Thursday, December 17, 2009

Espich: We've Been Had By The CIB

It takes a little longer for some folks to catch on to what I've been telling you for some time now: Indianapolis' Capital Improvement Board operates like a classic Ponzi scheme. Rep. Jeff Espich (R-Uniondale) is apparently the newest believer. He is reacting with outrage to the announcement this past week that the CIB is considering a proposal by Indiana University-Purdue University to divert millions of dollars in revenues intended to maintain the CIB's facilities to pay for repairs to the Natatorium. In a press release entitled "Rep. Espich Outraged With Indianapolis CIB," Espich has these words to say about this latest saga surrounding the CIB:

“I must be missing something,” said Rep. Espich. “Just a year ago, state government and the public were told that the CIB was broke and tens of millions in operational shortfalls were occurring annually. The state was asked to help ‘bail out’ the CIB. Many members of the General Assembly worked long hours to investigate, review and propose solutions.

“The legislature acted to provide additional state revenues and new taxes to help solve the problem. As a result of this assistance, Hoosier citizens are now paying more taxes. Now, we hear the suggestion that the CIB has so much money that some of the funds could be granted to others. If the CIB has extra funds, consideration should first be given to reimburse the state’s contribution.”

The Indianapolis campus is proposing that 40 percent of the hotel and food and beverage tax generated by University Place Hotel be assigned for use by the natatorium for a 16-year period. This percentage would generate an estimated $4.36 million over 16 years.

“With the state facing a revenue decline and difficult budget cuts, those funds could be directed to public education. I do not doubt the serious need for renovation at the Natatorium and that the facility is extremely important to the city of Indianapolis.”
If you want to really work yourself up in a lather, you should go over to the website and watch the video clip of this week's CIB meeting. You will be treated to incoming CIB President Ann Lathrop's explanation of why the CIB closed on a $9 million loan from the state this week. Lathrop said there was no immediate need for the money, but she thought it was the right thing to do to go ahead and borrow the money because there was "no prepayment penalty" and having that extra money would provide more "flexibility as we go into Pacers negotiations and any other challenges that we have in the future." No member asked her a single question about a decision she seemed to have made unilaterally to take out the loan.

It seems the university claims that only 40% of the repair and maintenance costs associated with the physical education portion of the Natatorium can be paid out of state funds. The 60% of the facility used for diving and swimming cannot be paid out of state funds, or so says the university. While IU has been engaged in a non-stop building boom for the past several decades, it has been unable to find adequate funds to properly maintain the facility, allowing serious deterioration to the building to occur from a leaky roof, among other things. The entire proposition of the CIB paying for these repairs is nonsensical. I think Indy Tax Dollars sums it up well:
Is one entitled to ask just how much financial support USA Swimming is prepared to offer for the rehab, operation and maintenance of this "perfect facility?" Has the responsibility for paying for what one uses completely disappeared?

For that matter, has common sense disappeared too? The CIB is mired in financial difficulties, among which are the thousands of dollars it already disburses for the support of organizations which have no valid claim on the tax dollars being so used.

Now IUPUI wants nearly $275,000 per year for 16 years to be diverted from CIB funds - which are already being diverted from legitimate governmental expenses - to " assigned for use by the natatorium...."

Even if the proposal is not outrageous on the face, we have two questions. Could we be a little more specific as to the meaning of the phrase "for use by?" And, based on precedent, isn't fair to predict that, without fanfare or even public mention, the 16 year period will probably be extended indefinitely? Like the Food and Beverage Tax - the revenue IUPUI is asking for!

Almost no taxpayers wear red suits and have long, white beards. We think the folks at IUPUI are old enough to be told there really is no Santa Claus.


Downtown Indy said...

It's high time a politician stepped up to give this a critical look. I hope it's just the start of a serious investigation.

Indy has been getting fleeced for years in a Ponzi scheme that would impress even Tim Durham.

Patriot Paul said...

