Saturday, February 21, 2009

ICVA Should Be Looking Elsewhere To Fund Budget

Just how much should the public pay to finance the Indianapolis Convention and Visitors Association (ICVA)? That's a question which seems to be begged by a story in today's IBJ by Anthony Schoettle where the ICVA's Don Welsh makes the case for his organization. Currently, the CIB gives the ICVA over $11 million annually, which represents 70% of its annual budget. In other words, we spend about $20 for each room night booked by conventions. Although the ICVA is supposed to be under contract with the CIB to oversee the city's convention industry, the CIB also budgeted another $2.5 million itself this year for advertising, which is an increase of nearly $2 million from earlier budgets. The CIB announced it was cutting that budget as part of its efforts to trim $6 million from its budget this year.

One of the reasons the CIB (i.e., Mayor Greg Ballard) is seeking another huge tax increase now is to continue its current funding of the ICVA and contribute another $3-4 million, bringing the taxpayers' contribution to the ICVA to $15 million annually. The ICVA's Welsh promises that the increased funding will pay for itself through higher bookings for conventions. One might ask why area hotels and restaurants aren't interested in kicking in extra money to the ICVA if the result will be 150,000-200,000 more convention room nights.

Schoettle mentions once again Bob Cockrum's silly idea of imposing a new income tax on persons who work in Marion County but live outside of it. Those are taxpayers, incidentally, who are already paying local income taxes to the counties where they live. Cockrum's son, by the way, has a financial interest in the new Marriott Hotel being built adjacent to the convention center at a cost of nearly $65 million to taxpayers. Councilor Joanne Sanders also supports the additional funding for the ICVA. “What the ICVA has been able to do with a relatively small budget and small staff has really been phenomenal,” said City-County Councilor Joanne Sanders, Democratic minority leader. “We lose sight of the fact that this is an economic development issue as much as a taxing issue. These initiatives bring jobs in the hotel, restaurant and other hospitality and tourism sectors in our city.” Sanders is currently employed as an International Representative for the International Alliance of Theatrical Stage Employees (IATSE), the same union which represents workers at the convention center.

Frankly, I consider the ICVA's insistence that it be given even more money insulting. The taxpayers built the convention center and have paid to expand it a couple of times and now are shelling out $200 million more to expand it yet again. We spent $320 million, plus interest costs, to build Circle Centre Mall adjacent to the convention center. We've spent hundreds of millions more subsidizing hotel projects and other capital improvements in and around the convention center. We've spent more than a billion more on new stadiums. And it's still not enough. Had enough?

Friday, February 20, 2009

Raising Taxes For CIB Could Hurt City's Convention Business

The IBJ's Scott Olson delivers a prescient story today on the impact of raising the City of Indianapolis' food and beverage tax and innkeepers tax to bail out the CIB's nearly $50 million budget shortfall in covering expenses for the Lucas Oil Stadium, Conseco Fieldhouse and the Indiana Convention Center. Did you know that Indianapolis' innkeepers 16% tax rate is among the highest in the nation already? Look at this comparison:

  • Indianapolis--16%
  • Miami--13%
  • Las Vegas--9%

Our food and beverage tax of 9% is nothing to slouch at either. Another 6% tax is levied on car rentals. Collectively, those taxes raise more than $76 million annually in Marion County as follows:

  • Food & Beverage--$36.3 million
  • Innkeepers Tax--$36.2 million
  • Car Rental Tax--$4.6 million

A secret plan hatched by the Ballard administration and shared with state lawmakers would hike these taxes 1%, generating $18 million from the food and beverage tax and $2 million from the innkeepers tax, still short by millions of what the CIB says it needs to close its budget gap. The food and beverage tax was doubled and the other taxes increased to pay for the Lucas Oil Stadium. When taxpayers adopted the original 1% food and beverage tax for the original dome, they were told the tax would disappear once the stadium was paid off. Instead, the tax has been made permanent, and the dome had a debt equal to its original $70 million cost when it was imploded in December to make way for the expanded convention center.

