Games with COIT, LOIT, PST and Library Funding

I don't know what actually takes more slight of hand, the movement of dollars from one fund to another that are said not to be possible, or the explanation of why it can't be done in similar situations.  Fully funding the Indianapolis-Marion County Public Library is a prime example of this slight of hand.

Just last year, the City-County Council filled $1.0 million of a $1.8 million shortfall, with money laundered from the Ameriplex TIF District - money that had been sitting in the TIF District fund to act as a reserve to satisfy bond holders.  At the time, Councillors like President Ryan Vaughn, stated that they could not cover the remainder of the Library's shortfall with money from the Consolidated Downtown TIF District, even though it was exactly the same type of situation and even though they had just managed to pull $8 million a year from that TIF to pay more money to the Pacers.

Earlier this year, with much show and fanfare, the Council passed a resolution urging the Indiana State Legislature to grant them the power to send some County Option Income Tax revenues to the Library in future years.  The Legislature indicated that the City already had that power, but reaffirmed it with new legislation.  Now that the City and the Council has that power, Councillor Vaughn and others are making noises that indicate they will not split the COIT revenue with the Library anyway.

IBJ reporter, Francesca Jarosz, has a good article in the current IBJ that goes into the COIT - Library - IndyGo funding issue pretty well.  I agree with Councillor Jackie Nytes' position, captured in the final two paragraphs of the piece:

Jackie Nytes, a council Democrat, said giving the library even a small share of income taxes this year is important in setting a precedent.


“We recognize there is a need as a show of faith to find a way to begin that sharing of income taxes,” Nytes said, “even if the initial allocation may be more symbolic than substantive.”

I decided to look at the 2011 City-County budget to see where the City and County income tax money was going, just to see what I found.  I looked at the budget breakdown "2011 Council Adopted Revenues by Subobject by Fund" and "2011 Council Adopted Revenues by Fund by Subobject".  Click here for page with links to a variety of ways to dissect the budget.
 
But, first, a step back to explain that there are three separate taxes revenue streams that combine to total all of the income tax collected in Marion County.  There is the County Option Income Tax (COIT).  There is the Local Option Income Tax Property Tax Make Up (LOIT).  There is the Public Safety Option Income Tax (PST).  Some will tell you that the PST is dedicated to public safety an cannot under any circumstances be used for anything else.  But, that is not the case and in 2010 it was in fact redirected for use anywhere on anything to benefit the final City-County budget both in 2010 and in 2011.
 
In 2010, $21.1 m of COIT money and $13.3 m of PST money were put into the County Rainy Day Fund, where they were essentially laundered so that they could be used for any expense.  $17.3 m was transferred out that year and $17.5 m transferred out to benefit the entire budget.
 
So, for just 2011, how is COIT, LOIT, and PST being spent?
 
COIT:
Fire fund -- $40.4 m
IMPD fund -- $79.2 m
County General Fund -- $6.4 m
MECA fund -- $6.8 m
 
LOIT:
Consolidated County fund -- $2.6 m
Parks fund -- $2.1 m
Redevelopment fund -- $55 k
Solid Waste Collection fund -- $3.1 m
Fire fund -- $8.8 m
IMPD Fund -- $4.8 m
County General Fund -- $13.9 m
 
PST:
Public Safety Income Tax fund (from City's take of PST) -- $29.9 m 
Public Safety Income Tax fund (from County's take of PST) -- $20.6 m
 
These funds are then the sources of money that go into each departmental budget.  The grand total of income tax revenues for the City-County in 2011 comes to $218 million.  Surely the Library is important enough to the powers that be, regardless of party, to send less than 1% of the income tax revenue to help make Indianapolis a great place to live.
 
But, somehow I expect there will be more slight of hand trying to explain why COIT, LOIT, and PST cannot be shared with the Library than prestidigitation in making it happen.

Council to Take Stand On Property Tax Dollars to Pacers

Tonight's City-County Council meeting will see final adoption of the various budgets for the City, County, and municipal corporations.

The CIB budget has become the poster child for how to glam up the usually boring budget process. Just try to pass $8 million of property tax money to a sport organization; that's apparently all it takes.

The rest of the budget should pass in with little excitement.

The CIB budget, however, is different.

It is time for the individual Councillors to take a stand on the movement of $8 million in property taxes from the consolidated downtown TIF to the Pacers, through the CIB. They can amend the proposed budget to redact the $10 million total gift, or just vote against the budget as it now stands.

If no new budget is approved, the CIB would have to live on the same budget as last year. Although the CIB cried wolf throughout all of their bailout hearings in 2009, they still managed to pad the 2010 budget enough so that there was an extra $10 million in it to give to the Pacers.

