Wednesday, June 03, 2009

Is The Airport Authority Indy's Next Problem Child?

Indianapolis' Capital Improvement Board has been running deficits for a decade and is now demanding a $48 million a year bailout from the state legislature. Gov. Daniels and Mayor Ballard plan to announce tomorrow that controversial tax and spend plan they plan to shove down the throats of legislators at next week's special session as part of the state budget. The Indianapolis Water Company is facing rising, uncontrollable debt that may well end in a bankruptcy. And now the Indianapolis Airport Authority is complaining about a $15 million shortfall in this year's budget, raising serious questions about whether it can afford the brand spanking new $1 billion midfield terminal that just opened late last year.

The Star's Brendan O'Shaughnessy reports that the airport authority's new CEO, John Clark, said layoffs and tapping into the authority's $200 million reserves are not off the table. Clark backtracked on an original assertion he made to a Star editorial board that the authority currently was running a deficit:

"If we look back at projections of growth and the number of flights and passengers, clearly we're way off," Clark said in a meeting with The Indianapolis Star editorial board. "The challenge is to look at our business model and see how we can become more efficient."

Clark told the editorial board that the airport faced a deficit of $15 million and provided other budget numbers that an airport spokeswoman later said were errors.

The spokeswoman, Susan Sullivan, said the airport projects revenue to be $15 million less than expected but still expects to have more revenue than expenses.

Instead of ending 2009 with $68 million in operating cash, Sullivan said, the airport now expects to end up with $53 million. She said that would still be $4 million more than at the start of this year.

Clark acknowledged late Tuesday that he miscommunicated the airport's financial situation to the editorial board.

Here's what really troubles me. The airport authority's entire budget is $170 million; however, $100 million of that amount represents its fixed debt service costs. That means the airport authority would have to slash its operating budget by over 20% to make up for the loss of revenues it is currently experiencing. O'Shaughnessy's story indicates air traffic at the airport is down 10% this year. Clark tells O'Shaughnessy that tax increases are not an option, but he had few answers about how to deal with the problem. It is disturbing that none of the board members O'Shaughnessy attempted to reach for comment bothered to return his call. Selling off unused land may be an option in the short-term to shore up the authority's finances. The authority already jacked fees to the airlines to help pay for the new terminal so it might be cutting off its nose to spite its face if it attempts to raise those fees even higher. Parking and concession revenues aren't as high as what had been expected. Maybe the airport authority should stop giving out free parking to all of the politicians to help shore up those numbers.

The bottom line folks is that the City of Indianapolis has been living way beyond its means for too many years. The City's approach has been to build the biggest and greatest stadiums, convention centers and airports whether the money is there to pay for it or not. It keeps plowing tens of millions of dollars into private, downtown development projects, coupled with tax abatements, that force the City to take away from other valuable services simply to look impressive to the outside world. At some point, it has to end. We simply can't afford to continue spending like drunken sailors.

9 comments:

artfuggins said...

Part of the problem is that years ago both Market Square Arena and the Hoosier Dome were built as bare minimal structures that quickly became outdated and not very functional. MSA was so dark that it was difficult to televise games there. The steep steps did not even meet codes .....both facilities were done on the cheap and quickly became obsolete. If they had been constructed and planned with a litle vision, it would nothave been necessary to replace both in such a short period of time. Despite current financial difficulties, Conseco and LOS will last forever.

Indypendent said...

Is it time to be concerned? As long as revenue is still greater than expenses should we really be concerned?

IndypendentReview.com

Advance Indiana said...

It is rather confusing. Clark raised the alarm bells to the Star's editorial staff, only to be contradicted by other numbers furnished by the airport authority's spokesperson.

HOOSIERS FOR FAIR TAX said...

Are peoples' heads spinning yet? First the library debacle, then the CIB, now the Airport Authority!

HELLO? Is there a single competent person who is in a leadership capacity running our city?

Dana said...

"MSA was so dark that it was difficult to televise games there."

Are you saying that we couldn't have added LIGHT FIXTURES!? Great good gods.

"he steep steps did not even meet codes"

Apparently the steps met code well enough to get the place built...

"Despite current financial difficulties, Conseco and LOS will last forever."

Oh please. Can I hear a bid for the Thousand Year Reich? Forever is a gods-dam-med long time. I'll make you a bet that the Lucas Oil Stadium movable roof starts to have alignment problems in just a few years. I would have added more vertical guide rails.

Concerned Taxpayer said...

Wait a minute, there, Melyssa.

You forgot The Simon Palaces (both on Capital Ave and Washington Street); the Large Oil Can; the death of the Indianapolis Police Department; etc. etc. etc.

And I believe the person you should be looking for is the one and only Bart (I Lie) Peterson.

Downtown Indy said...

The day any contemporary, city-owned sports facility lasts more than 30 years will be a rare day indeed.

Funny how these places are great and wonderful when they are soon to be built and get labelled horrible, nasty dungeons a mere 20 years later.

The day will come when Conseco and LOS are both labelled horrible, nasty dungeons that simply cannot support their tenants adequately.

Citizen Kane said...

"The bottom line folks is that the City of Indianapolis has been living way beyond its means for too many years. The City's approach has been to build the biggest and greatest stadiums, convention centers and airports whether the money is there to pay for it or not. It keeps plowing tens of millions of dollars into private, downtown development projects, coupled with tax abatements, that force the City to take away from other valuable services simply to look impressive to the outside world. At some point, it has to end. We simply can't afford to continue spending like drunken sailors."

Exactly right! I've argued privately with others about the airport terminal. They are the ones who believe that we are the 13th largest city in the U.S. and should be developed as such, no matter the cost. But the reality is that we are not the 13th largest (not even close) when it comes to Metropolitan population and that is what really counts, with respect to airports and other large public works. There has never been any reason to believe that the our airport needed any major changes; there was nothing in the airport traffic patterns to indicate that we needed a larger, newer or better facility. Now, they have a bigger facility with more wasted space and more long-term maintenance headaches. We don't generate the air traffic and never will unless there is a fundamental change in the economic development of this city.

Unigov said...

Anyone who's driven around the city lately must notice that the city has stopped mowing much of its right-of-way. Post Road just north of Washington. The south side of Raymond immediately west of Randolph St.

Why ? Cause the city is broke.

John Ketzenberger famously claimed that building the new Colts stadium would not divert funds from other needs...but I've never seen grass 18" high along Raymond in the 30 years I've worked in that area of town.

Agree w/ Citizen Kane about the airport - but with a mayor whose family owns a construciotn business, and a city-county council president who owns a piece of a concrete company, what are you gonna do ? You build an airport, that's what. Heard a couple talking the other day about how "nice" it is. Nice costs money, money we ain't got.