Monday, May 3, 2010

The Mayor's Magic Water Deal

(Enter CARNIE BARKER onto pier, speaking with a bullhorn):

“…gather around, friends, and witness the amazing legerdemain (a/k/a “sleight of hand”) of the Great Ballardo, a political magician who pulls money from an empty hat.”

Of course, magic isn’t real, but I fear we’ll soon all be the suckers born every minute of whom P.T. Barnum spoke if Mayor Greg Ballard achieves his two-step skullduggery with the city's water transfer and road repair bond issue.

To proponents of these deals, I ask, "Can't you see our future is the hat, and these deasl are what makes it empty? Or do you just not care because you'll profit from it? (But more on that later).

For months, Indianapolis’ illusionist-in-chief has touted the sale of the city water and wastewater facilities to Citizens Gas as a one-stop, $425 million bonanza of smaller rate increases (a/k/a "backdoor tax increases"), roads, bridges, and sidewalks. That’s a complete distortion, but fortunately, now that the Indianapolis Star’s Francesca Jarosz has seen the Mayor's misdirection, she won't let him dart out of the spotlight of public scrutiny.

Here’s the real deal, folks. City-County Councillor Mike Speedy has introduced two resolutions. The first is for the transfer of the water and wastewater facilities to Citizens Gas, a deal plagued with problems but not the subject of this post. The second is for the issuance the aforementioned bonds, a notion crammed into the City’s Memorandum of Understanding (MOU) though it has absolutely no connection to the Cit Gas deal.

Why do I say there is no connection? Because Mayor Ballard’s chief-of-staff, Chris Cotterill, said so.

From the Star:
[Cotterill] said the city can collect the $140 million whether or not the Citizens sale is approved. That money comes from annual payments made from the sewer utility in place of taxes, and because the sewer system is appreciating in value, the city is increasing the annual payments and capturing them upfront.

Why would Ballard combine the two? PR. He wants the bigger number.

But let me dissect something for you because this is critical.

“capturing them upfront….”

That phrase – “capturing them upfront” – makes me chuckle. It sounds like the Mayor took a butterfly net and, through his NatGeo-acquired tracking skills, snagged the rare specious, Taxpayerus Chumpus.

Every time you hear “captured them upfront,” your mind should automatically think, “unleashed your financial future into the wild to be devoured."

You see, there is a schedule of payments in lieu of taxes (PILOT) to be made to the City of Indianapolis through 2039 by either the current management of the water/wastewater system or Citizens Gas (Exhibit E of the Memorandum of Understanding), and folks, it's clearly more than $140 million, even over a ten-year span. I can only assume, therefore, that this graph of what WILL be paid already includes the additional amount expected from capital spending. But there's absolutely no explanation on that point. Did the Mayor just pull this $140 million out of a hat, too?

Here is something else fascinating I just saw in the MOU that I missed before:
The City has projected that given the significant capital spending associated with the Wastewater system, the annual payment in lieu of taxes will increase in accordance with law. Accordingly, the City intends to issue debt secured by the PILOT ("PILOT Bonds")prior to the time a definitive agreement may be reached by the parties.

Isn't that the strangest (and most arrogant) thing? The MOU actually foretells the timetable for issuing the bonds vis-a-vis the water company transfer. Were I a city-county councillor, that might rub me the wrong way.

But getting back to the philosophical issue, instead of living within the City’s means and collecting the PILOT dollars year-to-year, the Mayor is going to take a loan against all of these future payments so that he can have and spend all of the money right now. This is why I keep telling you all it’s a payday loan scam.

Can you imagine pulling this same idea with our local option income tax (LOIT)? I don’t have the precise figures on how much that 1.62% LOIT brings in annually, but say I'm mayor, and I say, "Hey, we know for a fact we're usually around $200 million. What if we go find a private company that will give us $100 million now for the next ten years instead? This is basically what we're looking at, folks.

You WILL pay for every dollar of this in the form of higher sewer rates, but guess what? When it comes time to hold the guy who hoisted this onto you accountable, he'll be out of office traveling the globe with his wife. And therein lies the diabolical genius of the Mayor's plan. He'll sell us all on how we need to take political decisions out of politicians' hands because they won't "do the right thing" and ask for tax increases when they're needed, but he'll make certain whoever follows in his shoes has to do exactly that by taking away what would otherwise be general fund revenues for the City.

Also, while I don't want to get conspiratorial on anybody, if you have a Cit Gas board comprised of the Indy business elite, might it be a stretch to envision a Board deciding to press as hard as possible for rate increases during the term of a progressive mayor they want to make a one-termer? I say this because non-profits are some of the most "political" orgnaizations in existence, and a quarter of the citizenry will still try to blame the Mayor for every rate hike, even though they're told repeatedly it wasn't his/her decision, and the rest will just have some Carteresque malaise that colors the rest of the voters' opinions about life in the big city under Mayor x/y.

Coming soon....what political insiders are supporting this deal and why


1 comment:

Alex Ralston said...

Your post is so money (pun intended).

Remember, this is the same guy who nailed Bart Peterson for every water rate hike - calling each of them a tax increase.

Peterson took politics out of the process, made tough decisions, and asked for necessary rate hikes.

And for that, he was shown the door by the guy who says politicians can't be trusted to make the tough decisions. Better to sell off the whole damn utility and take the payday loan.

Must be nice for Ballard. He gets his cheeseburger and he gets to eat it, too.