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2005 Budget Presentation
Mayor Bart Peterson
August 2, 2004
This budget season feels like the end of an era. We have struggled year after year to make budgets work in the face of rising costs and relatively stagnant revenues. Somehow each time we have managed to make it through. Once again, I offer you a fully funded budget that does not cut essential city services and does not raise taxes. But without significant changes in the structure of government here in Marion County, massive tax increases, layoffs of police officers, Sheriff's deputies and firefighters, or both, are on the way.
But before we go into the details, I wanted to review some of the things we have been able to accomplish together in our city even in the midst of such a bleak budget environment.
After months of intense effort, we were able to announce in June that we had reached an agreement with AAR Aircraft Services to lease part of the Indianapolis Maintenance Center at the airport. Before the end of the year, a portion of the outstanding workforce that United left stranded will be able to start back to work.
Simon Property Group will build its world headquarters building in downtown Indianapolis, and our new landmark hotel, The Conrad, is now under construction. The redevelopment of the former site of Market Square Arena will also reshape the face of the city and be the catalyst for a rebirth of the east side of downtown.
And the Market Square deal set an important precedent. The $2 million in sale proceeds from the site will go directly into the Indianapolis Housing Trust Fund for affordable housing citywide. We have already received the first payment of $500,000.
Later this fall, construction will begin on the first phase of a new affordable housing development on the south side where Brokenburr Trails once stood. This has the potential to turn around a troubled area as dramatically as Fall Creek Place has done. There will be 217 units of new housing, commercial development, a community center, a 2.5-acre park in the center of the community, and other amenities.
Code enforcement has been a priority of my administration since I took office in 2000. So far this year, our new night and weekend inspection force is on pace to investigate double the number of complaints than it did in 2003.
Since I last stood before you, I have announced four new charter schools, bringing the total number of charters granted in Indianapolis to thirteen. With five schools opening in the next month, we will have a total of ten charter schools operating in Indianapolis this school year.
2005 will be a big year for the arts, culture and sports in Indianapolis. The Indianapolis Symphony Orchestra will be celebrating its 75th anniversary. We will see the re-opening of the renovated Indianapolis Museum of Art. Indianapolis will host the NCAA Women's Final Four and the U.S. Gymnastics Championships. Promoting these and dozens of other important events and shows will be a key focus of our Cultural Tourism Initiative for the next eighteen months.
Most of this could not have been achieved without the partnership between the Mayor's Office and the City-County Council, a partnership that has transcended partisanship. Thank you.
With all this good news and positive momentum, it is with more than a little trepidation that I approach the subject of the sorry state of our local government finances. Earlier today, I announced a proposal that, if passed by the state legislature, will help us with a long-term solution. Indianapolis Works is the sweeping reform that is needed to secure our city's future financial well-being. My proposal to reform city, county and township government is laid out in a very specific, detailed document that is now available for public review. I encourage each of you to read the copy you have received and to recognize that as difficult as it is to contemplate dramatic change, we really have no choice. This year's budget makes that clear.
With the budget I bring to you today, we will continue making progress in neighborhoods, with code enforcement. We will preserve arts funding. We will provide summer programs at parks. We will continue to pick up the trash on schedule, build sidewalks, maintain the sewers, repair streets and plow snow. In short, we will not cut back on essential city services. Where we will cut back is on new spending for things such as new computer hardware and software, supplies, vehicles, equipment, tools, office furniture, and outside contracts.
I have announced more than $55 million in previous budget reductions and spending cuts in the 2003 and 2004 budgets. We've taken unprecedented steps to curb spending and preserve the City's savings account in the face of financial challenges. The 2005 city budget represents an increase of $17.2 million over the 2004 budget. Factoring out mandatory Public Safety increases, the city budget represents real spending cuts of $1.8 million from the 2004 budget. The $20.1 million public safety increase is due to police and fire fighter salary and benefits and police and fire pension obligations. And we funded at least $3.4 million in non-public safety contractual increases such as sewer system contracts, a new federal water quality permit and health insurance increases, with other budget cuts.
Funding this budget has not been easy. For instance, we are proposing a number of fee increases, which will bring in more than $400,000 in new revenue. Some of these fee increases include parking violation fines, increasing the Department of Metropolitan Development's accelerated inspection fee, and increasing some administrative fees to reflect the actual cost of providing city services.
We are taking out a one-time loan of $10 million from the Sanitary District to enable the continuation of essential police and fire services. This is perhaps the most unappealing part of tonight's budget proposal, but we are committed to repay the loan in eighteen months.
Our biggest fiscal challenge is still finding a secure funding source to lessen the impact of exploding public safety pension obligations. Some means of managing these obligations must be created if we are to avoid catastrophic cuts in other areas. In the future, we will be seeking additional state pension relief. Today, I am asking the City-County Council to join me in establishing a public safety pension stabilization account. We are proposing to issue up to $100 million in bonds to create a pension stabilization account for the long-term, while funding the 2005 pension shortfall. The bond proceeds would create a City pension relief fund that would be used to further stabilize the City's share of this obligation. The City could draw from that fund as needed. While I realize the creation of a pension stabilization account is only a first step, it is an important and necessary step to ending the financially dangerous practice of linking public safety operations with the payment of pension obligations.
Our City and County employees make me proud every day. It is our employees who are on the front lines, getting the job done for our citizens. There are no layoffs and no salary cuts contemplated in this budget, but once again this year we will not be able to give city employees the salary increases they deserve. However, I will do everything in my power to hold the line on health insurance cost increases for our employees.
Together, we must work to make wise use of the peoples' money. Together, we must face the dark fiscal crisis that overshadows the budgets proposed tonight. And together, we must resolve that the SerVaas Public Assembly room will not see more stop gap budgets under our leadership. I look forward to working with you over the next several weeks.
Thank you.
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