Wednesday, January 10, 2007

Higher Taxes And More Borrowing In Peterson's Future

Mayor Bart Peterson (D) announced his crime plan last night, and it promises lots more public borrowing and higher taxes. The Star's Brendan O'Shaughnessy writes:

Taxes seem likely to rise -- though what kind and how high are uncertain -- under Mayor Bart Peterson's plan to spend $85 million more per year on crime-fighting and to pay off police and fire pensions.

The Democratic mayor proposed borrowing $450 million for what he called a permanent fix to a long-standing pension liability that has crippled the city's ability to balance its budget and battle crime.

The mayor's plan, outlined in a speech Tuesday evening before law enforcement officials and supporters at the City-County Building, could cost as much as $1.3 billion over the 25 years it takes to pay off the debt and associated interest. If Indianapolis were to do nothing, officials say, the city's obligation to those pensioners over the next three decades would be roughly the same.

The initiative, which could involve an increase in the sales or income tax, also comes on the heels of a report by a task force that urges the city to combat last year's surge in violent crime with stepped-up supervision of and help for ex-convicts and at-risk juveniles.

Peterson did not say specifically how he will find the extra $85 million, including about $35 million a year Indianapolis would need to repay the $450 million loan.

But he said he will push legislation expected to be considered by the General Assembly this session to give local governments power to raise taxes other than property taxes.

Should that legislation, known as Hometown Matters, be adopted, he then will consider his options and announce exactly how he intends to move forward sometime between the end of the legislative session in late April and the crafting of the city's 2008 budget in August.

What really bothers me about Peterson's initiative is that he waited until the end of his second term to do something about the problem, and it comes after he raised taxes and borrowed closed to a billion dollars to fund a new stadium for the Colts and expanded convention center. The unfunded pension liability issue should have been tackled before the city committed itself to so much new public spending on the convention center and stadium. The idea that we're now going to go out and borrow close to a half billion dollars to close the unfunded pension liability gap is simply unsound government financing.

Peterson can't be blamed for the unfunded police and fire pension liability. His predecessors had much more to do with that, including Lugar, Hudnut and Goldsmith. But he chose to be mayor so he's the guy on the hot seat who must make the difficult choices. If we're looking for a truly long-term fix to the problem, the entire pension system for police and fire needs to be overhauled. Private sector employees are seeing their pension systems altered drastically. Why shouldn't public sector pensions be revamped? As for the new taxes, I suppose the working class will get stiffed again. But will the multi-million-dollar handouts to business the city is fond of giving away end?

8 comments:

Don't Be Wrong said...

Alright Gary, I'm sick of you, and those loonies at IndyU bitching about how the "Mayor raised taxes for the stadium." It just ain't true. The mayor had a funding source without an additional tax, it was your beloved Governor who decided to tax the Indy Metro Area...

Just get it right.

Anonymous said...

will the multi-million-dollar handouts to business the city is fond of giving away end?

No.

Not only is Mayor Bart being a typical Dem and falling into that spiral of tax-spend-erode tax base-tax-spend- etc, he has yet to show any effort at improving government effiency. And NO the consolidations are NOT improvements in government effiency. That is a high price shell game. Even fire consolidations are NOT going to bring about drastic efficiencies, unless you want to close fire stations and furlough firefighters.

Someone I know who is quite wise, tells me that Government should be run like a business. Right now Mayor Bart is running it like a charity, or worse - a mob. No - I correct myself - mobs make lots of money.

If Mayor Bart thinks he can force the surrounding counties into coming up with taxes to support his programs he can go perform unnatural sexual maneuvers upon himself.

Anonymous said...

The mayor had a funding source without an additional tax

A downtown Indy casino? That'll never happen that would cut into the ghetto pea shakes.

Anonymous said...

You couldn't be more correct.

Theunfunded pension liability at that time was hovering at $400-420 million. The exact amount could not be determined. The books were that bad.

But, by my count, he has been solely responsible for four budgets since Democrats regained control of the council.

Granted, unfunded pension liability requires tax increases or loans, most of which the legislature must approve, and the opposite party over there has hated All Things Peterson

Still, it's difficult to imagine why four different budgets went the same exact direction: almost unbounded support for commerical development. To the degree our Comprehensive Plan has become a joke.

Last night's speech, preceded by the task force's crime study, brought up nothing new.

Like it or not, election year or not, I think his popularity can withstand a cold hard truth exposed to Indy's residents:

it'll cost another 80-90 million to take care of this. Let's do whatever it takes. Including, yes, God forbid, a tax increase.

Anonymous said...

"Private sector employees are seeing their pension systems altered drastically. Why shouldn't public sector pensions be revamped?"

You bring up a good point. The fact is that for years a government job consisted of usually low pay but great benefits. We are now seeing a change in this. If we are going to cut benefits, then we need to pay a wage similar to the market in terms of professionalism, responsibilities, etc.. After four years, a Columbus, OH police officer makes $64,000/year. Our officers make around $52K + $6K take home car. Basically a combined income of $58K. That is still $6,000 less than a Columbus, OH officer.

I have never been a big fan of forced savings/pensions. I am hoping that we are able to get into our PERF accounts this year because I could use that money to update our master bath in our home. I have more faith in that money in helping sell/add value to our home than it being there when I retire.

Anonymous said...

"Alright Gary, I'm sick of you, and those loonies at IndyU bitching about how the "Mayor raised taxes for the stadium." It just ain't true. The mayor had a funding source without an additional tax, it was your beloved Governor who decided to tax the Indy Metro Area..."

Are you telling us the Gov raised the hotel, rental car, and food taxes in Marion Co.? If so, that is incorrect. It was the CCC/Mayor who did this, not the state. The state only gave the option. We could have easily told Ir$ay to take a hike. We could have easily told Ir$ay that he could either take a hike _or_ the contract would not have been as nice. There was no reason Ir$ay got the naming rights. No reason that Ir$ay should have been given income for stadium usage outside of the Colts use of the stadium. Bart gave away too much money. It will be interesting to see if Ir$ay ends up in the middle income bracket or ends up in a higher bracket compared to other NFL team owners.

Anonymous said...

How much money has Irsay and all of those developers contributed to his reelection campaign? Check out his campaign account!

Citizen Kane said...

Peterson does not want to solve the pension problem, he just wants to pretend to solve it. Indianapolis's budget problems are related to all of the giveaways (debt service, abatements, tax increment financing, and the like), which have hamstrung this city financially for many years. He has done nothing to make that situation better.

If the city had paid off the the Hoosier Dome and redirected the CIB funds for actual capital improvements, the city would be in good shape by now. The funds from the CIB could have (with proper legislation) been used to fund the criminal justice system, etc. It all about settting priorities. And when the priorities only relate to enriching the already wealthy, this is what we get. But the sycophants will say he had no choice; there is just no other way.