Until Jan. 18, nobody dreamed of comparing Bob Taft to Mitch Daniels. The Ohioan with the famous Republican name is despised in his own party as a tax increaser. In contrast, as President George W. Bush's Office of Management and Budget (OMB) director, Daniels was a tax-cutting supply-side advocate.If Novak were alive today, he could have easily been coaxed into writing a similar column taking to task Indianapolis Mayor Greg Ballard for breaking his pledge to voters and increasing taxes to bail out the Capital Improvement Board.
But in his State of the State address Jan. 18, the newly inaugurated Daniels stunned Hoosiers by proposing a one-year increase in Indiana state income taxes from 3.4 percent to 4.4 percent for people making $100,000 or more a year.
It is difficult to exaggerate the surprise in Washington at Daniels's apostasy, linking him with Taft. If this veteran political hand takes the tax increase route out of his budgetary problems, does that suggest Republicans are toying with abandoning their stand against any federal tax hike -- party doctrine ever since the senior George Bush's politically disastrous 1991 increase? They are forgetting that higher taxes inevitably mean more, not less, spending . . .
Republican legislators accept the need for tax increases, but want to boost "sin" taxes (on cigarettes and alcohol). When a political ally privately asked Daniels why he was going the tax-the-rich route, he replied that Democrats could not now accuse him of balancing the budget on the backs of the poor. That amounts to avoiding criticism from the left by imitating it, a tactic used by the GOP in the past with calamitous results . . .
But many other Republican leaders oppose any tax increase of any kind at any time, for one reason. It was stated for me this week by Mississippi Gov. Haley Barbour, who was deputy to Daniels in the Reagan White House. "Raising taxes," said Barbour, "is the enemy of controlled spending." More revenue inevitably generates more government. Accordingly, Barbour has fought all tax hikes and intends to veto an increased tax on cigarettes if it passes the Legislature.
Daniels might well take Barbour's example to heart as more relevant than the four-to-one Hoosier support for taxing the rich shown by his polls. With such backing at home, Daniels is contemptuous of criticism from Grover Norquist's Americans for Tax Reform and The Wall Street Journal.
"If I told you how little I care," he told me, "it would be hard to exaggerate." But the OMB director who faced down congressional big spenders might consider Haley Barbour's theory of how taxes impact spending.
Tuesday, August 18, 2009
RIP Robert Novak
Chicago Sun-Times political columnist Robert Novak succumbed to brain cancer today at the age of 78. The Joliet, Illinois native's career spanned more than five decades and included a stint covering the Indiana State House during the 1950s as a correspondent for AP. It's lucky for President Barack Obama and the Democrats that the hard-hitting conservative didn't survive long enough to cover the Obama years. There are few journalists of his caliber today who are up to that challenge. One of my favorite Indiana-related columns by Novak was one where he took to task Gov. Mitch Daniels for proposing an income tax increase on people making more than a $100,000. Here's a little of what he wrote of Daniels before he shelved the ill-conceived tax increase:
Monday, August 17, 2009
Star Editorial Backs Rae
IACC Director Douglas Rae got a bit of a boost today from an Indianapolis Star editorial in an ongoing effort by acting Public Safety Director Mark Renner to oust him after he's been on the job for six months. The editorial reads, in part:
Certainly, Rae has been given less than a wealth of time to prove himself. His boss is even newer, having stepped in just two weeks ago upon the abrupt resignation of Scott Newman. It is to be hoped that familiarity will lead to accord.
Brought here from Philadelphia seven months ago by Newman as a highly touted animal control expert, the first true specialist ever to hold the local post, Rae inherited a maligned mess. He set forth an aggressive agenda of slashing euthanization and boosting adoptions of the 20,000 unwanted animals taken in annually . . .
"There is that accusation that I am more focused on animals than on the people of the community. That's simply not true," Rae says. "I would love to adopt out 100 percent of the animals that come in, but I know that's not possible, and I never would sacrifice public safety to that."
Renner says the core of the problem is communication -- staff discontent over management style, rapport with some animal-welfare groups but not others, public perception of a laxity toward strays.
"Bridging those gaps," as Renner puts it, has been the subject of discussions between the two men. Surely, mutual satisfaction can be reached even in these cash-strapped times and even in the volatile political climate that dogs engender.
Memories of the turmoil preceding Rae's arrival are all too fresh. His ability and zeal to break free from that history must not be allowed to go to waste.