A lobbyist for the hospitality industry, John Livengood, warns that tax increases could have a negative impact on the local tourism industry. “That’s the one that haunts me; that’s the one that keeps me up at night,” said Livengood, executive director of the Restaurant & Hospitality Association of Indiana. “It just boggles my mind. I don’t get it.” "Meeting planners who often consider taxes when seeking convention sites could be dissuaded by Indianapolis’ costs, argued Livengood, who hopes the CIB will seek alternatives such as a ticket tax," Olson writes. "And not just tourists are affected," he adds. "Anyone who dines out would pay more, and if residents stop eating out, local restaurants suffer."

"Only the little pay people pay taxes," New York hotelier Leona Hemsley once quipped before she was charged and convicted of tax evasion. When will the little people rise up and demand that the billionaire Simons and Irsay pay their share of the costs of having these sports palaces? Haven't you paid enough already?

The Continuing Crisis In Indianapolis

If you found yourself mystified by the IBJ's revelation that local corporate investors in the Circle Centre Mall had agreed to divert their dividends to the CIB to finance construction of Conseco Fieldhouse, the father of the deal which gave us the mall, former Mayor William Hudnut, was equally confused. Ruth Holladay has the scoop on Hudnut's reaction to this news:


"First, the folks that stepped up when I was mayor, pledged some funds, and were given a position as limited partners in the deal, did it in good faith as a gesture of civic leadership. They closed a gap of some $50+ million that opened up when commercial real estate took a downturn in the late Eighties. Without their efforts, the Mall would not have been built.

"Second, since the original deal was made during the Hudnut years, lots of things were changed, renegotiated, refinanced, etc., none of which I know about.

"Persons more familiar with the story, who are still in Indpls., like John Krauss, Mike Higbee, Fred Armstrong, Dave Frick, could probably fill in those details, if you are interested. And of course, (former Mayor Steve) Goldsmith (elected after Hudnut) and his people, like Bob Grand), since they were the ones who effected the changes.

"Third, I don't recollect that the CIB had any involvement at all in the original deal on the Mall, as it was called.

"How they and other capital projects like Lucas Oil Stadium and Conseco Field house, deals done after I was gone, got involved, is a mystery to me.

"Fourth, hindsight is more accurate than foresight, so of course, in these downtimes it is easy to criticize deals that government made once to stimulate economic development, now that we are in a recession. But certainly, originally, all the investors knew there was risk.

I still appreciate their initial investments.

Yeah, old Bob Grand was right at the center of the deal. Now he's fully in charge of the CIB, notwithstanding his paid status as an attorney and advocate for the billionaire Simons, to represent your interests. Thanks a lot, Mayor Ballard.

On that gigantic water rate increase the unelected Indianapolis Water Works Board rammed through tonight without public input, at least one City-County Councilor is speaking out. "No board or commission should have the local authority to raise fees and taxes," said Councilor Ben Hunter. "These decisions should be made by elected officials so taxpayers can hold them accountable for their decisions," he continued. "The Waterworks Board as a courtesy never made communication with the Public Works committee on their request for a rate increase." That's right. This unelected board appointed by the mayor didn't even consult with our elected officials before seeking a tax increase. In other words, it's acting just like the CIB.

Hunter is seeking a delay in the Board's emergency request to raise water rates 20%, on top of another general increase in rates. "There are many issues on the horizon that will affect Marion County taxpayers, including a fee increase in sewer rates to fund work for the CSO (Combined Sewer Overflow) project under a federal consent decree," Hunter said. "We must find efficiencies and work together on these matters and consider the tough economic times taxpayers face in this county."

This is a big scandal waiting to be uncovered by some ambitious reporter in this town, which we may or may not have at the moment. Based on accounts I've heard from numerous Indianapolis residents about over-billing by the Indianapolis Water Company over the past year, some real hanky-panky has been going on in the billing department at the water company. I believe my own homeowners association may of been a victim of over-billing. Anyone who asks questions about spikes in their water bills are told there was a malfunction in the water meter and a suggestion is made to replace it to fix the problem. Attempted class action lawsuits have been dismissed by our local courts. Former Mayor Bart Peterson and CCC President Beurt SerVaas cooked up this over half-billion dollar deal to purchase the water company to protect us against astronomical rate increases and, yet, that is precisely what we're getting. Someone got rich off that deal and now we're paying the price. Is there anyone left in government that acts for the interest of the public and not themselves?

