Indy Council GOP offers $20M road plan, setting up battle with Hogsett

Indianapolis Republicans on Thursday introduced a proposal to spend $20 million on roads and sidewalks, using money released earlier this year by the state, setting up a showdown with Mayor Joe Hogsett and the Democrat-controlled City-County Council ahead of next month's budget vote.

After years of acrimony between the council and Republican Mayor Greg Ballard, the proposal could represent the first major legislative challenge of Hogsett's first year in office. Hogsett's Democratic Party holds just a one-seat advantage on the 25-member council, and two swing votes — one in each party — have suggested they may break with party leaders on this issue.

The Indiana General Assembly earlier this year released $52 million in local income tax money to local governments, earmarking $39 million of it for infrastructure. Republicans want to spend the $39 million on roads and sidewalks. But the Hogsett administration has proposed keeping the money in a rainy day fund in 2017 to shore up the city's dwindling reserves.

Instead, Hogsett has proposed a $50 million-a-year infrastructure plan that calls for $20 million in road bonds. That's part of a larger $75 million series of bonds for projects that include parks, two new fire stations and a public safety dispatch system.

GOP leaders said Thursday their proposal seeks to strike a compromise, spending $20 million of the state road funding on the mayor's infrastructure plan and borrowing for the other projects.

“Democrats want us to take on debt to pay for the infrastructure needs," Minority Leader Mike McQuillen said in an interview. "... Why do you use a credit card when you have the cash? That’s the $20 million question.”

The Hogsett administration argues that the city's reserve funds have become so depleted in the wake of the Great Recession that it needs to sock the state road money away in case of an emergency, such as the 2014 polar vortex that busted the snow-plowing budgets of cities across the Midwest. Officials also are concerned about rating agencies downgrading the city's credit rating if they don't start replenishing the rainy day fund.

“Mayor Hogsett was elected last year by voters who sent a clear message: stop the wasteful government spending, and defend Indianapolis taxpayers," Chief of Staff Thomas Cook said in a statement. "... Unfortunately, today’s proposal is exactly what drives taxpayers crazy: raiding our rainy day fund for no reason and putting Indianapolis on a one-way road toward a future tax increase."

The administration says its debt proposal won't need new taxes, because a series of bonds from 2007 are about to be paid off. The other $30 million in the mayor's transportation plan would be funded by a mix of local transportation dollars and grants.

Indy Mayor Joe Hogsett stalls on spending state road money

Democrats hold a one-seat majority on the council, but straight party-line votes have been rare this year. Still, a 13-12 party-line vote on a procedural measure regarding the road bonds is a sign that this amendment likely will divide the council.

That may leave the proposal's fate to two moderates: Republican Jeff Miller and Democrat Jared Evans.

Evans did not immediately respond to a message seeking comment. But earlier this month he was a reluctant "yes" vote on the procedural measure for the bonds, saying he doesn't understand why the city would pay interest for road projects when the state gave the city cash to pay for road improvements. He voted for it anyway, because it was a nonbinding declaration of intent.

That same evening, Miller said he wanted to support the administration on the bond issue but voted "no" because he had too many unanswered questions. For one thing, Indianapolis Bond Bank officials said at a hearing that they couldn't provide an estimate of how much the city would spend on interest.

Miller co-sponsored Thursday's proposal but said he hasn't ruled out borrowing for roads, either.

"I think there’s really three options," Miller said. "Do I spend the $20 million in the bank? Do I bond $20 million? Or do I go back to the 2017 operational budget and say did I cut too much money" that could have gone to roads?

"I’d rather do all of the above," Miller said. "If I sound like I’m throwing a lot of options on the table, it’s because I want a lot of options on the table."

To keep up with regular maintenance, the city would need to spend $194 million annually — nearly quadruple the $50 million planned for next year.

And repaving isn't the only problem, Miller noted, citing an IndyStar investigation that examined the city's high rate of pedestrian deaths amid a lack of streetlights and sidewalks in Indianapolis. After a 20-year pause in new sidewalk construction, it would cost the city $750 million just to bring sidewalks to major thoroughfares.

Left in the dark: Indy's deadly streets

Ultimately, both sides acknowledge that the disagreement over how to fund $20 million pales compared with the broader funding challenge.

“Well, we have to begin the process somewhere," McQuillen said, when asked about the long-term problems. "The Republicans and the Democrats already agree that this arbitrary number of $20 million needs to be spent. It just comes down to this fundamental difference of do we pay cash or do we bond out?”

From the administration's point of view, the interest costs are a price it's willing to pay to make ends meet while the city rebuilds its reserves. And the idea of bonding for capital projects isn't a new one. Under Ballard, the council voted 27-2 to borrow $70 million for the "RebuildIndy 2" infrastructure project. All but two Republicans supported it.

The proposal being debating now involves a revenue stream that has been consistently dedicated to debt since the Steve Goldsmith administration, according to the city controller.

"The two capital debt levies existed since 1993," city controller Fady Qaddoura said this week. "... These (projects) are things that we need, we can't afford, and we have the flexibility to be able to achieve them through two capital debt levies."

The budget vote is slated for Oct. 10.

Hogsett plan to borrow $75M for parks, roads draws fiery showdown with GOP

Call IndyStar reporter Brian Eason at (317) 444-6129. Follow him on Twitter: @brianeason.