Wednesday, August 29, 2012

New Hope for IPS

Posted By on Wed, Aug 29, 2012 at 9:00 AM

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By now you have probably figured out that I am not a big fan of Indianapolis Public Schools. I think Superintendent Eugene White is the epitome of everything that is wrong with modern public education in this country and think a majority of IPS School Board members are living testimonials to Murphy's Law. Now with that said, I think the upcoming school board elections provide an opportunity for the state's largest school district to do a complete 180 and become a diamond instead of big lump of coal.

A number of candidates have filed to run for the board this year. The list is as follows:

At-Large

- Sam Odle

- Larry Vaughn

District 1

- Catlin Hannon

- James Nixon

- Larry Whiteman

District 2

- Gayle Cosby

- Sharon Dunson

- Alvin Esper

- Elizabeth Gore

District 4

- Diane Arnold

I have interviews both Gayle Cosby and Catlin Hannon. I've found both educators to be sharp, passionate and more than willing to put students first. They believe resources should be directed from the Central Office, or as I call it the politburo, and sent back to the individual schools. Principals should have more autonomy and more decisions should be made at the district level.

I know Sam Odle by his stellar reputation in the Indianapolis community as someone with keen business acumen, which would come in handy in helping run the district's finances. James Nixon has been a frequent advocate for schools and has been speaking out for the need to fix IPS for months. Even Larry Vaughn, known as "Crazy Larry" to those of us in the talk radio business, is known to find a good idea or two, but then again even a broken clock is right twice a day.

I haven't had the chance to visit with Larry Whiteman, Sharon Dunson or Alvin Esper but I do look forward to talking with them over the next few months.

I do know current IPS board member Elisabeth Gore and to be frank I wish I didn't. She has been one Dr. White's enablers for years. And it was under her tutelage, along with Mary Busch, Mike Brown and Marianna R. Zaphiriou, that the district loss control of several schools to the state. There was nothing more frustrating than watching these four wrap a school board meeting and get back into the clown car that they came in after having help ruin the lives of more students. This is why I thanked whatever deity was available at the time for Samantha Adair-White, Annie Roof and Diane Arnold.

I think there are good crop of candidates for the IPS board that the voters can pick from. I just hope the race doesn't get lost in the 2012 shuffle. School board races are at the bottom of the ballot, but they are the foundation for any community. Indianapolis will never be able to truly move forward unless its schools get fixed. Hopefully, the voters of IPS will also see it that way and make some real change for a body that really needs it.

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Tuesday, August 21, 2012

Indy's Income Problem

Posted By on Tue, Aug 21, 2012 at 8:30 AM

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As the Indianapolis City-County Council gets ready to take up Indianapolis Mayor Greg Ballard's budget and possibly come up with an alternative plan to close a $35 million - $65 million budget hole, I think it probably wouldn't hurt to take a few minutes and talk about the real root cause of Indianapolis' money problems. As much as some individuals would like to blame the shortfall on property tax caps, in fact, Indianapolis' problem is that the city does not have enough taxpayers.

Allow me to explain. Opponents of property tax caps say that because they exist, local governments have been robbed of badly needed revenue, never mind the fact that people were losing their homes because of skyrocketing assessments, but that's beside the point. Under the tax caps, Indianapolis went from collecting close to $450 million in 2007 to slightly more than $300 million in 2013. However, the big drop off in property taxes took place from 2008 to 2009, when it dropped from about $400 million to about $275 million. Since then they have stayed relatively stable at the $300 million mark.

Income taxes are a bit of a different story. First of all, you have to know how local government finance works. When the state collects income taxes it doesn't immediately disburse them to local governments. It actually takes anywhere from 18-24 months for the money to get to the local level. So the income taxes the city is receiving today was actually collected back in 2010 ­— during the worst economy since the Great Depression. Back in 2010 the city was getting disbursements based on 2008-2009 income tax collections. Today state revenue collections are up, which bodes well for the city's income receipts a couple years down the road.