UPDATE: The Star's Brendan O'Shaughnessy provides more insight on why it is the Indianapolis Water Company requires such a large rate increase. It turns out that some bond expert advising the Indianapolis Bond Bank thought it would be a great idea to use a variable rate bond on 58% of the $840 million in debt being carried by the water company to save a little on interest in the short-term. Now those rates have skyrocketed. O'Shaughnessy writes:

Officials from the Department of Waterworks said the more immediate rate increase is necessary because the financial market crisis has caused interest rates on Waterworks' debt to nearly triple. Interest rates on that debt rose from 3.5 percent to 9.5 percent in the past two years, forcing Waterworks to make $20 million more in interest payments in 2008 than in 2007 . . .

Today, nearly 58 percent of the department's $840 million in debt is in variable-rate bonds, meaning that it changes on weekly intervals in response to market conditions. The rates on these bonds were low when they were issued, saving the city money. On the other hand, they carried a greater risk than fixed-rate bonds.

"Apparently, it seemed like a good idea at the time, but it turned out to be a bad idea," said Steele, who joined Waterworks last year.

Kevin Taylor, the Bond Bank's executive director, said variable-rate debt can be enticing, but that as a rule of thumb, it should make up no more than 20 percent of an entity's bonds.

"Fifty-eight percent is very high," said Taylor, who also took over last year. "It's too much uncertainty and interest-rate exposure, and it's playing out right now."

Taylor said he hopes to change the agency's debt mix by the end of March.

O'Shaughnessy's story notes that Jim Steele has helped trim the water company's budget since joining it last year, including $1.5 million in outside consulting. I wish he had shared who Peterson set up for all of that outside consulting work. You can bet they were big contributors. Can you guess which big law firm in town is counsel to the Bond Bank?

Thursday, February 19, 2009

Marion County Facing Financial Disaster Due To Another Property Tax Bill Delay

Marion County property taxpayers have still not made their final payment for last year's taxes, and Marion County Assessor Greg Bowes announces today that this year's payment for last year's taxes could be delayed by months, forcing local governments to once again take out short-term loans to pay the costs of government. In a sellers' market, interest costs could be higher than usual, which means fewer dollars to pay for already-budgeted expenses. Even worse, as more and more people lose their jobs in this deep economic recession, the likelihood of more property owners missing their payments this year will only increase. Bowes blames the reassessment, but I thought that was the excuse for the third payment for last year's taxes not being paid until this spring. This is just one more reason why Indianapolis leaders should not even be thinking about imposing new taxes on already stressed out taxpayers to finance the sports palaces with a $50 million bailout. Local governments are going to need every available dollar just to pay for basic services. If the CIB needs money, then the Irsays and Simons will just have to pony up. We're tapped out.

Ticket Tax A Done Deal?

The IBJ's Anthony Schoettle blogs today that Indians, Pacers and Colts ticket holders should plan to pay a higher tax next season for their tickets:

After talking to state legislators and City-County Council members this week, I’m convinced one of the mechanisms to raise revenue for this shortfall is going to be a ticket tax hike. People buying tickets to sports and entertainment events at Conseco Fieldhouse, Lucas Oil Stadium and Victory Field are already getting dinged with a 6 percent tax. It soon could be 7 percent or 8 percent, maybe even 9 percent. For every 1 percent the ticket tax is raised, that would bring in between $600,000 and $800,000 annually from Pacers, Colts and Indians games. Other ticketed events in those venues would add to the till. Still, a ticket tax is only part of the answer to making up the shortfall, but as far as I can tell, it’s the most popular part. So, despite all the teams’ efforts not to raise ticket prices, those prices will be increasing.

“Of all the potential funding sources, the ticket tax makes the most sense to me,” said City-County Councilwoman Joanne Sanders, Democrat minority leader. “I think true users of the facility should have to pay. The direct use is an important thing to look at.”

