Follow the Money

A long time ago now, the Marion County Alliance of Neighborhood Associations began following the City's annual budget based on one proposition.  That proposition is that our elected officials can say lots of things, spin lots of yarns, and try to influence public impressions, but they will always put money into the things they feel are priorities regardless of what they say.

Today we sit with news reports of yet more MILLIONS of dollars going to the Pacers and their billionaire owners - voted on by the CIB prior to public disclosure of the actual deal agreement(read Gary Welch's excellent piece on Advance Indiana for more). 

Our elected officials are prepping us for goodly increases in income taxes to provide more cops on the street - while saying violent crime is actually down, its just shooter's aim that has improved.

Our elected officials will be looking to eliminate the local homestead credit - the third time for this push.

Our elected officials will look for a calm moment within which they can place the mass transit referendum on the ballot to raise taxes even more - and you just know that the light rail boondoggle will somehow be included once again.

But, where do we actually stand?  What priorities has Mayor Ballard-Vaughn actually placed on his spending of tax dollars?

Below are two charts comparing the actual budget numbers for some City Departments and Municipal Corporations for 2014.

First is a comparison of several Municipal Corporations as well as the collective revenue from Marion County's TIF districts.  The total budget for all Muni Corps is nearly that of the entire City-County budget ($955 M vs $1.0 B).

You will notice that our elected officials value sports as much as they value the current IndyGo and public Library combined.  The slush fund that TIFs provide, of course, also rivals the basic public service spending that I thought City government was supposed to provide.

The chart below compares spending on different departments included in the City's annual budget.  The Fire numbers include the fire budgets for the three Townships that still operate their own departments in addition to IFD's budget.  The Parks budget number shown below also includes money Ballard has moved into DPW's budget.  DPW's budget number has the Parks money removed.

Elected officials give a little more priority to police and fire than they do sports, but not substantially more.  Parks has been gutted by this Mayor.  In fact, Ballard-Vaughn's proposed RebuildIndy 2 program would spend just about as much on painting bike lanes as he budgeted for all parks in 2014.

When an elected official talks to you about his or her priorities, ask them how they are really spending our money.

Principles Matter - But, Evidently, That's Negotiable

Some power brokers in the Republican Party and some power brokers in the Democratic Party only care about how much money flows their way.  To them, there is no 'enough'. 

There is no 'enough' just because your parks aren't kept up.  There is no 'enough' just because there are too few police and the City can't afford to give them contractual raises.  There is no 'enough' just because all the sellable public assets have been sold. There is no 'enough' just because good public servants are being laid off so that well-connected organizations can get more lucrative contracts to do their jobs - and poorly at that.

There is no 'enough' as long as the City can cash in future generations' welfare for more dollars today.   There is no 'enough' as long as there are more square miles that can be turned into TIF slush funds.  There is no 'enough' as long as the City can gain, even if that gain causes an equal loss to Township Schools.  There is certainly no 'enough' as long as taxes can be raised.

Jon Murray, IndyStar city hall beat reporter, wrote an article that was posted last night online and delivered to subscribers on paper today, that clearly shows how little residents and taxpayers mean to some of those elected to serve the public - not elected to serve themselves and their money backers.  Paul Ogden, over at OgdenOnPolitics, commented on the story last night.

Murray reports on negotiations between Council President Maggie Lewis and Mayor Ryan Vaughn.  These negotiations are about eliminating the local homestead credit and expanding the old IPD taxing district.  He says of those two 'tax changes':

The combined upshot would include a tax cut for central parts of the city, higher taxes for outlying areas and a hit to township school districts’budgets. 

Council President Maggie Lewis, a Democrat, said the Republican administration was holding firm on the tax proposals but has been open to discussing options that include tapping into utility sale proceeds and unused money from tax-increment financing districts.

That could soften the blow of the tax changes by paying for council Democrats’ priorities, she said.

Its not about softening the blow to taxpayers.  The power brokers behind Lewis want those taxes raised - the more the merrier.  Schools be damned, taxpayers be damned - keep the tide of cash flowing ever greater.  Lewis is actually trying to find MORE money to spend to 'justify' voting for raising taxes.  If she cared about the public interest, she'd be negotiating to supplant some or all of the tax hikes with money in the $80 million 'fiscal stabilization fund' that was created with the utility sales money.  But, no, its all about ever more money for the power brokers and the well connected developers and the campaign contributors.

Lewis and Vaughn are just trying to soften the blowback on Councillors who vote for these tax increases.  They are trying to come up with a one-year token infusion of extra money into the budget to somehow bedazzle the public with a forever-year increase in taxes and hit to Township Schools' budgets.

Lewis' branch of the County Democrat Party is as corrupt as Vaughn's branch of the County Republican Party.  And all they want is more access to your purse so their 'friends' can broker more bond sales, lobby for more deals for their clients, land more contracts, and turn their campaign contributions into more tenfold taxpayer handouts.

There still are Councillors who act on principle and for the public good - a couple, all of the time - some, only 'negotiating' that principle away from time to time.   It is up to these Councillors how the City will move forward.

There's Exaggerating - Then There's Outright Lying

I attended last night's Public Works committee meeting for two items - the proposed hike in stormwater management fees and the budget.  Among other agenda items, there was Prop 250, which looked to use some new gas tax money from the state, to float bonds to pay for infrastructure improvements.

Gary Welsh over at Advance Indiana, and Jon Murray over at IndyStar, both did a good job relaying particulars.

The late night newscast by WTHR, channel 13, however, did not do a good job.  All they did was quote the Mayor's press release - which was so far beyond exaggeration as to be an outright lie.

