Indy Tax Dollars

Congratulations...

... to the editor of the local daily on his column in the Sunday issue.  The headline reads, "Watchdogs to look out for your interests."  We believe this is exactly what the community should expect from the news media, and we are delighted that this decision has been made.  The column says, in part, "Protecting the public and private interests of citizens is a major goal of ours...."  The proposed concept is an "investigative team" composed of five members of the paper's staff, all of whom we are told, have outstanding reputations in this type of reporting.  We applaud what the paper is going to try to do.

The column closes with these words.  "Let me know of issues you think the team needs to investigate."  We accept that challenge and herewith make some suggestions.

1.  What is the total long-term debt for which citizens of Indianapolis are liable?  This should include all boards, commissions, and agencies which legally may sell bonds or enter into long-term contracts or leases which require any form of taxation to retire such obligations.  This effort might start by determining which governmental units are involved and the relationship between them.

2.  Apparently, few payments have been made against the principal of the original debt of $75 million for construction of the RCA Dome.  The 1% Food and Beverage Tax was levied for that purpose, and collected for about 25 years.  What happened to those revenues?  Coincidentally, was there malfeasance involved in the diversion of those funds?  Is there evidence that revenues from the increased 2% tax will be used to pay off the new stadium?

3.  What revenue is being derived for the ordinary and usual purposes of civil government from the Circle Centre Mall?  Three direct requests for this information to our City-County Council representative have resulted in one "I'll look into that" and two subsequent failures to reply at all.

4.  The real estate at the Market Square Arena site has now been vacant for seven years.  Why has the plot not been sold and restored to the assessment rolls?  Is a political decision getting in the way of an economic one?

5.  There are an unknown number of acres of prime real estate downtown which are owned by local government but which are being used by private, for-profit businesses.  What revenues are these lands producing for the city, to what use are those funds being put, and are the moneys the equivalent of a realistic property tax levy?

We suggest that these are all questions to which the taxpayers are entitled to an answer, and we offer them quite seriously as potential subjects for the new "investigative team."  We wish the team good luck, and again, we applaud the paper for initiating this effort.

Two peas...?

We find ourselves wondering whether anyone else sees some similarity between Washing D.C, and Indianapolis these days, this despite the fact that we don't pretend to have any real inkling of what's going on down there.

But it does seem to be a somewhat familiar scenario compared to what we've seen here in recent years.  In both cases we are/were being warned of dire financial implications if the taxpayers don't come up with a huge pile of money.

In Washington, the disaster will be the collapse of the financial structure of the nation.  In Indianapolis it was to be the collapse of the downtown commercial structure and municipal revenues.

In Washington, governmental policies and mishandling of institutional regulations are a significant part of the problem.  In Indianapolis, governmental policies such as Tax Increment Financing districts, property tax abatements and outright subsidies have contributed directly to the fiscal woes of the municipality.

In Washington, private greed, allowed and even abetted by governmental policies and officials, has caused millions of dollars to disappear into the pockets of those who have "friends on the inside."  In Indianapolis, private greed has been able to dictate sweetheart lease arrangements of publicly funded properties by local government, to the absolute benefit of the rich while most taxpayers cannot afford to make use of those facilities.

In Washington, the situation came to a head with little or no real warning, and certainly with no input from the taxpayer.  In Indianapolis - and here the scenario differs a little - the only "warning" the taxpayer got was media repetition of press releases from public officials telling us how "the city" was going to get filthy rich.  Early on, these included the lies of those officials that the taxpayers would indeed have some input before the deals were finalized.

As this is being written, we have no idea what kind of deal is being hammered out in Washington.  We can only hope that the taxpayer will come out better than has been the case here in Indianapolis.

More bits and pieces...

We re-open reference to an article appearing in the daily paper (9/17/08) about the financial condition of the Capital Improvement Board (CIB).  There is a quote from a Colts official as follows: "To suggest reopening (the lease) agreement that took four years to negotiate is ludicrous."  Some of us don't necessarily think so.

But an interesting aspect of the statement is that it takes the negotiations as far back as 2001-2.  We seem to have a fairly distinct memory that Mayor Peterson was still saying that there were no plans for a new stadium at that time.  Surely the "community minded" Colts must take some responsibility for foisting a secret, billion dollar debt on to the backs of the taxpayers.

As far as the city/state deal is concerned, it is true that the state shoe-horned its way into the situation.  But our recollection is also that the final form of the arrangement specifically says that upon completion of construction, operation and maintenance of the stadium become a responsibility of the CIB.  Is it fair to ask what plans the CIB had before the state shoved its way in?   (Please don't suggest a downtown casino!)  And as far as money goes, there can already be diverted as much as $16 million per year of state revenues to the CIB from income and sales taxes through a Professional Sports Development Area under the provisions of Indiana Code 36-7-31.

