TIFS as Crony Capitalism?

I’m on the mailing list of the libertarian Cato Institute (and the Republican and Democratic parties, among other strange bedfellows). I am fond of Cato–not because I agree with them on very many issues, but because–unlike the Republican Party–they are intellectually consistent. So I was very interested to receive a (snail mail–no link) report titled “Crony Capitalism and Social Engineering: the Case against Tax-Increment Financing.”

For those of you unfamiliar with TIFs, the concept is fairly simple. In order to induce development of projects that would not otherwise be economically viable (sometimes called the “but for” test, as in “but for the economic assistance, the project wouldn’t be built), the municipality caps the property taxes at the rate being paid prior to the new development, and plows the added taxes into the development for a period of time, in order to bridge the gap.

The Executive Summary makes several points:

1) By diverting the “extra” tax dollars generated to the project, those dollars are lost to the schools, libraries, fire departments and other urban services. In a sense, those services are also subsidizing the development. (To which proponents of TIF financing would respond, yes, but if the project would not otherwise get built, and if the abatement ends after a reasonable period of time–after which those urban services do receive the extra income–everyone benefits.)

2) Studies have shown that cities are not really applying the “but for” test. Many of these projects would have been built without the extra help. (Whoops!)

3) The new developments impose added costs on schools, fire departments, etc., so other taxpayers are either subsidizing the added burden imposed by the development until such time as the abatement ends, or getting reduced services during that time.

4) No matter how well-intended these programs, officials will often give in to the temptation to use TIFs as a vehicle for crony capitalism, providing subsidies for developers who in turn provide campaign funds to those same officials.

The Cato report has other problems with TIF financing, primarily because it is often used to support denser in-city developments over suburban low-density ones. In my opinion, that’s an argument FOR rather than an argument AGAINST–as the techies might say, that’s a feature, not a bug. But it is hard to argue with their other criticisms.

This is what makes policymaking so difficult. If  TIFs are used as originally intended–and used selectively–they can be a very useful tool.  When I was in city hall, in the early days of their use, I was a proponent. But at that time, TIFs were being used by urban governments to level the playing field–to compete with the lower costs of suburban development. Over the years, the tool has been adopted by smaller bedroom communities like Carmel and Greenwood–and developers have learned to play “let’s make a deal,” in essence turning TIFs into bargaining chips. One result has been that the “but for” test is history. And when the “but for” test was gone, so was the original justification for the program.

Unfortunately, selective use of TIFs has gone the way of the “but for” test. Here in Indianapolis, if news stories are to be believed, the Ballard Administration is proposing to turn the whole urban core into TIFs. (Okay, maybe I’m exaggerating a bit. But not much.)

It’s just further evidence that the Cato report is correct when it notes that TIFs have “become a way for city governments to capture taxes that would otherwise go to rival tax entities such as school or library districts.”

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Appreciating Our Assets

My husband and I just returned from the Phoenix Theatre’s production of “Avenue Q.”

We had seen the show on Broadway a few years ago, and thoroughly enjoyed it, so we had a pretty good basis for comparison–and this show was every bit as good as the production we saw that night in New York. The singing, acting, stagecraft–all were absolutely first-rate. It was just a great show.

Sometimes we forget how much talent we have right here in Indianapolis–and how important it is to support our local cultural assets. The Phoenix was the first local professional theater to produce cutting-edge new plays and emerging playwrights, and it has consistently been intellectually provocative and technically excellent. The IRT, another important community asset, provides more mainstream fare, and over the years both theaters have been joined by several others–not to mention various other performance venues.

City leaders talk a lot about the importance of science and technology to economic development and the local economy, and it is undeniable that efforts like Bio-Crossroads and Internet II are vitally important to growing our city. But a flourishing arts community is equally important. A vibrant arts community–galleries, theaters, festivals, poetry readings, Fringe festivals–contributes to a good quality of life, and that in turn appeals to what Richard Florida calls the Creative Class, which in its turn contributes to job creation and economic development.

On a more mundane level, world-class entertainment helps fill local bars and restaurants and generates foot traffic for retail venues. (Studies suggest that those who patronize the arts add much more to the local economy than do those who attend sporting events–although public support for the latter is many times the support we give the arts.)

The Phoenix was sold out for the Sunday matinee, and evidently tickets are going fast. If you are lucky, you might still be able to see this fabulous performance of “Avenue Q.”  And if Indianapolis is lucky, we will continue to attract people like the Phoenix’ founding director Brian Fonseca–people who enrich our community and add immeasurably to the quality of our urban life.

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Plotzing

Yesterday, Dana Milbank’s column in the Washington Post began as follows:

The Israeli tabloid Yedioth Ahronoth came out on Wednesday with a shocking report: Republican presidential candidates Mitt Romney, Newt Gingrich and Michele Bachmann would join Sen. Joe Lieberman (I-Conn.) at Glenn Beck’s rally in Israel in August.

It turned out that much of the report was wrong. The three candidates quickly said they had no such plans – a sensible decision. Beck’s hateful shtick encouraged even Fox News to end his show later this month. But, incredibly, another piece of the report was true. “I’d love to participate,” Lieberman confirmed when The Post’s Felicia Sonmez found him in a Capitol hallway. “It’s just going to be a rally to support Israel and the U.S.-Israel relationship.”

Never mind that Beck, a Christian Zionist, supports Israel because the return of Jews to that ancient land is a necessary condition of the Rapture, during which Jews who refuse to accept Jesus and convert will be consumed by fire–a biblical prophecy with which Lieberman might be presumed to differ.

Milbank noted that Lieberman’s willingness to make common cause with Beck made him “plotz” (a word that very roughly translates into “‘become agitated.” The full meaning of “plotz” is probably appreciated only by those of us with Jewish mothers and grandmothers).

Milbank was astonished that Lieberman, who wears his religion on his sleeve,  would embrace Beck, one of the country’s most prominent anti-Semites. He failed to understand that what Lieberman and Beck share is far more than unwavering, uncritical political support for Israel. Both men lack any hint of self-awareness. Both are supremely confident that they own the Truth and have a duty to lecture everyone else about that Truth. Both engage in smarmy self-righteousness. Both are narcissists.  Both, in a word, are zealots–blinded to any worldview beyond their own and utterly convinced of their own moral superiority.

As the character of Yenta in Fiddler on the Roof might have put it, “It’s a perfect match!”

Pathetic Policy Discourse

There are a lot of examples of what happens when those making policy don’t know what they are talking about, but here’s one that just annoys the hell out of me every time it comes up.

The New York legislature is preparing to vote on whether the state will recognize same-sex marriage. The Times reports that one of the “concessions” being demanded is explicit language protecting churches that refuse to officiate at such unions.

I know I harp on the importance of constitutional literacy, but this is a perfect example of what happens when even the most basic, rudimentary constitutional knowledge is absent.

The First Amendment religion clauses not only protect all of us from governmentally-imposed  religion, those clauses also protect the free exercise rights of religious organizations. That means–at a minimum–that government cannot force churches to engage in activities that are counter to their beliefs. Churches and other religious organizations are even exempt from civil rights laws when hiring for religious positions. Bottom line, it would be unconstitutional to demand that clergymen officiate at same-sex weddings, and any effort to sue them for refusing to do so would be immediately tossed out of court.

Furthermore, the “marriage” that government recognizes is civil marriage only. Government classifies people as married for purposes of determining who is entitled to the 1000+ legal benefits that accompany recognition of that contractual relationship. Civil and religious marriage are different. Governments do not and cannot “sanctify” a marital union–for that, people have to go to their respective churches (a growing number of which are willing to do so). Our constitution separates church and state (no matter what Michele Bachmann and her ilk think), and that separation means government has no authority over religious doctrine and belief.

When political actors demand statutory “protection” for churches, you can be sure the actor is either dishonest or ignorant (not that these categories are mutually exclusive). Granted, adding language that duplicates the existing constitutional protection doesn’t require proponents of same-sex marriage to give anything up. But it implicitly suggests that–absent such language–the government could make the demand in the first place, and adds to the ever-growing stupidity of our national discourse.

