An analysis of the homestead credit by Ballard's own controller proves that his claim that only the rich would pay more taxes if the homestead credit is eliminated is patently false. About 38% of homeowners, including many of those living in higher taxed areas with higher-assessed homes receive no benefit from the homestead credit because their taxes have already hit the 1% cap imposed under state law. As fellow blogger Pad Andrews' explains, the city controller's figures show that a majority of the tax increase that will result from the elimination of the homestead credit will be borne by those owning homes valued at $150,000 or less. Those figures show that only 99 homeowners will see a tax increase of $100 or more with an average home value of $368,674, while more than 46,000 homeowners with an average home value of $103,2227 will see a tax increase, albeit a smaller tax increase on average than those with higher-priced homes who have not yet reached the state-imposed property tax cap. "So, eliminating the homestead credit has little to do with rich folks paying their due," Andrews notes. "The tax increases will tend to hit those with lower value homes. If you live in a higher tax area, then you'd escape a tax increase for a home value lower than someone living in a lower tax area."
Ballard took office in January 2008 with the benefit of a 65% increase in the county option income tax passed by the Democratic-controlled council and signed into law by Peterson, the so-called public safety tax, which was intended to shore up a budget deficit and to provide sustainable funding for the city's public safety departments. Voter discontent over the income tax increase, coupled with skyrocketing property tax bills, helped Ballard win a narrow victory over Peterson and elect a Republican-controlled council. State lawmakers passed landmark property tax reform legislation that brought permanent property tax relief to property owners; however, all taxpayers were hit with a permanent one percentage point increase in the state sales tax to pay for the tax relief afforded to property owners. Ballard, for his part, made the Peterson income tax increase permanent despite campaigning against its enactment. Despite the promise the tax increase would allow for the hiring of 100 more police officers, the City now has a police force that is 300 officers smaller since enactment of the public safety tax increase. Ballard blamed the economic recession and property tax caps on the lack of funds to adequately fund public safety.
Two years into office, Mayor Ballard pushed through more tax increases to bail out the CIB, which claimed to be running a $47 million deficit and at risk as a going concern because it had assumed full responsibility for the $20 million a year in operating and maintenance expenses on the newly-opened Lucas Oil Stadium, and because it had no revenue stream to cover the added costs after giving billionaire Jim Irsay's Colts rent-free use of the stadium. As a consequence of raising the city's hotel taxes and auto rental tax, Indianapolis now has one of the highest tax rates of any city in the country for visitors to Indianapolis despite the large investment the City has made in expanding its convention facilities to attract more conventions and visitors to the city. Visitors pay a hotel tax rate of 17%, an auto rental tax rate of 15% and a food and beverage tax rate of 9%. The CIB now sits on a $67 million cash reserve, even after making a $33.5 million public subsidy to billionaire Herb Simon's Indiana Pacers, who claims without substantiation that his NBA franchise is losing money and who has threatened to move the team elsewhere if the CIB didn't pick up maintenance and operating expenses for the Fieldhouse, even though the team gets rent-free use of the facility and retains most of the revenues from non-game events hosted at the Fieldhouse.
Rather than eliminating the homestead credit, Democratic councilors proposed an alternative $15 million payment-in-lieu of taxes (PILOT) to be assessed against the CIB on the nearly $1.5 billion in facilities it operates in downtown Indianapolis that are used primarily for the for-profit benefit of the billionaire sports team owners and the downtown convention business. Mayor Ballard immediately denounced the PILOT as a move that would imperil the financial stability of the CIB despite its ongoing private discussions with Herb Simon to re-up the multi-million dollar public subsidies for his Indiana Pacers. In the real world, the Ballard administration and the CIB would be undertaking discussions with the two billionaire sports team owners to pay their share of property taxes like every other business owner in this city, particularly given how much the City is forced to spend every year providing public safety services for the events at these facilities. The Hulman-George family has always paid its fair share of property taxes on the Indianapolis Motor Speedway, which conducts far fewer events annually than either the Fieldhouse or Lucas Oil Stadium. It's not fair that billionaires Jim Irsay and Herb Simon get rent-free use of these facilities for their multi-million dollar business organizations and pay absolutely nothing in property taxes on those facilities. The only people favoring the super rich over ordinary taxpayers in this debate is Mayor Greg Ballard and the Republicans on the council who've followed his misguided fiscal policies over the past five years in lockstep. Time and time again Ballard has chosen the side of the downtown mafia that is filling his pockets with campaign contributions, free tickets, meals and country club memberships and other lavish gifts and overseas junkets over ordinary taxpayers.
