IBJOpinion

EDITORIAL: Consider tapping bank fund to ease budget woes

 IBJ Staff
January 1, 2011
Back to TopCommentsE-mailPrintBookmark and Share
IBJ Editorial

It’s shaping up to be a heck of a fight.

Legislators trying to wrestle to the ground a two-year state budget—with sharply reduced revenue, programs that have been cut to the quick, a supposedly untouchable education allocation, and a host of fresh lawmakers full of their own priorities—will inflict more than a few bumps and bruises.

Something that might apply a little salve to the wounds is withdrawing cash from the dormant public deposit insurance fund, or PDIF. As reported in a front-page story in last week’s IBJ, the $250 million fund has not been tapped in nearly 20 years. This is in spite of the avalanche of bank failures during the recession.

Indiana is the only remaining state with such a fund, which was created in the wake of the Great Depression to safeguard money invested by public entities in the event a bank holding those funds failed and the Federal Deposit Insurance Corp. didn’t fully cover the losses.

The need for it is questionable now, because new state regulations require banks that hold public funds and have high risk ratings to back up those funds with collateral. The value of that collateral is expected to be $5 billion.

Which makes the need for the PDIF debatable, in spite of bankers’ political posturing to the contrary. With a projected gap of $1 billion between expenses and revenue in the next two years, the state needs to harness all possible resources to prevent cuts from going any deeper than necessary. The governor advocates dipping into the fund, and at least one high-ranking House Democrat thinks it’s worthy of discussion.

It seems reasonable for legislators to consider making a concession to banks, such as a lower income tax, to address their claims that the money belongs to them, since financial institutions paid into the fund for decades.

The solid majority of Republicans in both houses means business-friendly legislation is likely to get more attention than usual this year. Lawmakers should support Hoosier investment by beefing up these tax credits:

• Increase the maximum for venture-capital tax credits to $1 million, suspend the application fee, and simplify the application process.

• Increase the revitalization of unused industrial sites by expanding the use of so-called “dinosaur building” tax credits to include facilities that are smaller, were in use for a shorter time, and have been vacant for a shorter time.

Finally, in spite of the Republican sweep in November, we ask legislators to steer clear of issues such as gay marriage, abortion and immigration. Inserting such polarizing questions into the session only makes it more difficult to achieve compromise and progress on more pressing matters. The budget alone will create enough opportunities to make fur fly.

Let the debating begin.•

__________

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

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I am also a "vet" of several Cirque shows and this one left me flat. It didn't have the amount of acrobatic stunts as the others that I have seen. I am still glad that I went to it and look forward to the next one but I put Varekai as my least favorite.

  2. Looking at the two companies - in spite of their relative size to one another -- Ricker's image is (by all accounts) pretty solid and reputable. Their locations are clean, employees are friendly and the products they offer are reasonably priced. By contrast, BP locations are all over the place and their reputation is poor, especially when you consider this is the same "company" whose disastrous oil spill and their response was nothing short of irresponsible should tell you a lot. The fact you also have people who are experienced in franchising saying their system/strategy is flawed is a good indication that another "spill" has occurred and it's the AM-PM/Ricker's customers/company that are having to deal with it.

  3. Daniel Lilly - Glad to hear about your points and miles. Enjoy Wisconsin and Illinois. You don't care one whit about financial discipline, which is why you will blast the "GOP". Classic liberalism.

  4. Isn't the real reason the terrain? The planners under-estimated the undulating terrain, sink holes, karst features, etc. This portion of the route was flawed from the beginning.

  5. You thought no Indy was bad, how's no fans working out for you? THe IRl No direct competition and still no fans. Hey George Family, spend another billion dollars, that will fix it.

ADVERTISEMENT