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A Day at Boy’s State

Tuesday I drove to Angola, Indiana (and yes, it’s a LONG and boring drive), to talk to a group of seventeen-year-old boys who were attending a leadership training session as part of this year’s Boy’s State.

My youngest son attended Boy’s State some quarter-century ago, and not much about teenaged smart-asses has changed. (I happen to really like teenage smart-asses; all of my sons fell into that category.) It’s a time of life when bright kids still think everything is possible, when everything, no matter how humdrum or serious, is fodder for adolescent humor, and the world is endlessly interesting.

Of course, our current political dysfunction hasn’t escaped notice. During the question-and-answer exchange, one boy posed a question: Given the choice, would I prefer to run 10 miles in 95 degree heat, or spend a half-hour with Sarah Palin? (I had not mentioned the former half-term governor of Alaska during my talk).

I’m attaching the text of my remarks–which will seem very familiar to those of you who read this blog with some regularity.

__________

The program at Boy’s State was founded on a simple but very powerful insight: In order to be a leader, you first have to be a good citizen. Those of you who are here today clearly understand that—Boy’s State traditionally draws the most politically aware and civically active students. So I am probably preaching to the choir, but here goes!

If there is one thing that history has taught us, it is that without good citizens–citizens who vote, participate in policy debates and hold government accountable–power really does corrupt those who exercise it. Apathetic citizens enable indifferent and self-serving public officials.

If leaders are first and foremost good citizens, the question becomes: what makes a good citizen? I think that there are three requirements topping the list: Constitutional literacy, critical thinking skills, and the willingness to pay one’s dues.

What do I mean by each of these?

1)     Let’s start with Constitutional literacy. You simply can’t be a good, responsible citizen if you are ignorant of the history and philosophy of your own country. A couple of months ago, Newsweek Magazine ran an article titled “How Ignorant Are You?” It was a quiz, with questions taken from the tests immigrants have to pass in order to become citizens. The percentages of Americans who could answer the questions correctly were embarrassing—for most of them, it was less than 30%. There are literally hundreds of other surveys that confirm how little most Americans know about their own system: two-thirds of us don’t even know that we have three branches of government!

If you don’t know what the Enlightenment was, and how it shaped our constitutional system, if you don’t understand that the purpose of the Bill of Rights was to protect individual rights both from government and from what the Founders called “the tyranny of the majority,” if you don’t understand the difference between civil liberties and civil rights, you can be a very good person, but I would argue that you don’t know enough to be a good citizen.

Constitutional and historic literacy are just the beginning. You also need critical thinking skills.

2)     What I mean by critical and analytical skills is the ability to tell the difference between facts and garbage. One of the reasons that Constitutional literacy and an analytical mind are such important parts of good citizenship is that the world is a much more complicated place than it used to be, especially when it comes to the oceans of information we get every day. The internet is a wonderful thing—I’m not sure how I survived before email and Google and Facebook—but because it brings so much unfiltered material into our lives, the ability to separate factual, credible information from spin and propaganda is more important than it has ever been. If you don’t know what the Constitution and Bill of Rights really say, or how the Courts have defined and interpreted what they say, you’re a lot more likely to believe that forwarded email you got from your crazy old Uncle Ray, or the fabricated history being peddled by the partisans on talk radio.

In the last few years, we have seen incredible changes in the media. Fewer people read newspapers or even watch the evening news on television, and more and more of us get our information on line. Some of that is great, some of it isn’t. We are in danger of losing real journalism—where people monitor what governments and businesses do, where they fact-check and provide context and background. Instead, we have mountains of unsubstantiated opinion, PR and spin. Good citizens have to be able to separate fact from fantasy. They have to live in the world as it is, not in a bubble where they listen only to things that confirm what they already believe—and the internet makes it so easy and tempting to construct that bubble. At the School of Public and Environmental Affairs, where I teach, we are so concerned about this issue that we have established a new undergraduate major in Media and Public Affairs. So far, it is the only major of its kind in the country.

There have always been programs exploring the connection between the press and democracy—examining why the Press received First Amendment protection and what role the so-called “Fourth Estate” is expected to play. But at SPEA, we teach people who will manage the public’s business—the people who will be tomorrow’s political leaders, elected officials and public servants, the men and women who will make and administer the laws. And those people can’t do their jobs unless they understand the constantly changing media environment in which they will operate.

