If Democrats who control the City-County Council proceed today with their short-sighted plans to drain $15 million from the Capital Improvement Board, it's likely to cause long-lasting problems for the city on multiple fronts.
First is the financial damage the move would inflict not only on the CIB, which operates Lucas Oil Stadium and other Downtown venues, but also the local convention trade, Indiana Black Expo and arts programs, which are supported by the agency.
Second, and potentially worse, are the ramifications inside the Statehouse. Powerful state Sen. Luke Kenley said last week that a decision by the council to raid the CIB's accounts would be "counterproductive" in moving forward on future projects that require the General Assembly's approval. The city must have Kenley as an ally if there's any hope of finally building a mass transit system in the region.
Kenley's objections are based on recent history. The CIB faced a $47 million budget deficit less than four years ago. The city turned to the Statehouse for help, and lawmakers gave Indy's leaders $18 million in loans and the authority to raise taxes.
Those moves worked so well that the CIB has now built up a cash balance of about $67 million. Council Democrats are eager to use that money to help plug a shortfall in the city's 2013 budget.
But the CIB isn't as financially comfortable as it might appear. The agency has been building up reserves in anticipation of repaying several loans, including more than $33 million owed to investors that helped finance Circle Centre mall and Bankers Life Fieldhouse. Central Newspapers Inc., The Star's former owner, was among the investors in the 1990s that loaned the city money to build the mall and the stadium.
On Friday, Indy Chamber President and CEO Scott Miller described a council committee's decision to take money from the CIB as "irresponsible" and one that "creates a fiscal cliff that would be a detriment to long-term stability, economic attractiveness and job growth in the city."
Taking cash from the CIB is undeniably tempting in the short term. But it would create long-term problems that residents and their leaders would regret for years to come.The Star is trying to build the case for another general tax increase like the 65% income tax increase it supported 5 years ago, the so-called public safety tax that was suppose to be a permanent solution to funding public safety. A true watchdog of the taxpayers would be calling for an audit of the City's books to determinate what happened to all of those higher taxes we've been paying. A true watchdog of the taxpayers would ask why the CIB told the public that it required a major tax increase, which was also supported by the Star editorial boarad, three years ago in order to remain solvent but somehow was able to give a $33.5 million subsidy to billionaire Herb Simon for his Indiana Pacers and still manage to sock away $67 million in cash reserves. A true watchdog of the taxpayers would be honest with the public and concede that the CIB is not worried about its ability to pay its debts if it has to pay a $15 million PILOT but whether there will be enough money to pay Herb Simon's next extortion demand. A true watchdog of the taxpayers would ask why the City can tap TIF funds as a matter of convenience to shore up city finances when those funds are supposedly necessary to meet the long-term financial debt obligations of the TIF district. None of these are questions that will be asked by the Star because it long ago ceased to serve its role as a watchdog of the taxpayers when it became a financial investor in the CIB's long-running Ponzi scheme, a financial interest its editors have conveniently omitted in the past whenever it discusses matters pertaining to the CIB until fellow blogger Paul Ogden called them out on it.