I find myself in the unusual position as a life-long Republican and elected Republican precinct committee person siding with the Democratic-controlled council on this matter. Fortunately, the Democratic budget that rejected elimination of the homestead credit was approved on an 18-11 vote. Two Republicans voted with the Democrats, including Councilors Christine Scales and I believe Councilor Jason Holladay, but I'm not certain of Holladay's vote. On a 16-13 party-line vote, the council also approved the CIB budget, which included the $15 million PILOT. The Republican arguments that the PILOT is being illegally imposed was effectively shot down by the council's counsel, Fred Biesecker. Republicans argue that because an assessment on the property was not made by March 1, the PILOT could not be imposed as part of next year's budget. Biesecker pointed out that on one prior occasion, a $4.9 million PILOT was collected from the CIB several years ago. Biesecker noted that no tax had been assessed that year by March 1 on CIB properties before the council adopted the PILOT. He further reminded councilors that a PILOT is not a property tax by definition; rather, it's a substitute payment for services provided to otherwise tax-exempt property. He added that the enabling statute for the PILOT merely imposes a cap on the amount that may be assessed; it does not provide the specific manner for assessing the property. Further, Biesecker says that state law allows for assessments to be imposed on property omitted from the tax assessment rolls for up to three prior years.
UPDATE: The Mayor's office wasted no time putting out a statement to denounce the council's actions tonight on the budget:
"Budgeting is not a one-year exercise. It requires prudence and a focus on the long-term fiscal health of our city. The budget in any particular year must help set up future budgets.
"The Council majority's current plan is unfunded, increases spending, more than doubles the deficit for 2014, and strips support of our downtown economy in order to give tax breaks to a select few.
"The budget I proposed to the Council this year was responsible for the long haul and ensured that income tax dollars are being used to support our police officers and firefighters. There is money for public safety in this year's proposed budget, but only if the Council has the will to make tough choices.
"In the meantime, we must talk frankly about what public safety and criminal justice will look like over the next 20 years. If we don't, the budgeting process will be painful for the next few years.
"I will spend the next few days reviewing the final document adopted tonight and the many options afforded me by law as Mayor of Indianapolis."Incidentally, the Mayor has no legal authority to veto the CIB budget as it is a separate municipal corporation over which he does not serve as the executive. The audacity of the mayor to accuse the Democratic-controlled council of stripping "support of our downtown economy in order to give tax breaks to a select few." This coming from a man who accepts free floor seats to all the Pacers games and then instructs his appointees to the CIB to hand out a $33.5 million subsidy to the billionaire owner of the team. This coming from a man who gave $6.5 million of our taxpayer dollars to the man who bankrolls his campaign and pays for overseas junkets that he and his wife take after tripling the rates we have to pay to park at the damn metered spots downtown so his money man can build a new parking garage from which he alone will derive financial reward. Nearly 50,000 homeowners, Mr. Mayor, is not a "select few." How dare you attack working class homeowners. You are simply pissed off that the CIB won't have the money to give your buddy Herb another multi-million dollar public subsidy. You don't care about public safety, and you sure as hell don't care about the ordinary citizens who pay the lion's share of taxes in this community. You have turned into the worst enemy of the people who busted their asses to put you in office. You are a worse traitor than Benedict Arnold.