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INDIANAP PWR4CCP : Mayor Joe Hogsett says he'll introduce Indianapolis' first 'honestly balanced budget' in a decade

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08/14/2017 | 12:17pm CEST

Aug. 14--Mayor Joe Hogsett is planning to deliver to the City-County Council something that he says it hasn't received in a decade: a structurally balanced budget.

Hogsett is scheduled to introduce the city's 2018 budget, his second as mayor, at 7 p.m. Monday at the City-County Building. The proposed $1.1 billion budget would increase funding for infrastructure and public safety, while requiring most other departments to hold the line, or even cut spending.

Hogsett said in an interview his budget proposal fulfills a pledge to close what his administration estimated was a $50 million structural deficit when he took office last year. A structurally balanced budget is one in which sustained revenue -- property taxes, for instance -- exceed expenses. The administration is projecting a $211,061 surplus for 2018, up from an estimated structural deficit of $23.8 million in the 2017 budget.

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"We are submitting a spending plan that erases the historical structural deficit that has plagued our city for far too long, and which has forced city leaders to rely on one-time cash infusions to fully fund budgets," Hogsett said.

Hogsett hopes his vision of fiscal responsibility, mixed with new investments, will receive a warm reception from the 25-member City-County Council. The Democratic-controlled council last year approved his budget with little drama, including five votes from Republicans.

But the Democratic mayor's declaration that the structural deficit is in the city's rearview mirror could be a point of contention as council members pore over the spending plan. Budget balancing is a complex feat in government finance -- and subject to a wide range of interpretations.

"The structural deficit, if you ask five different economists, or people in the city who are financial gurus, what the structural deficit is, you'll get five different answers," Republican Majority Leader Michael McQuillen said. "I'm not a (certified financial planner), I don't know exactly how big the structural deficit is."

'Public safety and infrastructure'

The City-County Council is scheduled to vote on the budget Oct. 9, after nearly two months of hearings. Hogsett's proposal addresses two of the biggest criticisms among council members: that the administration has failed to invest enough money to fix and replace ever-worsening streets, bridges and sidewalks, and that too little is being done to address the city's violent crime problem.

"This is a budget about public safety and infrastructure," city controller Fady Qaddoura said. "This is what we're investing in."

Hogsett's budget allocates $275.9 million for the Indianapolis Metropolitan Police Department, an increase of more than 5 percent. That includes money to hire 86 new police officers, on top of 85 officers that are expected to be hired this year. Hogsett is projecting a two-year net gain of 66 officers by the end of 2018.

Police staffing has long been a sore point in Indianapolis. The city has raised taxes twice since 2007 for the purported purpose of adding officers. Yet, the city had 1,575 officers when Hogsett was elected -- fewer than the 1,606 who were employed at the end of 2007. A September 2016 IndyStar investigation found that fast-rising police salaries have made it difficult for the city to expand the size of its police force.

The city has 1,681 officers, according to IMPD, a number that fluctuates because of the high proportion of officers who are at or near retirement age.

"During the course of the campaign, we talked about adding 150 new officers net," Hogsett said. "And I think if we stay on the path that we've begun, then over the course of the four-year budget cycle that we'll be responsible for, I'm confident we will be able to say that we have come exceptionally close, if not satisfied, that 150 additional new net officers."

McQuillen, the council's Republican minority leader, said he'll be looking closely at IMPD's budget.

"The most important thing to me at this point is public safety," he said.

Orange barrels ahead

Hogsett is proposing to increase the Department of Public Works' spending by more than 13 percent to $151.8 million. That includes more than $90 million for transportation infrastructure projects in 2018 -- a $35 million increase over what the administration projected a year ago when it submitted a four-year funding plan to the council.

The extra transportation infrastructure money is largely thanks to a gas tax increase approved earlier this year by the Indiana General Assembly. Indianapolis is expecting to receive $12 million in gas tax money from the state next year.

In addition, the combination of a balanced budget and new gas tax revenue has given Hogsett confidence to start spending a contentious $52 million pot of local income tax money that was released last year by the General Assembly. Hogsett put that money in a rainy day fund, including $39 million that was designated for roadwork.