Here's what the press release said, from Murray's report:

“Democrats on the City-County Council turned their backs on every neighborhood in Indianapolis,” Ballard said in a written statement. “By placing politics ahead of the best interests of the community, they rejected a plan that would have provided sidewalks in many of our neighborhoods, repaved every one of our worst streets, made our bridges safer and fixed flooding problems in some of our poorest neighborhoods.”

Lie, lie, lie.

Here are the particulars from last night's debate on floating these bonds.

The state is sending the City/County an additional amount of money from the gas tax revenue it receives.  Lori Miser, head of DPW, and Deron Kintner, head of the bond bank/deputy mayor, said it was $7.8 million in new money.  Hope Tribble, CFO for the Council, said it was $6.2 million.  This is not guaranteed every year, although it appears that the State has committed to try to send it - if they can.  The gas tax has been a hot topic in Washington for years now, as it is not as much of a revenue source for transportation as they would like.

In either case, the proposal was to pay $9 million per year in debt service on new bonds.  Depending upon the interest rate at the moment the bonds were floated, this could generate anywhere from $135 - $150 million.  The bonds would be paid back over 30 years - so the taxpayers would spend $270 million over time to get maybe $150 million now.  That computes to paying $120 million in interest and fees - nearly half.

The City would add this $135 million to money it will spend on infrastructure anyway, to make a grand total of $350 million in spending over the next 3 years.  Without bonding, they would have $242 million to spend over the next 3 years (I added the $9 million per year to the base $215 million).  So, the City can still repave 'every one of our worst streets', and make 'our bridges safer'.  The flooding issues I'll leave to another blog post.  Suffice it to say, the City doesn't direct stormwater projects to the poorest neighborhoods in any case - they direct the money to flooded neighborhoods.

DPW has been circulating a list of infrastructure projects that total between $500 and $600 million.  Of course, any neighborhood looks to see if it's roads are listed.  But that is clearly far more projects than can be done with the money - bond or no bond.

So, the pivotal question was, is it fiscally sound to borrow additional funds using a shaky revenue source as collateral?

The committee vote was along party lines - 5 to 2.  The Democrats were fiscally responsible, choosing to avoid the situation where an unreliable stream of money from the State would be used to float bonds that would have to be repaid even if the State stops sending that extra.  If the extra money continues to come in, well we and the next generation will have $270 million to spend on streets and sidewalks.

I just don't understand why $242 million is somehow chump change to spend on infrastructure over the next 3 years, and why we have to continually reach into the pockets of the next generation to get what we want today - and wasting half of the money we steal from them on interest and fees, to boot.  There should be no sin in patience, prudence, and protecting the next generation.  There is, however, a sin in lying to the public.  Shame on Mayor Ballard for lying and shame on WTHR for passing that lie along as the entire story to its viewers.

Which is Better for Indy's Tourism - Inflation or the CIB?

The 2012 Annual Report of the Capital Improvement Board is posted on their website.

In the latter portion of the Report, the CIB lists the preceding 10 year history of a number of items - from tax revenues, operating revenues and expenses, as well as number of events and attendance numbers.

As you know, the CIB is responsible for the Indiana Convention Center, Lucas Oil Stadium, Banker's Life Fieldhouse, and Victory Field, as well as some other parking properties.  They take in tax revenues from the Innkeepers, Food & Beverage, Car Rental, and Ticket sales at their venues.  There is also a "Professional Sports Development Area" designated downtown, where all of the State Sales and Use Taxes, State and Local Income Taxes, and the F&B Taxes go to the CIB.  Furthermore, the MDC gives the CIB $8 million of property tax revenues from the consolidated downtown TIF each year.

In looking over the table of tax revenues, it dawned on me that one could determine the size of a variety of entertainment/tourism market segments from the taxes recovered from those market segments.  For instance, the CIB takes in the revenue from a 1% F&B tax, imposed on all food and beverage outlets in Marion County.  Simply multiplying that tax revenue by 100 gives the size of the MC F&B market segment. 

Similarly, if one uses 2003 (the first of the 10 year data noted) as the starting point, one can calculate the growth of any of these market segments over the decade.  Again, for instance, if one divides each year's F&B tax revenue by the amount the CIB got in 2013, one would have the growth in the MC F&B market segment over time.

All of these can be compared to the rate of inflation, to ask the question, has the CIB helped grow the entertainment/tourism market more than inflation has?

PSDA Allocation - original footprint only

 

The revenue captured by the CIB from the original PSDA footprint was $6.45 m in 2003, and grew to $7.27 m by 2012.  All revenue numbers from 2004-2012 were divided by the $6.45 m figure from 2003 to generate the red line in this graph.  The blue line is the growth in inflation.

Of note is the fact that in mid-2005, the MC F&B tax doubled, and in 2008 the State Sales Tax went up from 6 to 7% and the Local Income Tax went from 1 to 1.65%; thus increasing the expected revenue to the CIB from this area.  Of course, the Great Recession struck in 2008.  In 2012, the City hosted the Superbowl.

If the CIB is to have an effect, one would most expect an increase in the PSDA, which is the footprint of the buildings owned by the CIB and nearby hotels.  One is hard pressed to see any particular effect on the original PSDA besides inflation and random bounce.

 

Admissions Tax - original 5% tax on events held in CIB facilities



 

 

The revenue captured by the CIB from the original ticket tax was $4.54 m in 2003, and grew to $6.5 m by 2012.  The red line is growth from the ticket sales market segment.  The blue line is the growth in inflation.

