Home > Political Animal > The Perils of Riches
The Perils of Riches
By Jim Sack
Fort Wayne Reader
While many cities and states are struggling to balance their budgets, while some cities are nearly bankrupt or demanding higher taxes of their citizens just to keep police on the streets, we are in the enviable place of having a mostly balanced budget, low debt, and surplus cash in the form of the Legacy.
But, having a pocket stuffed with cash also presents challenges in how to put that money best to work, and how to protect it from vultures.
Give much credit to Mayor Tom Henry and his team, as well as City Council, for managing the Legacy process. What could have been a vitriolic, contentious squabble has evolved to a studied and patient way of investing in our future.
Now comes yet more cash in the form of the Regional Cities award, that could also be transformational and catalytic, but unfortunately, this time neither the state, Greater Fort Wayne, nor the other champions of the project have done a sufficient job of explaining the process and including taxpayers in the discussion.
Some of that confusion was resolved recently when City Council listened during a rare Fifth Tuesday forum to a Region Development board member, representatives of Greater Fort Wayne Inc., and others explain the fund, its limitations and goals. It was a meeting that would better have been held months ago instead of the shrimp and roast beef gala at the Grand Wayne when the fund was first ballyhooed.
The RC offers $42 million in state incentive funding and depends on local monies to provide the rest, some $400 million, depending on who’s counting. In a recent GFW study a variety of funding approaches are discussed, including debt consolidation, bonding, and a range of new taxes. The study also recommends using the Legacy, hustling local foundations, and taking funding from the Capital Improvements Board to complete GFW’s projects, which includes millions for Skyline Plaza, a private downtown development. You may remember Eric Doden, the president of GFW, himself received millions of public money to build his apartment complex, Cityscape Flats, from which he will profit handsomely, so he sees nothing wrong with taking your taxes and giving them to private developers to fulfill his vision, thus the concern of council and the taxpayers who gathered that Fifth Tuesday to hear to GFW’s explanations.
But, perhaps this hell-bend-for-leather approach is exactly what we need. Fort Wayne has been on a downward economic spiral since Harvester pulled up stakes and moved to Ohio in ‘82. Our long contraction is reflected in gradual wage collapse; where workers once enjoyed paychecks well above the national average we are now some 20% below the average.
So, perhaps now is the time to bet the farm, borrow to the hilt, empty the Legacy and raise taxes to pay for it all. To wit, interest rates are near historic lows and should stay comparably low for another decade, so payback will be comparatively easy, if all the optimistic assumptions come to pass. Lord willin’ and the crick don’t rise… The economic development clan see downtown revival eventually producing significantly greater tax revenue capable of servicing greater debt, if things to go plan. They figure now is the time for us all to ante up a bit more to create the amenities that will burnish the image of the community and draw even more businesses and entrepreneurs to the area thus creating yet more momentum. This is “strike-while-the-iron-is-hot” time for our leaders. Damn the torpedoes, full speed ahead.
This is where the perils come into play.
Ahead of us we have a textbook opportunity for whopping mistakes and grand corruption where the unscrupulous skim public money for personal gain, and catalytic growth fails to materialize. It will happen. Surplus breeds waste.
Additionally, a sense of unfairness is developing. To some people in the neighborhoods key maintenance is being neglected as spiffy new projects take priority.
What concerns some average citizens is that the infrastructure of this community is in bad shape, but there never is enough money to make essential repairs, much less get ahead of the problems. We have a hundred plus year old sewer system, curbs have all but disappeared in some parts of our city and sidewalks have gone to seed, our signature parks could use a few million more each year just to keep up, basements and underpasses still flood.
Critics also lament that the economic development clan is too generous with public money in funding private projects. They want the ratio of OPM (other people’s money) vs. skin-in-the-game to be adjusted away from the former and toward the latter. And, shouldn’t the community also expect measurable ROI on projects, plus stipulated claw-back? On the credit side shouldn’t we also create additional streams of revenue to replenish the Legacy?
To avoid the perils of riches one would think balance can be struck. After all, we are in an enviable financial position compared to most of the rest of the world, so the wolf is not at the door, there is time, and we have models that work.
The question is whether the mayor, city council, and Greater Fort Wayne can establish a system to prudently manage our newly found riches for the long run and for the general community. It is a truly remarkable time in Fort Wayne, but perception is important. At the moment the average citizen feels very uncomfortable, confused and anxious about OPM and ROI.