Indy Tax Dollars

Next stop?

We wonder whether someone can tell us where the next opinion change will land Mr. Mark Rosentraub.

Once he was a sports economics expert writing that professional sports are a less than significant impact in a city because they relocate spending rather than add to it.

Now he is a "sports business author" reversing his field with all the skill of a million dollar running back in the NFL. He currently tells us, "Where spending occurs matters as much as if spending occurs." (Our emphasis.)

A big front page article in this week’s IBJ tells us, with substantial quotes from Rosentraub, that a cancellation of the professional basketball season will be a financial disaster for the city, to say nothing of loss of the team. We’d like to see some facts rather than fancy.

While the article is about the possible cancellation of a season, Rosentraub is quoted as saying, "I guess it’s a case of being careful what you wish for." (This reference is to the possible loss of the basketball team.) Or is it really a case of being careful what you put in print?

The Pacers use Conseco Fieldhouse for 45 games, about 12% of the year. We are not told how many other events are held there. How many dollars do these generate? There is no estimate about what revenues similar events would bring the city if they were not diverted directly to the Pacers. Nor are we told how many events are rejected because of Pacer usage of the facility.

Rosentraub tells us a fieldhouse is doing three important things; providing service-sector jobs in a central location, reducing energy use by keeping jobs centrally located and keeping money flowing into Center Township.

(The first two seem to negate any need to improve IndyGo!) Does the energy saving offset extra pollution of people driving downtown? Considering the volume of downtown tax revenue being sacrificed on the altar of "economic development," including professional sports subsidy, why is the rest of the county responsible for financing the basketball team?

What will the expert’s reasoning be next year?

What are they thinking?

When we used to review local governmental budgets as a part of our job, we always wondered at the disconnect for so many people between spending and taxes, and the need for prioritization.

The feeling came back this morning when we read the column in the morning paper by one of its prize columnists.  In lamenting the financial position of IndyGo, our so-called public transportation system, and suggesting that tax increases are the proper solution, Ms. Smith winds up by saying, "When logic fails, it’s time for the ludicrous."

She goes on to suggest asking for individual contributions, money collections at the office and bake sales.  Ludicrous?  Absolutely.  Any more ludicrous than some of the alternative uses being made of public funds by the city?  We think not.

What we do not understand is the ability of the author to overlook what is actually happening locally.  We wonder whether there is a connection between the writings and the editorial position of the paper for which Ms. Smith works. We do understand that our fiscal senses have been dulled by the folks in Washington throwing around billions and trillions, to the extent that a few millions hardly seem worth mentioning.  But we will mention them.

With the complete support of the paper, the city currently is squandering something in the neighborhood of $10 to $15 million converting three blocks of a city street into a park or promenade or some other "ludicrous" idea - all for show for those attending an up-coming football game.  What would those dollars have done for IndyGo?

Has it occurred to anyone what an attraction benches on heated sidewalks and streets will have for the homeless in the winter?  After the football crowd has gone home of course.  What kind of program and/or facility for the homeless would $15 million accomplish?

With no objection from the paper, a gift of more than $30 million of municipal funds was handed to the local basketball team on the simple claim that it was losing money.  We haven’t seen a column speculating what that money might have meant to IndyGo.

Then, of course, we can get into the really big money - hundreds of millions.  The city is committed to a debt of over $1 billion to build the indoor football field in which the above mentioned game will be played.

Under the rules of semantics currently in use, that project is, of course, called an "investment."  It is an investment which will pay a handsome return to the team owners of the National Football League and some downtown businesses.

We wonder what an "investment" of a billion dollars in IndyGo might have meant to the guy who may or may not be able to get across town on a bus.  And we wonder why the columnist and her editorial bosses never seem to notice the disconnect between raising revenues and the absolutely outrageous lack of prioritization of the use of those revenues.

Let’s face it. The leadership of this city is primarily interested in providing transportation, and attractions, for people to come downtown and spend money.  (You know – attractions like Union Station for instance.)  And they will continue to throw public funds at any program which is projected as accomplishing that fact.

Is it too much to hope for a media with fewer endorsements and more questions?

Something new under the sun?