If you compare the proposed 2011 budget ($104 m) with the approved 2010 budget ($94 m), there is a request for $10 m extra dollars. But, if you compare the proposed 2011 budget ($104 m) with the amount expected to actually be spent in 2010 ($85 m) you find a huge increase, amounting to nearly $20 million in new dollars. And remember, that $85 m figure includes the $10 million 2010 installment of the Pacers gift from the taxpayers of Indianapolis.

As some Councillors will try to tie the IndyGo and Library budgets to their CIB vote, let me remind everyone that IndyGo got the budget it asked for and the Library got $800,000 less than it asked for. IndyGo's 2010 budget is $75.7 m, while its proposed 2011 budget is only $63.5 m; a $12.2 m reduction. The Library's 2010 budget is $49.5 m, while its proposed 2011 budget is only $45.2 m; a more modest, but still real, reduction of $4.3 m.

Isn't it time the priorities for how we spend tax dollars get put on services for Indianapolis residents, rather than on bailouts for sports teams?

It is time for the Council to say clearly to the Capital Improvement Board - "enough". We shall see how each Councillor votes tonight, after all of the hand-wringing and declarations of it being a hard decision are over. Remember folks - it is your money they are spending.

Muni Corp Committee To Move Forward on CIB, Library, IndyGo Budgets

Tonight, the City-County Council's Municipal Corporations committee will do the final review, revision, and vote to move all of the municipal corporations budgets out of committee. There are 5 municipal corporations - the Airport, Health & Hospitals, IndyGo, the Library, and the Capital Improvement Board.

The Airport and H&H budgets will enjoy little to no drama tonight. This is not the case with the other three.

Will Higgins reports in this morning's Indy Star, that there is a deal to replace all of IndyGo's and much of the Library's proposed shortfall appeal with money set aside when the United TIF was created.

What's a shortfall appeal? Its easiest to explain by starting with how a tax rate is determined. You determine a tax rate by dividing the amount of property tax requested in a budget, by the assessed value of all property that will be used to pay that property tax. The taxing unit, whether it be a school, a library, or the City, are bound by the property tax rate. If somebody doesn't pay their taxes, too bad. If the property owners appeal their individual assessed value, and win, then the total assessed value drops. This, too, reduces the property tax revenue that the taxing unit gets -- unless it files for a property tax shortfall appeal. If granted, the next year's tax bills will show an additional line for those properties that have not already hit the tax caps - raising those property tax bills.

In the case of IndyGo and the Library, a shortfall appeal cannot be submitted to the State Department of Local Government Finance without the prior approval of the Council. If granted, the additional tax would be applied to next year's tax bill -- just in time for the reelection campaigns for Mayor and City-County Council. And, none of those folks want to HAVE to be explaining how its REALLY NOT a tax increase.

This alone would be incentive enough for the 'deal' that seems to have been struck by the Council leadership. Higgins reports,

A bipartisan group of council leaders on Monday agreed to recommend adding $1 million to the library's 2011 budget, partially offsetting the library's property tax shortfall appeal request for $1.8 million.

The group's plan also would provide IndyGo with the $1.5 million it initially sought in its shortfall appeal.

...

The money would come from a fund created in the 1990s to service debt from a tax-increment financing district that helped finance the former United Airlines maintenance hub at Indianapolis International Airport.

Under the proposed deal, the funding source would be recurring for the library but a one-time-only fix for the bus service.

This deal would not increase the proposed budget for either IndyGo nor the Library - and actually would decrease the Library budget by $800,000.

The drama with the CIB is still bubbling. I think we can be sure that the deal struck on the IndyGo and Library shortfall appeals will be played, behind the scenes of course, as a sufficient trade to allow the $10 million gift to the Pacers in the CIB budget. The question is, who will bite? Council President, Ryan Vaughn, has been quoted in previous Star reports by Jon Murray, as tying the two issues together. He quotes Vaughn as saying,

Members of both parties say they are reluctant to approve the CIB's budget. Council President Ryan Vaughn, a Republican, says it's a tough call when the library and bus systems' long-term fiscal health is in question.

"I think people are open to passing it as long as we are finding solutions to the library situation," Vaughn said in an interview. "We want to work hard to send the right message to the public."

We shall see what happens tonight. Will the Councillors on the committee think that not cutting the proposed IndyGo budget and cutting the proposed Library budget by only $800,000, is sufficient trade for $10 million to the Pacers in the CIB budget. If they do, then Councillor Vaughn is correct - if that deal is struck, the Councillors WILL BE FORCED to "work hard to send the right message to the public." I say that because I don't think the public is that dumb or ill-informed.

Councillors serving on the Municipal Corporations committee are: Republicans, Barb Malone (Chair), Jeff Cardwell, Bob Lutz, and Angel Rivera -- and -- Democrats, Maggie Lewis, Dane Mahern, and Jackie Nytes. The meeting begins at 5:30 in room 260 of the City-County Building.