The Capital Improvement Board on Monday will begin the arduous task of convincing a skeptical panel of City-County Council members to adopt a budget for next year that includes $10 million for the Indiana Pacers.

Members of the council’s seven-member Municipal Corporations Committee already are expressing discontent about the $73.1 million operating budget CIB officials will present to them on Monday evening. While the committee won’t vote on its recommendation until Oct. 19, councilors from both political parties said last week they were inclined to reject it.

That could signal a tough ride for the budget in the full council, which is expected to vote on it Oct. 25.
 
“I could see us just saying, ‘No, we’re not going to approve your budget,’” Bob Lutz, a Republican who sits on the Municipal Corporations Committee said of the committee vote.

“There’s a lot of discontent on the council with what they did,” he said in reference to the Pacers’ funding.

This summer, CIB and Republican Mayor Greg Ballard’s administration laid out a plan to provide the Pacers with $33.5 million over three years, including $10 million per year to operate Conseco Fieldhouse where the NBA franchise plays and a total of $3.5 million for improvements to the venue.

CIB provided the Pacers’ first $10 million in July from this year’s $63 million budget, which the council already had approved. But the council must sign off on the $73.1 million for next year, which includes the next $10 million installment.

If the council committee were to reject CIB’s budget later this month, it would go to the full council with a negative recommendation. The 29-member council ultimately will decide whether to approve it, based in part on that recommendation. The committee or the full council also could amend the budget to remove $10 million from CIB’s budget, but it’s not clear whether the council could specifically bar CIB from providing the Pacers with $10 million, said Bob Elrod, the council’s attorney.

Ryan Vaughn, the council’s Republican president, said the CIB budget is always among the toughest to pass, but he expects this year’s will be particularly difficult.

If the full council were to reject next year’s budget, CIB would revert back to its budget for this year, which is $10 million less.

CIB President Ann Lathrop said she “would not want to predict” whether the board could find $10 million in cuts needed to make the Pacers payment and carry out CIB’s other functions operating the city’s convention center and sports venues.

“That’s a significant percentage,” she said.

Councilors such as Lutz disapprove of providing the Pacers with tax dollars. He said he made a tough choice last year in approving a 1-percent hotel tax hike, which, along with state loans and an increased take of sales and income tax revenue, helped CIB avert a projected $47 million deficit.

It angers him that the board is now asking to spend more to help a private operation.

“I’m furious about the CIB,” Lutz said. “They came to us last year and said we don’t have the money to operate and we need this tax increase.”

CIB officials, however, point out that the board also made draconian cuts and maneuvered to resolve a $25.4 million debt insurance issue.

For other councilors, funding CIB seems a misplaced priority when other agencies such as IndyGo and the Indianapolis-Marion County Public Library, whose budgets they also approve, are struggling. Those agencies receive funding from different sources than CIB, which this year will get some property tax money from a downtown tax district but gets most of its revenue from taxes on things such as income, food, beverages, auto rentals and hotels.

But Maggie Lewis, a council Democrat on the Municipal Corporations Committee, said the city needs to come up with creative solutions for the other entities before CIB gets her support.

“If we can find dollars to support [the CIB], why can’t we do the same for the other two municipal corporations?” Lewis said. “We find ways to fund things that are important to us.”

Jackie Nytes, another Democrat on the committee, said her frustration stems from the way the process was handled.

Earlier this fall, the city’s Metropolitan Development Commission approved setting aside $8 million in property tax money from a downtown tax-increment financing (TIF) district to CIB. That money must be used to benefit the Indianapolis Convention and Visitors Association, but it also frees up other CIB money that otherwise would go toward that group.

Nytes said she sees using the TIF money as a way of getting around having the council approve additional CIB dollars to benefit the Pacers.

“If I were voting Monday, I probably would vote against it,” Nytes said. “My whole problem with the whole thing is the surreptitious way they went about it.”

City officials, however, have said the process was transparent because all MDC meetings are public.

Lathrop said she hopes the council discussion will be positive and emphasized the importance of CIB's having adequate funding next year. The expanded convention center is scheduled to open early in 2011.

“In a time when we’re nearly doubling the size of our convention center, we have to service the people who are going to be in that building,” Lathrop said.

The CIB budget will be presented to the Municipal Corporations Committee at 5:30 p.m. Monday in room 260 of the City-County Building, 200 E. Washington St.