Indy Tax Dollars

Three interesting items...

...in the local daily.  Yesterday gave us an item about the excellent financial condition of the Simon mall operations, the obvious result of superior business acumen.

We congratulate the company on its great success, particularly in light of the current economic situation, and we wish it well for the future.

BUT...we still wish someone would explain why these same folks cannot make a profit running a basketball team in a spectacular palace built by the taxpayers, for which they pay $1 a year rent, from which they receive all revenues, and for which they receive an additional $10 million annual subsidy for operations.  An explanation...PLEASE!

This morning’s paper tells us about the progress being made on the Georgia Street project.  That’s the one where we’re turning a downtown street into a park with trees and benches, attracting thousands of people downtown - even after the Super Bowl, which is the real genesis of the idea.  (The same thousands which flocked to visit Union Station no doubt!)

Original publicity speculated on having some sort of weather-proof covering over the street.  We didn’t see that mentioned today.  We suggest sliding the movable roof of the football field over to cover the street.  After all, it doesn’t seem to be doing much moving where it is.

The possibility of re-naming the street has come up.  Here’s an idea. How about "Boondoggle Boulevard?"

The third item also has to do with city officials' obsession with the Super Bowl.  Consistent with NFL greed, residents near the football field apparently are now facing a $75 licensing fee if they wish to use some of their private property to park fans’ cars on game day.

We’ve heard about the riches this event will bring into the city.  But, as is usual, only the NFL and the folks with the right political connections will get any of the gravy.

Considering the on-going "security perimeter" discussion, those poor folks will be lucky if they’re not told to move out for the week.  To a designated hotel of course.

It's the language, Stupid!

Remember when the slogan was "It’s the economy, Stupid!"?  Well, it still is, but we’ve come to the conclusion that the economic situation is supported by the mutilation of the English language. Herewith, two or three examples.

The first applies very much both locally and nationally. The others are more frequently used at the federal level, but certainly contribute to all governmental fiscal problems.

The number one language problem locally is the substitution of the friendly word "invest" for the unfriendly word "spend" in particular cases.

Thus, maintaining libraries and parks are "expenditures" while committing to a debt of more than a billion dollars for a football field is an "investment."

Aid to public transportation for the average citizen is an unaffordable "expenditure" while subsidies of questionable multi-million dollar real estate ventures are "investments."

Supporting police and fire protection is an "expenditure" of public funds while paying a basketball team to play in a taxpayer built palace is an "investment."

Getting the picture?

The second example is somewhat related, but applies more readily at the federal level.  This one is based on the concept that everything you earn is really the property of the government.

This leads to applying the term "tax expenditure" to any governmental action which allows you to keep more of your earned income.  Any change in the tax code which reduces the amount government takes out of your paycheck is a "tax expenditure."  And we all question governmental "expenditures" - right?

In his press conference last evening, the president urgently referred to the need for "investment" in education, "investment" in infrastructure, "investment" in research, etc., etc.  And, of course, these "investments" are not compatible with additional "tax expenditures."

The third item, and possibly the most outrageous, is the use of the word "cut" as applied to governmental budgets.  This is a subject which needs the most intense scrutiny, particularly in the midst of the current debate about the need for federal budget cutting.

If a governmental agency has a budget of $1,000,000,000 and requests $1,500,000,000 for the following year, a reduction of the request to $1,250,000,000 is NOT a budget CUT.  All too often, we find reports in the media of precisely this kind of action, frequently quoting the agency head as to how it has been crippled by having the budget "slashed."

A "cut" means this agency should be looking at next year with $750,000,000 - or less - and any agreement which comes out of the current debate with a different approach will spell the doom of this economy.

Let’s try to simplify it.  Should a golfer admit he loves the game and is willing to "spend" $75-$100 on greens fees and cart, ingest some additional calories with a few beers, and expose himself to sun damage to the skin?  Or should he claim that this is an "investment" in his health? He’ll get exercise - getting in and out of the cart - that will work off 1 or 2 ounces of the additional beverage weight.  And a few bucks more on sun screen may prevent further expenditure on a visit to a dermatologist.  (The latter being a necessary expenditure probably caused by the unnecessary investment to begin with. That, of course, does not happen with governmental programs!)

When mis-use of our language is helping to lead us into economic disaster, isn’t it time we used that language with more honest attention to the real meaning of words?

