“I thought the council was asked to help solve the CRC’s severe cash problem,” Councilwoman Luci Snyder said. “I’ve pretty much had it with the revision of facts. . . . My stand is, that if that’s the case, we are done.”
Friday, August 10, 2012
It's Called A Bailout, Mayor Brainard
Carmel's disastrous fiscal policies should serve as a warning sign to Indianapolis' City-County Council as Mayor Greg Ballard tries to blackmail them into approving a massive expansion of TIF districts to finance more "economic development" activities at the expense of basic city services. Carmel has put a substantial amount of its tax base in a TIF district. Funding of the TIF district is controlled by the Carmel Redevelopment Commission, which is controlled by Mayor James Brainard's appointees. The CRC has racked up $345 million in debt to finance The Palladium, The Performing Arts Center and City Centre, all projects which have benefited Brainard's largest campaign contributors. It now turns out that revenues generated by the TIF district are not adequate to meet the Commission's long-term debt obligations. Mayor Brainard asked the Carmel City Council to have the city take on responsibility for about $195 million of the $345 million in debt and refinance it to take advantage of lower interest rates. The council seemed willing to go along with the plan until Mayor Brainard opened up his mouth and told the Indianapolis Star that the action was necessary to deal with "a short term cash flow problem." That comment angered Councilor Lucy Snyder, who chairs the Finance Committee. She responded by telling reporters that the council was pulling the plug on the refinancing plan if the problem wasn't a serious one.
Mayor Brainard quickly backtracked on his comments sufficiently to get a second chance from the council for approval of his debt refinancing plan, which will include greater control by the council of spending by the CRC. Brainard is now acknowledging that the CRC has "a serious cash flow problem." I don't even consider that language strong enough. Without the city taking on this debt and refinancing it, the CRC would have to default on its debt obligations. In other words, it's a bailout. The Carmel predicament should be a wake-up call to municipal bodies across the state. Carmel is, after all, the state's wealthiest and fastest growing municipality. Carmel has relied heavily on an expanding tax base acquired, in part, through sizable annexations that allowed the city to get by with ambitious spending by the CRC fueled by a TIF district without raising taxes on property owners. Those days are about to run out. Carmel taxpayers will have to pay the piper and start paying more in taxes to finance the reckless fiscal policy pushed by Mayor Brainard.
Carmel's neighbor to the south, Indianapolis, has allowed more than 10% of its tax base to be absorbed by TIF districts, consuming about $100 million a year in property tax revenues. Spending by TIF districts is controlled by Mayor Ballard with little or no council oversight. Mayor Ballard is demanding yet another major expansion of TIF districts to finance more economic development activities. Current TIF districts have already amassed a combined $844 million in debt, with an annual debt service cost of $64.2 million. Significant sums of that debt represent direct grants provided to private businesses for so-called economic development efforts. TIF funds are currently being tapped to provide annual subsidies to the Indiana Pacers, which the CIB would like to see made permanent, and have been used to subsidize billionaire Dean White's J.W. Marriott Hotel, Bill Oesterle's Angie's List and the Lilly-backed City Way project. Misinformed and uneducated members of the local news media have accused Democrats on the city-county council who have questioned the wisdom of allowing even more assessed property to be absorbed by TIF districts of engaging in partisan politics. Speaking as a legitimate fiscal Republican, unlike our RINO mayor, the Democrats are wise to put a break on TIFs. They are decimating our tax base that we rely upon to fund basic government services to finance the private business activities of those who make large campaign contributions to the mayor. City agencies are being asked to slash their budgets to close a $50-60 million budget deficit. Yet Ballard is trying to shrink the tax base that pays for those services to free up more money to reward his campaign contributors. It's public policy at its worst.