Tuesday, July 28, 2009

Council Committee Advances $25 Million CIB Tax, Spend & Borrow Bailout Scheme

I'm glad I didn't waste the time to go over to the City-County Council meeting tonight to listen to more than three hours of BS from high-paid downtown elites who've been doing the same song and dance for the past couple of decades that got the CIB in the financial mess it's in today, and each of whom has a personal financial stake in the outcome. There was absolutely no opposing, substantive testimony allowed at tonight's council meeting by the Rules & Public Policy Committee Chairman Robert Lutz, and I'm not talking about the handful of citizens who were allowed to provide rushed statements near the end of what turned into a more than 4-hour meeting or the excellent presentation Sean Shepard made on behalf of the Libertarian Party, although he drifted away from the central issue later in his discussion.

Despite the yeoman's work blogs like this one have done to try to inform the City-County Councilors on this topic tonight, I didn't hear a single good question from a single member of the committee tonight. These people are hopeless. On a voice vote motion, the Committee voted to advance a proposal that everyone concedes is at best a band-aid solution to the CIB's financial woes. Councilor Angela Mansfield (D) cast the only dissenting vote. Contrary to Chairman Lutz' comments tonight, this proposal is not about a single increase in the hotel tax. It sets in place the wheels to borrow and spend another $27 million the CIB has neither justified nor has any way of repaying short of more tax increases by 2013.

I can only conclude that CCC President Robert Cockrum is totally shameless. His son is an executive at White Lodging and his hotel under construction, the J.W. Marriott, is a direct beneficiary of tonight's council action. He participated in the debate and supported the resolution. I've long since given up on members of the City-County Council adhering to any sense of ethical propriety so I can't say I'm surprised by his actions tonight.

I heard councilors falsely claim that they are given no other choice than to pass this lousy proposal or let the CIB reach a point that it is no longer able to operate the facilities and begin cancelling conventions. The CIB doesn't own Lucas Oil Stadium. It doesn't own the expanded convention center facility. The state of Indiana owns both. If the CIB cannot afford to operate these state-owned facilities, it seems pretty simple that the CIB needs to turn back over one or both of these leased facilities to the state. That doesn't require closing facilities. That doesn't require cancelling conventions. That doesn't require raising taxes. That doesn't require borrowing more money. And it doesn't jeopardize the City's bond rating. It does require having common sense and, unfortunately, nobody on the council seems to have any common sense. Bankrupty is an absurd suggestion, and I wish Ed Coleman and others would stop making a complete fool of themselves by beating that dead horse. And for those of you who doubt the viability of my idea from day one to turn LOS over to the state, you may be interested to know that some of Mayor Ballard's closest advisers urged him to do just that. The only reason he didn't go forward with it was because certain attorneys with a vested interest in protecting their legal work represented that the CIB could not legally do that. To them I say, baloney. If Mayor Ballard had followed my wise counsel, he would have put this monkey back on Gov. Daniels' back where it belongs and bolstered his own standing with the good citizens of this county.

One final comment on tonight's hearing. I heard one councilor after another beating the drum that somehow or another Marion County residents are getting a raw deal and have to give more to the State of Indiana than it gets back. That claim could not be more inaccurate. The reality is that Marion County makes off like a bandit when it comes to enjoying the largess of the State of Indiana. Taxpayers across the State have pumped billions into this county over the years. Thousands of state employees are amassed in the county. Thousands more are based here to lobby and represent interests of hundreds of trade associations based here by virtue of our capitol city status. Large amounts of privately-owned real estate is leased from Marion Co. property owners to house the activities of these employees. State taxpayers have helped finance our sports palaces and our Circle Centre Mall. They've helped build expansive highways, bridges, streets, sidewalks, canal and sewer improvements. No other county in this state does as well as Marion County when it comes to state funding and support. I hear about all of these employees from the suburbs coming to the City and taking their tax dollars back to their suburban counties. Has anyone noticed how many people are now commuting out to the suburban communities from Marion County for employment who bring their tax dollars back to this county? Give me a break. Enough of beating this dead horse already.


Paul K. Ogden said...

Gary, you and I don't agree with bankkuptcy. Chapter 9 bankrutpcy is definitely an option. As pointed out by Elrod today, the CIB could actually be forced into bankruptcy by creditors. They might not have any choice.

The important thing is that a BK authorization would give the CIB incredible leverage to renegotiate contracts and restructure debt. You may not even have to ever file - the mere threat will force them to the table.

Even if evey tax is adopted that they want, they are in such a deep hole that they will never get out.

Of course the downside is that it doesn't do any good to renegotiate contracts and restructure debt if the behavior that led to bankruptcy doesn't change. There is nothing indicating that the CIB giveaways will stop and the Pacers giveaway of $15 million is proof of that.

M Theory said...


Unknown said...

I've generally been of same mind about the CIB, but now I'm wondering if you're not just an anti-sports anarchist, AI. Ha ha!

If we give these "state facilities" back, is there any reason to think that the end result - us paying more taxes - would be any different? Yeah, the Governor sniped about CIB operating costs, but that's easy to do when you don't have to actually RUN a CIB.

Sorry, but I'm not all that keen on letting the Governor raise money for a Presidential bid from big money donors or pose in Superbowl pictures when he'd raise taxes, too. He doesn't get all the PR benefits while we still eat the same costs in a different form.

So, I tell you what...I'll start publicly advocating for your plan when the Governor says the following:

(1) "I want to run these facilities;"

(2) "I promise if you give them to me, nobody but those who attend events will pay more, and if I can't deliver on this, you should never elect another Republican again, inclding me, because we'll all be a bunch of hypocritical liars" (gotta make sure there's no "it's a bad economy" wiggle room); and

(3) "I won't give CIB operations to a French conglomerate in exchange for a huge (but massively undervalued over the lease-life) lump sum. I am so confident that my exceptional management will reduce costs, I won't need to sell-out Indiana again for short-term political gain."

When I hear these words, I'm on board.

I don't see it happening though. The Governor doesn't want to lead on this because he KNOWS he'd have to raise taxes, a task which will be damn near impossible now that you've enraged every out-of-county legislator by making them all feel Marion County is sucking Indiana dry.

"Seriously, AI, is your goal to collapse everything by inaction?" he asks while lobbing an ostensible softball....

Gary R. Welsh said...

Here's why Governor Daniels should get to run these:

A) He apparently has extra money laying around for this purpose because he's willing to give the CIB an additional $8 million a year and loan it $27 million.

B) The state collects more money from the regional food and beverage tax than it takes to pay off the bonds.

C) He made the decision to build these facilities knowing there wasn't money there to pay for them.

D) He says he could run them more efficiently than the City.

Gary R. Welsh said...

Councilors' desire to keep that steady flow of free tickets to Colts games is too enticing I suspect to allow them to turn control of LOS over to the state.

Grumpy Old Man said...

Do any you know when the new hotel tax will take effect?

Nice posts, guys, especially the commentary on how well Marion COunty makes out. Whenever I complain about tax payers funding LOS and Conseco Fieldhouse, I always hear the "benefits to Indiana" bunk. I usually respond with "Marion County is not Indiana."


Blog Admin said...

Rich, it depends on when it is passed in the full council. The date I heard last night was something like Sept, 2010.

Chris Worden said...

Good answer.