Tuesday, April 10, 2007

When Winning Is Losing

Mayor Bart Peterson (D) is telling the Indiana General Assembly if it doesn't give the city of Indianapolis new taxing authority this year, the city's credit rating will be lowered, resulting in millions more being paid out for interest on the city's debt. To pay for the higher interest on that debt the city will be forced to raise your property taxes. The Star's Brendan O'Shaughnessy writes:

Mayor Bart Peterson took his campaign for new taxing powers to the Statehouse on Monday, warning lawmakers that without their help Indianapolis could end up shelling out millions of dollars more to pay off pensions and fix the city's sewers.

One of the nation's biggest credit-rating agencies, Standard & Poor's, is threatening to downgrade the city's rating if Indianapolis does not find a way to address its deficit, pension liabilities and growing public safety needs.

The city's AAA bond rating, maintained by a handful of cities nationwide, has let it borrow money for significantly lower interest rates than municipalities with lower ratings.

Looking for help, Peterson made a last-ditch effort Monday to turn up the heat on lawmakers as deadlines loom this week to pass bills that would help Indianapolis.

The city is seeking legislative authority to raise new taxes in order to spend $85 million a year to plug a pension-related budget deficit and pay for new crime-fighting initiatives.

"If we don't see success here in the legislature, it's clear the credit agencies will downgrade the city," said Peterson, a Democrat. "Lawmakers can't keep cutting back on the ability to raise funds and expect cities to keep running."

Barbara Lawrence, who heads the Indianapolis Bond Bank, said a AA credit rating would cost the city about $3 million more in interest costs during the next 30 years on its proposed pension fix.

The Peterson administration hopes to sell $450 million in bonds to permanently address its underfunded police and firefighter pension funds.

The bottom line is your taxes are going to go up whether Mayor Peterson gets more taxing authority or not. The only question is which taxes are going up. It would have been nice if the Mayor had thought about these issues when he handed out hundreds of millions of dollars in public subsidies to some of Indiana's wealthiest citizens over the past 8 years.

19 comments:

Anonymous said...

AI - AMEN BROTHER!

Wilson46201 said...

When I worked in the Township Assessors Office years ago during the Republican domination of county politics, I observed most new downtown buildings were covered by tax abatements - Circle Centre was created with TIF abatements. It's not Peterson who suddenly and corruptly used tax abatements as an inducement for investment in Indianapolis. It's a standard economic device used everywhere in America.

By the way, the large unfunded pension deficits were built up under the previous Republican city administrations ... to keep taxes low, the costs were shuffled off to the future. That future is here now - pensions must be paid - those deferred costs are due now. And you blame Peterson? Pshaw!

erik said...

Bottom line....Peterson is a real-estate developer turned mayor. He could care JACK SQUAT about the average homeowner in Marion county. High taxes, decreasing property values, poor public schools, and misplaced priorities from a CORRUPT administration. Want to know where all the money is? Follow it from the pea-shakes to the banks where it is laundered, then into the pockets of Gray et al....... No wonder people are moving from Indy like the plague is here.
Tax and spend, the Democratic way of life.

Anonymous said...

Can we please refrain from broad-brush accusations? AI attempted to start an honest and open dialogue about tax subsidies. And now I've learned Wilson also worked in an assessor's office. Scary.

Tax abatements were the uber-God of Mayors Hudnut and Goldsmith. They work well, most of the time.

The real budgetary stumbling blocks in this city, are the long-ignored big-ticket items: combined sewer overflow, the jail and under-funded pension liabilities.

It's a puzzle of tax revenues used to support all those, and all were mandated by one federal agency or another. The Justice Dept. has a standing (15-years I think) order regarding jail overcrowding, from a conservative Republican federal judge.

CSO had to be fixed or the EPA, rightfully, was going to slap huge fines on the city.

Each of those problems, fixed over time, would've cost us less than half today's total.

Problems ignored are problems amplified.

Add to that, the ridiculous layering of administrative overhead, by multiple fire departments, and you've got a prescription for budgetary train wrecks. Peterson's first campaign detailed how he'd like to combine those services, consolidate, and save money. As well as deal with the jail and CSO and pension problems.