Sunday, August 16, 2009
Truth In Budgeting
Mayor Greg Ballard's administration appears very proud of the 2010 budget it has presented to the City-County Council. Ballard touts a "balanced budget" at a time when "money is tight for everyone." Well, almost everyone. Despite the administration's efforts to make you believe they faced an incredible task in closing a $40 million shortfall allegedly caused by the new property tax cap law, the actual numbers behind the budget tell a much different story.
To be sure, government is taking more of your tax dollars. In 2007, the last year of the Peterson administration, the City-County budget included $564 million in tax collections. The 2010 budget projects tax collections of $680 million, up 20% over Peterson's last year in office. Total tax revenues in the new budget are up 6%, and it relies on $11 million more in property taxes than last year. The last year Bart Peterson was in office, the City received only $33 million in federal funding. The 2010 budget anticipates $124 million in federal funding, a 275% increase, or a difference of $91 million. Combined federal and state support is up to $277 million, about a quarter of the entire budget. And let's not forget the $30 million a year savings the City of Indianapolis realized after the state picked up more than $400 million in public safety pension liabilities and $99 million in child welfare services erased from the City-County budget after the state also took over funding of those services.
The Ballard administration has produced a balanced budget, if you want to call it that, thanks to: its decision to make Bart Peterson's 65% increase in the income tax permanent; the legislature's decision to assume the City's huge pension liability and its child welfare expenses; and an unprecedented surge in federal support dollars. Candidate Ballard opposed Peterson's income tax increase, as did most Republican members of the City-County Council. Candidate Ballard said Peterson's last budget contained a lot of fluff; however, he has used the extra revenues added during the Peterson tax and spend years to maintain a higher plateau of spending that shows no signs of abating. The so-called $16 million surplus the administration says it will put in a rainy day fund comes from the extra income tax revenues from the Peterson tax increase.
Peterson's much ballyhooed income tax increase promised to provide a permanent fix to our unfunded pension liability problem for our public safety retirees. It promised to freeze property taxes, and it promised to put 100 more police officers on the street. To the extent the property tax cap law has diminished revenues, the Ballard administration has relied on the additional income tax revenues to offset those lost revenues, although it isn't clear to me there has been any real loss of property tax revenues. As I indicated, property tax collections are expected to be up $11 million in 2010. Does Ballard suggest they would have gone up $50 million if he didn't have those additional income tax revenues? Those promised 100 police officers never materialized. Instead, the administration chose to put more money in civilian employees to assist police. The 2010 budget adds 50 new police officers; however, federal funds are being tapped to support those new positions.
Spending on public safety is way up as Ballard promised to do during the campaign, but that is largely because of the costly 9% pay raise over the past two years afforded under the police contract at a time when most people are seeing their wages frozen or reduced, if they're lucky enough to have a job. The merger of Perry Township Fire Department will not produce any savings; it, along with pay raises for union employees, will cost us an additional $12 million. The Perry Township firefighters are getting a big fat pay raise as they become Indianapolis firefighters, though, because we pay our firefighters much more than Perry Township did. There is also a $2 million a year savings in the budget achieved through the elimination of township assessors. A glaring example of what is not a priority in this budget is our City's parks. Their budget falls $5 million from $32 million to $27 million at the same time the Ballard administration raised taxes to support the sports palaces. There is $1 million in unnecessary funding for the arts and another $4 million in campaign pay off dollars to a few minority churches and nonprofits for "crime prevention grants."
More than $800 million in spending is not even included in the City-County budget. That includes: nearly $100 million for the Capital Improvement Board; $40 million for the library district; $290 million for the Health & Hospital Corporation; $54 million for IndyGo; and $224 million for the airport authority. The library, HHC and IndyGo will collect more than a hundred million in property taxes between them. Ballard and the Republican council supported another $21 million a year tax, spend and borrow plan to fuel higher levels of spending for the CIB. The library board is doing nothing to abate its property tax burden. And the HHC is setting out to borrow $750 million to finance construction of a new hospital. While it claims it can be built without increasing property taxes, it is dependent on hundreds of millions in federal health care dollars that could well be diminished or redirected under the Obama administration's health care plan pending before Congress.
Incidentally, that more than $800 million in off-budget taxing and spending doesn't include the City's water company, which is saddled with more than $800 million in debt, forcing double-digit water rate increases to pay for that white elephant. There are also double-digit increases in sewer rates to pay for the long-neglected combined sewer overflow problem. Those are tax increases if you're the one paying for those services. And the City is looking at raising parking rates downtown as well to help raise more money.
