The Magic Act that is the CIB: Watch the Magician's Other Hand

Yesterday the Capital Improvement Board claimed to much fanfare that the Board was trimming $6 million from its budget. Included in such cuts were the such nifty items as leaving adminstrative positions unfilled, cutting back on security, and delaying maintenance.

As always, Gary Welsh over at Advance Indiana lifts the curtain to reveal the the dog and pony show that is the CIB:

=>As is it always seems to be the case, things are not as they appear. The CIB's 2009 budget is $110.2 million, which is $20 million over the CIB's 2007 budget, the last year it operated before the opening of Lucas Oil Stadium, a budget increase of 21%. The 2009 budget contained an astounding 75% increase in salaries from $12.4 million to $21.8 million. The CIB says it had to add 52 full-time employees since it opened Lucas Oil Stadium. That translates into an increased cost of over $180,000 per employee. The CIB's 2009 budget also added in an additional $2 million for advertising, utility costs nearly doubled to $8.1 million, repairs and maintenance costs tripled for the new stadium, topping $3.6 million. There's even $4.2 million in additional money for land and building alterations, renovations and repairs.

=>To pay for this higher budget, the CIB is drawing down more than $25 million from its reserves; otherwise, the CIB projects its revenues in 2009 will actually be over $8 million less than they were in 2007. Part of that relates to $4 million less in food concessions and $6 million in suite license fees given up to the Colts franchise. Tax receipts from the food and beverage tax, the innkeeper's tax and car rentals are expected to grow close to $4 million.

=>So what about this so-called $6 million in budget cuts? Barney Levengood told the Board that he would find the savings by cutting $1.1 million in salaries and benefits, $2.3 million in maintenance and repairs, $2.1 million from a combination of advertising cuts and utility, legal and insurance savings, and $250,000 from supplies (the supplies line item was also doubled in the 2009 budget).

=>But are these really cuts? Or did the CIB intentionally inflate its 2009 budget in anticipation of this day when it would have to make its case to the public to raise taxes to bail it out of this colossal financial mess, which I contend was intentionally planned by the CIB's leaders. The CIB knew it had no revenue stream to pay higher costs associated with the new stadium because of the sweetheart deal it negotiated with the Colts. Yet, the CIB went forward with the stadium plans anyway. Contrary to the efforts of some apologists for the Peterson administration, a downtown casino never factored into the equation because the proposal never gained currency in the legislature. The CIB has already conceded another $15 million in subsidies to the Pacers to match the Colts' sweetheart deal even before sitting down to negotiate a new lease agreement with the Simons. Notice that the taxpayers are always told about long-term leases secured by these deals but are never told about the clauses which allow for those long-term leases to be opened up and renegotiated by the team's owner in a much shorter period of time.

The Indianapolis Star trumpets in its sub-heading in today's printed version of the Indianapolis Star that "Board that Runs Stadiums Won't Seek Property Tax Hike to Plug Deficit." In the article, Bob Grand, President of the CIB, said he was ruling out lobbying for higher property taxes as a potential solution. Don't think for a second that that quote is an accident. Grand knew it would be picked up the Star and made a part of the story. Grand's comment though is extremely disingenuous. He knows the CIB has never been funded by property taxes. One wonders why he did not publicly rule out federal and state income tax increases to cover the CIB too, which taxes also do not fund the CIB. Grand is like a magician. He wants you focusing on one hand, while not watching what the other hand is doing. You will notice he did not rule out increasing those very taxes and fees which actually fund the CIB. According to the Indianapolis Business Journal, the Mayor Ballard's administration is behind the scenes lobbying for higher taxes for the CIB. Again, it is the same thing with Bob Grand. He thinks he's the smartest guy in the room and that everyone is so stupid they will believe him no matter what tale he spins.

It should be noted that part of the $43 million shortfall ($50 million if you accept the IBJ's figures), still includes an additional $15 million the CIB plans to give to the Indianapolis Pacers, who are owned by Herb and Mel Simon, Grand's clients. Again, Bob Grand, contrary to his promise to recuse himself in matters that involve his clients, the Simons, is in the middle of CIB discussions about how to give the Simons' Pacers millions more in taxpayer money. Grand has no problem, supposedly, cutting back on security or low-paid staff members, but when it comes to pulling the plug on giving $15 million more in taxpayer money to his wealthy clients, well that is not on the table.

It is time for leadership from the Mayor. He needs to take control of the CIB and start asking for accountability from the Board, including asking for more than a few resignations. The City-County Council likewise needs to get actively involved and start demanding full disclosure from the CIB on everything. The secrecy with which the CIB has historically operated, needs to be relegated to the scrapheap of history. Even though the CIB works for the taxpayers, it is clear that the taxpayers are low on the Board's list of priorities when it comes to making decisions. That needs to change.