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City-County Council passes controversial budget

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The Indianapolis City-County Council approved a budget Monday night that relies on a $15 million payment from a tax-exempt entity, likely setting the stage for a legal battle, plus difficult negotiations with Mayor Greg Ballard.

The council adopted its budget on an 18-11 vote with two Republicans, Christine Scales and Jason Holliday, voting with the Democratic majority. The council added the $15 million payment-in-lieu-of-taxes, or PILOT, to the Capital Improvement Board’s budget on a separate vote, which fell along party lines, 16-13.

Ballard’s office immediately issued a statement that questioned the Democratic majority’s fiscal responsibility.

"The council majority's current plan is unfunded, increases spending, more than doubles the deficit for 2014, and strips support of our downtown economy in order to give tax breaks to a select few,” the statement said.

Ballard has 10 days after receiving the budget to accept it, reject it, or employ his line-item veto. He and the council must reach agreement by Oct. 30. 

Crime and a desire to hire more police officers and firefighters drove the council’s budget, and more than one Republican expressed sympathy with that cause. Scales, who represents a north-side district, said some of her constituents are so fearful that they’re putting their homes up for sale. She said she wanted to vote for the $15 million fee to the CIB but ultimately decided the legality was too questionable.

Jeff Miller, a Republican who represents near south-side neighborhoods, said he also wanted to make room in the budget for new police and firefighter hires, as well as raises that were supposed to take effect in 2013. “It’s just disappointing we didn’t make that mission No. 1, that I didn’t make that mission No. 1,” he said. “My residents were willing to pay more to fund that.”

Miller said he thought it was reasonable to ask the downtown Capital Improvement Board to chip in for public safety. But he and other Republican councilors said the city should also follow through on Ballard’s proposal to eliminate the homestead tax credit.

Democratic council leaders rejected that idea, which meant they needed to look elsewhere for $9 million in revenue. Council Vice President Brian Mahern came up with the idea of the PILOT fee, which would be enough to also hire 50 police and 30 firefighter recruits.

Mahern said his plan is the “very best attempt to address public safety issues” without putting the burden on taxpayers. He noted that the CIB, a municipal corporation that oversees Bankers Life Fieldhouse, Lucas Oil Stadium and the Indiana Convention Center, has paid $30 million over the past three years to the Indiana Pacers.

Mahern’s proposal set off a wave of resistance and criticism, from CIB-funded groups like VisitIndy to state Sen. Luke Kenley, who said it would jeopardize the legislature’s support for a mass-transit plan.

CIB officials argue that any PILOT for 2013 should have been assessed by March 1. They also say they can’t afford the $15 million because $52 million of their $67 million reserve fund is already earmarked for debt payments and building maintenance.

City Controller Jeff Spalding pushed for eliminating the homestead credit because it would raise baseline revenue, helping close a $65 million budget gap in 2013, as well as the deficit that’s forecast for 2014.

The homestead credit, which is distinct from the widely used homestead deduction, historically was used to offset homeowners’ tax bills through income-tax revenue. Since Indiana introduced caps on property taxes, however, the offset doesn’t affect all homeowners equally.

Councilor Ben Hunter pointed out that the credit mostly benefits owners of higher-value homes. “As a moderate Republican, I have a hard time with that,” he said.

Other action by the council:

-- Reduced public works funding through RebuildIndy by $20 million to $67 million in the main budget. Republican members of the council’s public works committee voted against this provision and spoke out again Monday night, saying it would jeopardize federal matching grants and amount to micro-management of the Department of Public Works. Committee Chairman Vernon Brown, a Democrat, said he still wants to see the $20 million spent, but he wants to public works staff to update the council on its project list first.

-- Cut $100,000 from the Indianapolis International Airport’s professional services budget. The budget cut was introduced by Republican Councilor Robert Lutz, who represents southwest-side neighborhoods. Lutz said he’s upset with airport officials for opposing a potential competitor, a park-and-fly enterprise, which would bring additional tax revenue to Decatur Township.