Some news media and local blogs have picked up on the fact that the once destitute Capital Improvement Board (CIB) has suddenly found $8 million to hand over to the city for part of the cost of entertaining the NFL moguls while they deign to play their football game in our city.

These other sources have commented articulately and accurately on the situation.  But we’ve seen one statement which we think deserves special attention.

"‘I think, in general, we get the hospitality taxes that are going to be coming in due to the event,’ said Lathrop. ‘Given the significant, one-time-only impact this is going to have, we think it is the right thing to do as a good corporate citizen.’"  The source of the quote, Ms. Lathrop, is the president of the CIB.

We wonder at her choice of words to begin with.  Does she really only "think" that the CIB is the beneficiary of one of the highest "hospitality" taxes in the nation?  A lofty position acquired by increases enacted for the specific bail-out of the CIB when it was pleading eminent bankruptcy.  May we ask which budgetary item was reduced by $8 million in order to make this magnificent gesture?  How many other such items have this kind of slush in them?  We know the Feds can simply print money.  Does the CIB have a couple of presses stashed somewhere beneath that (never) moving roof?

But the phrasing that really caught our eye was the last part of that second sentence.  We repeat: "...we think it is the right thing to do as a good corporate citizen."

Are we missing something?  When did a public agency, supported by tax revenues, become a "corporate citizen?"  And how is shoveling an excess part of its revenue to another public agency doing "the right thing?"  We would think the "right thing" might be shoveling any excess funds back to the taxpayer.

(Actually, we think good corporate citizenship would be demonstrated by downtown businesses voluntarily participating in something like our suggested Revenue Increment Financing plan!)

Well, at least we certainly have to applaud the creative approach.  The leadership of this city has been practicing fiscal sleight of hand for decades.  This is only another example of the shell game where the pea so mysteriously keeps appearing unexpectedly.  But we don’t remember the travesty ever having been played out in the name of "good corporate citizenship" with taxpayer dollars.

Watching the magicians perform the amazing budget manipulations really would be quite entertaining if it just had a less disastrous effect on the taxpayers

A huge "Thank You..."

...to our compatriot at Had Enough Indy? who has come up with information which seems to confirm the need for answers to questions raised in our last post.  Although we’ve never seen it mentioned in the media, apparently the Super Bowl Host Committee is now also known as "Our 2012SB, Inc.," a 501 (c) (6) not for profit corporation.

Our feeble attempt to find more information on the Internet brought us to a site where no incorporators, officers or board members of the corporation are listed.  We opted not to pay $125 for a "premium" report including some of these items.

But a very interesting segment of the Had Enough Indy? blog was this partial quote of the purpose of Our 2012SB.  The activities of that organization will be carried out "Under the supervision of the National Football League...."

That paragraph is further expanded to include this wording. "Our 2012SB will serve as an extension to the National Football League in the local community...and as a manager of local resources such as City services, event venues, accommodations, and thousands of volunteers."  (Our emphasis in both paragraphs.)

So we now add questions to those in our post of Aug. 14.

Who are the incorporators, board of directors and officers of Our 2012SB?

Is there a contractual relationship between the City and Our 2012SB authorizing the questionable financial giveaways to the NFL?

Do we really have a local organization doing the negotiating with (approving demands by) the NFL while at the same time "under the supervision of" and acting as "an extension of" the NFL?

Has anybody downtown ever heard the words "collusion" or "conflict of interest" or for that matter, "highway robbery?"

Has Indianapolis really become Alice’s "Wonderland?"

Addendum:

Before we were prepared to post this essay, the new issue of the IBJ hit our mailbox with a story about the planned revelry and merrymaking involved with the Super Bowl.  The sub-headline got our attention. It read, "After NFL decides what it wants, party planners will pounce."

The following statement is just one example of our bowing to the NFL: "Some prime space is off the market.  As part of the bid package, the NFL will use the Indiana Convention Center at no charge, covering only labor and set-up."  (Again, our emphasis in both paragraphs.)

But we thought the article included some information supporting our proposal for Revenue Increment Financing (RIF) as opposed to Tax Increment Financing (TIF).