Let's define reality

This morning’s front page carries a story entitled "When dreams meet reality."  It’s all about some of the major projects near downtown in which the city is planning to inject major public funding.

Without going into details about the various deals, we’ll cite two quotations from the story which we believe honestly represent the outrageous fiscal policy which has been the basis of the city’s operations for decades.

The first is from Mayor Ballard.  He says, "It’s going to be long term and we’ll need some private funding along the way."  (Our emphasis.)  Now there’s a drastic approach. Is he really going to ask a developer to help pay some of the bills?

Will the city commit millions upon millions of tax dollars to these "dreams" while counting on some philanthropic real estate developer or sports franchise to toss in a few bucks somewhere along the line?  Could this be an expansion of the policy under which we pay the basketball team to use the facility we built?  Really??

The city’s expenditure of public funds will, of course, be called "investment."  And sometime in the future - probably in about 15 or 20 mayoral terms of office - there may actually be a return.  But it will be in terms of our great civic pride that we have kept downtown businesses going by shoveling tons of our money into someone’s "dreams."

The second quote is from Deputy Mayor Mike Huber.  He says, "When a city is making public investment, it gives significant confidence to developers and companies that they can take risks, because the city will work with them."  There are those dreaded words!  (Our emphasis.)

Well, yes.  He’s probably right.  As a matter of fact we’d probably have confidence to trade our old Chevy for a brand new Mercedes, or even a Rolls Royce, if we had some way to guarantee that our neighbors were required to put up the money we chose not to!

Some "risks" are riskier than other "risks."  Is one entitled to wonder whether the real decision on a deal comes down to consideration of the size and source of political contributions being pretty much equal to actual value of a given project to the city?   

Have the citizens of Indianapolis become enablers of those who will profit from risk-free dream building?  Shouldn’t we at least be entitled to help decide which dream will be given the mayoral blessing?

What we see...

...as opposed to what we don’t (want to?) see.

We’ve commented before about the eerie similarity between activities in Indianapolis and in Washington, D.C..  We think it’s getting scarier.

Here, for instance, we make an extremely questionable deal for a parking garage.  The media is told "trade secrets" are involved and maybe some day we’ll find out why the taxpayers are expected to build the garage and give it and its revenues to a private company.  This, unfortunately, is consistent with long-time fiscal policy of the city.

We’re spending a great deal of public money on a "legacy" project for the near east side of the city, and somehow linking it to the Super Bowl.  If in fact, the project is something necessary and desirable, why did we have to wait for a boondoggle like a football stadium and game to get it under way?  The cost of the stadium certainly would have covered the project hundreds of times over.

In Washington, we hear endless talk about openness and transparency.  But they write a 2,500-page piece of legislation behind closed doors and pass it without reading it.  Currently major fiscal problems (potential disaster?) are being hashed out behind closed door meetings in the White House, followed by "leaks" consisting almost entirely of finger pointing.  What happened to Congress’s constitutional responsibility for financing government?

Part of the argument used justifying the monster bill was an alleged $500 billion of waste and fraud in the Medicare and Medicaid programs.  If we knew the situation existed, why did we need additional legislation of any kind or size to go after it?  That amount would make a pretty fair dent in the fiscal problems they’re fighting about.

Both political parties locally have participated in outrageous multi-million dollar subsidies for local billionaires, while the administration in Washington raves ideologically and unceasingly about the need for additional taxes on all those billionaires and their corporate jets.

Locally we’re threatened that downtown will implode if we don’t continue to throw money at professional sports.  In Washington we’re warned that Social Security checks won’t come if we don’t submit to major tax increases.

We keep wondering why right and wrong so seldom seem to be any part of the equation.  Apparently, if we don’t know what’s happening, we accept, or at least are expected to accept, whatever we’re handed if it can be made to look legal. ("Legal" being only loosely related to "right and wrong.")

That brings us to another - very much off-topic - situation on which we will make a brief comment.  We didn’t follow the "Casey Anthony" case and read only parts of an article after the acquittal, plus a few letters to the editor.  We were dumbfounded by the amount of press coverage the whole thing got, and the nationwide outrage expressed at the acquittal.  Part of what we read indicated the thought that the defendant was a "party girl" who couldn’t be bothered by the responsibility for the child.

If that was the case, we have to wonder about the outrage of many of the same people if the same result had been accomplished by an abortion 30 months before the actual murder of the child. No 24/7 news coverage for that!

