Sheila Kennedy has a righteous rant about a good many things, but in particular the “imperial mayor” bill for Indianapolis going through the General Assembly. Traditionally, I have not paid much attention to Indianapolis-specific issues because: a) I’m not there; and b) The Indianapolis blogosphere has been pretty active. I’m not sure if “b” is as true as it once was.
In any event, Sheila describes part of the imperial mayor bill:
The imperial mayor bill is an invitation to corruption. While most of the media attention has been on the proposal to eliminate the at-large council seats, the most dangerous parts of the bill give the mayor control of the Development Commission and remove council oversight of many–if not most–spending decisions. It effectively removes important checks and balances on administrative behavior at a time when local media oversight is virtually non-existent. Actions by the Development Commission can move big money; for one thing, the Commission can ensure successful financing for a project that would otherwise be unable to secure such backing. The current appointment structure was intended to prevent decisions based upon cozy relationships and political connections rather than sound principles of land use. The imperial mayor bill will facilitate cronyism.
The refusal to allow Indianapolis citizens to decide for ourselves whether we want mass transit is the most infuriating action taken in a legislative session that has produced plenty that is infuriating. The notion that a study committee is needed is laughable–Central Indiana transportation organizations have studied the matter for the last twenty years. Let’s call it what it is: a giant “fuck you, Indianapolis” from the General Assembly to the region that generates the bulk of the state’s tax receipts.
This activity by the legislature makes the mayor’s office look almost like a regency on behalf of the General Assembly. The legislature grants extraordinary powers to officials it favors; and it legislates directly for the city where it fears the locals won’t make the correct decisions. The citizens of, say, Knightstown don’t receive anything like this level of attention or interference.
I’m not going to go crying for Indianapolis – I’ve seen one too many of its fine citizens oblivious to the existence of the rest of the state. But I can certainly appreciate why it’s citizens might feel that local affairs are being micromanaged by state government.
My blog updates nearly daily.
The Indianapolis blogosphere is pretty active in some areas. There certainly aren’t a lot of liberal blogs based out of Indy, or even Indiana in general. Indy Vanguard has picked up the slack, but isn’t specific on Indy or Indiana and is very much a blog for liberals from Indiana to write about a variety of issues. Besides Jon, I can’t think of a long running left-of-center blog that has been updating as long as compared to, say, Ogden on Politics or Advance Indiana.
And a comment on the Indy/general Indiana divide: Interesting to note that one of the Republican committeemembers that heard SB621 was voting for SB621 to remind Indianapolis that “southern Indiana does exist.” Her district has Evansville, which recently voted down a referendum to consolidate their city and county government. But efforts to make SB621 into a voter referendum were voted down on 2nd reading.
Have to wonder if the mayor of Indianapolis was currently a democrat would this legislation even be considered? Continue to be dismayed at the efforts by the legislature to dictate local government issues and now down to setting up how locals determine their representatives on a local board.
The most ardent supporters of the Indy Connect plan seem to be people who base their fiscal philosophy on Keynesian economic theory. Many of them also seems to lean left on many other issues. What some folks don’t seem to grasp, based upon their limited, Pollyanna logic, is that we are witnessing an drastic change in how we fiscally run this country.
For decades, governments at all level sold bonds to raise funds to fund a variety of projects. We also saw private business use the same principle with corporate bonds. However, everything is drastically changing, and the old way of raising funds may not be around much longer, as more and more people get burnt. The Chrysler and GM bankruptcy changed the rules when it comes to bond holders having “first dibs” on the assets during a private company bankruptcy. The recent Stockton, CA bankruptcy ruling is interesting, and I hope it goes all the way to the US Supreme Court. If it ends up like the Chrysler/GM issue, both corporate bonds and muni bonds should no longer be considered safe at all. At any given time, a municipality, or quasi-government entity, could pass billions in bonds, and really have no plan to tax the underlying citizens to make good on those bonds in the future.
