Monday, October 8, 2012

Give Ballard His Budget

Posted By on Mon, Oct 8, 2012 at 4:00 AM

click to enlarge abdul-hakim_shabazz.jpg

We are in the home stretch of budget talks and hearings down at the Indianapolis City-County Building. Since mid-August Councilors have been pouring through the document, trying to figure out alternatives to Mayor Greg Ballard's proposal to close a $65 million budget gap due to rising city expenditures and declining income tax revenue.

The Mayor has proposed closing the gap by putting on hold scheduled raises to the police and fire department, eliminating the homestead property tax credit, taking $37 million from rainy day fund balances as well as using $10 million in TIF funds.

Some Council Democrats want to levy a PILOT (payment in lieu of taxes) against the Capital Improvement Board to try and close that gap. And some Republicans are looking at ways other than eliminating the homestead property tax credit to close the budget hole. Those two ideas feature several problems.

First, to levy a PILOT against the CIB the property the CIB manages would have to be assessed, which has not been done because it is government property. Second, the CIB, while it has $65 million in cash reserves, has a lot of debt to pay off, including a loan to the State of Indiana. Taking from it only puts the organization back on a path to bankruptcy, which is where it was several years ago when the Legislature came along to bail it out in the first place. Most importantly, this would be just a one-time fix to a long-term problem, like dipping into your savings account to pay your monthly bills.

As far as not repealing the elimination of the homestead credit, it's important to remember why it was created in the first place. During the days of skyrocketing property taxes, the credit was necessary. Property tax caps alleviated that problem. The state eliminated the credit a few years ago. Also, by eliminating the tax credit, which actually costs about three times as much to administer as it brings in ($13.5 million to provide $4.5 million in relief) , not only will more money flow to the city of Indianapolis, but actually numerous municipalities and other units of local government which are strapped for cash. Schools alone would get nearly $4 million.

Perhaps the most important reason the City-County Council should give the Mayor his budget would be to give him complete ownership of the city's financial situation. Not that I am a big fan of abdicating responsibility, but sometimes, from a political perspective, punting is the best thing to do. If the whole budget plan falls apart, the Mayor's office can't blame the Council for not passing his budget plan. And if it is a success, the Council can take some credit. There's nothing like a financial shortfall to bring out the political chess master in everyone. In addition, it's important to note that as the city tries to go to the Legislature and push for mass transit, it would look better if Indianapolis and Marion County are seen as making tough choices as opposed to kicking the can down the road.

So with less than a week to go, the Council should go ahead and give the Mayor his budget. It will make life easier for everyone, today and definitely tomorrow.

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