Monday, October 14, 2013

Ballard Coughs Up $15 Million Stowed Away In Different Funds To Avoid More Tax Increases

By hook or crook, Mayor Greg Ballard has been trying to force the City-County Council to accept permanent tax increases to close what has been described as a $15 million budget deficit. He sold the council on expanding the base of the IMPD taxing district, a permanent property tax increase, and he's been trying to force an even larger, permanent property tax increase by eliminating the homestead property tax credit. This from the guy who went before the House Ways & Means Committee his first year in office and asked the legislature to eliminate all property taxes. At the same time, we've witnessed hundreds of millions of tax dollars being diverted under this mayor for the personal business use of his big campaign contributors. After months of wrangling over the budget, an agreement is announced where $15 million in found funds is uncovered to shore up the supposed budget deficit, including:
  • $5.7 million just sitting in an escrow fund leftover from the deal to sell the water and sewer utilities to Citizens Energy several years ago;
  • $6.9 million borrowed from a "fiscal stability fund" that currently holds about $80 million; and
  • $2.4 million from the city's rainy day fund.
Most importantly, the deal ensures that the CIB's 40% increase in its operating budget will remain intact, which we've come to understand is Mayor Greg Ballard's number one budget priority in city government because of all the free tickets he receives to Colts and Pacer games and concerts and other events hosted at the CIB's venues. The budget will supposedly allow IMPD to hire 30 new police officer recruits next April, a number that is needed just to replace retiring police officers. Police will still get the pay raises provided under their contract, and there will be plenty of money to continue boosting the pay of Mayor Ballard's mayoral staff. Next year, Ballard will be back seeking even more tax increases because future tax diversions he has on his plate will continue to erode the tax base relied upon to fund basic city services. The local media will never report these facts to you, but that's how it is. It's unfortunate that the City-County Council lacks members or staff who have the ability to uncover the constant shell games that are played with city funds. Who knows what you'll find hidden away. The convoluted way the City keeps its books would make it a piece of cake for an unscrupulous insider to steal millions of dollars annually without ever being noticed.

UPDATE: The  council voted to approve the budget tonight by a vote of 26-2. Councilors Robert Lutz and Christine Scales voted against its approval. Interestingly, the engrossed proposal voted on by the council omitted the language retaining the homestead property tax credit, a difference of about $11 million. There was no debate on the budget's passage, which is quite telling given that it's the most important vote council members make during the year.

The only debate occurred over the passage of the CIB's budget, which came in response to comments by Councilor Frank Mascari in opposition to their budget because it includes more subsidies for the Pacers. Naturally, Bob Grand's stooges on the council, Aaron Freeman and Ben Hunter, spoke up in defense of the continued subsidies. What really upsets me is the disingenuousness of councilors' explanations for their actions. Repeatedly, there is reference made to binding agreements and state laws that tie the hands of the council, specious claims that the council illegally sought to impose a PILOT on the CIB, and that the agreements with the sports team requires these subsidies.

The CIB had a long-term, binding lease agreement with the Pacers, which required the Pacers to pay all maintenance expenses on Banker's Life Fieldhouse. Herb Simon threatened to break that lease agreement with the City, for which he would have been subject to draconian penalties, unless the CIB agreed to fork over tens of millions of dollars to his team annually. Ostensibly, these payments are to cover the maintenance costs on Banker's Life Fieldhouse, which the Pacers were contractually obligated to pay since they pay no rent and retain all of the revenues the facility generates. These numbers are inflated. It doesn't cost that much money to maintain Banker's Life Fieldhouse. Besides, the CIB had already been paying for any extraordinary capital expenses for improvements to the facility and continues to pay those extraordinary expenses, even after handing out $10 million a year to the billionaire Pacers' owner.

As to the PILOT, the council had statutory authority to impose a PILOT on the CIB since its inception. Lucas Oil Stadium and Banker's Life Fieldhouse are used exclusively for the benefit of the for-profit businesses of the Colts and Pacers. Go anywhere else in the state where publicly-owned property is being used exclusively by a business for its personal business use and property taxes are levied upon those businesses. That's the law. That's what is required by the Indiana Constitution. Only in the Twilight Zone known as the CIB is it considered anathema to make a private business pay property taxes on publicly-owned property used for private purposes. The CIB and the Pacers, which both pass out a ton of free tickets to state lawmakers just like they do for council members, convinced the legislature to pass a horrible law that repealed the statutory authority of the council to collect a PILOT on these facilities. What else is new? Our state legislature could care less what the Indiana Constitution requires or whether taxpayers are treated fairly under our state's tax laws. As long as everyone is getting their free tickets to the games, everyone at the State House and the City-County Building is happy. The council voted to approve the CIB's budget on a 19-9 vote.

5 comments: said...

Not quite on target, but not too far off either as these things are linked...

guy77money said...

Great article Steve! Gary what is the fiscal stability fund and why does it have 80 million dollars in it? Does borrowed mean it has to be paid back?
They can use that money to balance the budget every year?

Gary R. Welsh said...

The fiscal stability fund is an added fund into which money is set aside, like the rainy day fund, that purportedly offers assurances to bondholders that the city will have funds to pay debt service on bonds that it issues in the event the dedicated revenue streams earmarked to repayment of those bonds proves inadequate.

guy77money said...

The police won't get the raise until July (going from memory) so the city skates thru a half of year of no raises.

Flogger said...

Well Steve, for a certainty The Star will never print the Atlantic Article.

I liked in particular, "Public handouts for modern professional football never end and are never repaid. In return, the NFL creates nothing of social value—while setting bad examples, despite its protests to the contrary, regarding concussions, painkiller misuse, weight gain, and cheating, among other issues."