Further straining the CIB budget are two one-time payments on bond debt in the wake of the global financial crisis. Treasurer Ann Lathrop said the CIB will likely have to use cash for a $17 million payment due in June because short-term borrowing is very difficult to get.
Lathrop reported some good news on another $26 million payment due in September. A new insurance company may get a high enough credit rating to make the payment unnecessary.
Blame the global financial crisis, right? Who made the decision to abandon traditional debt instruments and why? The use of these "weapons of financial mass destruction", as Warren Buffett describes them, didn't come about until more recent years as governmental entities piled up more debt upon already huge debts to undertake capital improvement projects they could not afford. The way the CIB's debt is structured is just one big Ponzi scheme. The easy way out is just to blame the global financial crisis so nobody bears responsibility for the decisions that got us into this mess.
The media is also continuing to perpetuate the urban myth that the CIB is undertaking massive budget cuts. The Star's Brendan O'Shaughnessy writes:
The committee suggested that the full board save $442,000 by cutting 13 percent from grants to the arts, cultural tourism, Indiana Black Expo and the Central Indiana Corporate Partnership. Another $960,000 cut was recommended in a maintenance fund used to make unexpected repairs.
The extra cuts of $1.5 million combined would come on top of $6.2 million the CIB has already trimmed this year. The CIB began downsizing after releasing a report in January showing a current operating deficit of about $25 million that could grow to more than $43 million in 2010.
Again, because it bears repeating, the CIB hiked its budget this year $20 million from where it stood at the end of 2007. Don't insult our intelligence by suggesting you're making budget cuts when all you're really doing is reducing the level of spending increases. And you could have predicted they would begin a round of cuts to the local arts to ramp up the pressure from various players to support more tax increases to bail out the CIB. "The committee also discussed other options for closing the CIB's operating deficit, including a 1 percent increase in the food and beverage tax, which would bring in $19 million per year," O'Shaughnessy writes. "Raising the tax, however, would also make the city's food and beverage tax the second-highest in the nation." "Raising the hotel tax would make the city first in the nation on that front."