Indy Tax Dollars

Memories

A story in yesterday morning's paper jogged a memory for us and we did a little research in our own archives.

The item in question was headed "DOWNTOWN BOON BABY!"  It reinforced, no doubt without meaning to do so, the thought we have held for along time.  This "boon" - the fabulous impact of professional sports we have had drummed into our minds by this same paper is just that - a downtown boon.

This is particularly true of the basketball franchise because of the large difference in the number of games, plus the fact that the fieldhouse seems to book more large events than the stadium.  As has been pointed out by many others, we're talking about discretionary spending and the money used downtown is, in fact, money not being spent somewhere else in the city.

This leads us back in time to a post we made on this blog on December 8, 2005.  On that date we suggested an alternative to Tax Increment District (TIF) financing of downtown projects, to be known as Revenue Increment District (RIF).  (Actually at the time we used the term "Income" Increment District.)

Briefly, an RIF would function by taxing the specific increases in revenues of downtown businesses which we are now told are easily identified.  This current story in the paper indicates how easy - and how appropriate - the use of an RIF would be.  There are quotes from several business owners who admit that their business revenues increase from 25% to 40% when there is an event at the Conseco Fieldhouse.  The same is undoubtedly true for Colts games.

Downtown businesses are obviously the very direct beneficiaries of taxpayer "investments."  And yes, we know the arguments about jobs, etc..  But it might well be the case that, while things are booming downtown, restaurants and bars in outlying areas are laying off  bartenders, cooks and/or servers simply because that money has moved downtown.

We've been told the economic impact of the situation involves hundreds of millions or even billions of dollars flowing into city coffers as a result of these taxpayer investments.  If these estimates are anywhere near the truth, why not tax these increased receipts directly, up front, to pay for the projects responsible for the revenues generated by their presence?

Property tax relief?  We wouldn't even try to guess how many property tax dollars an RIF would free up for legitimate governmental functions! 

Privatization

It's a big word which has become increasingly used in a variety of circumstances.  In far too many of these circumstances, always involving public tax dollars, we happen to think the word's definition is far too vague.

We're now being told the city is "investigating" a change in the handling of our sports palaces and convention center, and has issued a "request for information and qualifications" (RFI) as a preliminary to such possibility.

One reaction to the suggestion has come from the current president of the Capital Improvements Board (CIB) who is quoted as saying the board has laid out financial realities  and has now "solved almost all the problems."  This, of course, is the same body which some weeks ago was apparently nearing bankruptcy, then, a few days ago suddenly found enough money not only to be self-sufficient but be able to bail out the Pacers to the tune of $15 million annually.

We are told the RFI says the city is "...interested in opportunities that will enable it to...build relationships with strategic partners...and enter into a multi-year agreement with one or more respondents for the operation and management of the facilities."

Frankly, considering the history of the whole downtown sports boondoggle, this simply looks to us like a way to get more hands into the public till.

As we, and many others, have said, any legitimate effort to repair the situation must absolutely include an independent audit of the CIB financial policies and actions which have produced the situation to begin with.

Would not "due diligence" require any company or group of individuals interested in the proposal to look at all the records?  Surely the taxpayers would be entitled to such information prior to any "multi-year agreement."

Meanwhile, purely in the interest of nostalgia, we'll repeat the "privatization" idea we floated many months ago.  The city should, for the price of $1 (one dollar) each, sell the fieldhouse to the Pacers and the stadium to the Colts, making them, as with any legitimate business, owners of the land and improvements on which their business operation takes place.

Current tax levies would cover construction debt service.  But there would also be an offset by what the city would save in what it is now - and will be (?) - paying for operational and maintenance costs of the properties.  And, of course, private ownership would call for placement of nearly $1 billion worth of property on the assessment rolls,  a potentially very significant increase in city revenues.

The possible elimination of the CIB, plus the indicated potential savings, plus the increased property tax revenues, must certainly add up to a net financial gain for the city.

Worth a try?  At least the idea would not open the taxpayer wallet to more "redistribution of wealth." 

YES (?) or NO (?)

Today's issue of the Indianapolis Business Journal (IBJ) carries an editorial which we think deserves a response.  The editorial very strongly urges city residents to support a referendum concerning the future of Wishard Hospital.

Frankly, we're not prepared to comment on the specifics of the need for the proposal.  We are aware that the current buildings are old and quite possibly, or even probably, in need of extensive renovation or complete replacement. 

But we do think it is high time the voters/taxpayers were dealt with openly and honestly when they are being asked to support massive expenditures of public funds.

The wording of the referendum upon which the people are being asked to make their decision is nothing more than a "puff piece" for the hospital, with no specifics as to cost nor the means by which such obligation would be met.  In fact, the only direct reference to the purpose of the project is to financing "...safe, efficient and functional facilities for the Wishard Hospital project."

