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Monday, October 15, 2012

Council budget raids board funds

Posted By on Mon, Oct 15, 2012 at 11:00 PM

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You would think that if the voters of Marion County entrusted you to be a partner with the mayor in balancing a $1 billion budget and closing a $65 million loophole, the least you could do is act in a responsible manner. Unfortunately, that message was lost on Indianapolis City-County Council Democrats.

On Monday night, and along party lines, they passed a budget balanced, in part, by taking $15 million in payments in lieu of taxes (PILOT) from the Capital Improvement Board. Just so you know PILOTS are used to collect revenue from non-property-tax-paying entities, like utilities and hospitals, which still use government services. And while the Council is acting within its authority to levy a PILOT, it did not follow state law while doing it, so this is only going to cause future problems, both legal and otherwise.

Here's why:

Under Indiana law, the same rules that apply to assessing and collecting property taxes must also apply when collecting PILOTS. That means the property subject to the PILOT must be assessed by March 1 of the year prior to collection. So if the Council was going to collect a PILOT next year, they should have assessed the property by March 1 of this year. That didn't happen; the Marion County Assessor completed the assessment earlier this month.

Second, anytime property is assessed, notice must be sent to the owner offering the opportunity for appeal. That the CIB not receive proper notice is not the only problem. A legal question remains unsettled as to who is responsible for Lucas Oil Stadium. Back in 2005-06, there were issues as to whether there were enough funds to build the Stadium. To make it happen, the Daniels administration sold the idea of a food and beverage tax to the doughnut counties. In exchange, the state took over the property, even though the CIB manages it. So if the state is the owner and the CIB, the property manager, why is the CIB getting stuck with the bill?

And speaking of the state, we now enter the most troubling part of the entire deal. To get the $15 million, the Council wants the CIB to dip into its cash reserves. The problem with that is those reserves are used for construction, and to pay back future loans which are coming due. By attempting to take that money, not only is the council putting the CIB back on the road to bankruptcy, it is really ticking off Indiana lawmakers that had to bail the agency out back in 2008. It is so bad that Sen. Luke Kenley (a Noblesville Republican and state budget God) has said if the city takes money from the CIB, they can pretty much forget about mass transit or any other financial help for projects. Because the whole reason for state assistance was to get the CIB out of financial trouble.

But what did Council Democrats do at the end of the day? They did something that is illegal and will do nothing but create ill will on the other end of Market Street. And it still, unlike the Mayor's budget plan, does not help address the long-term needs of the city of Indianapolis. And it sets a horrible precedent because now when the city runs short, the council can ignore state law and levy a PILOT against any not-for-profit whenever it feels like, regardless of the impact on the charity. And to add even more insult to injury, the Council is taking the entire $15 million for the city budget, when if they really wanted to be fair, they would only take the city portion of the PILOT and then distribute the rest to other local governments like schools. They complain when the mayor used TIF (tax increment finance) dollars for the city and didn't distribute it. Way to go guys. With partners like these, who needs enemies?

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