Thursday, August 20, 2009

Ballard Wants To Tap Rainy Day Fund To Aid Billionaire Simons

Would someone tell me when Mayor Greg Ballard reaches the bottom? Another day brings new outrage at his blatant hypocrisy. The man who ran against higher taxes and in favor of transparency in government is suggesting that the City consider tapping $16 million in rainy day funds to help provide an additional $15 million a year subsidy to the billionaire owners of the Indiana Pacers. [See below--the original blog poster IBJ's Anthony Schoettle is now contradicting his earlier blog post] The IBJ's Anthony Schoettle blogs today about the mayor's idea amidst skepticism from council members:

City-County Council President Bob Cockrum said it’s not an ideal time for the Pacers to come looking for help, but added that he is open to listening to the concerns of team officials and the city’s Capital Improvement Board, which is charged with overseeing Conseco Fieldhouse.

“The problem is, where does the money come from?” Cockrum said. “There’s certainly nothing in the Municipal Corporations Committee [budget]. I’m sure it will be discussed in September.”

One source of the funding could be the city’s rainy day fund, an idea floated by Mayor Greg Ballard. The mayor’s proposal, sources said, is to squirrel away as much as $16 million in that fund in 2010.

The only reason the City will have any extra funds in next year's budget is because Ballard decided to make permanent Bart Peterson's 65% income tax increase, a tax increase opposed by candidate Ballard. As I've previously discussed, the so-called surplus quickly disappears when you factor out the infusion of federal dollars rolling into the City's budget, funds that are not likely to be there in the future. The 2010 budget also relies on a rosier picture for tax collections than may actually materialize.

UPDATE: Well, now Schoettle is contradicting his own words on his blog. "Mayor Ballard has not publicly suggested the rainy day fund money should be directed to the Pacers," he now writes. "In fact, he has resisted the idea of spending that money at all." "Certain member os (sic) the council, however, appear more willing to delve into that fund." Who are you to believe? At first we're told the CIB bailout includes money for the Pacers. Then we're told it's off the table. Three days after the bailout is approved by the council, we learn the subsidy to the Pacers is back on the table. I'm beginning to believe you cannot believe anyone on what their intentions are. Schoettle suggests now the mayor "has not publicly suggested" the idea. What this suggests to me is that a source from the mayor's office mentioned it to him but now doesn't want it attributed to the mayor. Just blame it on those bad councilors.


Paul K. Ogden said...

Anthony Schoettle offers a comment on the article saying Ballard did not raise the idea of giving $15 million in the rainy day fund to the Pacers. But what he says in the post seems in direct contradiction. If someone is "floating" an idea, they are "raising" it. I'm not sure what the explanation is for the supposed distinction. If he "floated" the idea, that's bad enough.

Gary R. Welsh said...

I saw that. It completely contradicts what he wrote earlier on his blog.

Paul K. Ogden said...

I don't know why this continues to be an issue (okay, I guess I know why.) If you read the contract closely, the Pacers have no leverage to make any demand on the City for years to come. It's disturbing how these public officials insist on giving the billionaire Simons $15 million more of taxpayer money.

Gary R. Welsh said...

You know why, Paul. There's a big kickback in it for some folks if they hand over the money the Simons are demanding. That's how it works in this town.

Jon said...

Just found this in the CIB audit;

"Under its agreements with the Pacers Basketball, LLC, the CIB anticipates the need for
renewed negotiations surrounding the funding of the operating expenses for Conseco
Fieldhouse. Pacers Basketball, LLC is generally required to pay the operating and
maintenance costs for this facility. While not certain, it is believed that it will be necessary
for the CIB to accept greater financial responsibility for such costs in the future and that such
costs may amount to approximately $15,000,000 annually. See Note 11 for a discussion of
the termination rights of Pacers Basketball, LLC relating to the use of Conseco Fieldhouse.
A termination of the CIB’s agreements with the Pacers Basketball, LLC would be expected to
decrease Professional Sports Development Area Revenue, (particularly the 2005 PSDA
Revenue) as well as the Original Marion County Admission Tax and the 2005 Marion County
Admissions (see Note 10), and result in the CIB’s assumption of control of Conseco
Fieldhouse and related material operating cost burdens" (page 73 of CIB audit)

Although no one bothered to research note 11 (note 11 deals with the Colts, note 10 deals with the Pacers, there clearly was an intent to fork over the 15 million dollars long before now.

Gary R. Welsh said...

Jon, That audit statement is dated May, 2009. It was never released to the public during this year's debate over at the legislature. The auditors had no choice but to mention the $15 million since it had already been raised publicly by Pat Early months earlier.

Paul K. Ogden said...


I just read Note 11. It is flat out wrong. There is no language about a mutually agreed termination fee in that contract. Instead there are two formulas provided, which I have discussed in my blog. You use the formula that provides for the smallest penalty. But even if you do the penalty can be substantial. In 2009, for example, the penalty would be about $145 million dollars.

Plus the issue of whether the Pacers are losing money is only one of the conditions that must be met for the termination fee to apply. The other two are that the Pacers are selling the team (at least the controlling interest) and relocating.

I don't recally any provision in the contract that requires the CIB to pick up operating costs if the Pacers are losing money. That is a completely new claim that first appears in Note 11. Rather the notion that we should pick up operating costs was always based on the concern the Pacers would terminate the contract if we didn't.