One downtown restaurant is said to have had revenues of $300,000 at the time of the last men’s Final Four, and is hopeful of nearing $1,000,000 from the Super Bowl.  We aren’t given the base from which to compare, but we’ll make a reasonably conservative guess and say the ordinary revenue for an average comparable time period might have been $250,000

$300,000 would have been a revenue increment of $50,000.  If the operation reaches $1,000,000 as hoped for, that is an increment of $750,000.  This quadrupling of revenue would be a direct result of the construction of the football field known as Lucas Oil Stadium.  Under our RIF plan, a set percentage (one third?) of the increment would come right off the top and be dedicated to payment of the debt incurred in the construction of that football field.

This would still leave the restaurant with revenue for the event three times its average.  And if we wanted to get semantically creative, as our politicians seem so often to do, we wouldn’t even have to call the action a tax.  It would be a "user fee" on those attending, collected by the business as it collects the sales and use tax.  The difference is computation on the end result instead of transaction by transaction.

Promoters of the Super Bowl are projecting hundreds of millions of dollars of new revenue for the city. The application of the RIF approach to this and to all future events at the stadium might mean that the debt could be eliminated in a very few years.

Should local taxpayers be given a vote on that?

A follow-up...

...to yesterday’s post concerning turning the city over to the NFL for the 2012 Super Bowl (SB for the sake of future brevity) - in this case with specific reference to parking facilities.

We woke up early this morning and began to think about the situation, and remembered a statement from the newspaper article which started a new train of thought.  A spokeswoman for the NFL was reported to have said "...the use of the state (parking) lots was part of the bid to host it (the SB), along with the use of parking lots at the Indianapolis Zoo, Victory field and the airport."

We thought we remembered something else and managed to find an article in the IBJ dated December 8, 2008, referring to the SB "bid" including "...an ‘indeterminate’ amount of state and local taxes waived on property, revenue and expenditures by the NFL in preparing for and staging the game, including the Marion County Admissions Tax on the game itself."

Seems to us a lot of very serious questions are being generated.  Since we haven’t seen them in the professional media, we’ll ask a few of them.

Who is the SB Host Committee, who appointed it, and under what legal authority does it act?

Does a "bid" to host the SB constitute a contract binding upon Indianapolis, Marion County and the state of Indiana?

Was the "bid" formally approved by any legally constituted legislative body before being presented to the NFL?

Under what section of the law is the committee authorized to offer waiver of the application of state and local taxes to private individuals or corporations?

Under what section of the law is the committee authorized to offer diversion of non-tax revenues (parking fees) to the use of private individuals or corporations?

Considering the state fiscal picture, giving away revenues is a little more understandable.  Not acceptable, but understandable.  Having read an article recently about city budget cuts, we feel more unhappy about handing out municipal revenues.  Particularly when the direct beneficiaries are also the direct beneficiaries of the massive revenues which will pour into the coffers of the NFL owners as a result of the game.

We suggest that, the next time such an attack of sports hysteria hits the city, everybody calmly sit down and think about it for 10 or 20 years.

This is what we had in mind?

Reference is to the upcoming Super Bowl.  A quick review.  The city is committed to a debt of more than a billion dollars to build a football field for the benefit of the National Football League (NFL).  At the insistence of the local franchise, something more than $50 million was included in the cost to have a roof capable of being opened.  This has apparently turned out to be a very expensive bragging point with little or no utility.  Memory tells us it has been used no more than half a dozen times since the building opened three years ago.

As a reward (?) for this billion dollar boondoggle, the NFL has graciously allowed our city to host an event which seemingly will benefit almost everybody but the average citizen of the city.  Special ordinances - prepared by the NFL? - are being presented to the City-County Council to meet the demands of the NFL as to how our city shall be run while their eminences, the team owners and their minions, grace us with their presence.

As is the customary practice, about anything these folks want, they will get.  And most likely it will be at little or no cost to them.  Meanwhile, every possible test will be used to demonstrate that dollars which are spent will go to the NFL rather than the city or its residents,

A few days ago we were told of the intention of licensing private property owners who might wish to offer their private property to fans for parking.  Today’s paper pretty well explains that move.  Over 6,000 parking spots will be handed to the NFL, including the revenues therefrom, many of which are on publicly owned property.

