Sunday, November 29, 2015

Say No To the Mayor and Council Raises

At tomorrow night's City-County Council meeting, Prop 413 will be introduced.  If passed it would increase the salary of the Indianapolis Mayor and base compensation of Council members.  The Mayor would receive $125,000 per year, up from $95,000 - a 31.6% increase.  The Council would untether its compensation to whatever the Mayor makes and opt for a $16,400 base salary.  That would increase their base from $11,400 to $16,400 - a 43.9% increase.  Both receive other, smaller categories of compensation as well.

The press is reporting that this would put the Indy Mayor closer to the salaries of certain donut-county Mayors.  This does not convince me of the wisdom of the proposed raise.  $95,000 is still high enough to put bread on the table.

While we are at it, the Deputy Mayor salaries should be rolled back to pre-2014 levels, or just less than the Mayor makes.  While I often hear that those at the top positions in government need to be paid enough to keep them from moving on to the private sector - I find that is usually what they intend to do all along, and that they are using the government position as a key stepping stone, no matter the salary for those 'lean' years.

According to the US Census, fewer than 5% of Indianapolis residents made over $100,000 in 2014.  This "over $100,000" category is a catchall for the upper limit earners.  So, the Mayor and Deputy Mayors are not grievously harmed by receiving compensation less than $100 grand.  Methinks there are other reasons to be Mayor or one of his closest advisers - public service among them.

Mayor-elect Hogsett should ask that the increases instead be applied to an effort to bring all City-County employees up to a living wage as serving a greater good.  Combining the proposed increases for Mayor and Council with a rolled back Deputy Mayor compensation would provide well over $200,000 a year in seed money.

It is unclear how many city employees do not earn a living wage - and that ignorance in itself is not a good thing.  The lowest salaries listed in the budget ordinance do cover a living wage for a single person with no children - just over $20,000.  The living wage doubles with the addition of one child.  I doubt the city can afford that much as a minimum, but we need to have our City Government be a good employer, too.  That means we need to know where our employees stand, whether we are equipping them with knowledge and skills to move forward in life, and how to best compensate all of our employees.  We need to look at the reality of the job holders, too - are they entry level workers developing their skills for better paying jobs elsewhere, or are they on a career path that will become problematic as their families increase?

Every year, select employees get raises - usually those with union contracts and some with higher salaries who could earn more elsewhere.  In the near decade I have been following the budget process, only once was a comprehensive compensation review conducted, followed by raises to move some employees out of poverty wages.  Most every year, most employees get no raises.

This is an opportunity for Mayor-elect Hogsett to set a positive tone for his Administration - that all employees matter and that a living wage is a goal worth evaluating, setting and meeting for the City of Indianapolis.

Tuesday, November 10, 2015

The Invisible Hand(out) of the (Taxpayer Financed) Market

The war between cities and regions to attract business development generated the handouts known as 'incentives', 'tax increment financing', 'abatements', and more - a virtual cottage industry in how to funnel taxpayer funds to well connected developers.  There are more noble goals in play at the same time, like, hoping for a catalyst to spur private sector investment.  But the subsidies don't seem to ever end.

We have seen this cottage industry begin to morph from incentives to entitlements - industries that are begging for land upon which to develop, still expect hefty abatements to "level the playing field" and they no longer even try to tie job gains with those tax benefits.

Now, quietly yet out in the open, there is another transformation happening - the perpetual enrichment of favored landowner through taxpayer funded inducements for development upon leased real estate.

The North of South/City Way investment of about $100 M of taxpayer money involved development of the housing/retail/hotel/fake tech park built on top of land leased from Eli Lilly.  How much cash flow that provides Lilly is - well - none of your damn business, Ms. Taxpayer.

While the land lease model worked out in City Way, it does not always go so smoothly.  The airport has been trying to lease prime real estate where its old terminal used to be.  It has prominent frontage along I-465 and enviable access, not to mention an already existing parking garage.  Plus the old building has been torn down and hauled away.  Height restrictions do play a role here, but there is also the ingredient of who would want to lease the land upon which to construct a building.  Even a fifty year lease will find a day when the tenant must either re-up the lease or move on -- and at what cost?  The only offer they have noted in public has been a casino complex - which I personally root for, but the point here is the paucity of interest.

Last night the City-County Council voted to float $75 M in TIF bonds for the 16 Tech project.  Roughly $55 M would go to move water lines, power lines, and gas lines, and build a bridge and a park - all of which will make the land owned by IU Foundation, IU, Beurt R & Corena J  Servaas, the Benjamin Franklin Literary Medical Society, Health & Hospitals Corp. of Marion County, and Methodist Hospital much more valuable.  Yet, this land will be leased to eventual developers, not sold for the development.  But, it gets even better for these entities - 16 Tech Community Corp has been set up and will be funded by the rest of the bonds to the tune of just over half a million a year (with salaries ranging from $30,000 to $200,000) and their job will be to market the property to developers - so that these not-for-profits don't have to lift a finger or pay a single salary in order to cash in on the taxpayers' largess.

All that said, this one kind of amuses me.  I like the area in question getting a leg up and I like trying to promote biotech for the long run.  I do wonder, though, how viable the land-leasing model will be. In worst case, Mass Ave and Union Station and Circle Center Mall and the rest of the consolidated downtown TIF can all contribute to paying off the bonds.

I've wandered off the point of this post.  What we now have are the taxpayers being expected to fund a quarter to a third of all downtown development AND sustain abatements that need not include increased employment ALL THE WHILE our investments are quietly generating a perpetual revenue stream to well connected landowners.