Tuesday, August 07, 2007

Tax Abatements Take Their Toll On Indianapolis Taxpayers

When Mayor Bart Peterson tries to blame everyone else but himself for the problem with skyrocketing property taxes in Marion County, you need to remind him about all the tax abatements he's handed out over the last several years. Since 2003, the total assessed value of business property that went untaxed has grown from $364,234,250 to $798,835,860 in 2007, or an increase of 120%. A proposal by Councilor Lincoln Plowman (R) to freeze the granting of any new tax abatements until the reassessment ordered by Gov. Daniels is completed is drawing fire from business groups according to a story today by the Star's Brendan O'Shaughnessy. Recall that one of the main reasons Gov. Daniels ordered the reassessment was because about 75% of the business property in Marion County was not reassessed by assessors.

Think about it. Mayor Peterson removed close to $800 million in assessed value from the property tax roles, or 1.5% of the total tax base, in his game of picking winners and losers for this year alone. Taxing units have no other choice than to look to other taxpayers to shoulder the tax burden. In the case of schools, which consume 50% of your property tax dollars, the property tax is the only tax they have at their option to fund public education.

The actual decision to award property tax abatement is made by the Metropolitan Development Commission, who are appointed by the Mayor, CCC and county officials. The Democrats currently control all those appointees. And unless you are a political insider, you don't have a snowball's chance in hell of ever being appointed to the MDC. Several of the members have blatant conflicts of interest. In short, the folks on the MDC are simply rubber stamp for the Peterson administration.

As O'Shaughnessy's article notes, tax rates in the counties surrounding Marion County are lower. Some argue you have to give away the tax abatements to get businesses to locate in Marion County. On the other hand, you drive up taxes for everyone else each time you hand out abatements to another business owner. It's a vicious cycle. The Star article doesn't include figures for it, but Marion Co. also has substantial amounts of property in TIF districts, particularly in the downtown area. The TIF district captures all the growth in property tax revenue to pay for improvements the taxpayers funded with borrowed money. Take that new Marriott Hotel being funded with $65 million in public funds. When it is completed, the increased property taxes it will pay on the new hotel will be used to pay off the bonds which funded the public investment in this private endeavor. Again, taxing districts must look to other taxpayers to pick up the revenues lost to the TIF district.

19 comments:

Wilson46201 said...

According to the same Star article, tax abatements are 1.9% all over Indiana while in Indianapolis it's only 1.5%. In comparison to our fellow Hoosiers, Marion County is being fairly stingy on abatements...

Anonymous said...

This post has a great deal of fact in it.

For the other side, you should've listened to Abdul's show this morning. The guest host was Jackie Cissell. Her 7 AM guest was Commissioner Musgrave of the DLGF.

Everyone knows Jackie is a Mitch cheerleader. Her 8 AM guest was the lite guv. If you can get lighter-weight than Jackie interviewing Becky, please advise.

Musgrave and Cissell had a verbal lovefest for Mitch, and the new commissioner, for whom I had a great deal of hope, spewed forth 35 minutes of partisan assessment nonsense riddled with inaccuracies.

Whether we like it or not, these are the culprits of this property tax nonsense:

1. Overspending by all governmental units
2. Too many govt. units
3. The legislature.
4. See No. 3
5. The system of twp. assessing
6. See No. 3 again
7. The DLGF itself--they approved the taxing matrix, or template if you will, that local assessors used. They approved it last year.

We will solve this mess when the legislature acts based on sound, nonpartisan information. There's a small window of opportuntiy here for meaningful generational reform. Our track record isn't good (see Bowen's 1973 "reforms").

A suggestion: appoint some super-commission, somewhat immune from the ebb and flow of seasonal politics, similar to the Base Realignment and Closure Commission. They'd have a lot more freedom to do what's right, and it would take, ideally, a 2/3 legislative vote to overturn their recommendations, or they'd become law.

In the absence of some "cover" for our worthless legislature, nothing will get fixed.

And I'll not trust anything from Musgrave's mouth now, although I was prepared to do so, because of her miserably partisan hack performance this morning. A real shame. She showed promise.

Anonymous said...

The follow-up question is how many of those jobs originally promised to be created actually now exist?

Historian said...

I remember when Bart Peterson was running against Steve Goldsmith.

Bart had a problem with Goldsmith giving abatement's to buildings around the new Circle Center mall. He suggested that the huge investment in Circle Center should be enough incentive for follow on investments.

Fast forward to today. Bart heavily subsidized the Conrad Hotel (next to the mall) and continues to hand out large incentives to more hotels after a $1 Billion investment in Lucas Oil Stadium and a expanded convention center.

Anonymous said...

Are kickbacks part and parcel with abatements? Urban planning experts seem to think so. In fact, abatements account for a tremendous amount of corruption because they are truly not subjected to real oversight.

If I'm Mayor, and I get a tax abatement worth millions for you then what are you going to give me in return? Hell, I'm only making $93,000 as Mayor and you make millions off my abatement gift so why wouldn't I EXPECT a little $$ for my time and trouble?

I'm not saying this is happening here in an honest city like ours but IT HAS happened in many others.
I'm sure if I asked my dad to loan me $1 million dollars to run for a job that will only pay me $93,000 he's going to want to know what the angle is.
Is there an angle? You decide.

Advance Indiana said...