Still, the only long-term solution to the city's revenue crunch is to create more taxpayers, which in turn will translate into more taxes. This is why things like TIF Districts are important. They create jobs and economic development in areas where there are none. And this is why we also need to continue to improve the quality of education in the city. Good schools mean an educated workforce and that makes it easier to attract quality employers. This is also why the city's AAA bond rating is so important. The bond rating is important because it shows the city is stable and businesses can come and set up shop here. Even things like hosting a Super Bowl help because it puts the city on the radar screen of potential employers looking to escape cities with high taxes and crumbling infrastructure.

The only real solution to the city's financial problems is long-term economic growth, which comes from making more taxpayers and creating more jobs. Until then, tighten your belts and enjoy the property tax caps.

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Tuesday, August 14, 2012

Okay Democrats, Time to Deliver

Posted By on Tue, Aug 14, 2012 at 8:30 AM

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If my essay's topic involves Democrats, one might expect to read some criticism. In this case, such an assumption is half right. I do plan to offer some criticism to my Democratic friends on the Indianapolis City-County Council, but think of it as constructive criticism.

On Monday, Indianapolis Mayor Greg Ballard presented his budget. By now, you probably know the city had a $65 million shortfall and has outlined a number of steps to close that gap, including cuts in public safety and the elimination of the county homestead property tax credit.

When Council Democrats had their news conference shortly after the Mayor's they walked a line between welcoming the Mayor's budget and being skeptical of what's in the details. They were not overtly partisan to their credit, however they did seem a tad bit upset over not getting an advanced copy, even though their chief fiscal officer did attend the budget briefing for the media, and I assume got a copy of the same power points as the rest of us.

While no one likes to stare down the barrel of a $65 million budget shortfall, this is the chance for Council Democrats to prove that they can be partners with the Mayor and govern this city like fiscally responsible grownups, because their past record hasn't been all that great. They have been holding up economic development with TIF districts costing thousands of jobs. They wanted to spend money on redistricting which was already done and personnel changes in their own staff put them over budget. However, there is always an opportunity for redemption.

They can redeem themselves by explaining how they plan to live up to Monroe Gray's pledge that the City-County budget not result in any job losses or interruptions of service for taxpayers. They can fully explain how they plan to, as Council Vice-President Brian Mahern brought up, address the revenue question. City income tax revenues dropped $40 million last year. Are they talking about an increase in the local option income tax? A small increase could yield millions of dollars and close the budget hole tomorrow. When public safety guru Mary Moriarty Adams says the Sheriff's office is underfunded because he requested $122 million and the Mayor only gave him $108 million, where does she plan to get that $14 million? Where will funds be shifted from?

City-Council President Maggie Lewis says the Council is committed to passing a balanced budget by the October deadline. She says she wants to have a conversation with taxpayers and that there should be more transparency. I for one am looking forward to that conversation.

Hopefully my Democratic friends will offer better suggestions than they have in the past such as taking out $100 million in loans to pay for operating expenses for which the city is still paying about $9 million annually; money that could be going to shore up other city programs.

Like I said, this is an opportunity for a group that has not had the best fiscal management record to step up and show they can govern. I really do want them to succeed. This city has some big challenges and if they don't like the Mayor's plan, then they have an obligation to offer up their own. And if they are successful, not only does Indy stay on track, but they get the added bonus of shutting me up. Now that alone is worth $65 million.

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Tuesday, August 7, 2012

Budget deficit; public safety in crosshairs

Posted By on Tue, Aug 7, 2012 at 4:00 AM

One of Indy's finest rides. Public safety represents the biggest slice of the city's deficit budget. - PHOTO COURTESY OF BULLDOG 23, OCCUPY AMERICA, FLICKR CREATIVE COMMONS
  • Photo courtesy of Bulldog 23, Occupy America, Flickr Creative Commons
  • One of Indy's finest rides. Public safety represents the biggest slice of the city's deficit budget.


[Editor's note: This story originally reflected a budget gap estimate of $33 million-$35 million. A clarification from the city's comptroller kicked that estimate up to $50 million -$60 million. We've updated the story to reflect this information. A shorter analysis based on this column ran in NUVO's print edition for the week beginning Aug. 8.]

