Gov. Mike Pence's $53M bicentennial plans hit financial snag
Last year Gov. Mike Pence confidently announced $53.5 million in new building projects to celebrate the state’s 200th birthday.
Now, he’s staring at a $38 million hole in those plans.
That’s because Pence banked on a relatively novel funding strategy: leasing excess space on the state’s 310 cellphone towers. In announcing the plans last year, the governor said the arrangement would bring in up to $50 million, covering virtually all of the bicentennial plans.
But more than a year later, that money has not materialized.
A fiscal note prepared earlier this month by the state’s nonpartisan Legislative Services Agency projects revenue from the cellphone tower leases at $10 million to $12 million over the next 10 years.
That’s far too little money to pay for the projects Pence announced last year: A new $25 million state archives building, a $24 million inn at Potato Creek State Park, a $2.5 million education center at the State Library and a $2 million Bicentennial Plaza behind the Statehouse.
The Pence administration, however, is insisting the cellphone towers will produce the money needed to fund those projects.
“We believe that the proceeds from the cell tower lease will more than cover the costs of the bicentennial capital projects,” said Micah Vincent, Pence’s top financial official.
But the timeline for those proceeds to materialize remains unclear.
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The state agency handling the effort to lease the cellphone towers said it expects to share more information about potential revenues and partnerships “in the months ahead.”
“We’re progressing with the discussion phase with carriers at this point, and we're working to match need with available capacity,” Dan Huge, director of the Indiana Finance Authority, said in a statement. “It's a process that takes time, but we anticipate a good response to this effort.”
In the meantime, the state continues to spend money on the projects — nearly $4 million so far. That includes $2.5 million in design fees for the state archives building, $1.4 million in construction on the Bicentennial Plaza at the Statehouse, and $295,000 on the education center.
Without a sure source of funding for those projects, lawmakers have taken steps to provide a financial backstop for the bicentennial projects.
Sen. Luke Kenley, R-Noblesville, has proposed shifting $23.7 million in excess tax amnesty money to the bicentennial projects. Even with that infusion, the bicentennial fund would still be more than $17 million short.
Kenley said this week that the governor’s office has since assured him that the backstop won’t be necessary.
“I’m relying on what they’re telling me — that we don’t have to rely on the amnesty money for the bicentennial,” he said. “I’m going on faith. They assured me they can get this done.”
The provision Kenley authored is part of a broader measure, Senate Bill 302, that changes how $169 million in revenue from last year’s tax amnesty program would be distributed.
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Originally, $84 million was earmarked for Pence’s Regional Cities Initiative, an economic development grant program, and $6 million was set aside for the Hoosier State rail line. Any excess would have gone to the general fund to cover basic services.
Now, Pence wants $42 million of the excess to go to his Regional Cities Initiative. That leaves $37 million for lawmakers to play with, but there’s no consensus about whether the bicentennial projects should get a chunk. A competing House bill, for example, would use the money to help fund the state’s employee and teacher pension funds.
The Senate proposal, with its $23.7 million for the bicentennial, is now in the hands of the House Ways and Means Committee, which is scheduled to take up the billon Wednesday.
Rep. Tim Brown, the Crawfordsville Republican who chairs that committee, said there’s still some debate about whether the cellphone tower leases will cover the bicentennial projects.
“I think initially there wasn’t probably as much competitive nature as (the Pence administration) initially thought there might be,” he said.
Rep. Greg Porter, the committee’s leading Democrat, said four cellphone service carriers were approached about leasing the towers, but that three said they weren’t interested.
“The governor is betting on the come and things did not roll his way,” Porter said. “We said that from day one. Here you are betting on the come with the cell towers, and we don’t think that’s going to happen.”
Now, he said, Republicans are scrambling.
“You have to figure out where to find those dollars. That’s what they’re doing right now,” Porter said. “Sen. Kenley is trying to help the governor reboot his budget because there were a lot of shortcomings.”
Vincent, the Pence administration's top fiscal officer, said Porter's suggestion that the proposed lease arrangements haven't attracted much interest is inaccurate.
"We have had a number of companies throughout the process consider the lease initiative, and to date none have rejected the opportunity," he said. "These transactions can be structured in many different ways, and we are structuring the transaction to maximize value for the state of Indiana. The level of interest will vary according to the structure proposed."
In the meantime, at least one project — the Inn at Potato Creek State Park in North Liberty — is effectively on hold.
The Indiana Department of Natural Resources sought to partner with a private developer for the project back in March, shortly after Pence announced plans for Indiana’s first new state park inn since 1939.
There were inquiries, but no proposals were submitted, leaving the state to design and build the project itself.
“DNR remains interested in having a lodge at Potato Creek State Park,” said Phil Bloom, a department spokesman. “However, design work, groundbreaking and so on will not begin until funding is in place for the project.”
Call IndyStar reporter Tony Cook at (317) 444-6081. Follow him on Twitter: @indystartony.