Among other things, the editor suggests the project should be supported because it has the approval of the Indianapolis Chamber of Commerce.  One wonders whether we should rate this as more or less important than our billion dollar sports palaces - another expenditure of public funds supported by the Chamber.

The editorial further tells us that, "...this particular referendum has nothing to do with raising property taxes.  In fact, the project can be completed without nicking the taxpayer for one thin dime."

Given this "fact," presumably we can also be assured that any debt to be incurred will be in the form of "revenue bonds" to be paid from current revenues rather than general obligation bonds which could fall back on the property tax payers.

We do urge serious voter participation - Yes or No - but only with full knowledge of the potential impact of the vote, and a decision made on the basis of that knowledge rather than a vote for "motherhood, apple pie and the flag."

A little change

We've become accustomed to having the front page of the morning paper dominated by sports news.  Today we're getting (more) fiction and/or humor.

Reference is to this morning's statement about revenues being collected for payment of the debt generated by the stadium/convention center project.

Seems we're running way ahead of anticipation on those revenues.  And the article tells us we'll be paying off the bonds ahead of schedule.  Even better news!  "Once the projects are paid off, the legislation that created the tax increases calls for them to expire."

Sound familiar to anyone?  What are the odds?  This is the same agency which collected the food and beverage tax for a quarter of a century and never paid down the principal on the original debt.  (Almost seems that long that we've been asking "Where did more than two decades of tax collections go?"  We're still waiting for even an echo to the question, much less an answer!)

It's also the same tax which was to "expire" but was quietly extended during the Hudnut administration, so don't hold your breath on that one either.  Of course there is an answer to that situation.  If the tax is supposed to end when the debt is paid, and the debt is never paid, then probably it is reasonable to keep on collecting the tax!  Right?

We'll make a prediction.  Part of those "excess" dollars now coming in will somehow find their way into the marketing budget we're told the convention center so desperately needs.  And probably into other areas we'll never hear about.

Some legal eagle undoubtedly will tell us that can't happen because the law requires the debt payment.  If that happens, we hope that legal eagle will be prepared to tells us at last who got the money that was supposed to pay off the RCA Dome.

And we hope that legal eagle will be watching to see that all those revenues really are being used to pay the current debt.  We're too old to expect to be here, but we do hope that when the time comes to build the next sports palace, the taxpayers will not be told they still owe the $995,000,000 worth of bonds shown in this morning's paper.

A necessary look back

For those of you reading this website in the past, this entry will look familiar.  But we do think the message bears repeating.

Present media reporting continues to tell us of the financial woes of the Capital Improvement Board (CIB).  The latest tale of misery concerns the possibility that CIB employees may have to bear the brunt of years of irresponsible mis-management by having to take furloughs or layoffs.

10 years ago the CIB, this group of fiscal wizards, turned over Conseco Fieldhouse, a $183 million building, to the local basketball franchise, rent free and with team retention of all revenues, with the franchise responsible only for operational costs. 

About 4 years ago, these same folks arranged for the construction of a $750 million football field, paid the franchise $100 million to "force" it to use the new stadium, and, once again wearing Santa Claus suits, gave virtually all revenues from the building to that franchise.  (A franchise which, incidentally, now demonstrates its civic attitude by responding to the city's plea for financial help with a polite "drop dead.")

At about the time of the announcement that there had been no plan for higher operating costs for a larger, more complex stadium, the public was made aware that the CIB had, in fact, been operating in the red itself for the past 10 years.

Currently, a $3.5 million deficit is projected for next year's CIB budget.  And there apparently is serious consideration of the Board picking up annual Fieldhouse operating costs of $15 million because the basketball team loses money in its rent-free palace.

(An article in the current Indianapolis Business Journal (IBJ) is headlined, "Flush with cash, Simon revives hunt for acquisitions."  We're told that, as a result of smart money management, Simon has accumulated "...$6 billion in 'dry powder' it can use for acquisitions...."  The idea that people smart enough to amass that kind of fortune but run a basketball team at a loss for 20 years - the last 10 in a rent-free building - does seem to present an anomaly.)

But, let's get to the point.  Despite this terrible history of financial ineptitude, much of it carried out in secrecy, city leaders seek only to find additional sources of taxpayer dollars to be handed over to these wastrels.

And no one - NO ONE - in any position of authority is willing to say, "STOP!  It is time to to look back and see how we got here before scraping more hide off the taxpayer.  It is time for an independent audit.  It is way past time to find out where the money has gone."

We believe the taxpayers are entitled to answers.

We also believe a city having severe problems keeping its public parks available to its citizens, is morally wrong to tax those same people for the purpose of subsidizing millionaire-owned, private, for-profit entertainment businesses.