Friday, December 20, 2013

Ballard Blames Council For City's Lower Bond Rating

This week, S&P lowered the City of Indianapolis' bond rating two notches from AAA to AA. If you read the rating announcement, you understand why the rating was lowered. Firstly, S&P has adopted new standards for analyzing GO bond ratings for municipalities. Applying the new standards, the rating agency found the debt level being carried by the city was too high based on available revenues to pay its debt obligations.

According to the Indianapolis Star, Mayor Ballard reacted to the lowered bond rating by blaming the Democratic-controlled council for its failure to raise property taxes by eliminating the homestead property tax credit, which would have made a negligible difference in the city's financial situation. To piece together its latest budget for 2014, the city is tapping one-time sources to balance the budget.

What Ballard doesn't explain, which is largely the reason the city's bond rating has been lowered, is that he has continued the municipal financing scheme of expanding the areas of the city's tax base that are within a TIF district, thereby starving other municipal services of funding needed for basic operations. The growing tax revenues diverted into the TIF districts, now approaching 15% of the property tax base, are used to leverage more borrowing to finance more publicly-subsidized private development undertaken by contributors to Mayor Ballard's campaign committee. City-County Council President Maggie Lewis released a statement in response to Mayor Ballard's criticism of the council, which appears to recognize the role TIFs have played in worsening the city's credit worthiness.
“We are disappointed that Mayor Ballard would lay the blame for city’s credit rating downgrade at the feet of the City-County Council, particularly after we worked so closely with him to craft a budget that passed with bipartisan support.  For the last six years, Mayor Ballard has neglected to adequately finance and staff public safety in our city, and our citizens have been forced to deal with the consequences of his inaction every day.  Protecting our citizens is our number one priority, and Mayor Ballard signed off on this bipartisan plan with the 2014 budget.  Rather than revise the past, I, along with other Councillors, have been working on a new set of polices that will make the use of Tax Increment Financing in our city more transparent, disciplined, and responsible, as well as leading a study commission to identify public safety funding and staffing needs for the long term.   Working together on these kind of initiatives is the way forward.” 
I wish Lewis had put her words to action when Councilor Brian Mahern was pushing for TIF reforms and to put a break on establishing even more TIF districts after the council went to the trouble of having a report prepared that demonstrated the long-term havoc TIF districts were wreaking on the city's finances. If the council had listened to him, it would have never expanded the downtown TIF district and created the near-northside TIF district that ripped a new, giant-sized hole in the city's property tax base.

No comments: