Council GOP seeks to spend tax reserves, criticizes Hogsett borrowing plan

September 29, 2016

Indianapolis City-County Council Republicans are at odds with Democratic Mayor Joe Hogsett on how to pay for the city’s infrastructure needs.

Republicans, led by Councilman Mike McQuillen, proposed on Thursday spending $20 million on road funding using local option income tax revenue that the state had been holding in reserves and recently sent to the city. That's part of a $52 million one-time release of cash.

However, Hogsett’s team has proposed paying for road improvements by borrowing, saying that the city could renew some bonds that are about to expire, which means tax rates would not go up. The Hogsett administration maintains the $52 million received from the state is better used at this point shoring up the city’s savings accounts.

City officials are fearful that ratings agencies will downgrade Indianapolis' credit rating because of previous withdrawals by the former administration from the city’s fiscal stability fund.

McQuillen said the Democrats “would rather us take on debt to pay for infrastructure.” At least $39 million of the $52 million returned to the state must be spent on infrastructure funding—or put in the city’s savings account.

Spending the money “would allow us to get to work immediately on streets and sidewalks,” McQuillen said. “Why use a credit card when you have the cash?”

McQuillen said he looked forward to debating the issue with Democrats, who hold a one-seat majority on the 25-member council.

Hogsett’s plan to reduce stress on the city's $1.1 billion budget plan calls for issuing up to $75 million in bonds to pay for capital expenses, including $20 million for infrastructure with other revenue going to fire stations, voting machines and a police dispatch system.

The city would basically renew bonds that are about to expire to fund the debt, meaning that the city would simply continue existing debt payments that are already factored into the budget.

Democratic Councilman Zach Adamson previously told IBJ that this could be a creative way to “try to avoid a credit downgrade,” which could hamper the city’s ability to get low interest rates.

Hogsett's chief of staff, Thomas Cook, criticized the Republicans’ plan in a statement to reporters.

"Unfortunately, today’s proposal is exactly what drives taxpayers crazy: raiding our Rainy Day Fund for no reason and putting Indianapolis on a one-way road toward a future tax increase,” Cook said.

"We urge our friends in the Republican caucus to stop playing politics and start listening to their own constituents who know our city can’t afford another year of spend first, plan later thinking.”


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