Wednesday, January 6, 2010

Candidates Respond To Indy Democrat's Questions on City Finances and Revenue

Last year...ok, it was just a few days ago... I posted this post on Marion County Assessor Greg Bowes' news that property tax revenue is certain to fall due to the current economic situation making real property worth less than in the not-so-distant past. This means that the city will have to do more with less as money for public safety and other services continues to decline. The thesis was that Mayor Greg Ballard will have to be a wizard to balance upcoming budgets.

Via Facebook, I sent the same question regarding the city's financial woes to both exploratory candidates for the Democratic nomination for Mayor of Indianapolis, Melina Kennedy and Brian Williams.

Indy Democrat:
"I wanted to give you both opportunities to address this perfect storm of revenue problems the city is going to be facing over the next few months as the reality of less property tax money (assessment issues), the lack of the means to raise property taxes (due to caps) and less state money (due to lack of collection of state sales tax, etc.) becomes a truism. How would you, as Mayor, tackle this daunting issue of less revenue for city/county services?

Also, what do you think of a campaign tactic (as Mayor Ballard employed in 2007) that essentially states that you can provide excellent city and county services without asking for more money from residents and business owners?"

Melina Kennedy:
"As your question suggests, there are no easy answers.

Let me first state what I think the problems are. The funding challenges that many local governments face have three major components: (1) lower property tax collections due to the legislative circuit breaker caps; (2) lower income tax receipts due to the national economic decline; and (3) a dearth of economic development that isn't necessarily related to the recession.

Each of these issues is different. The flip side to the property tax caps on government collections is that taxpayers are keeping more of their money. That's hard to argue with since our State's property tax system has inspired no confidence for more than a decade. On this score, local governments need to tighten their belts for time being. And local leaders should be honest about what service cuts are required in the short term. For example, I'm not sure the City-County's current revenue projections in the 2010 budget will hold up -- and our community will need to have a discussion about what that means.

In the medium term, the income tax revenues will come back when the economy turns around, although under State funding formulas, there is a bit of a lag in those payments to local governments.

The third issue, economic development and job creation, is far less technical than these first two. Creating and maintaining jobs ought to be a top priority in Indianapolis -- in the short term, the medium term, and the long term. In my view, it can't ever stop. For example, even with necessary belt tightening in short term, I do not subscribe to the notion that a mayor can ever take his or her foot off the gas in terms of job creation under the theory that only the "nuts and bolts" really matter in running a City."

Brian Williams:
"You are rightly identifying what I believe will be one of the most important issues the city will face in 2011 - how does Indianapolis address operating budget issues (declining property, sales and income taxes) and capital budget challenges (CIB, combines sewer overflow, airport - whose debt was downgraded ) in a financial sound manner.

Because it is clear that the current revenue sources for the city will not support the current nor anticipated or desired needs of Indianapolis, as Democrats, we must offer solutions that generate revenue, create an amenity or provide opportunity."

Editors Note:
Williams offered to discuss his views further on this matter in another forum. I have left out any personal notes or communications between myself and the candidates such as pleasantries, etc.

Thanks to both candidates for sharing their views.

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