Of note is that Lucas Oil Stadium opened in 2008.  Also, the Great Recession struck in 2008 and the City hosted the Superbowl in 2012. 

There would seem to be some indication of an early increase in these sales beyond inflation, followed by a slightly greater than inflation growth in the admissions tax revenue - but I do not have any numbers to indicate if ticket prices rose faster than inflation, or if the number of tickets sold increased.  As with the PSDA, one would expect any effect of the CIB to show up in its own facilities first and foremost.

 

Auto Rental Tax - original 2% tax on cars rented in Marion County

 

The revenue captured by the CIB from the original auto rental tax was $1.85 m in 2003, and grew to $2.35 m by 2012.  The red line is the growth in the car rental market segment.  The blue line is growth in inflation.

Of note is that the Great Recession struck in 2008 and the City hosted the Superbowl in 2012.  The airport opened its new terminal in 2008, along with new car rental facilities.

The CIB, and those who supported the recent hike in the auto rental tax, keep telling us that only visitors pay for rental cars.  There is not strong evidence that the car rental business has improved much beyond inflation over this decade.

 

Food & Beverage Tax - original 1% on Marion County establishments

 

The revenue captured by the CIB from the original 1% tax on food and beverage sales in Marion County was $15.62 m in 2003, and grew to $21.36 m by 2012.  The red line is the growth in the Marion County F&B market segment.  The blue line is growth in inflation.

Of note is that the Great Recession struck in 2008 and the City hosted the Superbowl in 2012.

Once again, inflation bounce could easily account for the 10 year growth in the F&B market segment.  We will have to see what 2013 and beyond bring, if we are to decide if the 2012 increase is Superbowl bounce or a sustained increase.

Innkeeper's Tax - original 1% on Marion County hotels

The revenue captured by the CIB from the original 1% innkeeper's tax was $3.21 m in 2003, and grew to $4.52 m by 2012.  The red line is the growth in the Marion County Hotel market segment.  The blue line is growth in inflation.

Of note is that the Conrad Hotel opened in 2006 and the JW Marriott in 2011.  Also, the Great Recession struck in 2008 and the City hosted the Superbowl in 2012.

Any growth in the hotel market segment appears to bounce around inflation.  Again, we will have to see future years' numbers in order to interpret the 2012 number as being caused by the Superbowl or by sustainable growth.

All Tax - this is the growth in all tax revenues and 'other assistance' received by the CIB over the decade from 2003 to 2012

The total tax revenue received by the CIB was $48.07 m in 2003, and grew to $138.78 m by 2013.  The red line is growth in all tax revenue.  The blue line is the growth in inflation.

There is little evidence that the growth in the entertainment/tourism market segments touted as being enriched by the activities of the CIB is anything but due to inflation, and perhaps the Superbowl.  That is reflected in the fact that the initial taxes levied for the CIB were not growing well enough to support the ambitions of the CIB.  Thus, additional tax hikes were implemented and other sources of cash were found.

The footprint PSDA was expanded twice in the decade from 2003 to 2012; the Admissions Tax was increased once; the Auto Rental Tax was increased once; the F&B Tax was increased once; the Innkeeper's Tax was increased twice; and the MDC began gifting the CIB.  Just this year, the Admissions Tax and Auto Rental Tax were increased yet again.  The two $9 m loans from the State to the CIB are not included in these numbers.

Bottom line - inflation accounts for nearly all, if not all, of the growth in several entertainment/tourism market segments in recent years.  The only thing growing beyond inflation is the amount of taxes being levied to feed the CIB.

IMS Tax Givaway Would Affect Local Tax Revenues To City and (Gasp!) the CIB

A lot of misinformation is swirling, regarding local tax revenue implications of SB91, the $100 million giveaway to the Indianapolis Motor Speedway.

From the bill itself (page 6 of the pdf, lines 24-34):

Sec. 5. As used in this chapter, "covered taxes" means the part of the following taxes attributable to the operation of facilities located in a motorsports investment district designated under this chapter:

(1) The state gross retail tax imposed under IC 6-2.5-2-1 or use tax imposed under IC 6-2.5-3-2.

(2) An adjusted gross income tax imposed under IC 6-3-2-1 on an individual.

(3) A county option income tax imposed under IC 6-3.5.

 

(4) An admissions tax (if any) imposed under IC 6-9.

 

Unfortunately, no estimate of the fiscal impact has been done by the Legislative Services Agency.  But, out of respect to the taxpayers of Indianapolis, let's at least stop with the erroneous information that this is only a State Tax giveaway.

Miles the Moocher - Beggin' For Speedway Handout

Anyone without a lobotomy knew this was coming.

Miles was put on the Board of the Speedway.  That famed, holy, altar to, well, speed.  Four wheel.  Two wheel.  Iconic.  American.  Speed.

But, Miles the Moocher; his appointment signaled a change of course that would embarrass most Hulmans.

It turns out, the Speedway wants Irsay's deal.  They want the Simons' deal.  They want $100 million.

Pay up Hoosiers.  Otherwise it is end times for Indiana itself.

In an exclusive - intrepid IndyStar reporter Jon Murray and his bi-line co-author Alex Campbell, report that the Speedway has taken the road more travelled - the road paved with taxpayer dollars - and are requesting a modest $100,000,000 dollars from you and me.

Feeling tapped out by the Pacers and the CIB's secret agreement?  Feeling unsympathetic because of the Irsay deal under Peterson?  Feeling verklempt at the thought of a new soccer stadium of all things?  Well, know that I feel your pain.