One thing that is all but certain is that the federal government cannot maintain the level of support the City is counting on for its 2010 budget. What happens when $50-$75 million in federal dollars disappears from the budget? Where will the money come from to pay for those additional police officers? More importantly, what if the administration's rosy forecast for tax collections misses the mark? Or what if the City is unable to flat-line health insurance costs in 2010 as the budget suggests? Due to rising unemployment and a growing number of home foreclosures, it is quite likely that property tax collections and income tax collections will be down significantly over the next year. That means the City will be forced to borrow money using tax anticipation warrants, and the City's downgraded bonds means the cost of that borrowing will cost millions more.
While this 2010 budget appears balanced on paper, the real test is going to come in 2011 when the City could well face a repeat of what happened in 2007. The CIB fix, by its own supporters admission, is at best a 2-year fix. The City has no idea how it's going to repay more than $27 million in borrowed funds from the State or handle the existing $3.5 million deficit even with the added taxes and borrowing. A slow economy and loss of federal funds could put the City in dire fiscal straits by 2011, an election year. The Republican mayor and City-County Council may be facing the possibility of choosing between a general tax increase and massive budget cuts to keep the City afloat. If it's lucky, it may be able to use smoke and mirrors to delay that outcome until 2012. You can rest assured though that there will be a day of reckoning.
To be sure, government is taking more of your tax dollars. In 2007, the last year of the Peterson administration, the City-County budget included $564 million in tax collections. The 2010 budget projects tax collections of $680 million, up 20% over Peterson's last year in office. Total tax revenues in the new budget are up 6%, and it relies on $11 million more in property taxes than last year. The last year Bart Peterson was in office, the City received only $33 million in federal funding. The 2010 budget anticipates $124 million in federal funding, a 275% increase, or a difference of $91 million. Combined federal and state support is up to $277 million, about a quarter of the entire budget. And let's not forget the $30 million a year savings the City of Indianapolis realized after the state picked up more than $400 million in public safety pension liabilities and $99 million in child welfare services erased from the City-County budget after the state also took over funding of those services.
The Ballard administration has produced a balanced budget, if you want to call it that, thanks to: its decision to make Bart Peterson's 65% increase in the income tax permanent; the legislature's decision to assume the City's huge pension liability and its child welfare expenses; and an unprecedented surge in federal support dollars. Candidate Ballard opposed Peterson's income tax increase, as did most Republican members of the City-County Council. Candidate Ballard said Peterson's last budget contained a lot of fluff; however, he has used the extra revenues added during the Peterson tax and spend years to maintain a higher plateau of spending that shows no signs of abating. The so-called $16 million surplus the administration says it will put in a rainy day fund comes from the extra income tax revenues from the Peterson tax increase.
Peterson's much ballyhooed income tax increase promised to provide a permanent fix to our unfunded pension liability problem for our public safety retirees. It promised to freeze property taxes, and it promised to put 100 more police officers on the street. To the extent the property tax cap law has diminished revenues, the Ballard administration has relied on the additional income tax revenues to offset those lost revenues, although it isn't clear to me there has been any real loss of property tax revenues. As I indicated, property tax collections are expected to be up $11 million in 2010. Does Ballard suggest they would have gone up $50 million if he didn't have those additional income tax revenues? Those promised 100 police officers never materialized. Instead, the administration chose to put more money in civilian employees to assist police. The 2010 budget adds 50 new police officers; however, federal funds are being tapped to support those new positions.
Spending on public safety is way up as Ballard promised to do during the campaign, but that is largely because of the costly 9% pay raise over the past two years afforded under the police contract at a time when most people are seeing their wages frozen or reduced, if they're lucky enough to have a job. The merger of Perry Township Fire Department will not produce any savings; it, along with pay raises for union employees, will cost us an additional $12 million. The Perry Township firefighters are getting a big fat pay raise as they become Indianapolis firefighters, though, because we pay our firefighters much more than Perry Township did. There is also a $2 million a year savings in the budget achieved through the elimination of township assessors. A glaring example of what is not a priority in this budget is our City's parks. Their budget falls $5 million from $32 million to $27 million at the same time the Ballard administration raised taxes to support the sports palaces. There is $1 million in unnecessary funding for the arts and another $4 million in campaign pay off dollars to a few minority churches and nonprofits for "crime prevention grants."