It's that time of the year for giving. Sure..take taxpayer money by the millions that you don't need. After all, the CIB was in crisis mode for months with talk of insolvency, questionable expenditures, incompetent planning, chronic complaining, and the source of justified derision by citizens and media editorials. So despite the 'investigation' that led to a giant Christmas present, legislators like Rep.Espich now sit with sugar cream pie in their face, while deepening the debt for homeowners. How proud must they feel of being scrooged and hoodwinked, especially when going into overtime at our expense to balance the budget.
' No member asked her a single question about a decision she seemed to have made unilaterally to take out the loan.' Say what? You mean all the dunces followed the new leader without question off the cliff with taxpayers in tow? Fire all of them as enablers who kept taxpayer money under false pretenses..and for what purpose they kept it? Under the pretense of "flexibility as we go into Pacers negotiations". Say What? Oh, I forgot, bribe money for the latest sports extortion. If a private individual had done this, they would be in the prosector's office.

M Theory said...

Gosh, maybe Espich, with his eyes now newly opened, will get angry about the fact that the legislature is trying to change the Constitution for property tax caps when our politicians are not obeying the Constitution that we've got in place.

In particular our state government is violating Article 8 which says that Indiana's schools are to be funded with corporation taxes.

Instead homeowners are forced to pay for school spending and the tab is sending some homeowners into foreclosure.

Paul K. Ogden said...

It's good to see Jeff woke up to what the CIB has been doing to Indianapolis residents for years.

Paul K. Ogden said...


I think we've discussed this before. Article 8 doesn't say that only corporation taxes can be used to fund schools.

dcrutch said...

Same song new chorus. Whether Wishard's shell game funding with IUPUI again working behind the curtain, IPS deep in big salary administrators, 2000 pgs of a health care plan we won't be given time to digest, or a suppossed skid row CIB, shaving expenses just before borrowing $9M: Taxpayers are nothing more than cattle.
I understand now why Indiana is ranked 48th for "happiest" states and Louisiana 1st: Louisiana's just as corrupt (Sen. Landrieu bringing home $300M for her health care vote)- but hey, at least they have sunshine!
Who needs a po' boy when (thanks to your government)- YOU ARE a po' boy! AHHH Gar-ron-TEE!

Blog Admin said...

I'm having a difficult time finding the CIB video on indygov. Anyone got a link?

Gary R. Welsh said...

I've added a link.

Jon said...

Per the IBJ for teh week of December 14-20 we see an article about mayors needing more revenue. In that article they quote the assesed valuation of Marion County as 56.9 billion dollars. Per article 13, part 1, of the Indiana Constitution,

"No political or municipal corporation in this State shall ever become indebted, in any manner or for any purpose, to an amount, in the aggregate, exceeding two per centum on the value of the taxable property within such corporation, to be ascertained by the last assessment for State and county taxes,previous to the incurring of such indebtedness; and all bonds or obligations, in excess of such amount, given by such corporations, shall be void"
Per my calculation 2% of 56.9 is 1.13 billion dollars. So tell me how we can add Wishard's 803 million to the 700+ miilion for LOS, the 275 million for the convention center, the Central Library, the airport, Conseco etc.
We are way past 1.13 in bonds now, how is that legal?

Gary R. Welsh said...

Jon, The Indiana Supreme Court stripped Article 13 of any effect when it ruled that you could create coterminous municipal corporations in a city like Indianapolis and not run afoul of Article 13. The debt of the Airport Authority, the CIB, the water company, library board, building authority, etc. don't count against the consolidated city's debt limit.

Gary R. Welsh said...

I believe the total bond debt for Marion County/City of Indianapolis, if you combine all those corporate entities, will reach about $4 billion once the Wishard bonds are issued.

Unknown said...

Gary, your point is well-made here, but Jeff Espich is just one of the village idiots at the GA who've stayed too long.

I believe he arrived in 1972. That's 38 years by my count. He's uttered some of the stupidest things ever said in that chamber. He supported Bowen's ridiculous 1973 tax package, which gave birth to some of the inequities in our property tax system. And doubled our sales tax, a trend continued exclusively by Republican governors over the years. But he's got Democratic company in the Stupid Corner.

So pardon me if I shoot the messenger. He and his ridiculous bowl haircut can go back to Uniondale from whence he came. He is part and parcel of the problem, along with Bauer, Dobis, Pond, et al.

Garton finally went. Way too late.

Downtown Indy said...

J Pat Bauer arrived in 1970, has a ridiculous rug and has served as nothing but an obstructionist for most of his 39-year tenure.

At least Espich is trying to be a positive force.

Of course the real blame lies with voters who accept mediocrity and outright incompetence, and continue to reelect these dimmies and feebs to office.