Just get on the damned phone and tell your State Legislature - un-ahh, no-way, not-happening.

Geez.  I'm going to go throw up now.

Let's Recap Where We Are At This Moment - Or - How The Diversion of Tax Dollars For Special Interests Is Going

It just feels like a good time to recap where our City finances stand.  Let's face it, you simply have to follow the money if you want to know what the priorities really are.

For the first couple of years of the Great Recession, the City's funding actually went up.  Last year and this, resources shrunk slightly.  Contributing to that was the erroneous calculation of income tax receipts, which the State has corrected with a lump sum payback and which has been deposited into the rainy day fund to spend next year.

The amount of potential revenue caught in the tax caps is growing, causing an corresponding decrease in revenues that the City qualifies for, but cannot collect.  The growth in tax caps is being driven by the increase in the amount of property value being pushed into TIF districts.  TIF districts continue to struggle, on the whole, requiring bailouts, transfers, and increased taxes to cover debt payments.  The city has $80 million from RebuildIndy funds sitting in an account; its sole purpose to convince bond rating agencies that we have enough money to cover our debts, at least for one year.  Meanwhile, the airport tries to shake down bond holders of the United TIF deal to accept 10 cents on the dollar.

We see a City-County Council approve two TIFs last year - one for a burgeoning area seeing ever increasing private investment - growth that was the 'old fashioned way', through a free market.  We see a proposal for development of a very valuable, city-owned block, being granted to a group who wants the block for free, plus millions in taxpayer assistance; not to the group that asked for tax abatements, but who was actually willing to pay for the block.  This pulls tax revenue from all taxing units and causes a reduction in the services that can be provided for the common good.

We see a City-County Council ready to approve one new TIF, which covers some of the most affluent areas of the County, along with one area of actual need, to fund public art and park improvements as two of the named uses for tax funds.  BTW, they have the temerity to also complain about crime as they move to strip off tax dollars that would have gone to fund public safety.  This, too will pull much needed tax dollars away from the common good.  In fact, they will take more than $6 million of promised tax revenue from the Broad Ripple parking garage away from the common good to make life more fun for some of our toniest neighborhoods.

We see two new tax increases on the verge of being passed that will be split between the City and the CIB.  The State Legislature granted the ability to raise these taxes as the final step in the CIB bailout.  One might wonder, if the CIB doesn't need the money, why would you raise the taxes? 

We see the formation of a public safety task force whose sole purpose is to make a case for higher taxes - once the mass transit tax referendum passes out of the State Legislature.  As we pull more money from our resources that pay for the common good, crime will rise.  Fearful residents are more willing to support a tax increase to pay for police protection that the City could have afforded had our City Fathers and Mothers not diverted money into TIFs and stadiums.

We see yet another $10 million going to the Pacers and their billionaire owners, who already get all revenue from the facility we taxpayers built for them.  Another deal is likely already written, but which will be kept from the public until the tax increases are finalized.  Even the CIB gets tripped up simultaneously saying they have enough money to give more of it away and that they may have to declare bankruptcy.

We see heavy hints that the taxpayers will soon be asked to build one of the Mayor's biggest campaign contributors a $200 million soccer stadium.

What is clear is that we are moving money into accounts that pay for corporate welfare, payback for campaign contributors, and sports welfare.  We see accounts shrinking that pay for the public good - good parks, good schools, and public safety to name some.

That's what is happening folks.  Follow the money.  The priority is not the public; the very public that trusted these folks enough to vote for them.   The priority is not to make Indy a better place to live.  The priority is not the common good.

CIB to Sign One Year Deal With Pacers

This press release came from Council President, Maggie Lewis:

Indianapolis City-County Council President Maggie A. Lewis

Media Response about CIB Vote to Extend Pacers Agreement

December 12, 2012

 

 

"Extending the Pacers agreement at this time allows us the opportunity to focus on the pressing issues at hand which is city governance.  Issues such as public safety are a priority for us right now.  Approving the agreement with the Pacers moves this off of our list and allows us to place all of our emphasis on matters that are pressing to our constituencies and will keep moving Indianapolis forward."

 

This just saves the CIB the embarrassment of begging for more tax revenue at the same time they are flush enough to hand millions more of public money to the Simons.  If they can afford an extra $10 million right now, then they should pay up on the PILOT and turn down any tax increases.  Enough is enough.

 

Super Bowl Costs FINALLY Beginning To Be Revealed

Thanks to all of my alert readers who have sent me links to news items reporting that some of the costs of the Super Bowl are FINALLY being revealed.  So, lets move forward here by listing our references and listing the costs now being reported.  To put it into perspective, the 2012 Super Bowl bid was submitted in April, 2008, and its terms are what are falling out into public view just 19 days before the event.

Articles of interest used for this blog entry in the order I received the links from alert readers:
Scott Olson, IBJ,  1-16-12 -- "CIB expects to lose money during Super Bowl"
Jon Murray, IndyStar, 1-17-12 -- "Super Bowl 2012 will drop Capital Improvement Board for a loss"
Mike Corbin, WIBC, 12-21-11 -- "Super Bowl Host Committee Releases Final Numbers"

Let's start with the last one and the claims of the Host Committee CEO, Mark Miles.

He claims that the "they've raised and are investing $154 million for some 250 housing units as part of the Super Bowl Legacy Project."  Well, as I recall, federal funds coming to the City were the bulk of the money being invested in the near eastside neighborhood.  Those funds were augmented by the NFL, but a clear accounting of the exact dollar amounts supplied by taxpayers but not credited to them has not been forthcoming.  From what I have heard, the lion's share of the investment comes from the taxpayer, not the host committee or the NFL, yet they are the ones getting nearly all the credit.