Republicans in power at the council level for his first term, and at the legislature throughout his terms, have been hellbent on disallowing anything that makes Peterosn look good.

So now, it comes to a bond rating.

Which was as predictable as rain.

He's made some mistakes, but this is all about raw political power flexing its muscles so that Peterson wouldn't get a victory. How else do you explain the stupid hanging on to township power?

Anonymous said...

Wilson is living in the past. That is what happens when your mind grows old and feeble and why Julia has time to talk to him five times a day and not show up for votes.

Anonymous said...

1014 - very nice! I enjoyed reading your take as well as AI's. Thank you.

Anonymous said...

Wow! 1014 seems to actually know what's up. Preach on Brother!

And not a single personal comment about anyone.

Wilson46201 said...

AI, why do you allow your discussion threads to be hijacked by anonymous nobodies with the obvious agenda of personal animus?

For that hateful anonymous nobody: "Those who cannot remember the past are condemned to relive it." I have some professional experience in the field of local taxes - your only expertise seems to be constant personal vilification!

Anonymous said...

Hey Bart.
how about you quit giving jim ursay every thing he wants and pay more attention to the tax payers who elected your sorry ass.........

Anonymous said...

sorry if you took the Assessor comment badly Wilson

Tax abatements are a risky business, but rarely does a large commercial real estate project go forward these days, without some kind of incentive to the developer. It's the world in which we live.

By definition, if a square block in Center Township is abated for ten years, the tax burden is proportionately shifted to all the remaining Center Township (non-abated) landowners.

There was a time Center had more commerical property abated than on the tax roles.

It became a cess pool, and some people were indicted and served time for the Merchants Plaza "abatement" and "reassessment." I believe your former boss, Wilson, narrowly escaped that fate by cooperating fully with the authorities.

It's messy.

Wilson46201 said...

No offense taken, 2:43pm. The Merchants Plaza/F.C.Tucker assessment scandal as I understood it was a shakedown involving 'subjective' assessed valuation and payoffs 25 years ago. That office was scarred bigtime for years!

Anonymous said...

"How else do you explain the stupid hanging on to township power?"

Sorry, but even the Democrat township office holders don't want their jobs taken away. I can assure you Constables don't want the power taken away. The reason the townships exist is politics. It was the reason why when the constables were done away with in all but one county in Indiana, Marion County. It is one thing to turn your fire department over to the city, it is another thing totally to say "You know, I agree with the mayor and think my job needs to go. As such, as of this date, all township offices will be under the control of the city/county." There are democrat trustees, so why hasn't the power been given up since the Dems now control the city/county?

Anonymous said...

"How else do you explain the stupid hanging on to township power?"

One other thing I forgot to add:

Something tells me that even if township duties were given to county boards, we still would be no better. Politics is politics. Different folks would be hired, likely at similar pay, to do the same jobs as before. So instead of your family member getting a nice township job, friends/family of the mayor/CCB get the jobs. Also, watch for a call from all these elected county hacks (not just Marion) to claim "Now that we are doing more work, we should get paid more money!" In the end, I wonder if the taxpayers would see _any_ savings at all.

Anonymous said...

Good points 2:43. Those involved the Merchants Plaza scheme were Hank Bayt who was Center Township Assesor or Trustee, Freddie Garver (a Democrat lobbyist), Larry Moore (a lobbyist) and Claude Magnuson (Treasurer of the Democratic State Committee at the time). Hank turned State's witness and both Garver and Moore got off on technicalities. Otto Frenzal should have gone to prison but didn't. Only Claude did prison time. Claude was a good friend of mine and he passed away a couple of years ago. Moore is still a lobbyist and I have no idea what became of Bayt or Garver.
The thing is, Hudnut was Mayor when all this came down.
Nationally, it's a proven fact that abatements offered by cities are a prime source of corruption regardless of the politics.
The last estimate I came by was that more than 1/3 of all the most valuable real estate in Indianapolis was not producing tax income for the city due to abatements. That figure was from 2003 so I'd say it's higher than 1/3 now, much higher.
Studies have also shown (see Mickey Maurer) that abatements generally are never needed anyway. They are just a huge trough that the well to do and the well connected feed from.
I would wager to say that Mayor Peterson could not provide a complete list of ALL the real estate in this town that's on abatements. That's not unusual as they are seldon tracked. That's why the CIB can operate under the radar until the time comes for the money to be doled out. BTW, where is the oversight for awarding cash and abatements? There really isn't any oversight and that's an open invitation for corruption.
Now the city is in dire straights and they want you and me to pay for it. Time to stop this runaway train!

