Wednesday, May 27, 2009

Bailout Out the Capital Improvement Board; Does the General Assembly Assist in Political Suicide?

In a matter of weeks, the focus will be on the Indiana Statehouse as the legislature returns to fulfill its legal responsibility of passing a budget. It appears that the budget bill will include a Capital Improvement Board bailout, or perhaps more precisely, provisions allowing the Indianapolis City-County Council to vote for new tax increases to channel more revenue toward the CIB.

While lumping the CIB bailout into the budget bill is going to make it much more likely to pass than it would as a stand-alone provision, one wonders if any CIB provision that requires the Council to raise taxes has any chance of passing that closely divided body.

The spread on the Council now is 15 Republicans, 13 Democrats, and 1 Libertarian. It's a safe bet that Libertarian Ed Coleman won't support any CIB tax increases. Democrats, while not necessarily opposed to tax increases, remember well the fact that the Greg Ballard is the Mayor because he ran against then Mayor Bart Peterson's COIT tax increase and is unlikely to want to help the Mayor out of the crisis by voting for taxes themselves.

With Republicans, even with the Coleman defection, still a majority on the Indianapolis City Council, the GOP could pass the CIB tax increases by themselves. To do so though, the Mayor would need 100% support from Republican council members for the tax increases. The political capital the Mayor would have to extend to get every last Council Republican to go along with the tax increases - a vote that would doom many of their political fates - would be extraordinary. Let's see that the Mayor does a superior sales job and gets 75% to go along with possibly a career ending tax increase, that still leaves the Mayor three votes short of a majority. Those three votes would have to come from Democrats. I shudder to think what backroom deals would have to be cut for those three Democrats to cross over. The one thing that works in the Mayor's favor on that score is that the Democrats actually want the Mayor to succeed in his plan to raise taxes so they can use that as a lethal club against him and Council Republicans in 2011. It is possible that the Democrats will send the Mayor a few votes to make sure he's successful in his suicidal efforts.

Thus, I'm not sure it's even wise for the legislature to include in the bill options to let Indianapolis raise taxes. Doing so is akin to buying a gun for someone who is suicidal. Mayor Ballard is determined to commit political suicide by raising taxes to bail out the CIB and take out Council Republicans with him. Why should Republicans in the General Assembly assist in helping Mayor Ballard do that, especially when he doesn't appear to have the votes on the council to pass the tax increases anyway?

That returns to the notion of other bailout options that may not require the Council to pass tax increases. Unfortunately an expansion of gambling is being pursued as an option. Indiana now ranks only behind Nevada when it comes to tax revenue derived from gambling. That is astonishing when one considers that it was only a couple decades ago that Indiana adopted a lottery, after years of prohibition on gambling in the state. One of the problems with the gambling ( I refuse to call it "gaming") option, and there are many, is that the State is already at the saturation point. Any expansion of gambling into Indianapolis generally only involve slicing the pieces of pie in smaller slivers. Another option being floated is to not expand into Indianapolis, but to allow table games at the Shelbyville and Anderson racinos, with some of the revenue channelled toward a CIB bailout. That, however, would cut into the French Lick casino business, so I'm sure that the owner of that casino, the Cook Group, would have to be placated.

If we think lobbying money has corrupted Indianapolis politics now, just wait until gambling lobbying money starts hitting the pockets of local politicians.

All the aforementioned approaches though belie the real problem with the CIB, which is that the Board has heavily subsidized professional sports, and insists on expanding those subsidies despite the fact that it is deeply in the hole financially and is begging for a bailout. It is truly remarkable that the CIB, the Mayor, and even the Council Democrats are determined to pick up $15 million a year for the Pacers in Conseco operating costs when in fact the Pacers have publicly said they never asked for the money and the CIB has absolutely no legal obligation to give the Pacers the money. If successful, we taxpayers would be paying the cost of running Conseco Fieldhouse while the Pacers get all of the revenue off of the building.

Any measure dealing with the CIB needs to include a requirement that the Board's past practices be investigated and that the CIB be reformed so that these mistakes never happen again. It is clear from the CIB's latest folly - the $15 million proposed annual gift to the Pacers - that it is not going to reform itself. The Board needs a major shakeup not only in terms of personnel, but in terms of its statutory authority. The CIB should not be in the business of handing out grants to various interest groups, such as Black Expo, the Arts Council, etc. Those groups should be going through the elected body, the Indianapolis City County Council.

Likewise, in special session, the legislature needs to put the bankruptcy issue into play by granting authority to the CIB and the City, to put the Board into bankruptcy. I still perceive reorganization bankruptcy as the best option for the CIB out of its current mess. But at the very least, the legislature should bestow on the CIB the option of bankruptcy, which would then give the Board a weapon to force the Pacers and Colts to the bargaining table, where concessions can be extracted from the teams, concessions that could alleviate the need for a taxpayer funded bailout. Of course, this remedy presupposes the CIB will have better negotiators than it has had in the past.

As the legislature special session nears, so to does the battle over the future of the CIB and Indianapolis politics. At the least, it should be interesting.

1 comment:

Jon said...

I once thought that this mess with the CIB couldn't get any worse but if the legislature insists in allowing the city to levy more taxes to bail out the CIB then alas I'm severely wrong it will be much worse. Not only will we continue to reward the sports magnates at the expense of the taxpayers but we still don't attack the root of the problem which is the incompetence displayed by the CIB. We don't understand why anyone in power, the mayor, the city council etc. have not demanded a reckoning of the finanaces of the CIB. The city council approves their budget why is this the only oversight? Why hasn't the mayor or the council recalled the members they appointed? Why isn't anyone demanding answers as to how the CIB could be in deficit for 10 years and not only failed to acknowledge that fact but continued to build sport palaces?