Also claimed is that the Host Committee "has also raised close to $27 million, surpassing the $25 million goal needed to host the 2012 Super Bowl."  No mention what that money was spent on.

And finally, this nugget: "Committee officials also say the city has fixed the Pan Am Garage which has been plagued by structural and water issues."  I recall news accounts of the Department of Code Enforcement closing parts of the underground garage at Pan Am Plaza until repairs could be made.  I thought that the garage was owned by someone other than the City and our MDC gave Pan Am Plaza to the Indiana Sports Corporation years ago now.  I certainly hope that the implication that the City paid to fix the garage and shore up the Plaza is erroneous.

The two stories on the costs and revenues of the CIB have overlapping figures.

NET - CIB
The CIB will lose $810,000

EXPENSES - CIB
$4 m to the City to pay for police overtime
$2 m for CIB employee overtime and temp hires
$794,000 paid to State to be applied toward stadium and convention center debt

REVENUES - CIB
$2.4 m hotel tax from visitors - not NFL employees
$440,000 food and beverage taxes - but none from LOS or ICC
$100,000 car rental tax - but none from NFL employees
(figures above are from IBJ and total $2.94 m - Star reports total estimate of $3.1 m from these taxes)
$4.1 m from NFL for labor costs due to Super Bowl events

EXEMPTIONS FOR NFL
hotel tax
restaurant tax
fuel tax
car rental tax
admissions tax
Star reports that "State lawmakers exempted the NFL and its affiliates from paying nearly all state and local taxes in connection with the Super Bowl".

LOST REVENUES - CIB
The NFL will get the food and beverage tax revenue for concessions sold inside LOS and ICC, instead of that money flowing to the CIB.

ECONOMIC IMPACT
between $150 m and $300 m in direct spending by visitors

NOT REPORTED
NFL gets proceeds from parking lots owned and operated by State and Local government entities - the full extent of this agreement has not yet been divulged
DPW, DCE, IMPD, IFD real costs associated with events - IMPD already spent at least $500,000 in 2011 in preparations and the City already spent $600,000 to provide free Wi-Fi in the mile square
Income lost to taxpayers in City's Georgia Street giveaway to Indianapolis Downtown Inc., not to mention loss of that entire asset which just saw $12 m taxpayer renovation (bipartisan vote of Council, by the way)
Cost to Indy-Go for free bus service for visitors

2012 Budget - Big Picture, Big Problems

Over the next couple of weeks the City-County Council committees will offer final amendments to each of their segments of the 2012 budget.   The full Council will vote on the entire budget in two weeks, on October 17.

As I've noted before, I've been spearheading the McANA effort to review the budget for the 5th year running.  Today, I'd like to take the eagle's view of the budget and talk about what I've been able to glean from the big picture.

First of all, this has been the most difficult budget to review.  There are stylistic changes, like how charges are made and for which departments.  There have been changes in the presentation that do not normalize out the unique expenditures or revenues that happen from year to year.  The practice in previous years made it easy to compare apples to apples.  In addition, there are significant issues with this budget regarding from where the money will be coming - specifically the administration's plan to tap excess revenue from both the consolidated downtown TIF and the Ameriplex TIF. 

We are told, but not shown with clear data, that there is a $64 million gap between revenues and spending for 2012.  To bridge this gap, we are told, that the Ballard administration has cut $20 million from individual department and agency budgets through their request for a 5% cut in base expenditures.  The administration also desires to take $38.5 million from the consolidated downtown TIF.  This all totals $58.5 million.  One item they are not publicizing is the extraction of $7.5 million of funds from the Ameriplex TIF to cover anticipated shortfalls in the debt service for the 'redevelopment district'.  I have asked for a list of the items funded by this district.  That brings the total to $65 million.  Close enough to $64 million for government work.

On the revenue side, I have had to pull figures together on my own, as my request for the summary revenue page has been met with the statement that the Controller's office does not want to put it out without being sure it is correct, and that they hope to release it prior to the full Council vote on budget.  Swell.

So, here is what I found about revenue shortfall for 2012 compared with 2011.

Total tax revenues - including property and income taxes and accounting for the effect of the tax caps - is $16.5 million less for 2012 than 2011.  One would expect these numbers to rebound as the economy recovers.

Federal grants are expected to drop by $15.7 million.  One would expect these numbers to rebound as the economy recovers.  However, the statement made regarding all grant funded programs has been that if the money does not materialize, the program is cut.

The healthy rainy day fund was nearly depleted last year, creating a drop from that source of money of $15.8 million.  I would not hold my breath on the recovery of the rainy day fund any time soon.

Last year, $3 million was taken from the golf course subfund of the Parks fund - but it was one time only.

The sale of the parking meters caused a $4 million revenue drop that used to go to IMPD and DPW.  This revenue will never come back.

The sale of the sewer utility caused a $13 million revenue drop that used to go to IMPD, IFD, and DPW.   This revenue will never come back.

The total revenue shortfall from the 2011 budget to the 2012 budget noted above comes to $68 million.

However, I see these revenues falling into three categories - revenue that will recover with the economy, money to fund projects that will not happen if the funding does not come through, and revenue that will never come back again.  One would expect the best effort to be made to bridge the gap for those revenue streams that should recover - trying to make ends meet until a better day returns.  One would expect to forgo those projects funded by grants.  And one would expect structural changes to the operation of the City-County to accommodate the reality that some funds are gone forever, as the assets that generated the revenue are gone forever.

