Sunday, December 30, 2012

CIB Lied To Council And Public Again: Does Anybody Care?

Truth in budgeting has never been one of the CIB's strong suits. In recent years, however, fudging of numbers has turned to outright lies being made by its officials during the budgeting process to hide its true spending plans, particularly when it comes to handouts totaling in the tens of millions of dollars. CIB officials claimed in 2009 a bailout plan approved by the state legislature and the City-County Council that included tax hikes and new state subsidies was necessary to maintain its solvency as a going concern. No sooner had the ink dried on the bailout plan than the CIB announced a three-year, $33.5 million give-away to billionaire Herb Simon's Indiana Pacers.

During this year's budget negotiations, CIB President Ann Lathrop claimed the municipal corporation was still working on a deal with the Pacers. Its proposed 2013 budget included no additional payments to the Pacers, and the City-County Council approved additional payments in this year's budget. When the City-County Council tacked on a $15 million, one-time PILOT payment to its 2013 budget to help defray public safety expenses for Lucas Oil Stadium and the Fieldhouse, the agency claimed its long-term solvency was threatened, even though it held $65 million in cash reserves, more than the amount held by the City of Indianapolis. Lathrop knew when she made those statements that the CIB was planning to make another $10 million payment to the Pacers before year's end out of this year's budget to explain why proposed new taxes to benefit the CIB next year won't be paid out the new taxes. The Indianapolis Star finds Lathrop's lying humorous, which it only mentions in passing in its "Behind Closed Doors" column in an item labeled "Pacing Payments":

The Capital Improvement Board unveiled a surprise earlier this month: a one-year extension of its three-year agreement with the Indiana Pacers, providing a new payment of $10 million to the team to help offset the cost of operating Bankers Life Fieldhouse.
The decision turned heads -- not only for how suddenly it cropped up but also because the CIB, which runs Indianapolis' sports venues and convention center, found a way to avoid seeking approval from the City-County Council.
The CIB is splitting the new payment between the CIB's current year and 2013 budgets -- within spending levels the council has already approved. That negates the need for the council's further sign-off.
Council Vice President Brian Mahern, one of the council's most vocal CIB critics, has cried foul over that arrangement.
It's the same council, controlled by Democrats, that slapped a $15 million one-time tax on the CIB for next year; the CIB is challenging that move, charging it was done improperly. Some council members also have criticized CIB spending priorities -- including giving the Pacers three $10 million installments of a forgivable loan under the 2010 agreement, which would have expired in June. That $33.5 million deal also included $3.5 million in fieldhouse upgrades.
Now, with the $10 million extension inked this month, the deal will last through June 2014.
During that time, the city and the Pacers will examine what each wants out of a new deal. For the city, one item now on the table is the potential transfer of responsibility for fieldhouse management from the Pacers to the CIB or even a third-party venue management company, confirmed Lotter, the mayor's spokesman.
Until the CIB's Dec. 3 meeting, President Ann Lathrop and Pacers officials had said only that they were working on a new long-term deal, making the short-term deal unexpected.
The Pacers, it turns out, will get the new $10 million payment before the one-year extension begins. The CIB planned to pay the team $5 million this month and $5 million next April.
Lathrop said the early payment wasn't unusual since the earlier installments under the 2010 deal occurred in advance of each year, the final one last January.
The first $5 million portion, paid this month, came from savings this year in utilities, temporary labor for big events and contractual setup costs, among other areas, Lathrop said.
The second installment in April will come from cost-cutting in next year's budget. "So we have $5 million that we need to come up with," Lathrop said.
The CIB approved the Pacers extension just as CIB leaders are examining whether to request council approval of increases to the ticket admission tax and auto rental excise tax. The hikes, part of a 2009 state bailout package of the CIB, are available only the first two months of 2013, and city leaders say a portion of the proceeds would go to offset the CIB's use of public safety resources.
Opponents fear those tax increases would only free up more money to subsidize the Pacers.
But for now, Lathrop insisted money from the potential tax increases wouldn't go toward the one-year extension payments.
"The first thing to say," she said, "is that we've passed the Pacers agreement to pay the $10 million under the current revenue streams we have."
In the future, the City-County Council should as a matter of practice slash the CIB's budget across-the-board and make it come back before it from time to time to seek additional budget authority for specific expenditures to remedy this problem. It might also want to consider putting Lathrop and her colleagues at the CIB under oath when they appear at public meetings to testify on the the CIB's budget. The threat of prosecution for perjury may be the only think left to force the CIB to provide truthful information when its officials testify in the future. As for the lack of seriousness taken by the Star to the CIB's transgressions, I suggest the taxpaying public stop subscribing to the newspaper since it obviously is no longer interested in being a watchdog for taxpayers.


Had Enough Indy? said...

You'll recall that the State Legislature was beside itself a few years back - trying to untangle all the lies spewed by the CIB regarding its fiscal health.

Seems the CIB has a long tradition of lying about its funds.

You make a good point about assuming they are padding their budget and just cutting it each year. There should be an ordinance passed where the extra can be channeled to the City budget.

Gary R. Welsh said...

The legislators were tripping all over themselves to help out the CIB because of all the free tickets they get to sporting events. The council, not the CIB, was criticized by Luke Kenley and Jeff Espich for levying the $15 million PILOT. Those guys never criticize the CIB for giving money to the Pacers like they attacked the council's actions.

Jon said...

The CIB is empowered to do exactly as they see fit because no one in local government holds them accountable, and frankly I don't see anyone trying to make them accountable.