Saturday, August 03, 2013

Ballard Plans To Seek 15% Increase In Income Tax Just Like I Told You He Would

Proving once again that everything he claimed to support when he first ran for mayor in 2007 was a complete lie, Mayor Greg Ballard plans to go back to the council and seek yet another tax increase to close what a mayor's chief of staff, Ryan Vaughn, and a city controller, Jason Dudich, both of whom were handpicked by Barnes & Thornburg's Bob Grand, are claiming is necessary to close a purported $55 million budget deficit. The dynamic duo well-trained in public disinformation have been quietly discussing with the usual suspects plans to raise the local option income for public safety from 0.35% to 0.5% and the property tax levy stabilization local option income tax from 0.27% to 0.35%. Combined the two tax rate increases would increase local income tax rates from 1.62% to 1.85%, a 15% overall income tax rate increase the corrupt pols want in order to raise another $40 million a year in tax revenues. At least this is what they're telling the IBJ's Kathleen McLaughlin, and which is exactly what I predicted months ago was in the works as the local media and the Ballard administration began working in tandem to convince the public more taxes would be necessary to properly fund public safety.

Let's take a trip back down memory lane. During the last year of the Peterson administration, the local income tax rate was increased from 1% to 1.65%, a 65% rate increase that was estimated to raise $90 million a year. Most of that money was to be put towards public safety; however, a portion was to be set aside to service debt on a more than a half billion dollars in bonds Peterson planned to issue to cover the city's public safety employees' unfunded pension obligations. At the time, we were told that debt service on those bonds would run close to $20 million a year. The public safety funding increase was supposed to allow the City to hire at least 100 additional cops to stem the skyrocketing crime problem. At the same time the income tax increase hit, homeowners were socked with double-digit property tax increases from reassessments following the conversion to the state's new fair market value approach to assessing real property. Fearing the enormous public backlash, Gov. Daniels moved quickly to freeze property tax levies to the prior year's level while the problem could be quickly studied and resolved. Ballard campaigned against Peterson's income and property tax increases and went on to topple the two-term incumbent by a small margin based on his anti-tax pledge.

Ballard takes office and keeps the 65% income tax increase intact, while hopelessly asking state tax lawmakers to repeal the property tax. Gov. Daniels and the legislature adopted a series of property tax reforms that capped taxes on homeowners at 1% of assessed value,  2% and 3% for rental property and commercial property, respectively. As a tradeoff, the state assumed greater responsibility for funding schools, assumed the city's unfunded public safety pension debt and increased the state's sales tax nearly 20% to help pay for those added costs. The second year in his office, Ballard rolled back the local income tax rate from 1.65% to 1.62%, or a reduction of 2% from the original 65% increase income tax. Of course, he no longer needed $20 million of the annual income tax increase necessary for the pension debt that had been assumed by the state, still leaving ample additional income tax revenues to fund city-county government obligations. That's also not taking into account multiple fee and parking meter rate increases the city has enacted since Ballard took office that generate a combined several million dollars annually. That's also not taking into account the increases in the hotel tax, admissions tax and auto rental tax to benefit the Capital Improvement Board, or the additional state tax subsidies it receives annually from the state. As for those promised 100 new police officers, they were never hired. In fact, there are fewer police officers today than the day that 65% income tax increase took effect.

Now about that 65% increase in the local income tax rate, Vaughn tells the IBJ's McLaughlin, "It's like it never happened." He claims the tax base declined so much from the 2008 recession that the gains from the tax increase have essentially been wiped out. "Marion County's total income tax revenue has declined from $297 million in 2008 to $273 million this year," McLaughlin writes. [Note the omission of the 2007 baseline number prior to the enactment of the 65% income tax rate increase, which was about $125 million]. Declining income tax revenues and property tax caps are to blame for a $55 million budget deficit according to City Controller Jason Dudich. What neither Dudich nor Vaughn will tell you is what happened to the money that was supposed to be used for debt service on the unfunded pension liability that disappeared thanks to the state. Add to that the impact of removing significant parts of the city's property tax base through the use of tax increment financing, which is now approaching 15% of the total property tax base after the TIF district expansions enacted this past year to the downtown TIF district to include the booming Mass Ave business district and the new, expansive Mid North TIF that takes in a large area of the north side, including booming areas of Broad Ripple.

What I'm trying to tell you is that the so-called $55 million budget deficit was created by intentional design on paper as an excuse to raise taxes. The game now being played with the city's budget is exactly the same game played by Mayor Ballard and Bob Grand with the CIB's budget when Ballard first took office and Grand announced that the municipal corporation was facing insolvency unless the state and the council immediately approved new tax increases and state subsidies to erase what was described as a $50 to $60 million deficit. After Ballard and Grand got their CIB bailout package approved, the CIB miraculously announced it was running big cash surpluses that enabled it and justified the awarding of $43.5 million in cash subsidies to billionaire Herb Simon's Indiana Pacers.

The priority of the Ballard administration and the majority of the members elected to the City-County Council has been to divert as much tax revenues as possible to finance every major downtown real estate development project the past six years with city tax dollars, along with a continued policy of handing out generous property tax abatements without regard to the impact those tax give-aways have on the balance of funds available to fund basic city services. That's why these same city leaders now claim there are inadequate revenues to fund public safety and other basic services. When they try to convince you otherwise, tell me they are liars, tell them they have breached the public's trust or tell them anything but your willingness to accept higher taxes to pay for public safety. It's nothing but a ruse, yet another shell game they're playing. You were fooled by those claims in 2007. Shame on them. If you allow yourselves to be fooled once again by the same phony claims, then shame on you.


Marycatherine Barton said...

It is no wonder that working class whites are giving up hope, as explained at the Tea Party economist website. I join with you, Gary, in calling for no more taxes in Marion County, and ask that the councilor elected to represent my district (who has brayed at Council meetings that he wants freebees from the sports magnates) to ask the heavily-publicly- financed Pacer and Colt organizations to chip in instead to cover any short falls in the County expenditures.

Had Enough Indy? said...

You did an excellent job of recapping all of the history of revenue flow from Peterson's days to today. Thanks.

Gary R. Welsh said...

Thanks, Pat. I notice that none of the mainstream reports ever provide the bigger picture to the public, which completely undermines the meme of their stories.