Using those categories, the $16.5 million reduction in tax revenues should be bridged.  This was already accomplished with the $20 million in budget cuts.

The $15.7 million reduction in federal grants should simply mean that those programs do not happen.

The $17 million from the sale of the parking meter and sewer utility assets is never coming back and there really should be permanent cuts made to reflect this reality.

The $18.3 million from the loss of the rainy day fund and the lack of new funds from the golf course subfund could go into either the first or last category - but I think they belong in the latter, since they cannot come back until much after the economy recovers.  This would bring the need for a structural budget change to $35.3 million.

Instead of dealing with this reality during an election year, the Ballard administration prefers to rob the downtown TIF district in order to make ends meet. 

The statement has been made that there will only be $20 million in excess funds left in the consolidated downtown TIF to appropriate for the 2013 budget.  The Ameriplex TIF has been robbed to depletion over the last couple of years.  There will be almost no wiggle room left and severe cuts, the need for which are being ignored this year, will have to be made next year.

The Cash Flows At The CIB

Its like we have our very own soap opera.  Instead of who is sleeping with whom, we have the always entertaining exhibition of the Capital Improvement Board being dirt poor one day, flush with cash the next, only to fall into abject need soon after.

Gary Welsh over at Advance Indiana (see "Georgia Street Project Includes Heated Street and Sidewalks") and Paul Ogden at Ogden On Politics (see "CIB To Spend $8 Million on Super Bowl") have both taken up WTHR's Mary Milz report that the CIB has an additional $8 million to contribute to the super bowl effort.  I began leaving comments on their blogs, but I have too much to say.  Figured I'd say it here.

Milz reports that the CIB will contribute about $8 million to the superbowl effort -- $4 million to help pay for Indianapolis' Department of Public Safety costs and another $4.2 million for more private security and other gameday expenses, which the CIB says the NFL will repay.  Some excerpts from Milz' report:

On Monday, the board approved a plan to cover private security as well as some of the other operational costs including staffing and utilities. Also included in that $8 million appropriation is $4 million for the city's Department of Public Safety. A spokesperson for Public Safety Director Frank Straub said it's earmarked to cover overtime for police and firefighters during the Super Bowl, noting 150 officers would be positioned inside the stadium alone.

and

Lathrop said the NFL has agreed to reimburse the CIB roughly $4.2 for specific gameday expenses including private security. She said the CIB hopes to recoup the remaining $4 million from the extra tax revenue generated during the Super Bowl.


Right now they're looking at a net loss of roughly $800,000. Lathrop said the goal of the CIB wasn't to make money off the Super Bowl but to help the city facilitate an event expected to generate millions in economic impact.

She said the lease between the CIB and NFL for the use of LOS and the Convention Center will cover the reimbursements. She said it's expected to be finalized very soon.

Here are my thoughts in no particular order -

1) Mayor Greg Ballard is facing reelection and cannot afford, politically, to cover the costs of IMPD and IFD overtime due to the superbowl - while cutting all departments except the Department of Code Enforcement. 

2) Last year the Mayor, through the MDC, gifted the CIB $8 million a year that is really destined for the Pacers, but which began with a December payment of $4 million that amounted to a surplus over what was "needed" for the Pacers.  The CIB now re-purposes that gift and returns it to Mayor Ballard for superbowl expenses that the public was told would not be.

3) The CIB knows full well that it will be back to begging for more tax increases next spring.  So, as a foreshadowing, it says that they will incur a "net loss of roughly $800,000".  The CIB bailout passed by the Indiana Legislature a couple of years ago, still has two tax rates that are scheduled to come up for consideration during a couple month window in the spring of 2012.  The City-Council can vote to raise the car rental tax and the admissions tax during that window.  If it fails to act, the option dies.  So, the CIB cannot go full tilt boogey with their flamoyant lifestyle at this time, lest they lose the sympathy of the Council next spring when they will again claim that hard times  have once again descended upon them - through no fault of their own, mind you.

4) Nobody will release the terms of the agreement between the City and the NFL for hosting the superbowl next year.  The City appears to be using the Host Committee (officially known as Our 2012 SB, Inc.) as a shell to protect the City from disclosure of the deal to the public.  The state has agreed to turn over to the NFL all of its parking garages and their profits, as well as the State's tax profits from the superbowl.  HB1125, passed in 2008, grants an exemption covering all state and local taxes, including the 6% admissions tax,  to the NFL and the NCAA when Indianapolis is the host city for a Super Bowl or Men's or Women's Final Four event.  It isn't a stretch, nor does it invoke a vast conspiracy theory, to conjecture that the City also agreed to such things.  It is a bit more than curious that the CIB's Ann Lathrop says that the $4 million 'gift' is just about the same as the $4 million the CIB expects to profit from increased taxes during the superbowl.  This can easily be the slight of hand employed to turn over all tax proceeds to the NFL - by paying for one of the NFL's legitimate costs.  If that is not true, the City can prove it by releasing the terms of the deal with the NFL.

Gary Welsh said it all, when he said : "How stupid do they think people are?"

Meanwhile, the soap opera continues.

ICVA - Seems More Money Wasn't The Answer After All

You all remember the logic dominoes that were set falling about two years ago -- the convention center has been enlarged and we added all these additional hotel rooms to the downtown inventory (all with the ever generous support of the taxpayers) so now we have to spend even more money on the Indianapolis Convention and Visitors Association (ICVA) to market that new space and new rooms.

