Tuesday, June 30, 2009

A Bailout Is A Bailout

While lawmakers have decided to short Mayor Greg Ballard a few million in his quest to bail out the CIB through a series of tax increases, state tax diversions and loans, the fundamentals of what they are proposing to include in the state budget have not changed. It's still a bail out. It still includes tax increases. It still takes money that could otherwise be spent on education or other more deserving areas of state government and gives it to one of the worst run governmental entities in the state. Instead of making the agency more accountable, the plan further politicizes it with political appointees beholden to the billionaire sports team owners. And at the end of the day, it still positions the CIB to carry out its plan to give an additional $15 million a year subsidy to the billionaire Simons for their Indiana Pacers team. The Star's Jon Murray explains the deal lawmakers intend to include in the state budget it votes on later today:

Under the latest rescue proposal, lawmakers agreed to allow an increase this year in the hotel tax only, boosting it to 10 percent from 9 percent.

The other two proposed tax increases could not be enacted until 2013 under the latest version of the bailout. They would raise the auto rental tax to 6 percent from 4 percent and the admissions tax to 10 percent from 6 percent.

All tax increases would be subject to approval by the City-County Council.
The plan, included in the proposed state budget set for a final vote today, would force the CIB to cut spending by a total of $22 million to cover its projected deficit next year.

That's close to the $23 million in cuts that Gov. Mitch Daniels identified when he unveiled his CIB proposal earlier this month.

Ballard is really getting no less than what he would have gotten under the original bailout plan proposed by Sen. Luke Kenley, which passed the Senate. Instead of getting all three tax increases this year, the state will allow the CIB to borrow $9 million over each of the next three years. When you add the hotel tax and the $8 million a year in state tax diversions, the CIB will have at least $20 million a year more to spend than it currently has. Remember, the CIB hiked its current budget by about $20 million from $100 million to a little more than $120 million. The claims that the agency is being forced to make deep budget cuts are all smoke and mirrors. Lawmakers want you to believe this deal is a real slap in Mayor Ballard's face; it's not. It's a slap in the face of taxpayers. Also, those other two tax increases on admissions and car rentals are still included in the plan. The City-County Council will just have to wait until 2013 to raise them. By that point, Democrats will have completely regained control of Indianapolis as planned by the downtown elites, Mayor Greg Ballard will have a cushy new job lined up for him as his reward, those other two taxes will be raised and the state will forgive the debt owed by the CIB. See how it works.

UPDATE: House Republican Leader Brian Bosma led his Republican caucus over the cliff today. All GOP members voted for the budget bill, while only 14 Democrats voted for it. Several Marion Co. Democrats wisely voted against the bill containing the CIB bailout, which the Democrats bashed in debate on today's budget bill. This begins the process of exterminating the Republican Party in Marion County. The downtown elites have decided there can be only one party rule in Indianapolis because it's too much trouble to control things if you have to deal with competing political parties. House GOP Leader Brian Bosma and Gov. Mitch Daniels signed on to the plan and ordered the Marion County Republican delegation, which is obviously devoid of any ideological conscience, to vote for the tax and spend bailout of the most corrupt and inefficient governmental entity in the State of Indiana. All the talk of government reform by the GOP turns out to have been one big fat lie. I'm ashamed to call myself a Republican today. I hope they enjoy their free tickets to Colts and Pacers games and the campaign contributions, even if they don't care about the harm they are doing to taxpayers. Bosma will continue to rake in legal fees for government contract work. Who cares how much damage he does to his own party. As long as he's making money, that's all that counts.

Here's the LSA synopsis of the CIB provisions contained in the state budget:

Provides that the state treasurer shall invest in obligations of the Marion county capital improvement board (CIB) if certain conditions are met. Provides that the investment may not exceed $9 million per year for 2009 through 2011. Provides terms for the CIB obligations issued to the state treasurer. Permits the Marion County city-county council to increase, before September 1, 2009, the innkeeper's tax by not more than 1% (9% to 10%). Permits during January through March 2013 the supplemental auto rental excise tax to be increased by not more than 2% (4% to 6%) and the admissions tax to be increased by not more than 4% (6% to 10%). Deposits the revenue from the county tax increases in a new sports and convention facilities operating fund for the CIB. Restricts the use of the new operating fund to paying usual and customary operating expenses with respect to capital improvements owned, leased, or operated by the CIB. Allows for an addition to the Marion County professional sports development area to include the hotels in an area bounded by Washington, Illinois, and Maryland streets. Provides for state sales taxes and state and local income taxes from the additional area to be captured for the CIB up to $8,000,000 per year. Allows the captured taxes to be deposited in the new sports and convention facilities operating fund for the CIB if: (1) the budget director determines that the innkeepers' tax is imposed at the maximum rate and in effect on January 1 of a year (September 1 for 2009); or (2) the city-county council raises at least $4 million from the innkeeper's tax and the capital improvement board issues obligations to the state treasurer. Reduces the number of appointments to the CIB by the county commissioners from two members to one members. Provides that one member shall be appointed to the CIB jointly by majority vote of a body consisting of one member of the board of county commissioners of each county (other than Marion County) in which a stadium and convention building food and beverage tax is in effect. Provides that the terms of the members of the CIB expire January 15, 2010, and new members must be appointed to serve terms beginning January 15, 2010. Requires the CIB to submit its operating and capital budget for review, approval, or rejection to the city-county council. Requires the CIB to present a long range financial plan to the city-county council before January 1, 2010. Requires the state board of accounts (SBOA) to do a financial and compliance audit annually of the CIB. Requires the CIB to submit the SBOA reports to the city-county council. Requires the city-county council to review the SBOA reports at a public hearing. Requires the city-county council to approve the issuance of revenue and general obligation bonds by the CIB. Removes the Marion County board of commissioners from the review and approval of general obligation bonds and adds a requirement for the mayor's approval. Makes corresponding changes. Authorizes an admissions tax for paid admissions to certain sports and recreational complexes. Provides that the admissions tax rate is 5% of the price of admission. Exempts certain events.

2 comments:

bing said...

The missing link is the CIB will be borrowing all the money necessary to pay all the Pacers new $150 million (10 years)in operational costs from the state.

The Colts and Pacers will not be contributing anything.

Its clearly a taxpayer bailout.

The irony is that the Colts cry "a deal is a deal", while the Pacers cry "a deal is NOT a deal".

jabberdoodle said...

This is going to take some digesting. Am I correct in that: the $9M loan (surprisingly beginning this year instead of next)for 3 years would put the CIB in a $27M + interest hole due in 2012. That forces the Council to raise the next two taxes in 2013, if only to repay the loan. This gives the Marion County Republicans a platform from which they can try to regain the Council in the 2015 elections. Then comes 2017 when the 'civic minded' folks like the Simons and the Star who have loaned the CIB $33M must be repaid. This gives the Marion County Democrats a platform from which they can try to regain the Council in the 2019 elections.

At which point the maids and busboys will still be making $18,000 a year and the head of the ICVA will be closing in on $1M a year.

Or am I missing something?