Monday, April 13, 2009

Ballard Chooses To Tax And Spend His Way Out Of CIB Mess

If you were expecting something original or creative from Mayor Greg Ballard as he announced his bailout plan for the CIB, think again. Ballard has chosen a plethora of tax increases and revenue diversions to put more of your hard-earned money into the pockets of the billionaire sports team owners. Ballard's specific plan, sans a downtown casino, calls for the following:

  • an $8 million cut from the operating budget of the Capital Improvement Board (after they started with a $20 million increase)
  • an increase in the ticket tax on all events at facilities the CIB operates from 6 percent to 10 percent (expected yield: $6 million)
  • Contributions from the Indiana Pacers and Indianapolis Colts of $5 million each
  • a one percent increase in the Marion County hotel tax (expected yield: $4 million)
  • a two percent increase in the Marion County car rental tax (expected yield $2 million)
  • the ability to increase the local alcohol tax (expected yield $10-12 million; if county captures 100 percent of local consumption)
  • a requested expansion of the PSDA to include the new JW Marriott and expand the scope of the tax to include sales and income (expected yield $8.8 million)

Ballard's $48 million tax increase plan to bail out the CIB will not actually mean any pain for the Colts or Pacers. The CIB still seems determined to pick up the lion's share of the estimated $20 million needed to operate the state-owned Lucas Oil Stadium. Further, his plan assumes the CIB will be picking up the estimated $15 million in operating expenses the Simons claim they are currently paying to operate Conseco Fieldhouse. This plan entails no sacrifices on the part of the billionaire team owners. Do not believe the spin on this bailout plan.

By raising the City's hotel tax by one percent to 17%, he ensures that city convention planners will be combatting sales pitches from competing cities that Indianapolis is too expensive of a place to host a convention. Indianapolis' bar and restaurant owners are also being clobbered with a tax increase in the form of at least a doubling of the alcohol tax. This will also act as an increase in the food and beverage tax on alcohol consumption. The alcohol tax is paid at the distributor level. When retailers pass the higher prices on to their customers, there will be an accompanying increase in the food and beverage tax. Marion County's food and beverage tax at 9% is already higher than all of the surrounding counties and one of the highest in the nation. I would note that Ballard's plan projects $12 million annually from a doubling of the alcohol tax, while LSA had projected such an increase in the state tax would generate $8 million annually for Indianapolis. Perhaps the additional $4 million is the resulting sales tax increase on alcohol.

Ballard's plan will increase the hit on state taxpayers. By expanding the professional sports development area to include sales and income taxes the J.W. Marriott convention hotel complex generates, the effect is to divert an estimated $8 million in state revenues to the CIB which would otherwise be available to fund such things as education, health services, etc. He is also banking heavily on a very speculative revenue source. The hotel industry is reeling from the current economic downturn, particularly high end hotels like the still-under-construction J.W. Marriott Hotel. See my earlier analysis here and this post on the IBJ's analysis. See also this story in today's New York Times.

In pushing his plan, Ballard continues to use a message that simply won't sell. "The financial problems related to the CIB did not happen overnight,"said Mayor Ballard. "And this is about more than the CIB. It's about Downtown Indianapolis, which serves as the economic engine for the county, the region and the state. It's about 66,000 jobs and $3.5 billion in annual revenue generated by the hospitality industry." Stop lying, Mr. Mayor. This is not about Downtown Indianapolis. It's not even about the City's convention industry. It's about putting tens of millions of additional taxpayer dollars into the pockets of the billionaire sports team owners every year. It is nothing less than that. Stop your scare tactics now, Mr. Mayor. They aren't working. The gig is up. And if you were really concerned about the future of the City's convention business, you wouldn't be proposing tax increases that could effectively break its back. The Mayor offers this additional good laugh according to the IBJ's Scott Olson: "The mayor said some of the taxes, particularly the alcohol and hotel levies, could be rescinded within five to 10 years, if the convention center expansion and Lucas Oil Stadium attract more events and generate more income for the CIB." Yeah, right, as if any tax increase implemented for the benefit of the CIB has ever been rescinded in the past despite promises to the contrary.

If Ballard's plan is adopted, it will ensure his status as a one-term mayor. Further, the Republicans will forfeit control of the Indianapolis City-County Council, which they currently only control by a one seat margin. So much for the accountability in government we were promised by candidate Ballard. Years of deception and deficit spending by the CIB is rewarded with more tax revenue to fuel even more spending. Did you expect any different outcome after the Mayor put the attorney for the billionaire Simons in charge of the CIB?


Indy4U2C said...

I wonder why the thought of managing the Fieldhouse and Stadium by the City and putting events in these venues that draw crowds and the City uses the revenue to pay for the venue? Why isn't the City taking all parking revenue? Why isn't the City taking all concession stand revenue?

It's a lot of money that is helping the Simon's & Irsay (rich people) get richer!

I know said...

What is they say in May, "Ladies and Gentlemen start your engines"? The last one out of Marion County please lock the gate!

Who lines up next for a bailout?

Is there any chance the "Temporary" tax might work like the car company. If you lose your job in Indiana will they give you back your tax?

M Theory said...

Here's the letter I wrote to the mayor's press secretary, good guy Robert Vane:

Hi Robert,

The mayor's plan is to tax and spend his way out of the problem. Did he ever say that he's going to lay down and give the billionaire owner of the Pacers $15 million of our money each year?

I lived downtown for 12 years (1986 to 1998). I used to be proud of it. I can't afford the taxes there anymore. So much for our "liveable" city.

Hope Ballard is happy with his new billionaire campaign contributors because I can already hear the rumblings, people aren't happy with Ballard anymore.


GARY: Thanks again for your analysis, and that overview of the water company "gusher" the other day was a masterpiece. If it wasn't for you, our citizens would surely be in the dark.

artfuggins said...

Which republican councilor is going to sponsor all of these tax increases proposed by Ballard? Then who will vote for them? Any Dem who votes for them will be toast so it will be a GOP tax increase....I wonder if Ballard has his 15 votes lined up yet?

Downtown Indy said...

Same S--t, different politician.

indyernie said...

I'll be very surprised if this proposal passes as written. Changes will have to be made before this proposal passes into law.
I'm also predicting that the Simon's will come through and Irsay won't.

Paul K. Ogden said...

Of, course, Indyernie regarding the Simons, let me just say if you give me $15 million, I will agree to give you $5 problem.

Al Dente said...

What the crap? It's utterly incomprehensible to me why the owners of these sports teams aren't the sole people responsible for these huge stadiums. I can understand a certain yet small amount of tax money going to the construction of these buildings, but these new taxes are ridiculous.

How about this? Why not force Lucas, Conseco, any Simon owned property (ie Circle Center), the convention center, etc, to pay their employees a living wage, thus creating more tax revenue?

Way to think outside of the box Ballard. Tax your way out of the hole.