Here's a reminder of the vast increases in taxpayer and private dollars that have gone into the ICVA in the last year and a half.  This is part of a report from the January 28, 2010, IBJ article by Scott Olson entitled "ICVA receives $5.4 million gift":

The Indianapolis Convention & Visitors Association announced at its annual meeting Thursday afternoon that it has received a $5.4 million gift-its largest from a private donor.


The contribution, which will be used to promote the city's tourism and convention business, came from the Dean and Barbara White Family Foundation Inc.

Dean White is the founder of Merrillville-based White Lodging, the developer of the $425 million, 1,600-room Marriott Place hotel complex downtown. The flagship 1,000-room JW Marriott is expected to open in February 2011.

"It's fantastic news," ICVA Executive Director Don Welsh said. "With the funding that we have, and the great product that we have, basically any excuses not to be successful are gone."

The grant from the Whites is to be spent over the next three years and totals nearly half the ICVA's $13 million annual budget. In a typical year, the association receives about $700,000 in private contributions.

The Indianapolis Capital Improvement Board funds 70 percent of its budget. The CIB, which operates the city's Indiana Convention Center and professional sports venues, increased the ICVA's funding from $6.9 million to $9 million in 2010.

Thursday's announcement follows a pledge Mayor Greg Ballard made earlier this month to give $1.5 million to the ICVA from funds returned to the city by companies that failed to meet job-creation promises tied to tax breaks.

Those funds also will enable the ICVA to better market the city both as a tourism and convention destination. The recent windfall is welcomed by John Livengood, president of the Indiana Restaurant & Hospitality Association.

"That has been our priority, to make sure [the ICVA has] the money to market Indianapolis," he said.

The ICVA has argued that it needs additional money to attract more conventions to the city. A $275 million expansion of the convention center, set to be finished early next year, adds 420,000 square feet to the mix. Including Lucas Oil Stadium, the ICVA will have 1.2 million square feet of convention space, 65 percent more than it had in the convention center and RCA Dome.

I love that quote from now Chicago resident, Don Welsh - "With the funding that we have, and the great product that we have, basically any excuses not to be successful are gone."


Fast forward to today.  This item in the current IBJ again by Scott Olson, entitled "ICVA expects to fall short of 2011 room-night goal":

The Indianapolis Convention & Visitors Association likely will fall far short of its aggressive goal of booking 725,000 hotel room nights this year for future conventions.


New ICVA CEO Leonard Hoops cautioned members of Marion County's Capital Improvement Board on Monday that, through April, the association is pacing at about 75 percent of its target.

“My goal is to get us back to where we were last year,” he said. “So I might as well fire that warning shot right now.”

ICVA sales staff met their goal in 2010 by booking 650,000 room nights for future conventions, but in doing so tapped most of their prospects. As of the end of April, ICVA had booked about 165,000 room nights.

“To get to that 650,000, the team worked very hard to close that out,” Hoops said, “and we started the year with nothing in the tank.”

You just cannot throw enough money at these guys.  And what's even better, there is nobody holding them accountable.

WRTV Takes Look at Broad Ripple Garage

Kara Kenney, WRTV reporter, did a very good job summarizing the issues revolving around the proposed garage to be built in Broad Ripple with $6.4 million of public money.

I'd embed the video, if it were possible.  Print version of report - click here.   Video version of report - click here. Gary Welsh of Advance Indiana and Zach Adamson, candidate for City-County Council, were both interviewed, among others.

Are Taxpayer Dollars Being Flagrantly Misused?

Yesterday I posted about the announced Broad Ripple parking garage and some tidbits I had gathered by simply going through government public records.

One document was the Request For Qualifications that was posted by the Ballard administration to solicit proposals for a parking structure in this area.  It specifically asked respondents to include construction cost estimates and operational expense estimates in their proposals.  Since this was not included in the winning group's proposal that I received from the City, I inquired after those numbers.  My request was denied with the citation of an Indiana State statute that trade secrets may be held from public disclosure laws.  I will, of course, take this up with the Indiana Public Access Counselor's office later this morning.

But, for now, I would like to share with you some conclusions of a 2007 study by Walker Parking Consultants analysing the adequacy of parking in the Broad Ripple Village area.  Walker Parking Consultants, along with Newpoint Parking, Keystone Construction, and RATIO Architects, formed the partnership that won the City's approval to build a 350 parking space garage with retail and a police substation at 6280-6286 N. College Avenue.

In the 2007 study, Walker Parking Consultants employed their 'trade secrets' to analyze the parking supply,  estimate cost of construction, estimate cost of operation, estimate costs to park, and locate where a new parking facility would be best suited to the needs of the area.  These are what I'd like to share with you today.

PARKING SUPPLY - the study concluded that of the 40 blocks of Broad Ripple Village, parking was adequate for almost all areas, at most times of the day, night, and week, in 2007 and as projected into the future.  There were 16 blocks that were shown to exceed 85% capacity at 11 pm on weekends.  A particular 6 block area was calculated to have a deficit of 132 parking spaces at 11 pm on weekends (adequate at all other times) and projected to have a deficit of 180 parking spaces at 11 pm on weekends in the future.

COST OF CONSTRUCTION -  the study noted the rising cost of concrete and cost of construction of parking garages over the previous 4 years, rising about 17% over that time span.  They concluded that it would cost $4.5 million to construct a 4 story, 300 space, parking garage.  They note that additional spaces would cost $21,878 per space.  Using that figure, a 350 space garage would come to $5.6 million - not including acquisition of land or demolition costs.

