I am leaving that off for now.
The rhetoric is that property taxes are stable, but income taxes are off $85 million from their peak in 2010. A closer look at the numbers provided in the 2012 budget book show a drop of $11 million in combined local tax revenues, an increase of $7 million in property tax revenues, and a drop of $15 million in income tax revenues between the 2011 and 2012 budget years. Add it all up and you have a drop of $19 million. Real money to be sure, but the City claims to have cut the budget by $20 million simply by requesting non-safety departments that rely on these very tax revenues to each cut their budgets by 6%.
Ordinarily I would also be commenting upon all of the other sources of revenue in this paragraph. But, unfortunately this year's budget book does not supply a summary table of revenues. I will have to slog through the details of the budget, which has been provided online, create my own spreadsheet and from that, my own summary table. I have not had the time. Representatives of the Office of Finance and Management insist that a summary table will be provided before the budget ordinance is passed. Great.
Moving on.
The budget for the Department of Public Works is more than interesting this year. That Department operated the profitable sewer utility that was the sweetheart part of the sale of the water and sewer utilities to Citizens Energy - a deal that closed this past week. DPW's budget is also the one that serves as the collector of parking meter fees. You will recall that the meters were sold via a 50 year lease with ACS and some local parking companies with enough political clout to get themselves included in this great giveaway of public assets.
Comparing the DPW budgets for 2011 and 2012 it is easy to see that expenses (p. 41 of the link) have dropped by $78.4 million (largely due to the off-loading of the sewer and water utilities), but a drop in revenues (p. 37 of the link) of $153.0 million. Looking closer, there is a drop in contribution from the Indianapolis Foundation/Central Indiana Foundation from $8 million to $200 thousand.
Under parking meters you can see a drop from $2.3 m in 2011 to $1.3 m in 2012. This, of course, is part and parcel of the fee-sharing demanded by the parking meter contract. None the less, it means less money for the City each year. In 2012 it means $1 m less. Still real money.
The rest appears to be mostly sewer utility related - so, roughly a drop of $144 m, give or take a couple of million. There is a PILOT (payment in lieu of taxes) that was increased this year and continues to flow from the sewer utility. That seems to be contained in its own fund which shows revenue for 2012 of $7.5 m. There is also another roughly $3.5 m scattered among a number of funds from PILOT payments from Waterworks. Good money, but not enough to cover the cash cow that the sewer utility was for the City and its taxpayers.
All of this distills down to about a $50 million revenue shortfall due to the sale of the sewer and water utilities and a $1 million revenue shortfall due to the 50 year lease of the parking meters.
It is apparent that the sale of our assets, especially our profitable assets, is having a much larger impact on the 2012 budget than is any drop in tax revenues. And while tax revenues will recover, loss of our assets will be a permanent loss to all future City/County budgets.
It therefore becomes imperative that the cuts be considered permanent and structural changes be made for sustainable budgets going forward. Sure, Mayor Ballard can transfer (aka 'rob') $38.5 million from the consolidated downtown TIF to make ends meet in 2012. But, lets not pretend that that is a permanent solution to a permanent change in City finances.
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HEI, when the state took over the fire and police pensions how much money did the city save annually on public safety? The police / fire pensions are vested at 20 years and therefore their pension payments are accelerated, in a 100 million dollar budget it would probably be 10 million or so in round dollars. Beside the increase in county tax of 65% and all of the other increased fees and charges that have occurred in the last three years they should be fat with cash even with tax caps.
Just as and aside have you tracked
revenue versus expenses over the last few years in the city budget? It would be interesting to see if expenses have increased disproportinally to revenue.
HEI, the state took over the unfunded liability of those pensions, per the figures form 2009 that was 16.7 million.
Jon, the forces on the budget also included the changes to the property tax laws, including the caps. I'll pull all of the numbers together tomorrow. I think the payments on the pre-77 pension were larger than what you have cited at the time the state took them over - for some reason $30 m is sticking in my head. Let me find the exact number, though.
One other thing is that Ballard's first two years included larger budgets - in part because he was adding fees to replace lost property tax revenues and the state gave more money than it took away. The 2011 budget year was the first time his budget decreased, but they had saved some money in a rainy day fund to absorb that hit. By then the real estate assessed values had begun to drop, as well.
This year the decreases seem real and large - although I still don't feel comfortable with exactly what that number is.
Do we receive federal dollars to offset our local cost for homeland securtiy? That is another 11-12 million of the public safety budget...
Here's the link to the revenue details.
http://www.indy.gov/eGov/City/OFM/Documents/Revenues%20By%20Agency%20by%20Subobject.pdf
page 10 is homeland security. They seem to be getting $17 m from FEMA.
Homeland security for the city is odd in that it is connected to a regional effort. If I've got the details correct, they pass out some of this money to the homeland security efforts in neighboring counties. Whatever the details were in how they are set up, not all of the money stays in Indy.
Okay Jon, the best I could find quickly is this: The State took over $65 million in former City obligations - including the pre-77 pension payments that were amounting to $30 million a year. The City began to received fewer property tax dollars, former Mayor Peterson's income tax increases hit at the same time -- all for a net increase of $4 million a year for Mayor Ballard in tax obligations vs revenues.
Another budget cut was selling off that IMPD helicopter for $750K.
I do wonder where the proceeds of that sale went.
And I wonder if having that copter flying could have been beneficial during the recent police chase, which now is becoming fodder for letting criminals avoid capture by merely driving away?
DI - I can't speak to the utility of a helicopter. I do however, have to side with a more stringent police pursuit policy.
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