Thursday, September 10, 2009

What The CIB Calls Belt-Tightening

I've gotten quite a chuckle reviewing the CIB's proposed 2010 budget before our City-County Council. As I started to blog about it, WTHR's Mary Milz led off this evening's news broadcast with a report about a possible plan by the City to privatize the convention center and stadium management to make further savings. Thanks to Pat Andrews for sharing the information with me that neither the CIB nor the City-County Council made available to the public prior to the CIB's budget hearing last week before the rubber-stamp Municipal Corporations Committee chaired by professional campaign button collector Mike McQuillen. The CIB would like you to believe that it has cut to the bone and turned in a budget nearly $15 million below its 2009 budget. The CIB padded that budget during last year's budget process so it could pretend to make budget cuts this past year. For the sake of comparison, I'm comparing the 2010 budget to the CIB's actual 2008 expenses.

The 2010 operating budget is 12% higher than its 2008 numbers. That compares to its adopted 2009 budget, which the City-County Council approved at a 38% higher level than the 2008 numbers. The CIB proposes to spend $63 million in 2010 compared to $56 million in 2008. The overall budget for the CIB is down considerably not because of operating cost reductions but because of more than a $20 million reduction in bond fund expenditures. Remarkably, the 2010 budget counts $9 million in borrowing from the State Treasurer as operating revenues, which represents 11% of its projected 2010 revenues. The recently-enacted tax, spend and borrow bailout plan approved by our City-County Council accounts for more than $20 million of the CIB's 2010 projected revenues, or 22%.

This "lean budget" the CIB touts includes $3.5 million in more spending on salaries and wages, a 21% increase over the 2008 spending level. It adds another $1 million to cover employee benefits, a 30% increase over the 2008 spending level. Spending on supplies is up 75%, or $1 million. There's a 24% increase in spending on consulting services. Utility expenses are up 42%. And there's a 26% increase in spending on communications and travel. The CIB is cutting its legal fees 25% from a $1 million a year to $750,000. Hopefully, Toby McClamroch has been instructed to stop bringing three or four attorneys along with him to every board meeting to simply sit and watch the board deliberate. Note that $3.5 million in savings comes from ending unnecessary grants to groups like the Arts Council and Indiana Black Expo.

I understand why Barney Levengood bellowed to CIB President Bob Grand at the end of the Municipal Corporations Committee, apparently thinking the WCTY broadcast was no longer live, "Holy shit!" Committee members treated the two with kid gloves despite the gross mismanagement and deficit spending that has plagued the CIB for the past decade. If Levengood has no fear of the council calling for his head, the City of Indianapolis may have other plans for him. Milz' report tonight discussed a Request for Information the City is releasing to potential contractors who might want to take a crack at managing Indianapolis' convention center and Lucas Oil Stadium. Ballard Chief of Staff Paul Okeson tells Milz the City believes it can realize several million dollars in savings through privatization. The union that employs Councilor Joanne Sanders is not pleased. Milz says even Levengood's job may be on the line if a privatization plan is approved. Levengood told Milz there are no definitive plans to lay off any CIB workers after a recent meeting with convention center workers; however, they may be asked to take another 6-day furlough to reduce costs he says.


Paul K. Ogden said...

I love how they just consider any loan "revenue." I guarantee you the CIB has no intention of every paying that back.

Great report, Gary. I'm not optimistic about contracting out the CIB's functions. First, no company is going to simply take over losing deals that the CIB has entered into. You'd have to make it profitable to them and that means kicking in (taxpayer) money.

Plus, you know they'll give it to some contractor who made big political contributions and of course an expensive, politically connected law firm will have to be hired to further fleece the taxpayers.

jabberdoodle said...

I have to admit I'm kinda shocked that Ballard (which means Grand and Loftus) have turned on their own. Hope Barney's 401K has recovered sufficiently to see what life is like in the unemployment line. $18,000 per month is hard to subplant with Indiana's 'generous' unemployment checks.

If the City wants a new tack to take -- I'd suggest running some numbers and looking at actual projections over a knee-jerk 'privatize everything' approach.

If you pulled the functions of the CIB, the ICVA, and IDI in house, I bet we could save a bundle. Then the hotel tax could be used to do what they call 'pay off the bonds'. After that, maybe it could fund road work and parks and things that make life good for those who cannot afford tickets to the pro games.

IDI - with its mere $1.1m per year from the Bond Bank and DMD, primarily, only duplicates the work of others. I even understand they ask City workers to contribute information that they then repeat back for their paycheck.

The ICVA with about $8M per year of taxpayer funds and a total of about $11M per year, gives discounts for rooms, as AI has exposed, and they hire other companies to build their website and create ads touting our civic spaces. The room discounts can be foisted on the hotel industry. And the City can hire someone to put out RFPs for the rest, cutting out more than Welsh's $350-$400,000 per year salary for the ICVA's expensive act as a middleman.

The CIB, with its $100M+ per year for 2008 and only $121M+ per year for 2009 and onward, puts on shows, which is a particular set of skills not associated with usual city functions. But, with some public input, I think we can pull at least part of the CIB's functions in house and save money in the process.

And Gary, look at the 'operating reserve & restricted escrow' line just before the total for revenues. They cut back almost $16M when they got the additional money out of the Council. Hmmmm. Almost a wash. One hand giveth, the other taketh away. So much for cuts.

As for the CIB, I'm sure they just forgot the promise that they would post the budget details online. They value open government, as we have been told on numerous occasions.

jabberdoodle said...

Paul - I thought we already had a politically connected law firm who has been hired to fleece the taxpayers?

Hoosier in the Heartland said...

I find it fascinating that they're asking the lowest-paid workers to take six-day unpaid furloughs.

The CIB would benefit more if Barry Livengood took a six-day unpaid furlough!