EDITORIAL: City government in financial bind

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IBJ Editorial

The solution to the property tax fiasco that swept Mayor Greg Ballard into office in 2007 is making his job harder, and it could lead to his undoing.

The Republican Ballard came out of nowhere to beat Bart Peterson, a Democrat who had served two terms and had been considered unbeatable. Ballard won because the public was furious over property tax bills that were dramatically higher than they were used to paying.

Turning him out of office might represent sweet revenge for Democrats, six of whom are lining up for a shot at Ballard in 2011, but they’d be stuck with the same problem Ballard faces: growing need in the face of shrinking city revenue. And, like Ballard, they’d be almost powerless to fix it.

The hikes that got Peterson in trouble were largely a function of the statewide transition to market-based assessments. The relief from those hikes—property tax caps—also were outside local control. The caps, which were adopted by the Legislature in 2008 and begin phasing in here with the bills to be mailed in October, will give relief to property owners, but they’ll limit how much governments around the state can raise to fund basic services.

The specter of the caps and their expected negative effect on city revenue has already gotten the city in hot water with one bond-rating agency. As IBJ reported last week, Fitch Ratings last month downgraded the city’s AAA rating. The ratings downgrade, if repeated by other agencies, could increase the amount of interest the city pays on its debt.

Fitch’s concern about the city’s finances comes in spite of the Ballard administration’s tight grip on city spending. The mayor’s first two city budgets both cut spending 5 percent, and the 2010 budget he proposed last month lops off another 5 percent. And City Controller David Reynolds is building up the city’s rainy day fund in anticipation of $30 million in annual revenue losses caused by the tax caps.

Perhaps the city’s conservative budgeting should have averted the ratings downgrade. But regardless of the rating, the city will be collecting less money at the same time it needs millions to pay for the increased cost of public safety and upgrades to the city’s crumbling infrastructure.

The mayor has, commendably, assembled an infrastructure task force to find creative ways to pay for sewer upgrades and to repair or replace inadequate roads, bridges and sidewalks.

But creativity can’t solve all the problems of a city whose hands are tied by decisions made by the state. The tax caps themselves aren’t bad, but state lawmakers won’t budge on giving local governments the freedom to restructure in ways that would allow them to live within the caps.

That’s the sad reality an Indianapolis mayor from either party will have to face.•


To comment on this editorial, write to ibjedit@ibj.com.


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  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.