The ticket tax is very popular with elected officials because they don't have to pay for their tickets. Either the CIB or a lobbyist gives them free tickets to the events. They are often invited to suites where they can eat and drink all they like for free. A ticket tax, however, doesn't come close to funding the $50 million budget gap the CIB is trying to close. The CIB claims it saved $6 million through budget cuts and the ticket tax would add no more than about $2 million-$3 million.

CCC President Robert Cockrum is as clueless as always. He's all for the ticket tax, and he wants to impose a new local income tax on people who work in Marion County but live outside it. "Cockrum said one potential source is a one-quarter of 1 percent income tax on people who work in Marion County, but live in other counties," Schoettle writes. And Sen. Luke Kenley is open to any possibility. "When asked about possible funding sources for the CIB’s budgetary shortfall, Kenley responded, 'Anything is possible," Schoettle says. I guess the food and beverage tax the neighboring counties are paying to support our sports facilities isn't enough.

As usual, none of the politicians want to make the Simons or Irsays pick up the tab for the palaces built for them on the backs of taxpayers. The two families have showered politicians with several million dollars in campaign contributions over the past decade. That's all it takes to make these politicians put the interests of the billionaire sports team owners ahead of the public interest. Had enough? Didn't I hear those words once before?

UPDATE: Note that Field of Schemes is reporting that an amendment by Sen. Tom Coburn to Obama's $787 billion stimulus bill that would have prevented any of the money from being spent on sports stadiums was stripped from the final bill. I wouldn't be surprised at all if Mayor Ballard and the CIB don't try to get federal stimulus dollars diverted to shore up the funding gap so the billionaire Simons and Irsay don't have to pay a dime.

The Worst Legislature

The late Harrison Ullman used to lament that Indiana had the worst legislature in the country. I suspect Gov. Mitch Daniels is thinking that this morning as he sees hope of implementing the local government reform initiatives proposed by the Kernan-Shepard Commission flushed down the toilet by members of his own party. The Star's Mary Beth Schneider sums up what happened yesterday at the State House:

Gov. Mitch Daniels' hopes of eliminating townships and otherwise restructuring local government suffered multiple blows Wednesday, as several bills he supported were gutted or defeated in Indiana Senate committees.

Advocates of the reforms blamed the setbacks on an entrenched political network in which lawmakers protect their friends in township government. Critics hailed the legislative defeats as a victory for maintaining decentralized government that is closest to the public.

Among the victims:

Bills to do away with township government, including one focused on Marion County. But senators passed amendments that would ban the future hiring of township officials' relatives and would require township budgets -- typically fat with reserves that vastly exceed the budgets -- to be reviewed by county councils.

A bill to consolidate smaller school districts was pulled from consideration without a vote.

A proposed constitutional amendment to eliminate some county offices as constitutionally required was voted down.

Daniels didn't hide his anger towards Republican senators. "I'll make no comment about Democrats all voting against reform, but when it comes to two members of my party, I'm disappointed in them and embarrassed for them. We'll try again next year," Daniels said in a statement. Daniels was referring to Sen. Jim Buck (R-Kokomo) and Sen. Sue Landske (R-Cedar Lake) according to Schneider. Sen. Connie Lawson (R), who thinks township government is indispensable, and Sen. Mike Young (R-Indianapolis), who doesn't want to consolidate fire departments, are equally to blame for the defeats suffered yesterday. What's left in the reforms pushed by Gov. Daniels, with the support of former Gov. Joe Kernan and Chief Justice Randy Shepard, is pretty much useless dribble that won't save taxpayers any money or appreciably improve government.

It looks like the only thing things this legislature is interested in doing is finding pork barrel projects on which to blow the state's reserves and the state's share of federal stimulus dollars, providing tax breaks for hard up casino owners, raising taxes on the little people to subsidize billionaire sports team owners, making sure Gitmo detainees don't wind up in Terre Haute's federal prison and designating sugar cream pie as the state's official pie. Yeah, Ullman had it just about right. This is the nation's worst legislature.

Wednesday, February 18, 2009

Indianapolis Water Users Slammed Under Proposed Rate Hike

The unelected 7-member board that oversees the Indianapolis Water Company has quietly requested permission from the Indiana Utility Regulatory Commission to seek an emergency order hiking water rates 20% on top of a general rate hike already planned. A spokesman for the Water Company blames the credit crisis for the need to hike rates, which will add an additional $5 a month for the average homeowner, according to WTHR's Mary Milz.