Wilson46201 said...

It's a trivial exercise to find all the tax abatements -- the property record system is completely computerized -- all abatements are "in the system" -- a simple query can pull up whatever abatement info is desired -- of course, knowing the structure of the data is needed to construct a useful query!

Anonymous said...

3:16, you are partially correct, but here's the full story, or at least more of the story re: Merchants Plaza.

Bayt turned state's evidence, it is alleged. He was part of the scheme, got paid off a measily 10 grand or so, and the others made hundreds of thousands or more. Which, in most books, makes Hank their beeyatch, ya know? Nonetheless, Mr. Bayt, I believe, stayed on as assessor from that incident, in (roughly) 1982, until this January. Shameful.

Larry Mohr, then president of the Indiana Electric Association, was convicted of fraud, and spent some time in minimimum security prison. He did not return to active lobbying. He was even involved in the establishment of some phony banks, which loaned to friends, who used the same damned racehorse as loan collateral at two or more banks. Seriously.

Fred Garver somehow dodged the situation, too...I think he got convicted on a small technicality. He was a utility lobbyist at the time, too.

Ditto Thomas Fruetenicht, a former Speaker, who did utility lobbying, too. I beleive he did return to lobbying.

Claude was not an officer of the state committee at the time of his conviction in this little reassessment kerfuffle. I believe he did serve minor time. He died not long ago, and, to my knowledge did not return to active lobbying. Except for his swerve into this situation, he was a kind and good soul to his grave.

And Wilson, the Center Township Assessor's office was and is mired in political shenanigans. The current occupant, placed there with the strongarm assistance of the incumbent Congresswoman and others, had zero--yes--ZERO--experience in the real estate field. He was going to keep his fulltime IPS maintenance supervisor's job when he got elected, er, coronated. Someone with common sense stepped in, I believe the IPS Superintendent, and disehfranchised him of that little scheme.

And the Center Township assessor's office was, and still is, the most screwed up in the county. Which is saying a lot, cause fat ole Carl Ricketts left his Lawrence assessor's office a complete mess, relatives on the payroll so long they forgot how to do the real work of the citizenry.

Off with their heads--all township government! It is by definition inefficient and duplicitous, and full of cronies, relatives and n'er-do-wells. Evidence the previous posts.

Sorry to hijack the thread, Gary...but this little forray into history was fun. And instructive.

Wilson46201 said...

"Nonetheless, Mr. Bayt, I believe, stayed on as assessor from that incident, in (roughly) 1982, until this January. Shameful."

You reveal your total ignorance of contemporary Marion County history. Hank Bayt was forced to resign and had to do some fast work with medical excuses to prevent doing his jail time. James Maley was elected to succeed Hank -- he retired last year.

The Center Township Assessor is an administrator of about 50 employees -- I used to joke with Maley that he was like the Queen of England : his deputies did all the work, he was the clever & smiling figurehead. Akers is an experienced administrator - he'll have no problems running that office which has well-defined tasks.

Anonymous said...

My apologies, Wilson...Maley was merely a deputy under Bayt.

And the current occupant, by any measure, is not qualified.

The County Assessor can aptly handle these township duties. I use the township office frequently whilst researching foreclosed properties. Trust me...the folks there are easily confused. Same story for many years.

Anonymous said...

Bottom line here is that all local governments are created by and derive their authority from the State of Indiana. Economic strength of Indianapolis is being drained away by movement of people with money outside of Marion County. What is needed is for the State Government to dissolve Carmel and Noblesville and Brownsburg and Greenwood and fold the local government jurisdiction for those areas into an expanded City of Indianapolis.