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?