Another try

At our age, sometimes the old memory cells work - sometimes they don’t.  Today they kicked in, for some reason.  It started, we guess, because of current city financial problems and speculation as to where the necessary (?) revenues would be found.

We found ourselves remembering a post to this website we made six and one half years ago, and reiterated four and a half years ago - (12/8/05 and 2/14/07).   It was in these essays that we suggested going directly to the source and applying what we chose to call Revenue Increment Financing - or RIF.

Estimates have been made in the past that the stadium/convention center would bring in an addition (that’s an increment!) of some $200 million per year.  Now we’ll make a guess, based on that guess.  We’d propose that as much as 80 percent of that amount, as gross revenue, probably will flow directly into an identifiable area downtown.

We’d call that a revenue increment district which would be the subject to our RIF assessment.  Under the current law, the entire increase of incremental property tax revenue is diverted away from usual and ordinary municipal costs toward debt payment. (Well, at least that’s the way it is supposed to work.)

But we wouldn’t be greedy.  We’d only suggest that the huge increase in gross downtown revenues be subjected to a 20 percent assessment, with the funds dedicated to those usual and ordinary municipal costs.

That would provide a new $32 million in revenues.  It would bail out the city from its current hole, and leave a few bucks over for parks, libraries and IndyGo.

And the beauty of the whole thing is this.  If spending public funds can be justified by calling the action "investment," then calling this function an "assessment" gets the politician out of trouble for raising "taxes."  And it wouldn’t hit the individual taxpayer - excuse us, we mean assessee - at all.

A positive deal for the politician - if there is any desire to balance the scale between the individual and downtown businesses for decades of the opposite approach.

Are you listening, Mayor?

A connection?

Three separate articles appear in the July 4 issue of the IBJ. Two of the stories begin, side by side, on the front page. The third is the top story on page 3. Not one of the stories mentions either of the other - a disconnect that we find interesting - or even puzzling.

The left hand item on the front page (No. 1)is headed, "Seeking a lifeline," and has to do with the dire financial straits of all of professional basketball, but specifically and particularly including the Pacers.

The right hand story on the front page (No. 2)is headed, "Shrinking revenue puts mayor in hot seat," referring to a drop in income tax revenues caused by general economic situation.

Page 3 (No. 3) gives us this headline; "City not explaining garage subsidy," referring to a proposed parking garage for the Broad Ripple area with serious questions about several aspects of the deal.

For the sake of brevity, we’ll refer to the item numbers.

No. 1 gives us the news that, for the 2009-2010 season, more than half the teams in the league lost money, and only two lost more money than the Pacers. Two questions and a comment. Do the people who put out the statistics get to see the books which are not opened here, and if not, how reliable are the numbers? What do other teams get in the way of public subsidy to make an accurate comparison with the multi-million dollar handouts the Pacers get?

If financial success for professional basketball is a national problem, then it appears that it is really time to consider giving a dying business decent rites. This suggestion is made even though, under the present culture, we’d still be propping up the buggy business at Studebaker in South Bend.

No. 2 offers lots of numbers about shrinking revenues and how bad the situation is going to be. Despite this, we learn, "...both Ballard and City-County Council President Ryan Vaughn, a Republican, say they won’t pursue any kind of tax increase." There is even more good news. The city controller "...intends to make the city’s cuts without affecting service."

Based on the immediate past, we must presume that this means we will still have police and fire departments, which is fine. But you may have to wade through knee-high grass in the parks or stand in line for the few hours your local library is open - if it is still open. And you probably won’t be able to get to either by way of IndyGo!

No. 3 is the most interesting, and possibly the most dangerous of all the stories, because it pretty well lays out the basis of the fiscal philosophy which has led to much of the current situation in Indianapolis.

Here we find that a $15 million parking garage proposed for the Broad Ripple area will apparently be constructed with important details of the project being kept secret, despite the fact that the city is expected to put up a large chunk of the money.

There is a connection between these news stories because together they represent nothing more than a continuation of long-standing public fiscal policy. It is a policy which makes taxpayer dollars available for back room deals with professional sports and with private developers for proposals approved for the right people by the right people in the current administration. And we use the term "current" because it has apparently carried through administrations of both political parties.

We continue to shovel public funds into the local branch of a dying enterprise. We continue to make deals smelling very much of crony corporate welfare. And we also continue reducing or eliminating ordinary municipal services to which taxpaying individuals are entitled.

Is this really how a "world class" city operates?