STATEHOUSE DISPATCH: Kenley’s funding plan has momentum despite critics

Remember when Republican Gov. Mitch Daniels felt “car-bombed” by House Democrats when they refused to provide a quorum for votes on 132 bills?

Then Senate Tax and Fiscal Policy Committee Chairman Luke Kenley, RNoblesville, must have felt last week that his plan to help finance a new stadium for the Indianapolis Colts and an expansion for the Indiana Convention Center was hit by rocket-propelled grenades.

Kenley proposed to finance the two projects through a combination of private, state and local funding. The sources would include a 1-percent local option sales tax on most services in Marion County, a tax on tickets at the new venue, a hike in taxes on professional athletes playing at the stadium or Conseco Fieldhouse, and an additional $5 million annually from the Colts.

The proposal immediately met with resistance from every quarter.

Indianapolis Mayor Bart Peterson, a Democrat who was pleased Kenley revived the concept of convention center funding as part of a package, questioned whether the bottom-line income was sufficient to finance the deal. And some eyebrows were raised about the implications of paying off the project in 20 years, onethird sooner than the mayor had proposed.

Peterson and Indianapolis business community leaders also executed a blitz over the sales tax proposal. They suggested work would be taken elsewhere to avoid paying an extra 1 percent on some expensive services, and that some entities might avoid Marion County or even move to doughnut counties to avoid the cost disadvantage.

The Colts and the National Football League also served up strong man-to-man coverage. They suggested the December deal could not be renegotiated, that the NFL backing for the deal could be withdrawn, and that they had already offered all they were willing to give.

About the only aspect of Kenley’s proposal that seemed to go unscathed was the moderate ticket tax, which was coupled with a prohibition on personal seat licenses and a requirement for a certain number of low-cost tickets.

So where does this go now?

Even before his first hearing on the plan March 22, Kenley was indicating there was plenty of room for negotiation, and that he expected an agreement between the parties ultimately to be on more of a middle ground.

And that is likely to happen. The convention center funding issue is back in the mix in the Senate and key senators want to see the deal done.

This session also brings with it the unique pressures of not being able to fully fund other state priorities that are arguably more important than entertaining a stadium full of people on eight or nine Sundays each fall, matters such as education and health care for the needy. And lawmakers from regions that don’t ordinarily or automatically identify with Indianapolis-such as Evansville, Fort Wayne, South Bend, northwest Indiana and southeastern Indiana-may be difficult to persuade if their projects don’t get funded or if bucks are siphoned off from their areas.

At the same time he proposed his funding plan, Kenley also unveiled another proposal, one that would reach into every corner of the state. He seeks to fund the growth of local government through a local option income tax rather than property taxes.

This proposal was overshadowed by the Colts plan in central Indiana media coverage, but actually would have deeper implications.

This would be a major restructuring of taxation concepts. The proposed system is more directly based on ability to pay and is simpler to administer. It would be a more honest and transparent method of funding local government. Local accountability and responsibility would also be increased, but it would mean a major shift in how Indiana taxes its citizens, and some would pay more.

Given the nature of the proposed changes and a number of questions raised about the concept by local government lobbyists, don’t expect this measure to be enacted in the remaining 30 days of the session. But it may be the most important matter that could be studied by lawmakers over the summer.

In the meantime, keep watching the budget as a likely home for the Colts deal, which should come together in late April in conference committee. As a budget item, it becomes more difficult for outstate lawmakers to oppose than if it’s considered on its own merits.