We’re told fees for these parking places have not yet been set, but that at Dallas for the game last year, they were $71 each.  God forbid a handful of individuals should cut into the NFL revenues by renting ten or twelve spots at a somewhat less gouging price.

The whole scene brings to mind a medieval castle where a banquet is being held.  The "nobles" are feasting on game having been run down by their dogs.  The dogs are now lying on the floor begging for scraps and hoping some kind soul will maybe rub their bellies.

This represents the "leadership" of a world class city?

A world in miniature

That’s how our little paperback dictionary defines the word "microcosm." Has it occurred to anyone how Indianapolis more and more seems to be a microcosm of the world known as Washington, D.C.? The question arises from a headline in yesterday’s paper. "Most city agencies face budget cuts."

Well, maybe not really.  We’re not sure about the local situation, but we feel certain that nothing significant will get done about any real budget cuts down east.  They’re still calling a reduction in an increase a cut!

But there are parallels.  While citing budget woes, the city is still committing to further debt for highly questionable projects.  A parking garage in Broad Ripple appears to be a giveaway.  A development on the south side of the downtown area will get public financial aid after private sources won’t touch the deal. Once called No-So, the city has changed the name to City Way.  Here’s a suggested alternative. How about No Way?

And, having made the determination that TIF funds can be used outside the geographic area of the district, they have suddenly decided that $40 million can be used to "reimburse" the city for downtown infrastructure expenditures.

"Ballard said the city has spent more than $40 million Downtown in recent years."  He’s short by several hundred million, but maybe we should be happy that he was reported to have said "spent" instead of "invested.."  That in itself is at least a step toward more honest use of our language, if not of our money.

There is a brief reference to the city using $4 million of "Capital Improvement Board money" for some Super Bowl "public safety costs."  Sounds like we might be reaching the point of calling the use of our money a "tax expenditure" like they do in Washington.

There is one engaging bit of whimsy in the story.  The Democrat candidate for mayor refers to the current mayor having made promises he couldn’t keep.  She says, "It’s something he should not have done as a candidate."  We wondered whether she was distinguishing between promises he couldn’t keep and those he never intended to keep.

It is an interesting thought, but either way, we think the concept would leave the city in dead silence for the months ahead of the election.

Hmmm.  Why not give it a try?

Looking ahead

 

A very brief article in yesterday’s morning paper brought some thoughts about the future of Indy tax dollars.  (Not this blog.  The real ones.)

The article had to do with security cameras being installed all over the downtown area.  Might be a good idea.  We really don’t know and wouldn’t comment on the possible benefits.  There is no reference to what such a system costs to operate.  The cameras themselves are a little pricey at $3,000 to $5,000 each.

But, we are informed that they are "federally funded."  So what the heck, we’ll take a couple of dozens - in assorted colors!

However, the monetary reference did provoke a question.  On the extremely unlikely possibility that Washington politicians might really take a serious look at financial realities instead of their own political fortunes, we wonder about future financial relationships between Capitol Hill and the City-County Building.

Does anyone downtown have authentic information about either on-going or projected programs which depend to any degree on the continued "generosity" of our congressional clowns?  If unexpected fiscal sanity should break out in Washington, which local governmental activities would be affected?  How much is Indianapolis dependent upon federal revenues?  Wouldn’t it be a good idea to have an inventory of these sorts of considerations?

We would further suggest that, if such a bolt out of the blue strikes, a seemingly little used word locally would become very, very important.  That word is "priority."

Between federal loans and grants and TIF slush funds, tax dollars have been tossed around pretty loosely here for decades.  We might, for instance, even wish we had used those six million transportation dollars for IndyGo instead of turning Georgia Street into Boondoggle Boulevard.

In the end, it all depends on us.  Will we continue to elect politicians on the basis of who can bring home the most federal bacon, operating under the delusion that we can come out ahead in the "out/in" equation, and that the "in" part is a gift from someone else?

Or will we tell Washington to back off, get out of those areas in which it does not belong, and keep our funds here to be used as we see fit without lining so many unnecessary pockets?   Could this be the time?

We know.  That’s a dream.  But the alternative is the ultimate nightmare!