State senate leader warns city about raiding CIB funds

State Senate leader warns city about raiding CIB funds

An influential Republican state senator says Indianapolis risks losing future state assistance to fund a mass transit system if the City-County Council raids cash reserves of a municipal agency to shore up its own budget gap.

City officials are exploring ways to close a $65 million shortfall in the $595 million general fund, which covers daily operating expenses.

To do that, Council Vice President Brian Mahern is leading a charge among council Democrats who want to propose so-called “payments in lieu of taxes” on Capital Improvement Board-operated properties in Indianapolis.

But Sen. Luke Kenley, who chairs the Senate Appropriations Committee, told the Indy Politics blog that the state would be “very hesitant” to provide any funding in the future to the city, singling out the city’s plans for a mass-transit system.

IBJ could not reach Kenley for comment Thursday morning.

The council’s municipal corporations committee is set to vote Thursday evening on the PILOT proposal. If it is approved, the fees would be included in the city budget the full council is scheduled to vote on Oct. 15.

Both Mahern and fellow Democrat council member Monroe Gray, who chairs the municipal corporations committee, think it’s only fair that the CIB provide some assistance. They say the city provided the CIB funds from the downtown tax-increment financing district when it needed help.

“Personally, I wasn’t excited about giving the CIB a helping hand a few years ago,” Mahern told IBJ on Tuesday, “but we did.”

The PILOT fee would be collected on properties exempt from property taxes including the Indiana Convention Center, Lucas Oil Stadium, Bankers Life Fieldhouse, Victory Field, the Virginia Avenue parking garage and Capital Commons.

The once-cash-strapped CIB expects to have a cash balance of about $67 million by year’s end. But the agency’s president, Ann Lathrop, insists that much of the reserve—$52 million—is earmarked for improvements to the properties and debt payments.

The CIB recovered by cutting millions in operating expenses and getting financial help from the state in the form of $18 million in loans.

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13 Comments

CIB

FletchmonOctober 12, 2012 7:41 AM
I am finally getting what I am voting for on council. The city is long overdue in getting CIB under control. They have been arrogant and thinking they are above reproach for far too long. CIB needs to be disbanded as I thought Ballard said he was going to do. Guess I'll vote differently next time. CIB control should be an election issue. And Luke Kenley just wants to give our $$ to sports special interests.

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Who pays the PILOT

Gary WelshOctober 11, 2012 5:33 PM
I agree that the PILOT serves no purpose other than moving public dollars from one pot to another if that is all that is going to occur. I can't think of any other for-profit business in this state that is permitted to use property exclusively for a for-profit endeavor and not have taxes assessed and paid on it other than the arrangement we have for the professional sports teams. In fact, the 1986 federal tax law was written so that bonds issued to build a new stadium or arena would not qualify for tax-exempt status. Local governments got around the new tax by dedicating new tax revenue streams to pay for bonds issued to construct new facilities, thereby negating the need to collect payments from the professional sports team owners to repay the bonds. Typically, whenever government-owned property is leased to a private business to use for a for-profit business purpose, then the otherwise tax-exempt property is assessed for property tax purposes. The intent of this proposal should be to make the sports team owners pay the PILOT, not just pay for it out of the CIB's tax revenues; otherwise, its purpose is defeated.

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Nothing Under the Cover

ChrisOctober 11, 2012 4:52 PM
Guest, the CIB's budget is reviewed and approved every year by the elected City-County Council. There is nothing "under-the-table" about the funds going to the Pacers or the Colts. I don't necessarily agree with funds going to wealthy owners of sports teams, but I don't think there is anything secretive about it. Meanwhile, the Mayor and the City-County Council approve, and in recent years have decreased, the city dedicated funding for the arts. If you want money to go the ISO, rather than harangue the CIB, you should contact your City-County Councilor and ask them to boost the city budget for the arts, and that can include additional funds for the ISO.

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Some nerve...

Ben B.October 11, 2012 4:24 PM
I agree that the CIB shouldn't pay PILOTs (a $1 tax on every ticket sold to downtown sporting events would be a better way to pay for the "loans" given to the CIB). But I have a bad taste in my mouth from Kenley's threat, i.e. "If you do what we, the legislature, disapprove of, we will punish you." This is precisely why Indiana needs true home rule: Indianapolis should be able to pass its own laws and taxes without the shaking fist of the state ever at its chin.

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I'm Scared!!!

