POLITICS

Mayor Greg Ballard sees rapid growth as way out of Indy’s budget problems

By Jon Murray
jon.murray@indystar.com

Indianapolis may be a bigger draw than surrounding areas in attracting young residents, but it’s got a problem.

Right as they begin raising families, many in their 30s split for the suburbs — taking their growing incomes, and the local taxes they pay, to bedroom communities in Hamilton, Johnson, Hendricks and other counties.

Behind those decisions to leave Indianapolis, even as many continue working in the city, are myriad factors. But the upshot, city leaders say, has been one of the key pressure points choking the city-county budget, nearly exhausting its reserves and keeping local government from expanding parks and other services as public safety costs eat up an ever-greater share of spending.

Mayor Greg Ballard wants to stem that tide.

He and his advisers are preparing later this month to lay out a new, galvanizing vision for how to attract and keep a massive infusion of middle- and higher-income residents.

The initiative will frame Ballard’s annual State of the City address, set for Feb. 27 at University of Indianapolis, at the midpoint of the Republican’s second term.

The way Chief of Staff Ryan Vaughn figures, boosting the city’s slowly growing population by 50,000 residents who earn $50,000 a year at local jobs would boost local income tax revenue enough to single-handedly erase the $40 million operating budget deficit that looms next year.

The promise of new higher-wage earners, in fact, has been one of the administration’s arguments for a proposed $18 million subsidy for a 28-story luxury apartment tower planned for part of the old Market Square Arena site.

Of course, the growth strategy isn’t a quick fix.

In the short term, city leaders likely will need to find other ways to cut costs and boost revenue, repeating the kind of budget triage that has dominated recent years.

Beyond that, Ballard’s staff members say they are working out details of an all-encompassing, multi-faceted strategy to spur growth and put the city on permanently stable financial footing.

The mayor’s office envisions redoubled efforts as far-reaching as fixing local schools, rooting out crime, spurring development of new kinds of housing, cleaning up decaying center-city neighborhoods, attracting new jobs, incubating homegrown startups, and expanding the offerings of festivals and events that make the city a culturally attractive place to live and visit.

Proposals could range from building more parks near desirable neighborhoods to encouraging denser development in hotspots to expanded crime-reduction efforts to make people feel more safe.

Advisers even envision an independent committee of community leaders to brainstorm ideas to enrich the city’s cultural fabric and promote the city to new residents — something Vaughn informally calls “the council of grooviness.”

In short: Make Indianapolis a place where families can thrive. Make it a place residents don’t want to leave as they get older. And make it cool.

Competition

If the mayor’s new strategy bears fruit, his advisers say, the influx of new residents would relieve the strain of constitutional property tax caps that have cut into local revenue for four years and recent recessionary dips in income tax revenue.

“We can’t cut back (spending) and provide any level of service that any citizen would expect,” Vaughn said. “We can’t tax our way out of it. ... We’re already not very competitive from a taxing standpoint with our surrounding counties. And we can’t grow fast enough,” at Indianapolis’ current glacial pace of 1 percent every two years or so.

The city-county budget’s roughly $600 million general fund, which covers daily operations and is the biggest part of the nearly $1 billion overall budget, directs 93 percent of spending to public safety, the courts and other criminal justice agencies.

That share is up from 84 percent in 2011, an increase resulting from small increases in public safety spending and repeated belt-tightening by remaining offices, departments and agencies.

Speaking to Indianapolis Star editors and reporters recently with other mayoral advisers, Vaughn said Ballard wants to focus on strategies to compete more fiercely with suburban counties that draw — and keep — middle- and higher-income residents.

“Property tax caps changed the game,” Vaughn said. “It’s about (growing) income taxes now. Because you pay where you live and not where you work, we’ve got to grow a density of people living here, not just people who commute here.”

The mayor’s office plans to issue a strategic plan outlining its proposals later this month, timed to his speech.

The strategy, as it’s shaping up, potentially could frame nearly every decision Ballard makes in the remaining two years of his second term — and throughout a potential third term.

Higher taxes

But the emerging growth-based approach doesn’t mean the mayor’s office is keeping tax increases off limits.

The Indy Chamber this year has begun lobbying the Indiana General Assembly to create a “commuter tax” that could be sold as a service fee for the roughly 200,000 residents of other counties who work in Marion County. Chamber leaders don’t anticipate any legislative action this year.

Indianapolis City-County Council President Maggie Lewis says the idea shouldn’t be discounted, considering the city’s challenges.

She also doesn’t want to take off the table the possibility of an increase to Marion County’s local income tax rate, which stands at 1.62 percent, to pay for better policing.

State law allows the council and mayor to increase that rate by up to 0.88 percentage points, or $440 for a resident who earns $50,000.

Ballard and his advisers say they’re uncomfortable with increasing Marion County’s income tax, since Hamilton and some other neighboring counties have rates set as low as 1 percent.

And though the mayor hasn’t endorsed the idea of a commuter tax, his advisers say it has merit. But such a tax could only happen if state legislators, who have shown an anti-tax aversion to a metropolitan mass transit plan, could be convinced to allow it.

During the recent meeting at The Star, Vaughn threw out another idea that also would require legislative approval: creation of a “regional tax council.”

Such a body, he suggested, could encourage collaboration between counties to smooth their differing income tax rates and divvy up tax money based on needs and merit.

Call Star reporter Jon Murray at (317) 444-2752. Follow him on Twitter: @IndyJonMurray.