Wednesday, September 06, 2006

Is Indianapolis Teetering On Bankruptcy?

Indianapolis is facing the worst financial crisis the city has faced in modern times. Mayor Peterson's long-term solution will ask the city's taxpayers to pay for the financial mistakes of his administration's and his predecessors. The big elephant in the room, which the Star's Brendan O'Shaughnessy dares to speak about in his story today about Mayor Peterson's latest proposal to spend an extra $10.5 million to fight crime, is the unfunded liability for police and firefighter's pensions. And it's a whopper--$400 million. That's almost half of the city's entire annual budget. Tucked away in O'Shaughnessy's story is this little tidbit:


The state now covers nearly 40 percent of the $90 million annual pension expense . . . Even with the state assistance, the city in 2004 borrowed $100 million to help pay the pensions of police officers and firefighters hired before 1977. That loan will eventually increase taxes and will pay the obligation only through next year.

Do you understand the gravity of these numbers? Ten percent of the city's annual budget is needed to cover current pension expenses before we even begin to talk about the $400 million unfunded liability. Now, consider the fact that Mayor Peterson has given away more than $1 billion in public funds to subsidize private businesses since he took office (e.g., Lucas Oil Stadium, Conrad Hilton, Simon Headquarters, Eli Lilly, Rolls Royce, etc.). Let's not even discuss the $10 million for which the city has yet to find a source of funding to cover annual operating expenses for the Colts' new stadium in a couple of years. Or the more than $1 billion the city will need to fund sewer overflow control over the next decade.

So what does it all mean? Unless you and I cough up more of our hard-earned income to bail out the city within the next year or two, the city will be facing bankruptcy, unless parks are closed, hundreds of police and firefighters are laid off, street and sidewalk improvements are shelved and so on. The Mayor said as much himself during a WTHR-TV interview last week. Is this the kind of leadership we want for another four years?

11 comments:

Wilson46201 said...

This unfunded pension liability situation is not unique to Naptown. The NYTimes had an article a few months back about how a national change in professional accounting methods is causing this problem to appear all over the country. I even recall mentioning it at the time to Billie Breaux, the Democratic candidate for County Auditor.

I'm not saying the problem isn't real - danger may be looming - but politicizing the solutions is no solution. Lest it be forgotten: the liabilities were mostly incurred during the 30+ years of GOP reign of City-County ...

Advance Indiana said...

Made worse by the current administration's give aways to private businesses at the expense of addressing this growing problem over the past 7 years.

Anonymous said...

Sadly, you're both right.

Someone has to roll up their sleeves and tackle this problem. I am a huge Peterson admirer, but he's not tackling it.

But in terms of budgeted debt vs. annual income, the absolute and undisputed King was Steve G.

We can address this problem in some respect,s by declaring a moratorium on tax abatements. That's a silent bud deadly thief of future revenues.

It's almost better to give an expanding/relocating business a direct cash grant, than to abate taxes for 10 or 20 years.

I don't know where to look for leadership on this overall budgetary issue. It certainly isn't coming from anyone in the Republican council caucus. (Will someone please tell Ike Randolph his 15 minutes of fame are up, and that having the local talk shows on speed dial is not sufficient talent to become mayor?)

If I had to guess, the GOP leadership on this issue would come from the momderates--Dr. Borst, Scott Keller.

But I'm not holding my breath.

Northeast Indiana Democrat said...

If it's a huge problem in Indy then perhaps the General Assembly will finally do something about it for all the cities and towns in Indiana. The GA's recent track record is to screw the locals so that they can get a nice slogan for their taxpayer-funded direct mail campaigns. Oh, and the taxpayers are screwed, too, but since the whole purpose was to make the legislators look good in their own eyes, MISSION ACCOMPLISHED.

Sir Hailstone said...

What has Marion County even received for these abatements? Indiana as a state is coming along with new jobs (Honda in Greensburg, yadda yadda) but in Marion County? I don't see a lot going on here.

I liked Mayor Steve for something he was excellent in doing: public-private partnerships. He subbed out parts of what is now IndyGo (was Metro at the time) to a division of Ryder Logistics. The non-county owned Jail II was established under Mayor Steve. I would take it further and put out services like tree trimming, ambulance service, roadside mowing, and such out for bid. Not only that but those who are serving sentences in County Jail - put them out there picking up trash along the roads. There are smarter ways to provide city services and Mayor Bart is doing none of them.

Anonymous said...

Hailstone, are you serious, is it possible you've figured out how to type out of your ass?

Brookings had a report this summer indicating that Indianapolis was the best (and the only to show growth) in jobs in the last five years. I think it was 10,000 new jobs...

Get your facts...perhaps you have some credibly then. Perhaps.

Anonymous said...

You may want to read that report you cited and get your facts correct. That brookings report referenced a federal bank report that cited the indianapolis REGION as having that growth. Take a look at that map of the REGION. It stretched down to Bloomington but conveniently left out Madison and Delaware counties.

Shame on you.

Anonymous said...

The Brookings eport, and many others like it, are absed on the Fed's regional banking districts.

These districts were established at least 25 years ago, by the fed economists. Their boundaires are determiend by economists. I have no idea why Bloomington is in, Anderson is out...but the economists, who are pretty smart, do.

Dems and Repubs for years have used these reports to credit/discredit themselves or their oponents. The data is extensive, and consistent.

Sir Hailstone said...

10,000 in Carmel, Greenwood, Plainfield, etc.

For Marion County itself? I stand by my previous answer.

Chrysler Foundry - closed
International Truck - 400+ laid off just before labor day - after the city recently gave - yes - another abatement so Navistar could upgrade machinery for a new diesel engine that Ford will buy for future Ford trucks.

The return upon the investment is not there.

Consistent yes, accurate - questionable.

Wilson - the pheonomenal growth of the City & County also occured under the GOP watch. But you won't mention that little fact. What has your handler and Mayor Bart done for us lately? *crickets in the background*

I thought so.

Anonymous said...

All of Hail's comments are correct.

So is this one:

U.S.Judge Barker's jail ruling was made 15 years ago.

Former Republican Councillor Beulah Cooughenor raised the CSO issue first in 1980.

And costly overlaps in administrative/service budgets for public safety have long crippled this community's ability to efficiently provide those services.

The cost of each of these ignored problems has increased greatly. Under Republican mayors and councils.

Finally, a mayor and council tackle the problems and offer some solutions. Not enough, but some.

Progress on important issues is slow.

Daniel Haszard said...

Eli Lilly 3Q 10% profit rise is nearly all from Psyche drugs including zyprexa.

How have they schemed to squeeze more money from their zyprexa cash cow when pill production has actually gone down?

ANS-Eli Lilly profiteers have jacked up the price of zyprexa to the federal govt,from the Medicare D payouts.

Eli Lilly is a big drug company that puts profits over patients.

They covered up findings that their Zyprexa has a TEN times greater risk of causing type 2 diabetes

Only 9% of Americans trust big pharma,right around the same rating as tobacco companies.

Daniel Haszard Eli Lilly zyprexa drug caused my diabetes www.zyprexa-victims.com