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  • Hmmm
    Indianapolis committed to this culture of being beholden to "major league" sports to be considered a "major league city" when they bailed out the Pacers in the 80s. Indy cemented it when they built the Hoosier Dome. As someone once said, "If you want to play, you've got to pay." So if you want things changed rather than bash the "billionaires" and ask for their fair share (what are you people communists?!) then maybe it's the politicians who should be bashed for cow-towing to the billionaires. These people ARE billionaires because the know how to play the game. And they are not going to cave to political pressure. You will continue to subsidize the billionaires as long as you want major league sports. If you want change then you need to elect politicians who will not pay. I believe those politicians are called Libertarians. Until then go watch the Indy Indians, or a high school game, or play golf, or go fishing. The politicians, and I believe 95% of the citizens, do not want to deal with what would happen if the Colts/Pacers left town. So you will keep paying and you should not expect anything in return, or refunded, besides entertainment.
  • Due Time
    Re:Executive, it's not fair that the taxpayers subsidized billionaire owners for 25+ years. It is equally unfair to establish TIFs that benefit the builders and developers at the expense of the taxpayers in that TIF area. Indianapolis currently has 16 of 40 TIFs that generate zero growth. It's time the sports owners and the developers paid a little in the kitty along with us taxpayers.
  • One more push to the suburbs..
    As our company develops our strategy for building a badly-needed new facility this irresponsible deficit budget decision helps push the multi-million dollar construction project, 200 jobs and seven million dollar annual payroll to the suburbs. This kind of management will insure the failure of Indianapolis to remain viable in the future, and all of the work to develop a positive, responsible image will have been wasted. This is pitiful
  • Clarification
    I don't mean to diminish the reporting efforts of Ms. McLaughlin. She has done some excellent reporting for this publication. I simply want to see all sides of this debate aired. I just couldn't allow the baseless claim being made by the Mayor and certain Republican councilors about the homestead credit to go unanswered--and I say that as a Republican.
  • Correction
    I meant $33 million, not $48 million.
  • Responsible?
    Finance 101, it's not a "money grab" from the CIB. Those sports facilities, inhabited by pro teams owned by billionaires, need to be paying property taxes. Talk about money grab...that's all the CIB has been doing to taxpayers for years. The CIB has not been responsible stewards of our tax dollars. Remember the $48 million gift the CIB and the City gave to the Pacers? As far as higher taxes, Mayor Ballard has for five years been advocating higher taxes. Now he's advocating a property tax increase to pay for public safety. We had a 65% increase in the local income tax in 2007 for public safety. Now Ballard wants to raise taxes more. The fact is the City's giveaways of our tax dollars to private develoepers is out of control The administration and the council's support of TIFs which draing property taxes dollars is out of control. There is nothing "responsible" about the Mayor's budget.
    • Great post!
      Great post Gary, couldn't have said it better myselfe!
    • Check The Facts
      I would encourage the reporter to check out the facts first before putting pen to paper. Ben Hunter's claim that the homestead credit mostly benefits wealthy homeowners is demonstrably false according to the city controller's own figures. Most of the higher-valued homes have already hit the property tax caps and don't benefit from the homestead credit. The vast majority is paid to homeowners with homes valued below $150,000. The council's counsel also explained that the PILOT being enacted on the CIB is being done in the same manner as the last time it was imposed on the CIB. There was no assessment of taxes made by the assessor the last time by March 1. The PILOT is clearly authorized by state statute. The only difference this time is that it is being done without the cooperation of the entity against which the assessment is being made this time. The CIB properties may be tax-exempt, but they are used primarily by private businesses for for-profit purposes. The PILOT is entirely appropriate under these circumstances. Why should the Hulman-George family pay property taxes on the Indianapolis Motor Speedway, while billionaires Jim Irsay and Herb Simon are given rent-free, tax-free use of the stadium and fieldhouse and expect full coverage of public safety resources during all of their events without compensation? And before we hear about how this payment is going to make the CIB unable to pay its bond obligations, let's get full disclosure from the CIB on how much more it plans to offer the Pacers in additional subsidies--on top of the $33.5 million the team has already received these past three years.
    • Booooo
      What a terrible and irresponsible result. Can you really call it a budget if it doubles the shortfall? How can any of the 18 call this a responsible budget when increased spending leads to a doubling of the budget deficit even after accounting for the one time $15mm money grab from the CIB. Folks, we are going down the wrong path that only gets more difficult over time. I am not a big fan of line item veto authority, but in this case, encourage the mayor to add some common sense to this nonsensical plan. Or reject it and send it back, although I cringe at the thought of what the council's next best idea may look like. Get ready Indianapolis, HIGHER TAXES are coming if this is the type of fiscal irresponsibility that is permitted to play out with our local leaders.

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