Council Republicans have complained that the city is sitting on $39 million in infrastructure money instead of spending it on much-needed projects.

Hogsett is proposing to add $6 million of that money into the 2017 budget, $16 million into the 2018 budget and $17 million into the 2019 budget. That money primarily would be spent on road projects and a new street light initiative. The city is finalizing a new streetlight contract with Indianapolis Power & Light Co. Hogsett during his state of the city address in April said he wants a new deal to lead to thousands of new street lights.

Hogsett is expecting to spend $311.9 million on transportation infrastructure projects over the next four years -- an increase of nearly $108 million over the administration's four-year plan that was given to the council last year.

"As long as you are not spending more than you're taking in, it would be equally irresponsible (to running a structural deficit) to not make expenditures and invest in the community," Hogsett said.

Job cuts, insourcing

However, for most departments, frugality will once again be the theme in 2018. Most city and county agencies would see small budget increases, while a few -- including the Marion County Sheriff's Department, the mayor's office and the Office of Corporation Counsel -- would be working with slightly less money.

At a time when Indianapolis is ranked among the worst cities for parks in the U.S., Hogsett is proposing to increase the Parks and Recreation Department budget by just 0.6 percent to $32.5 million. The Department of Metropolitan Development, which has a monumental task of facilitating residential and commercial development, would get a 0.4 percent budget increase to $65.6 million.

Flat spending nearly across the board has been one of the keys to eliminating the structural deficit, Hogsett administration members said. The mayor's 2017 budget slashed spending by nearly 1.5 percent. The proposed 2018 budget would increase by 3.7 percent over 2017, largely because of new spending on infrastructure. The city is projecting a 6 percent increase in revenue.

City cost-cutting initiatives under the Hogsett administration include cutting jobs through attrition, renegotiating contracts, bringing some services in house and replacing old technology.

As of June, the Hogsett administration had eliminated 50 jobs for a combined annual savings of $2 million, Qaddoura said. Other savings include: $2.3 million in reduced overtime spending for the Indianapolis Fire Department because of a new recruit class; $1.25 million in savings on delinquent traffic ticket collection after the city brought the work in-house; and $7.8 million in savings due to refinancing of $52.4 million in bond bank debt.

The spending cuts and new sources of revenue combine for a budget that Hogsett says will be balanced for the first time since Indiana capped property taxes.

Hogsett certainly isn't the first mayor to stress fiscal responsibility. Hogsett's predecessor, Republican Greg Ballard, prided himself on putting Indianapolis on sound financial footing during two terms that coincided with the brutal years of the Great Recession.

The Hogsett administration, though, characterizes the Ballard years as a period filled with stopgap measures, including the use of one-time revenue sources and drawing down on reserves, which kept the city afloat one year at a time.

Hogsett officials point, for instance, to Ballard's decision to lease the city's parking meters to a private company, which generated $10 million payments in 2010 and 2011, and to sell the water utility, a deal that created a $450 million infrastructure fund called Rebuild Indy. Ballard also instituted a hiring freeze on police officers, which the Hogsett administration says led to a decline of 100 officers between 2010 and 2014.

Former Ballard administration officials declined comment.

"It wasn't just these one-time infusions of cash," said Thomas Cook, Hogsett's chief of staff. "There were policy decisions that were made by the previous administration, which by no means are we passing judgment upon, but they had to think very creatively and in their own ways sort of make spending decisions in order to fund their budget over that period of time."

Hogsett on Monday will deliver a brief address announcing a new era of balanced budgets in Indianapolis -- and then leave his budget in the hands of council members to judge.

"It's taken a lot of hard work and, frankly, a lot of sacrifice on the city's part to make sure that we can return to kind of an honestly balanced budget," Hogsett said. "And the benefit of eliminating the structural deficit and balancing the budget is, on a go-forward basis, we'll be able to once again start making significant investments."

Call IndyStar reporter James Briggs at (317) 444-6307. Follow him on Twitter: @JamesEBriggs.

___

(c)2017 The Indianapolis Star

Visit The Indianapolis Star at www.IndyStar.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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