Of battles won and trouble ahead: Peterson says state action key to city’s future

Democrat Bart Peterson leaves office in early January after two terms as mayor of Indianapolis. Succeeding him will be Republican Greg Ballard, a former lieutenant colonel in the U.S. Marine Corps who parlayed property-tax outrage into a surprise win. As Peterson, 49, prepared to leave office, he sat down with IBJ. The following is an edited version of the interview.

IBJ: You didn’t expect to be stepping down this year. What was the most significant priority you had planned for your third term that you regret you now won’t get to tackle?

Peterson: Well, in addition to continuing some of the important initiatives that I feel very strongly about, such as education reform and neighborhood redevelopment through the Great Indy Neighborhoods program, probably the most significant [new] thing I was looking forward to was our environmental initiatives.

Indy Greenprint was our game plan for an aggressive effort, in what would have been the next term, to have the city of Indianapolis serve as an example of what an organization can do to promote energy efficiency and sustainability. The city is a billion-dollar a year enterprise with a lot of vehicles and buildings, so it’s not unlike a business when it comes to being able to find ways to operate more efficiently from an energy standpoint [and] in a more environmentally friendly way.

IBJ: Can that continue without you?

Peterson: Can it? Of course. But obviously that’s something that’s going to be in the hands of other people.

IBJ: Once you knew you were leaving office, was there any final business that you wanted to be sure to complete?

Peterson: I didn’t want to take on anything that was not pretty far down the road. Anything that was a major policy decision that would have long-term impact in terms of how the city functioned, it seemed to me after the election was best left to the next administration. I didn’t think it would be appropriate to make decisions that would bind the next administration.

Market Square Arena is probably the best example of that. We weren’t far enough along with the project that we had to complete it. And because it will require all kinds of different commitments and partnerships going forward, it seemed to me that’s best left to the next administration to make a decision on. They could go in a completely different direction, if they choose to, since we’re not bound by anything at that site now.

On the other hand, there were some things that, as long as the next administration wanted to get them done, there were some time constraints, and it would be better to get them done now than to wait. The convention center hotel is an example of that. In moving forward with that we made sure to check with the incoming administration and make sure the mayorelect agreed 100 percent with what we were doing, because again this requires commitments from the city and we didn’t want to bind him and his administration, if that’s not what he wanted. So with his support, we moved forward with that.

IBJ: Was there anything special you did to help Mayor Ballard’s transition team?

Peterson: We’ve been responsive to everything they’ve asked for. As far as I can tell, they’re happy with the cooperation. I’ve urged our people to be as cooperative as is humanly possible. My sense is that’s what they’ve done. They’ve done everything possible to help the new folks.

IBJ: The Legislature is preparing to substantially reform Indiana’s property tax system. Lots of Indianapolis residents are very concerned about their property taxes. They want to see them reduced and permanently stabilized. What can the mayor do specifically, as opposed to the Legislature or other officials, about that problem?

Peterson: There’s only a limited amount that the mayor can do. You control the property-tax-supported spending that the City-County government engages in. But you can see how limited that authority is by the fact that property taxes in 2008-our last budget-the city property taxes that I’ve had responsibility for are actually going to be lower than when I took office. And yet, of course, property tax bills have skyrocketed.

One of the key things to keep an eye on in property tax reform is how are the interests of the cities being taken into account? Property tax payers have to be the number one concern, and they will be. I’m confident of that. Property tax payers will be winners in this restructuring. The question is what condition are Indiana’s cities going to be left in after it’s all over?

One of my highest priorities, had I been re-elected, would have been to be an advocate for Indianapolis and Marion County in that debate. An advocate without a vote, but nonetheless an advocate. I don’t think there’s anything more important to the future of Indianapolis than making sure that we have enough money to have excellent public safety, that we have enough money to be able to run local government. Because local government is the level of government that most touches people’s lives.

IBJ: You repeatedly trimmed local budgets that you controlled for the city and county. If Gov. Mitch Daniels’ property tax plan goes through as proposed, it would eliminate an estimated $100 million in local revenues. If a city the size of Indianapolis is forced to make that substantial a cut, or to increase its income taxes equivalently in response, what will be the result?

Peterson: The answer I just gave deals partially with that, in saying I think that’s an example of how, with taxpayers being the winners, as they should be, there’s got to be somebody who’s a loser. And it seems pretty clear that’s going to be the cities.

You’re not going to find $100 million of fat in the city and county budget. If the city of Indianapolis and Marion County have to cut $100 million in spending, believe me, people will feel it. This won’t be the city we want it to be if the city has to lay off police officers, close parks, not pave streets or build sidewalks, all those basic services that city government provides. That needs to be understood and taken into account in the upcoming debate.

IBJ: Any thoughts about the issue of suburban migration, the idea that people are moving outside of Marion County because they believe either that their taxes are going to be lower, or their tax dollar buys more?

Peterson: That is exactly the problem that the Legislature and the governor have the ability to deal with, if they have the will to do so. I believe if they don’t, we’ going to see the slow death of Indiana’s cities, because the tax differential between the city, Marion County and the surrounding counties is enormous.

People often point to the schools as an example. Or the additional services that an urban area has to provide that a suburban area doesn’t have to provide, such as taking care of the streets and providing public safety for 140,000 people net who come into Marion County each day to work but who don’t live here and don’t contribute to our taxes.

