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What is the appropriate Legacy to leave?

Obligations of government must be addressed first

Crawford
Harper
Jehl
File photos
Street repairs are one governmental function that must be addressed in the face of a projected 2013 budget deficit.

The Fort Wayne city budget for 2013 must be completed by the mayor and City Council by the end of October. Early projections indicate the city will spend $3 million to $6 million more than anticipated revenue. Infrastructure, such as roads, needs more funds. What are our options?

The economic outlook is uncertain nationally and internationally. City water rates and sewer rates are up. Food, gasoline and health care costs are up. As prices and costs are on the rise, personal incomes and household net worth are declining. Citizens and businesses are all struggling in this tough economy. Right now, further tax increases are not an option. We need to keep as much money as possible in the productive private economy to spur economic growth and hiring.

The city has several funds with uncommitted cash balances. The budget’s cash balance is $15 million. The rainy day fund is $3 million. Unspent appropriated budget funds every year are several million. Legacy funds are $75 million. Tax increment financing funds balance is $20 million.

We have numerous other government-level piggy banks. The Capital Improvement Board will generate $70 million to $85 million over the next 17 years. The Allen County Rainy Day Fund is $12 million to $13 million. Township governments statewide have large cash balances, some as high as 200 percent of the amount spent in the previous year. Indiana’s budget surplus is $2.15 billion.

Some of this money needs to go back to taxpayers. The state is sending a refund of part of the surplus – an average of $100 per taxpayer. This is a great idea.

Real economic growth comes in the private sector. Every dollar in public sector balances takes a dollar out from private investment and output. Government should only take what it needs from the taxpayer to perform its limited necessary functions.

Some will say government should “invest” these uncommitted funds. But government “investment” plans often go awry. Stockton, Calif., invested in an arena, a water park, a new city hall, and with overly generous pensions, this resulted in bankruptcy. Harrisburg, Pa., invested in a green incinerator to change trash to electricity, yielding a $320 million debt and the city in state receivership. Jefferson County, Ala., invested in a large sewer project and risky bond swaps, yielding a $4 billion bankruptcy.

Local investments have occasionally had difficulties.

The Micro Standard deal in 1983 yielded a $1 million loss. Midtowne Crossing had numerous problems. The Public Safety Academy’s budget was scuttled by a dramatic falloff in grants and increased costs. Citizens Square has had numerous cost overruns and unexpected developments such as elevator repairs. Harrison Square’s original plans have had numerous delays owing to the recession and developer problems.

The city may still face future liabilities depending on the economy.

John Crawford, Mitch Harper and Russ Jehl are Republican members of the Fort Wayne City Council. They wrote this for The Journal Gazette.

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