COST OF OPERATION - They concluded that it would cost between $450 and $600 per space, per year, to operate a garage in the Broad Ripple area.  Combining these figures with the construction costs, the study conclude that the enterprise would break even with a parking fee of $5 per car.

BEST LOCATION - the study found two 'best sites' - the one selected by Mayor Ballard's administration in the last few days, and one two blocks to the east, behind the Vogue.  They rejected the College/Westfield corner as requiring visitors to cross busy College Avenue to actually get to the venues of Broad Ripple, and concentrated on the area behind the Vogue.


So, fast forward to today.  We have a project which is being awarded $6.4 million dollars from the City to help fund what we are told will be a 350 space garage with retail and a police substation costing $15 million.  Unfortunately, the City has decided to keep the costs analysis to itself, so we cannot review it for adequacy.  What we can do is look at numbers that are available to the paying public.  Land is assessed at market values in Indiana now, so we should be able to rely somewhat upon assessed values for the cost of property.  The Assessor's records show that one of the two parcels needed for the proposed garage is owned by a group named 6286, LLC, c/o J. Todd Morris.  A Todd Morris is noted in the Keystone Group's proposal as the Parking Manager for group member Newpoint Parking.  The AV of that parcel is $106,100.  The property at 6280 N. College has an AV of $999,600, bringing the total AV to $1,105,700. 

Say the cost of a new garage rose another 17% in the four years since the 2007 study, even though we are in a recession -- that would bring the cost of construction to $6.5 million.  Total cost with land acquisition and construction, but without demolition, of $7.6 million -- very much in line with the cost to construct the Ivy Tech Multimodal Parking Garage/Library/Retail structure that was used in the Keystone Group's proposal to show expertise.

Instead we are supposed to accept, without documentation, the need to spend $15 million - $6.4 million, or 42%, to come from City funds.

Are taxpayer dollars being flagrantly misused?

Tick, Tick, Tick - State's Unfunded Pension Liabilities

It strikes me that one of the real reasons that union bashing is being pushed so hard in the Indiana Statehouse these days, is that the State's unfunded pension liability is ticking away.

Part of the remedy being chased, appears to be the continued vilification of the very folks who were promised retirement benefits through negotiated contracts. Instead, perhaps, we should be looking at those who should have set enough money aside to fully finance the promises they were making to their employees.

That said, I am going to relate to you, some of the information I found on the web pertaining to all state's unfunded pension liability, but I'll pull out the Indiana information here.

Let's start with this nugget:

Joshua Rauh, Professor in the Department of Finance, Northwestern University, estimates that Indiana's State pensions could run out of money as soon as 2019 - eight years from now. Only Illinois and Connecticut State pensions are calculated to run dry before our State pensions are. And, this is predicated upon an 8% return on investment of the assets we have in those pensions.
To peruse Dr. Rauh's papers on this topic and others, click here, and as you see a title of an academic paper that sounds interesting to you, click the 'download' link.

As I reviewed analyses, it became clear that accurate base data were not available to any of the authors immediately. So, for instance, the Pew Center on the States published their analysis, "Trillion Dollar Gap", on the aggregate and individual State's unfunded pension liabilities in February of 2010, reporting on the conditions in 2008.

For Indiana, the Pew Center said that $9.8 billion (yes, with a B), was the unfunded portion of Indiana's pension liability. The total 'bill' as they noted it, amounted to $35.6 billion. They grade Indiana as a State where there should be 'serious concerns' about the unfunded liability.

Going back to Dr. Rauh's publications on the matter, I pulled a couple of data points over a couple of years. Dr. Rauh's data showed that in 2005, Indiana had a State pension liability of at least $29.2 billion, and had $19.5 billion in assets saved for the purpose of covering those obligations. By 2009, the Indiana State pension liability had grown to $37.3 billion, but the assets saved had grown to only $19.6 billion. The numbers for liability are the State's own estimates. Others, including Dr. Rauh and the Pew Center, say the actual numbers are much higher.

Here is the problem in a nutshell. At budget time, these pensions were not allocated enough money to be prudent.

This is just like in Indianapolis. Under Mayor Steven Goldsmith, the pre-1977 police and fire pension was not funded, creating a ticking time bomb. That bomb went off during Mayor Bart Peterson's term and ultimately cost him reelection.

This is just like here in the Decatur Township school district. I have blogged repeatedly about the district and its promises for high end retirement deals for administrators. Even though the State recognized the looming problem and tried to provide a fix for it back in the early 2000's, our Superintendent Don Stinson has continued to build unfunded liabilities, on top of the benefit promises that were fixed in 2003 and 2004.

The real problem has not been the unions that represent these employees. The real problem has been the unwillingness of elected officials to properly and prudently set aside enough money to fund these pensions as the employees retire. These elected officials made promises but did not back them up as they should have. Now they want to blame the folks to whom they made these retirement promises, instead of fixing the problem they created with insufficient budgets.

Now, I have no idea how to allocate the responsibility proportionately, as I haven't closely followed the State budgeting process. But, Governor Daniels took office in 2005, when our State's pension liability was $29.2 billion, by the State's own estimate. Within 4 years that liability had grown by $8.1 billion and we had saved only 0.1 billion more to fund that expansion. Governor Daniels submits the budget, but then folks like Representatives Brian Bosma and Pat Bauer, and Senators David Long and budget doorkeeper Luke Kenley, dive in and make changes as they see fit. What comes out is that they all bear responsibility. And we voters need to make sure that they fix this problem in a timely manner that doesn't put us all in the poor house.

2018 -- tick, tick, tick.