Those two things are often singled out. But I would say more importantly than those two things, there are a couple of other things that the state can actually deal with. Those are age-old problems. The distribution of responsibility for public infrastructure between a city and its suburbs, that’s an age-old problem across the country and certainly here in Indianapolis. The higher cost of urban schools is again an age-old problem. And there are no easy answers to those problems.

But there are a couple of other areas where there are much more readily available answers that could make an enormous difference, and that is the fact that the social safety net in this state is paid for at the county level, as opposed to being paid for at the state level. The consequence of that is the indigent health care costs paid for by Marion County taxpayers, the child welfare system paid for by Marion County taxpayers, is creating an enormous incentive for people to locate outside the city.

Those are social safety net costs. We can debate whether they’re the right level of costs, but that really hasn’t been what’s been in dispute. What’s in dispute is who ought to pay those charges.

If you live in Hamilton County or Johnson County or Hendricks County or Hancock County, you’re not paying for those services. You’re not utilizing them, and you’re not paying for them. But if you live in Marion County, you’re not utilizing them, and you are paying for them.

If those costs are not shifted to the state as they should be and as most people agree they should be, we’re going to see this enormous tax disadvantage between, not just Indianapolis and its surrounding suburban counties, but other big cities as well.

There is no fairness argument on why somebody who doesn’t utilize those services in Marion County should pay for them and somebody who lives in Hamilton County doesn’t have to pay for them. Its just that’s traditionally the way they’ve been paid. It’s a train wreck not just waiting to happen. I think it’s a train wreck that’s already happened. I think we saw the evidence of that when the bills came out in late June and early July. That is the biggest cause for the disparity between a tax bill in Hamilton County and a tax bill in Marion County for the same valued house. The people in Marion County pay the social safety net costs that are not paid for in Hamilton County, because there are very few indigents in Hamilton County.

IBJ: Your relationship with the police was often perceived as thorny. Do you think, in retrospect, there was any way you could have handled it differently, either in terms of their contract or in the way the merger was performed?

Peterson: I actually don’t think there was an opportunity to do it differently. When the new leadership of the (Fraternal Order of Police) came forward several years ago and essentially said we’re going to declare war against your administration unless you give us 9 percent raises per year, it was pretty easy to decide that we couldn’t do that and to make it clear that we couldn’t do that.

So declare war they did, and that was their choice. It was unreasonable, but I wasn’t going to buckle and agree to something that would have bankrupted the city and been completely unreasonable on top of that. So we struggled over many years and ultimately ended up with a contract this year … that officers approved overwhelmingly and that I think was very reasonable. It averages a 3 percent raise per year over four years, and provides some other benefits.

With regard to the merger, I had to do what was right for the city and what was right for taxpayers and what was best for public safety, and I’m convinced that the merger was.

IBJ: What are your personal plans for the future? Are you finished with politics?

Peterson: I don’t know what my personal plans are right now. I’m weighing a number of different options and opportunities. Running for office right now is not in my plans. Whether it ever will be in the future or not I don’t know, but it’s certainly not what I’m looking to do right now. I don’t anticipate getting back into that arena any time soon.

IBJ: What do you consider your proudest achievement in your time as mayor?

Peterson: Well, there are many. But if I had to narrow it down to one, I would say the creation of outstanding educational options within the public education arena, specifically charter schools and our other education-reform efforts, which have performed remarkably. The charter schools weren’t just a good idea. It’s been executed very well.

IBJ: Who do you believe would be the best choice to replace Julia Carson as U.S. representative?

Peterson: I’m not going to weigh into that at this time. I’m not saying I won’t ultimately endorse or support somebody. But I think it’s too early to do that.

I will say this. There will be a good candidate selected and I believe an outstanding person elected to fill the position of Julia Carson. But nobody will ever fill her shoes. She was a one of a kind, one of the most remarkable people I’ve ever met.

IBJ: Any recommendations on what we need to do to win the 2012 Super Bowl bid?

Peterson: I think the foundation has been laid very well for that, and I would expect that Indianapolis would win the 2012 Super Bowl [bid]. The biggest part of the work has been done. I just think the new team needs to go in there and bring it home, which I think they will.

IBJ: You’ve long wanted to eliminate the ramp taking connecting Market Street to I-65 South. Is that still in the works?

Peterson: Yes, in fact they should be breaking ground on that project any day now. It’ll start with construction of new ramps on Washington Street, and then move, after those are completed, to the dismantling of the Market Street ramps.

I think that’s going to be a huge, huge boon for the redevelopment of the near east side of downtown, the eastern gateway to Indianapolis. And it’s an enormous safety benefit as well, mainly on the east side of the interstate where people come off of the interstate at interstate speeds and go right into a neighborhood on east Market Street, with a school and a lot of homes. It’s long been a dangerous situation that will be eliminated by moving the ramps to Washington Street. So it’s going to have two major benefits.

IBJ: Any final thoughts that you wanted to share about your time as mayor?

Peterson: Real simple. I just want to say thank you to all the people of Indianapolis. I leave with a great deal of gratitude for having been given the opportunity to serve in this position, and to serve the people of our city for the last eight years. It’s just been a great honor and a great privilege. I’ve enjoyed it, and I believe we’ve made a lot of progress. So thank you.

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