The city’s Capital Improvement Board on Friday passed a 2017 budget with a $46 million deficit.
But CIB Executive Director Barney Levengood implored the board not to be overly concerned about the projected shortfall. The City-County Council is set consider the budget at its Sept. 25 meeting.
Total CIB revenues in the 2017 budget are projected at $129 million and expenses at $175 million.
Levengood explained that $33 million of the deficit is because of a long-anticipated bond for Circle Centre mall that is due to be paid in 2017.
“We’ve known this is coming and we have the money [in reserve] to pay for this junior subordinate note,” Levengood told the board at its monthly meeting.
When quizzed by board members about the other $13 million, Levengood simply said that’s because “expenses are over revenue.”
But, he added, this is not the first time the CIB budget has forecast a deficit.
“It’s not an unusual budget,” Levengood said. “We’ve historically been conservative on revenue and overstated expenses. We’ll make mid-year (2017) corrections.”
Since the CIB gets most of its revenue through a stew of taxes—many of which are tied to convention, tourism and other hospitality spending—it can be difficult to predict exactly what the quasi-governmental organization’s revenue will be six to 18 months in advance.
Levengood told board members he wouldn’t be surprised that by the end of 2017 enough revenue comes in to meet expenses. And, if it doesn’t, he said the CIB has enough in its reserve fund to cover the losses.
Several board members voiced concerns about dipping into the reserve fund designated for capital improvement projects. Levengood said there are two reserve funds and the one for capital improvement projects would not be jeopardized by a 2017 deficit—should there be one. “We won’t go near that,” he said.
Levengood warned that cutting expenses any further in the 2017 budget to try to trim the projected deficit would be unwise.
“We’re in the real estate business,” Levengood said of the CIB, which operates the Indiana Convention Center, Bankers Life Fieldhouse, Lucas Oil Stadium and Victory Field. “It’s a tough business. If we don’t keep these facilities top-notch, first-class … it’s not going to go well for us.”
Visit Indy CEO Leonard Hoops relayed a story to the board of a meeting planner at recent association meeting who told him and Levengood she steered her organization’s business elsewhere due to worn-out carpet in the convention center.
CIB President Melina Kennedy called the 2017 budget “very healthy.”
CIB member Maggie Lewis warned Levengood and other board members that if revenue is seen as too healthy, the City-County Council could move to take some of it away for other city needs. Levengood pointed out that the amount flowing from the CIB to the council is governed by state law.
“I understand that,” said Lewis, who also is the president of the City-County Council. “I’m just telling you what I’m hearing [from other City-County Councilors] and to be ready to address that.”
It’s important, Lewis said, for the CIB to remind council members during its budget presentation of all the benefits the organization and its facilities bring to the city.
“We have to make sure our story is being told,” she said.