WillOctober 11, 2012 3:34 PM
Umm, let's see, was Kenley by chance in the legislature when the Governor and the former Indpls mayor cut that FABULOUS deal for city residents that handed most of the possible revenues to be enjoyed from stadium use, not to our city's coffers, but to Irsay? Wasn't Kenley part of the group of legislators who looked the other way when the State did not include ANY provisions for operating costs to the stadium, thereby placing the burden for those expenses on Indianapolis taxpayers? Was Kenley providing any guidance or oversight when the CIB entered into those risky balloon loans that popped in our faces when interest rates went up and loans were called in? Kenley won't support his own mass transportation plan to bring property tax payers from outside Marion County into the city to use their season tickets to the Colts games at our stadium? Good-another financial boondoggle Marion County taxpayers will be spared from.

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How to Cut the City Budget

JoyceOctober 11, 2012 3:16 PM
Lay off some bureaucrats in the CC Building. Keep the cops.

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The CIB Needs To Help Fund The ISO

GuestOctober 11, 2012 3:09 PM
I know that the CIB is the official "slush money" under-the-table way the city bribes the Pacers and the Colts to say in town...but if they were to want to maybe do something of VALUE, the Indianapolis Symphony could sure use some help. The ISO is part of an arts industry here in Indy that brings in $400 million a year...yet only gets $1 million a year in help from the City. Contrast that to the Pacers...who bring only $55 million in revenues to the city but get $10 million of funding from the city. This is a crime...on all fronts.

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Simon & Irsay Need It More Than Us

MarvWOctober 11, 2012 2:45 PM
Kenley is right. Keep your paws off the CIB's money. That is the Simon/Irsay welfare fund. We can't expect these poor millionaires to pay for their own stadiums. We don't need police on the street but the Simons and Irsays need nice suites in which to entertain their politico buddies.

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The City Cannot Tax Itself

ChrisOctober 11, 2012 2:39 PM
If someone can explain how a city can tax itself to generates more revenue, then I would love to hear the explaination? The CIB is a government body, it operates public properties owned by the city. The properties are tax-exempt because the city owns them. A government cannot create new tax revenue by taxing itself--it just amounts to a shell game of moving funds around. Aside from the general economic downtown, the main reason the city has a deficit is do the constant stream of tax breaks and subidies it offers, with complicity from the City-County Council, to developers and companies. While limited tax incentives can be a useful economic development tool, when it becomes the norm to offer everyone tax break just for doing the things that in the past they would have had to finance themselves, then the system breaks down. Turn off the tap on tax breaks, and then there will be enough money to fund the services that taxes are supposed to pay for.

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Accountability

Finance 101October 11, 2012 1:30 PM
Let me understand this. The Council wants to approve taking money from the CIB who itself had to borrow $18mm of its reserve from the State in addition to its cost cutting measures. How about the Council lead by taking the difficult, yet necessary steps to balance balance the city budget or better yet budget for a surplus in order to build our city's own reserves. Even if the council passed this ill advised plan, what organization will be pilferred for addional funds next year...the state? No, it will come in the form of high taxes for Indianapolis residents one way or another. This sounds eerily similar to the Democratic Agenda in washingtion...keep spending over our means and balance the budget with tax increases. Indianapolis residents would get hammered twice with higher taxes at the federal level and at the local indianapolis level. Not to mention property taxes...Has anyone looked at their new property tax assessments. In some places on the northside, near Butler specifically, assessed values are up better than 20%. Try to sell your house at these levels! Once those assessed values are appealed appropriately, that budget hole will look worse. Come on Council, lead us and cut unnecessary spending!

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Partisan Playing Continues

kentOctober 11, 2012 1:20 PM
Why has any issue originally initiated by former Republican councilors become a target by Brian Mahern? Mahern seems to be back to party politics for the sake of partisan politics, of which most of us are getting very tired and sick of. In their older age both Louie and Ed Mahern have mellowed on their partisan plays, but it looks like Brian will continue the family dynasty of opposition because he can, not because it's best for the City and community. Looks like he also wants to keep his name out there for a future mayoral run.

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Leave the cash alone

indy1October 11, 2012 1:18 PM
Brain surgeons who are on city council. Leave your greedy hands off the cash. One problem is fixed for now. Then you want to Steal from one dept. To cover butt so you look good for your re-elections. Think 2x. What idiots !

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?

hotknicks1October 11, 2012 12:51 PM
Why take the money from CIB? Let CIB pay it's debts owed and reinvest into the properties... I'm not in agreement with the PILOT proposal... please explain how it will help.

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