More than $800 million in spending is not even included in the City-County budget. That includes: nearly $100 million for the Capital Improvement Board; $40 million for the library district; $290 million for the Health & Hospital Corporation; $54 million for IndyGo; and $224 million for the airport authority. The library, HHC and IndyGo will collect more than a hundred million in property taxes between them. Ballard and the Republican council supported another $21 million a year tax, spend and borrow plan to fuel higher levels of spending for the CIB. The library board is doing nothing to abate its property tax burden. And the HHC is setting out to borrow $750 million to finance construction of a new hospital. While it claims it can be built without increasing property taxes, it is dependent on hundreds of millions in federal health care dollars that could well be diminished or redirected under the Obama administration's health care plan pending before Congress.
Incidentally, that more than $800 million in off-budget taxing and spending doesn't include the City's water company, which is saddled with more than $800 million in debt, forcing double-digit water rate increases to pay for that white elephant. There are also double-digit increases in sewer rates to pay for the long-neglected combined sewer overflow problem. Those are tax increases if you're the one paying for those services. And the City is looking at raising parking rates downtown as well to help raise more money.
One thing that is all but certain is that the federal government cannot maintain the level of support the City is counting on for its 2010 budget. What happens when $50-$75 million in federal dollars disappears from the budget? Where will the money come from to pay for those additional police officers? More importantly, what if the administration's rosy forecast for tax collections misses the mark? Or what if the City is unable to flat-line health insurance costs in 2010 as the budget suggests? Due to rising unemployment and a growing number of home foreclosures, it is quite likely that property tax collections and income tax collections will be down significantly over the next year. That means the City will be forced to borrow money using tax anticipation warrants, and the City's downgraded bonds means the cost of that borrowing will cost millions more.
While this 2010 budget appears balanced on paper, the real test is going to come in 2011 when the City could well face a repeat of what happened in 2007. The CIB fix, by its own supporters admission, is at best a 2-year fix. The City has no idea how it's going to repay more than $27 million in borrowed funds from the State or handle the existing $3.5 million deficit even with the added taxes and borrowing. A slow economy and loss of federal funds could put the City in dire fiscal straits by 2011, an election year. The Republican mayor and City-County Council may be facing the possibility of choosing between a general tax increase and massive budget cuts to keep the City afloat. If it's lucky, it may be able to use smoke and mirrors to delay that outcome until 2012. You can rest assured though that there will be a day of reckoning.
Friday, August 14, 2009
The Case Of Jason Barber Gets More Strange
In June 2008, IMPD narcotics officer Jason Barber was arrested and charged with selling a handgun to a felon and official misconduct. The case against him took a very strange twist last November when the felon, Corey Smith, recanted his story and later turned up dead under suspicious circumstances. A couple of weeks ago, word came that Barber had been charged in an unrelated crime in Hancock County for allegedly beating a McCordsville, Indiana man at the man's home in April. The Star's Bill McCleery reported this on the alleged beating of Chris Choate:
When he was arrested Thursday, Barber already was "suspended pending termination" from IMPD after an earlier arrest on charges of selling a handgun to a felon in Marion County.The case of Jason Barber took yet another strange twist today when the Star reported in an online story that the attack on Choate stemmed from another man's affections for a woman with whom Choate was involved. "The victim, Chris Choate, 38, was involved with a woman who also was romantically linked to an Indianapolis attorney, said Sgt. Jeff Rasche of the Hancock County Sheriff's Department," the Star reports. "Rasche declined to identify the Indianapolis attorney or offer details." "The prosecutor's office pulled the name of the Indianapolis attorney from court documents before filing them." Hmmm. Anybody know who this attorney might be, or why his name would be pulled from the court's file?
"We feel there's sufficient grounds for termination even without this (Hancock County) incident," IMPD Sgt. Paul Thompson said.
The beating victim, Chris Choate, 38, described two of the assailants in the April 26 incident as wearing badges, guns and handcuffs. Detectives are working to confirm the identities of three assailants still believed to be at large, police said, and were hoping Friday to make additional arrests as soon as possible.
Hancock County Judge Terry Snow ordered Barber on Friday to have no contact with Choate and to have no firearms in his possession.
Choate picked Barber out of a six-person photographic lineup, said Maj. Joe Hunt of the Hancock County Sheriff's Department.
Detectives do not know why Barber and the other three alleged assailants would have a grudge against Choate, Hunt said. Police have theories related to the assailants' motives, but they are not divulging them pending further investigation, Hunt added.