I think this is important to understand because Indy Connect is going to require taxation and bond issues to drum up money for not only the initial plan, but also for future funding. It seems to me that the concept of just defaulting on such bonds has become so “Who cares?” in more left leaning areas, that those pushing this project seem to have the same attitude. Statewide Indiana politicians have every right to be worried that some state or federal judge in the future will issue a ruling demanding the state levy taxes on all citizens to fully pay for the issued bonds, or the judge may rule that bond holders should take a huge hit, which would severely affect other muni bonds issued throughout the state. I think at least the Indy metro area would be seen as a high spending, “just declare bankruptcy instead of levying property taxes” area, and thus bond rantings will tank as they will be thought of as being risky.
I believe we have two schools of thought when it comes to economic issues between the right and left. Not only is there is disagreement on how large government should be, but the left seems to have no problem spending as much as possible to build or fund whatever, they also really don’t want the true taxation needed to fund these projects and services. The entire historic way we fund government is constantly changing, and I can see why some statewide leaders worry about some future court ruling demanding a statewide tax levy to bailout Indy Connect.
The Chrysler bankruptcy did not involve unsecured debt getting paid before secured debt. Unsecured debt did not get paid out of existing Chrysler assets. Secured debtors got paid more out of the restructuring than they would have under a liquidation. Their real beef was that the angel investor (in this case the U.S. Government) didn’t offer secured creditors an even better deal. But, the government wasn’t obligated to do anything at all for them.
The other thing I’d note is that bonds are cheap these days. If a fundamental shift in how we treat secured creditors had taken place, one would expect rates to be higher to account for the increased risk. That hasn’t happened.
Astute observation that there are two different thought processes on Indy Connect. However, I disagree about your characterization of the two. I think that there is a younger, more metropolitan, and – generally – more worldly view that stands in one camp. These folks want to live downtown or near centers of eclectic neighborhoods (think downtown Carmel, Broad Ripple, the Massachusetts Ave. crew, and the up-and-coming Irvington). These folks generally are young and have money, but not families (since living in any of these areas is pretty costly at the moment). However, they’ve also been to other “big” cities in the United States and abroad and have noticed one thing in common – a thriving subway/ train system that allows folks to move from one place to another while living in the place they want to without worrying about transportation or how long the “drive” is.
The other, the generation that raised that bunch, has mostly never been out of central Indiana except on vacations to places that don’t have a train system (think warm and shiny – Arizona, Florida, California). They’ve always just driven everywhere and that’s good enough for them so it should be good enough for the younger crew/ their kids. They haven’t experienced the simplicity and ease that these systems bring to modern life.
Indianapolis – as it stands – is the 12th largest city in the United States. Marion County – according to the 2010 census – is the 55th largest county in the United States (larger than the population of six states). It is also in prime position to became the next destination for young people (i.e. the metropolis of this century). There’s ample land to build. Good policies towards bringing business in and staying. And – while this might ruffle some feathers – there’s little chance of a natural disaster occurring (unlike metropolis’ of the last century which mostly stand by coasts or large bodies of water OR don’t have any more space to grow).
Simply put. Mass transit is coming. It’s really just a question of when.
I cannot agree that the risk of bonds has increased to a point that you suggest. I see little in the market that would suggest the discounts that your analysis would suggest.
Will Indianapolis become an midwestern Austin? Doubtful. It is still has collar Klan counties.
Indeed: right-wingers want us to be governed in every aspect of our lives by our capitalist masters, while left-wingers want to restrain capitalism and strengthen guarantees of economic liberty so that we have maximum individual control over our own lives
Only *one* too many? ;-)
Maybe we ought to use the Chinese model and just change to a bicycle-driven modal model?
Statewide Indiana politicians have every right to be worried that some state or federal judge in the future will issue a ruling demanding the state levy taxes on all citizens to fully pay for the issued bonds, or the judge may rule that bond holders should take a huge hit, which would severely affect other muni bonds issued throughout the state.”
It should the former, if they are ad valorem. Units of government should abide by their obligations.
Projects like Indy connect are more often, as I recall, are generally revenue bonds where the bondholders take some risk of lack of revenues for whatever reasons.