We've taken some flak from folks who insist that the stadium is more than a football field.  Maybe so, but recent developments certainly indicate that concerts probably won't be a major factor.  For the first such event, complaints were numerous about lousy acoustics.  One gentleman wrote in the Indianapolis Business Journal (IBJ) that he left early.  His notes to himself included "Can hear the concert two blocks away.  Sounds better out here."  (Or are we looking at more cost over-runs to solve these little snags?)

The IBJ of 9/22/08 tells us that the CIB has voted to retain a New Jersey firm to "...work through a so-called 'punch list' of work (on the stadium) that still needs to be done."  We're going to pay this company "...less that $100,000..." for their efforts.

There surely must be local companies capable of doing that work - if in fact it is necessary.  We recall that the CIB executive director's budget testimony before the Municipal Corporations Committee of the City-County Council included the fact that the CIB has 192 employees in 2008.  (More coming in 2009.)  Who is head of operations and/or maintenance, and why cannot that staff carry out the job?

Last, but not necessarily least, we are told that possible cost-cutting by the CIB might even include the $1 million it is contributing to the arts.  Why is this body making "contributions" of any kind to anyone when its role is defined as operating and maintaining city-owned, sports-related properties?  What goes on here?  Apparently something more than $2 million per year of public funds have been going to the "poverty-stricken" arts movement.  What is the real extent of these municipal gifts?  Is this some more downtown smoke-and-mirrors?

Unbelievable!

At least we wish it were so.  But the precedent set in downtown fiscal practices over the last quarter century should have been a very broad hint that something like this might be in store for us.  Hold on to your wallet/purse, Mr. and Mrs. Taxpayer.

We refer, of course, to the morning headline (9/17/08) and accompanying story about the total lack of planning for the ongoing operation of the new football stadium - otherwise known as the Billion Buck  Boondoggle (BBB).

We were told months ago that an additional $10 million for operational costs would be needed due to the increase in size of the facility.  And even at that time, it was admitted that the Capital Improvement Board (CIB) didn't really know what the operating costs have been for the RCA Dome. 

Today's story carries a side-bar comparing some CIB budget figures for 2007, 2008 and 2009.  But these figures are irrelevant in that they compare total budget amounts which presumably include Conseco Fieldhouse, Victory Field and the convention center.

A former chairman of the CIB is quoted as being disappointed that operational costs were not just rolled into the original construction financing.  "I've been frustrated by suggestions that paying operating costs out of the bonds is unusual or bad public policy."  (A proposal to pay current operating cost by borrowing the money makes one wonder whether the gentleman might be affiliated with any of the national financial institutions now requiring bail-out at the federal level.)

The same gentleman has also said "...the convention center, RCA Dome and Victory Field all worked that way."  Is that a clue as to the disappearance of the Food and Beverage Tax revenues which were supposed to pay off the Dome construction debt?

The state senator given credit for putting the final deal together now says he is willing to help try to solve the operating cost problem, preferring to rely on "user fees."  There is, however, a problem here that demands clarification. 

When testifying about the CIB budget before a meeting of the Municipal Corporations Committee of the City-County Council, Mr. Levengood, executive director of the CIB, made a statement about revenues which appears in the minutes of that meeting as follows:  "He (Levengood) said that those areas in which the taxpayers pay to support the CIB is (sic) called  the User Tax."  Dare we hope this is not the senator's reading?

This city seems to have a definite problem with reference to the meaning of words.  For years claims have been made about the fantastic economic development of the "city" and the tremendous revenues coming into the "city."  Actually, additional revenues have gone into the pockets of developers and other for-profit businesses - or paid for their brick and mortar - while the municipality edges closer to fiscal calamity.  Let us rephrase an old saying - For years downtown interests have mined the gold while municipal government - the taxpayer - got the shaft.

Now we add another abuse of the language when we refer to coerced contributions as a "User Tax" with the implication of some direct benefit to the payer.  Please, folks.  The term "User Tax" is nothing more than an attempt to sugar coat the shaft.

There are no doubt tens or hundreds of thousands of resident taxpayers in Indianapolis who will never be "users" of the BBB, either by choice or because they cannot afford it.  Neither reason calls for the assumption that they are dunces which can be had for the taking without their knowing it. 

Bad news and good news

The headline in this morning's paper (9/15/08) reads, "MSA site will remain empty for a while."  We're talking about "...prime real estate three blocks from Monument Circle."

We're talking about a site that has been off the property tax rolls for 34 years.  We're also talking about a site that has been a ground level parking lot for 7 years while bureaucratic "planners" and economic "developers" have been unable to come up with the "right" use of the land.  It goes on and on!

Meanwhile it is rather obvious that no one in a position of authority has the faintest concept of letting the market determine what ought to be the economically proper use of the plot.  We are told that rejection of two current proposals "...will allow the Department of Metropolitan Development to further assess development alternatives."  (Too bad the word "assess" is not more prominent in their thinking.)

We find it absolutely amazing that the city agency most responsible for handing out tax breaks to downtown businesses have spent 7 years failing to figure out how to put a single piece of real estate back on the assessment books.

