A vote in favor of the tax increase -- a move supported by the local hotel association -- would raise about $4 million.
Although this is a fraction of the estimated $45 million deficit the CIB faces next year, the higher hotel tax would leverage another $17 million a year. The General Assembly tied $9 million in loans for the next three years to the council's decision on the hotel tax. An expanded Sports Development Taxing District, the source of another $8 million a year, also is linked to the hotel tax.
What would be the fallout if the council rejects the proposal? The city might well suffer from a reduction in the number of events staged at the convention center and the stadiums. The budget for marketing and promotion, important in competing with other cities for events, likely would be slashed. As a result, the infrastructure this community has spent decades building, from a first-class airport and convention center to world-class sports arenas, could end up dramatically underused.
Once again, we see someone using the convention business as cover for the real culprit behind the need for the CIB bailout: the billionaire sports team owners. The CIB has been running deficits for a decade. That deficit ballooned after the CIB agreed it would bear all of the operating and maintenance expenses on the new Lucas Oil Stadium built and owned by the State of Indiana, even though it had no additional funds to operate it because its lease agreement with Colts' owner Jim Irsay gives him all of the revenues generated by the new stadium. Further, the CIB has decided it wants to spend $15 million a year on operating costs for Conseco Fieldhouse, even though it is not legally obligated to pay those expenses, because the billionaire Simons complain that they are losing money on their Pacers franchise.
I've got news for you folks. The convention business for this city won't suffer one bit if this proposal is voted down. If it is voted down, perhaps the City will come to its senses and figure out it should simply give control of Lucas Oil Stadium back to the state and eliminate the need to find a funding source for all of those extra costs for the new stadium and tell the Simons we don't have $15 million a year to spare for their NBA team. Wouldn't it be ironic if the City-County Council voted to boost spending on the CIB, whose budget is already about a tenth of the size of the entire City-County budget, at a time that Mayor Greg Ballard is presenting a new budget that makes cuts in almost every department, save the public safety agencies?
The Star editorial adds this lie to the mix:
It's important to remember that visitors to the city, rather than residents, pay the hotel tax. That fact should temper any fears council members harbor over a political backlash. In fact, if the hotel tax increase is denied, city leaders may have no choice but to turn to other broader taxes to make up the CIB deficit. The political repercussions of that scenario likely would be disastrous, and rightly so.What you also need to understand is that this vote to increase hotel taxes in the City could well have the exact opposite impact on convention business in this City. Indianapolis already has one of the highest tax rates in the country, and this increase will push us to the top at 17%. The ICVA already has to subsidize some conventions that come to Indianapolis to make their decision to come here affordable because hotel rates are so high. Further, hotel rates in the neighboring counties are much lower because of the tax differential created by Marion County's high hotel tax. Indianapolis hotels have suffered greatly at events like the Indianapolis 500 and the Brickyard 400 because more and more people are choosing to stay at hotels outside of Marion County, choosing to stay as far away as 90 miles to get the best hotel rates. Finally, it is simply untrue to claim this tax is only paid by visitors. Many businesses in Indianapolis, such as Eli Lilly and Wellpoint to name a couple, bring employees and consultants to this city weekly who are put up in Indianapolis hotels. Also, family members of our residents often stay in hotels during visits for family gatherings, weddings, funerals, etc.
It is also important to remember that this tax increase will beget more tax increases in three years. This plan relies on $27 million in borrowing from the State of Indiana, which will have to be paid back at some point. The politicians think they can fool you with this tax increase by claiming it will be borne by out-of-town visitors, knowing that in three years there will have to be more tax increases to pay back the borrowed money. This is the same deception we've been told on all matters concerning the CIB for years. It's time to bring it to an end.
The most important point to remember in this debate is that we were promised a new style of leadership by the Republicans when they were swept into office during the 2007 tax revolt. We were promised greater transparency in government and no more higher taxes. The Republican-led Council and administration have failed miserably on those promises. Not a single head has rolled despite damning disclosure after another about the poor management and inefficiencies by the CIB's management. There hasn't been a single call to investigate how the CIB managed to incur deficits for a decade without anyone hardly noticing it. What we've gotten instead from the Republicans are more cover ups, misleading budget numbers and false representations about the need for this bailout. If that's what I wanted in 2007, I would have simply re-elected Mayor Bart Peterson and left the Democrats in charge of the council. Despite the false assurances by today's editorial, the Republicans should understand that there will be fallout from tonight's vote and it's going to be ugly for them. Becoming an echo to the Democratic Party and not a choice ensures the death of the Republican Party in Marion County.
Today's editorial is just another example of why the newspapers' readers are terminating their subscriptions in droves. The depth of the news coverage is fading rapidly, and the content of what is delivered is becoming unreliable and further biased. And one more thing for those Star editorial writers to ponder. Where's the outrage you expressed over and over again about former CCC President Monroe Gray's conflicts of interest when it comes to Bob Cockrum's big conflict of interest. Cockrum is not only supporting but also sponsoring the CIB bailout proposal that will directly benefit the new J.W. Marriott Hotel under construction, which is already receiving tens of millions in taxpayer subsidies. Cockrum's son is an executive with White Lodging, the company building the new hotel. I guess these editors won't let a conflict get in their way when the politician is pushing something they personally favor.