Barber was arrested on the Hancock County charge about 4:30 p.m. Thursday in Indianapolis, Hunt said.
Thursday, August 13, 2009
Do You Think Reggie Miller Will Get The Message?
It looks like some of Reggie Miller's Malibu neighbors are trying to send him a message. A plane toting this banner supposedly flew over several Southern California beaches this past weekend. Some people never change. I hear houses in Malibu are more susceptible to fires than they are on Geist.
Indianapolis Bond Bank Rating Downgraded
Fitch Ratings has downgraded its rating for bonds issued by Indianapolis' Bond Bank from AA to AA-, and the City's outstanding unlimited tax general obligation bonds from AAA to AA+. The Bond Bank rating affects $164 million refunding bonds for tax increment finance districts and $3.2 million taxable bonds. The rating service cited the contraction of the City's property tax revenue base as a result of the property tax caps and a decline in the City's fiscal reserves. Today's action by Fitch could lead to higher borrowing costs for the City. The bonds for the Indianapolis Water Company have already been downgraded. Fitch projects the City will lose $32 million in property tax revenues in 2010 as a result of the property tax caps; however, that loss is offset by the state's assumption of the City's public safety pension obligations and retirees' health care benefits. The City has been forced to borrow money because of the delays in property tax collections caused by the implementation of new assessments and property tax caps.
Now Let's Talk About That $15 Million For The Pacers
You and I both knew Councilor Robert Lutz was lying through his teeth when he told people in attendance at the Rules & Public Policy Committee hearing on the $21 million a year tax, spend and borrow CIB bailout hearing that the extra $15 million a year for the Pacers was off the table and not a part of this proposal. Originally, Lutz claimed he would offer an amendment before the ordinance's final adoption that gave the City-County Council more control over the agreements the CIB enters into with the sports franchises, but he pulled that amendment at Monday night's meeting. With the ink barely dry on the new city ordinance, the CIB leadership is already discussing giving away millions more to the Simon family despite the continued budget woes it faces. The Star's Francesca Jarosz fill us in on their plan:
After a series of painful budget cuts, months of political wrangling by state lawmakers and a precariously close vote by the City-County Council, now comes the hard part for the Capital Improvement Board.There you have it. Everythng is on the table. Although the article quotes CCC President Bob Cockrum as saying it would be difficult to obtain council support for more funding, he knows damn good and well the council past up the opportunity to control the outcome of the renegotiation with the Pacers. The current board members will turn over next January, and Bob Grand, Pat Early and the rest of the Board, all of whom are in the pockets of the sports teams, will make sure this renegotiation takes place before the new appointments occur, leaving it to a newly-reorganized board to pick up the pieces. As to the $26.3 million debt payment the Board's Treasurer, Ann Lathrop, discusses in the article, you can bet a deal has already been cut with the State to avoid that payment but she avoided saying anything about it to keep the pressure on wavering councilors.
The fact is, the CIB, which oversees the city's stadiums and the Indiana Convention Center, still faces enormous challenges . . .
Among the most difficult will be hammering out a new financial agreement with the Indiana Pacers, who, after years of losses, say they can no longer bear the entire $15 million cost of operating Conseco Fieldhouse.
Among those challenges is finding a way to help the Pacers.
The team has lost $200 million since Herb and Melvin Simon bought it in 1983, said Pacers spokesman Greg Schenkel.
The Pacers have made clear, Early said, that they can't continue to sustain those kinds of losses.
"I don't want to downplay the fact that there's some urgency," Early said. "We're either going to have to (find a solution), or we run a real risk of them not being in Indianapolis."
Schenkel said the team's intention is to stay here forever, and that's why it's important to continue discussions with the CIB.
The team's 20-year contract, signed in 1999, allows the Pacers an option of terminating early if they can show they are facing financial hardship, Early said.
Although the team has not asked to renegotiate its contract, it has given the CIB financial documents to show it is losing money.
CIB officials and city leaders have pledged they will continue to work with the team, but at this point, there are no concrete solutions.
Paul Okeson, chief of staff for Mayor Greg Ballard, said the city must get a sense of how much money the Pacers need before discussing a funding solution.
He said an agreement with the club could cost even more than the estimated $15 million the CIB would have to spend to operate Conseco Fieldhouse.
"Everything is on the table," Okeson said. "No doubt we're in a tough financial position, but we've got to make it work."
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