Come on, folks.  Give it a try.  Have an auction.  Sell the land.  If someone thinks a combination high-rise condo and Pizza Hut will make a profit, take the money, give your blessing, and get the h... out of the way.  Just make sure the new professional assessors do their job on the property!

And speaking of tax breaks, we congratulate Mayor Ballard on his decision to make a study of the use of Tax Increment Financing (TIF) districts in the city.  We take this as coinciding with something we have advocated for some time - at least a partial look backward to determine how the city got into its current financial bind. 

Some will say that development will not take place without these incentives.  Our take would be that such an attitude shows a real lack of confidence in the city and its leadership.  Do we really believe that local entrepreneurs cannot - or will not attempt to - make a go of businesses without being propped up by tax subsidies?

Certainly these goodies are used when they become a primary part of broad public policy.  Why not?  Would it be suggested that a kid walking into a candy store ignore the half-price chocolate bar sale and volunteer to pay the full cost?

If, in fact, development would cease in this city without the artificial stimulus of public funding, then we do indeed need to take a long, hard look at ourselves.  A world class city will never be built on such an overwhelming feeling of inferiority.

Bits and pieces...

...of some brief items which struck the eye in recent media output.

One was a major article about the NCAA and college sports.  Sunday morning, front page, above-the-fold news.  Seems someone did some investigation and discovered that - heavens to Betsy! - athletes may not be subjected to the same educational rigors that face ordinary students in a good many schools.  Well, we're certainly glad that's been brought to the attention of all the folks out there.  We won't hold our breath waiting for the NCAA to announce its efforts to eliminate this situation.

Elsewhere, it seems the financial problems of the city have brought out supporters of the arts community in noisy opposition to efforts to adjust the municipal budget.  Since we apparently are already the "community curmudgeon" we'll ask a question.  Where were these folks when the taxpayers were being committed to responsibility for the cost of a billion dollar football field.  Sure would have covered the cost of a lot of music, painting, dance, etc.!

Another story tells us of the Stadium Building Authority's latest hammering of property owners with threats of eminent domain.  The owners finally gave in and will sell the land in question - currently a 2.3 acre parking lot - to the authority.  One paragraph in the coverage says: "The authority wants the prime lot, which it leases for stadium parking, in part to build a pedestrian walkway to the new stadium from the Indiana Convention Center...."  At first we wondered what might have happened to the sidewalks in the area.  But then we now guess that what is really intended is a covered (enclosed? - heated? - air conditioned? - automated people mover?) walkway.

We have to admit to some curiosity about the phrase "in part" in the article.  The land is already being used for parking (although apparently not for the benefit of the handicapped ticket purchaser).  A "walkway" across the end of the property, wide enough to accommodate estimated traffic flow, would surely be available for less than the cost of the whole plot.  While the cost has not been announced, it seems likely to be in the neighborhood of $5 million.  What we have here is the city spending some millions of dollars to remove 2.3 acres more land from the property tax rolls.  Will someone tell us how this helps the municipal budget/property tax situation?

Are you paying attention, arts aficionados?  Hint, hint.  The CIB is already making donations to its pet organizations as a part of its tax supported operation.  Maybe you should just go around the Council, directly to where the goodies are being handed out without "interference" from elected officials.  The practice has failed to generate any objection from the Council or mayor in the past!

What can you lose?  Investigations directed at college "educational subsidies" for athletes sure won't give you any problems!

More boasting...

...which raises more questions.  A story in Monday morning's paper tells us of the terrific work done over the years by the head of Indianapolis Downtown, Inc, (IDI).  According to the sub-head on the story, her career "...has focused on reclaiming and rebuilding central cities."

An admirable concept, but we believe there are questions to which some attention should be directed.

One paragraph in the article says:  "And it is a different Downtown than at the start of Zahn's 15-year tenure.  More than 340 Downtown projects, totaling nearly $5 billion, have been completed.  Currently, more than 90 projects totaling $3 billion have been announced and are under way, including the construction of 1,900 housing units and creation of six cultural districts."

Some questions come to mind.

First - How many of the eight billion dollars came - or will come - out of the taxpayers' pockets?

Second - Since these figures are generally tossed about as the equivalent of "investment" in the city, when can the taxpayers/investors expect to start seeing a return on the funds they have involuntarily "invested?"  To date, these fifteen years and five billions of dollars have failed to alleviate the grave property tax problems facing the municipality.  (See current budgetary problems.)

Third - In those cases where the investment actually has been private funding, what has been the total diversion from property tax revenues by way of abatements and subsidies? 

Fourth - How much of the operational cost of IDI itself is paid with taxpayer dollars?

And while we're on the subject of questions - and our readers are no more tired of seeing it than we are of writing it - "What happened to the 25 years worth of tax revenue which was supposed to have paid for the RCA Dome?" 

Some businesses in a very small geographic area in the central part of the city seem to be doing very well with lots of people, traffic and bright lights.  It is amazing that, in the midst of all such jubilation and exciting activity, the same area is simultaneously a "black hole" into which these billions of dollars disappear - at least as far as municipal revenues are concerned.