Check out the list of the Mayor's campaign contributors. You'll find more than a few who benefitted from tax abatements.

Anonymous said...

How many of these properties that you claim are "taken off the tax roles" would remin abandoned or underutilized if not for abatements? And what about the ripple effect of suppliers and vendors who locate near a company that recieves abatements? The fact is, the State will not grant incentives to any company that does not have local support/incentives. Abatements are one of the few tools we have in this fight.

Anonymous said...

I've looked at the list Gary. I saw an awful lot of former GOP $$ in there along with the usual Dems.
Demographics change and the power base still remains the same for a select few.
This same game worked for a while in Camden, Cleveland, Newark, Detroit, Buffalo, St.Louis, Cincy and others. When they had extracted nearly every last dime they left town and went to the burbs and exurbs.

Anonymous said...

Plowman did not do his homework. There are at least 4 projects in Franklin Twp (Plowman's district) with pending abatements that would greatly benefit this township. Plowman is "shooting himself in the foot" on this one.

Russ said...

You know, taxation without representation is illegal, but what about the negative: untaxation without representation? Either way, the net effect is the same--you have to pay more out of your own pocket.

I applaud Lincoln Plowman's efforts, and like a commenter on your previous thread noted, is one of the few sharp tacks in a drawer full of political sycophant idiots on the CCC.

Anonymous said...

There's a first. Lincoln Plowman described as smart. Mark the date and time. You won't likely see it again.

The genius didn't realize that: he has little credibility as a city employee on the council; and that there have been approx. 12-15 projects in HIS district over the last few years, all of them passed by him by the Bond Bank, for his perusal.

And, uh, Mr. Historian,, remind me not to let you teach my kids history. Bart never ran against Goldy.

Someone smart should've because Goldy was a disaster as mayor.

But Bart never ran against him.

There are plenty of good arguments for and against abatements. I enjoy and learn form reading those.
Can we stick to, oh, the facts, for a change?

Intellegent discourse is one thing. Random rants are quite another.

Anonymous said...

Wilson/aka Mike O'Connor, When you spread something out over a large area such as Indiana it is fertilizer and stimulates growth.When you have a big pile of it in an area the size of Indy it is just a big pile of crap.

Anonymous said...

With all of these high taxes, and abatements being given to business to locate in Indy, it is putting quite a strain on citizens' basics.

So, if it is ok for the city to have a surplus, then why is not seemingly ok for the rest of us to have our savings for our futures?

Congress, State legislatures and city governments are spending our money and most of what they spend is no longer our discretionary money but is beginning to cut into our food, medicine, housing and retirement funds.

Why is an empty pocket always the same? Because it has no change in it!

Empty Pocket Blues song(3:33):
http://www.youtube.com/watch?v=uZK2fPhhJG8

Jason said...

Geez, I'm still reeling from the the fact that certain city employees were ordered to go to the CCC meeting (on the clock, no less), and they were let in and yet the general public was excluded. Nevermind the fact that it was a meeting that was supposed to be open to the public.

Tax abatements are definitely a part of the problem, IMHO, but it's a flat out fact that the shenanigans pulled in regard to the gallery last night were downright despicable.

Wilson46201 said...

Only 1.5% abated property in Indpls as opposed to 1.9% abated property statewide shows that tax abatement issuances are actually LESS in Marion County than statewide.

So what's all the hullabaloo about? It's election time -- must be desperate Republicans trying to gin up a fake issue...

Ed Godard said...

Wilson, I have to believe that if a Republican were mayor and giving out tax abatements like this, you would be calling it "corporate welfare". I would expect you to be joining in the calls to rein in abatements to business on the basis that it is unfair to the little guy property owner who gets no such abatement and has to suck it up.

I guess partisanship trumps ideology, eh?

Anonymous said...

Wilson/aka Mike O'Connor,
Thanks for proving my point if Indiana has 1.9% abatements and the city of Indy has 1.5% Indy has MORE not LESS in abatements. The population of Indy is not equal to or more than the state of Indiana. Therefore the burden of making up the loss of taxes given in abatements is transferred to a smaller number of citizens in Marion County as opposed to a larger number in the state. To make this simple so that even Bart could understand, He is not the Gov of Indiana, he is only a mayor of Indy and he is taxing its citizens out of their homes.

Historian said...

10:08

Be honest.

Fact:

Democrat Peterson did run against Republican Goldsmith's record in 1999 after Goldsmith decided he wanted to run for Governor. Dont


http://www2.indystar.com/library/factfiles/history/indianapolis/mayors.html

Anonymous said...

1.5% of total property? 1.9% of what?

Any way you slice it, except the fuzzy math 12:03 uses, the statewide total seems to be more abated proeprty parcels than the city.

And Historian, just for the record:

YOU'RE the one who said Peterson ran against Goldsmith in 1999. He did not. Period.

He DID run against 30-plus years of Republican executive office neglect of expensive and real problems: jail overcrowding (so bad it was cited by a conservative Republican US judge over a decade ago), infrastructure, CSO, underfunded pensions...

But hey, they sure held taxes down for all those years, huh?

Tell that to the little old lady on North Penn, just north of Williams Creek, who can't flush her toilet when it rains.

Problems delayed are problems amplified. Big time.

And history ignored, especially for a historian, means we're doomed to repeat it.

Keep your day job. Blogging with facts isn't your cup of tea.