Mayor Bart Peterson and former City-County Council President Beurt SerVaas brokered a deal with NiSource to purchase the water utility back in 2000 for $522.5 million. At the time, city leaders said the acquisition of the utility was necessary to prevent NiSource from selling to another investor-owned utility, thereby protecting Indianapolis water users from an excessive rate increase of 30%, which the public was told would occur if the utility was not purchased. Mayor Peterson boasted at the time that the deal would save users about $6 a month. The city then privatized the utility's operation in a deal with Veolia, a French company. Controversy later erupted when it was learned that Peterson had not disclosed a financial interests he had regarding the utility that posed a conflict of interest. City attorneys assured the public that the negotiators had not profited from the deal.

As an officer of my homeowner's association, I find this belated announcement of the rate hike unacceptable. We set our budget in December for the current calendar year. The water bill is a significant monthly expense for our association. Did anyone hear our mayor or city council members discuss this with the public? Oh, yeah, it's not their decision. That belongs to the unelected board appointed by the mayor and council leaders. Who are they?

  • Barbara Howard
  • Carmen Hansen-Rivera
  • Michael Hudson
  • Dan DeMars
  • Jack Bayt
  • Samuel Odle
  • Dr. Marvin Scott

Indianapolis sewer users have been socked with mammoth increases in monthly fees in recent years to pay for sewer improvements ordered by the federal EPA to comply with the Clean Water Act. An increase at this time will only add to their pain, many of whom are already struggling to make ends meet.

Former Judge Gary Miller Forms New Law Firm

Former Marion Superior Court Judge Gary Miller has formed a new law firm with his spouse, Tammy J. Meyer. Some of you may recall the controversy that erupted following last year's Marion Co. GOP judicial slating when two, long-time civil court judges, Kenneth Johnson and Miller, were not re-slated. A third Republican criminal court judge, John Hammel, also was denied re-slating. All three accepted the slating outcome and did not challenge the slated Republican judicial candidates in the May primary. A press release announcing the formation of MillerMeyer, LLP reads:

Former Marion Superior Court Judge Gary L. Miller, and Tammy J. Meyer, a former senior partner at Lewis Wagner, LLP, announce that they are forming the law firm of MillerMeyer, LLP .

Judge Miller retired from the bench at the end of 2008. He served for 10 years in major felony court, and 8 years in the civil division. He served as President of the Indianapolis Bar Association in 2003, and remains an Adjunct Professor of Law at the IU School of Law at Indianapolis. Miller is a nationally recognized speaker on the subject of legal ethics and trial advocacy.

Ms. Meyer has been consistently listed as a Super Lawyer and one of the Top 25 Women Lawyers in Indiana in Indianapolis Monthly. For the past 20 years, she has been a litigator focusing on product liability, medical device, business litigation, and insurance defense. She is a frequent speaker on topics ranging from trial tactics to environmental coverage issues. She is active in the Indianapolis Bar Association, Defense Research Institute, and the International Association of Defense Counsel.

Miller will focus on mediation, civil and criminal litigation, and legal ethics. Ms. Meyer will continue to focus on litigation in the areas of medical products, business, and insurance defense.

Tuesday, February 17, 2009

Reid's High Speed Rail From Vegas To Disneyland

Remember Barack Obama telling folks up in Elkhart last week that there were absolutely no earmarks in his $787 billion stimulus (spending) bill? An $8 billion high speed rail tucked into the legislation which connects Sen. Harry Reid's hometown of Las Vegas with Disneyland in Anaheim, California apparently doesn't qualify as an earmark by Obama's definition. "Proposals for magnetic levitation trains that could travel 300 mph and whisk passengers between Anaheim and Las Vegas in 86 minutes have been floated for decades as a way to ease traffic on Interstate 15 and reduce pollution -- and, of course, boost the Las Vegas economy," writes the Chicago Tribune. "The project's boosters hope the stimulus money will help get it moving."