In the next week or so, the City of Indianapolis will unveil its budget for 2013. I'm hearing a lot of gruff about Mayor Greg Ballard's office and the fact he gave raises (four months ago) to members of his key staff. I had to laugh at the faux outrage that has popped up surrounding the issue because the Mayor who oversees a budget of nearly $1 billion is catching you-know-what for about $150,000. Please note I don't recall this outcry when Democrats passed an ordinance spending $180,000 on a redistricting plan to replace one they privately admit is perfectly legal, but I digress. This point of this column isn't to talk about salaries, but to give you an overall preview of what's coming down the pike so you can make a better informed decision. Yes, I do have a bias, I freely admit that, but I also have the facts to back up my opinion.


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"By its very nature, the size of the any gap is an elusive calculation because it depends on several variables," Jeffrey L. Spalding, controller of the Consolidated City of Indianapolis, Marion County, wrote in a recent email.

"That said, a number of $50 million to $60 million is more representative of the gap between 2013 estimated revenues and 2013 estimated costs for current operations (remembering that there is some price inflation due to rising fixed costs for pensions, health insurance, utilities, contractual agreements, etc.). Thus, it costs more to do the same things in 2013 than it did in 2012."

The 2012 budget for the city of Indianapolis was about $945 million. However, the city-county doesn't get to use that entire amount. The real budget number is closer to $568 million. Where did that other $377 million go? Those are dedicated funds. Things like federal dollars for transportation, gas tax money, etc. That means that money can only be used for specific purposes and can't be moved around, so the city only has that original $568 million to move around from department to department.

Now let's break up that $568 million. $359 million goes to the city government (IMPD, IFD, Mayor's Office, etc) , $209 million goes to county government (clerk, sheriff, courts, recorder, etc). And in both the city and county budgets, public safety is the 363 kilogram primate. Public Safety makes up 88% of the city's expenditures and 75% on the county side. To put it another way, for every $1 the city-county spends, up to 88 cents goes to police, fire, courts, animal care and control, etc.

So now that we've done an overall look at how the money is spent, let's focus on the revenue side. The city of Indianapolis gets money from basically two sources, income taxes and property taxes. In 2012, the city got $196 million in income taxes and $303 million in property taxes. Not counting the recent reimbursement from the state regarding recently discovered dollars to the tune of about $47 million. There are other sources of funding, fees, grants, etc, but the income and property taxes are the big ones. Think of them as your main sources of income and the others are from part-time jobs.

The issue is this: In 2007, Indy took in $446 million in property taxes. In 2012, it dropped to $303 million. That $143 million difference is the result of tax caps, declining assessments due the economic slowdown and the removal of the child welfare levy off the city and picked up by the state. On the income tax side, Indianapolis took in $240 million in 2008. In 2012, it fell to $196 million, even after the 65 percent income tax increase passed back in 2007.

What's going on? The economy. And also the fact that income taxes are collected by the state and 18-24 months later disbursed to local governments.

In reality, Indianapolis dealing with revenue collections as if it were 2010, and we all remember those days don't we? Revenue collections are improving at the state level, but the city won't see that until about 2014.

Hopefully, you're still reading because I am about to tie this all together. The city-county will face an overall shortfall of about $50 million-$60 million when it is all said and done, mostly because of declining income tax revenue and flat property tax collections. And 80 percent of city expenditures are in the public safety category, so when Mayor Greg Ballard says the city will have to look at public safety to help make up the shortfall, you can start to see why. The other city and county agencies only make up about 30 percent of the total budget on a good day. Public safety avoided many of the previous budget reductions taken from other agencies' hides (totaling 8 percent in the last budget cycle). Public safety will be spared no more. This government cannot balance its books AND close a $60 million budget gap if it leaves 80 percent of its $568 million budget off the table in public safety accounts.

I could have gone into a lot more detail but this is Indy Finance 101, you really should enroll in my Indy Finance 468 course.

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