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State Senate leader warns city about raiding CIB funds

October 11, 2012

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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