I used to be the Indianapolis Corporation Counsel—the head of the city’s legal department. There were two newspapers, four television stations, and three full-time reporters who covered city government. If my Mayor wanted to communicate with his constituents, he put out a news release or called a press conference. Today, there is one anemic newspaper, literally hundreds of television channels, and no full-time reporters covering city hall. If a Mayor or business leader, or nonprofit manager today wants to communicate, he or she has to use multiple mediums: the local newspaper and broadcast channels, Facebook and Twitter, maybe You Tube…and undoubtedly there will be many others, as yet un-invented, by the time you all are active in your communities.  Those leaders not only need to know what’s out there, they need to know how to use those media to counter misinformation. And they need to understand that in the age of the internet nothing they email or tweet or put on You Tube is ever private. In other words, they need to learn what not to communicate—Just ask George Allen or Anthony Weiner.

Finally, the third quality of a good citizen:

3)     Willingness to pay one’s dues—taxes. This one isn’t going to make me any friends, but it’s true. We’ve had 25 years of politicians telling us that taxes are like theft, that they are government stealing our money.  Not so. Taxes are the price we pay to live in a society that makes it possible for us to earn a living and live in safe communities. Our taxes pay for everything from national defense to paved roads to air safety to garbage collection. Tax dollars pay for the schools you attend, the parks you play in, the police and firefighters who keep you safe. Don’t misunderstand—good citizens are diligent watchdogs of the public purse, because there’s nothing virtuous or patriotic about waste or duplication—but they are also willing to pay their fair share without whining about it.

Think about a basketball team where some players just don’t pull their weight, or clubs you belong to where most of the members let a few people do all the work. Most of us don’t think very highly of the slackers. Leaders and good citizens aren’t slackers—they do their share. And that includes paying their share.

There are lots of other behaviors that characterize good citizens—voting, keeping up on the news, serving on juries, working for a political party or for a cause you believe in—all the things we mean when we encourage civic engagement. But if you aren’t civically literate—if you don’t know the basics of our history and constitutional system—your vote won’t be as informed and you won’t be as effective.

If you don’t have the ability to assess the credibility of the news and commentary you are receiving, you won’t get the whole story, or the accurate account, and you will make decisions based on bad or inadequate or incomplete information.

And if you accept public services—police protection, garbage collection, paved roads, education and so many more—but you don’t pay your fair share of taxes, you aren’t a citizen at all. You’re a freeloader.

At the end of the day, being a good citizen requires a lot more than just being born in the United States. It’s more than wearing a flag pin, or being proud of what this country has accomplished. Being a good citizen means doing your part to move America forward, it means helping this country of ours live up to its highest ideals. And that requires civic knowledge, intellectual honesty and a willingness to contribute time, effort and tax dollars to our common civic enterprise.

Of course, you can be a civically-literate, well-informed, taxpaying citizen and not be a leader—and let’s acknowledge that good followers are just as important as good leaders. There are many skills that characterize leaders—skills that set them apart. One of the most important is the ability to communicate.

You’ll notice I didn’t say the ability to speak. That’s important, but language skills are only a part of communicating. Understanding our changing media environment is only a part of communicating. When my own children and grandchildren went to college, I gave them the same advice I am giving you today: get a liberal education that emphasizes oral and written communication, because if you can communicate effectively, you can do anything—and if you can’t communicate, you can’t succeed at anything. I was a lawyer for many years, and communication was at the very core of what I did every day—from writing clear, understandable contracts and legal documents, to persuading a judge or jury, expression is the heart of lawyering.

If you hope to run for office, or work in the public or nonprofit sector, the ability to communicate is equally important. I’ve hired people for jobs in every sector—public, private and nonprofit—and I can tell you that the most important skill after the basics involved in any particular job is the ability to speak and write clearly and without reliance on jargon.

Good communicators are good listeners, they know the rules of grammar and diction, and they don’t use flowery language or arcane vocabulary. Clear language tells listeners that you are a clear thinker. I’ve often had students come up after losing points on a test to tell me that “I knew what I meant, I just couldn’t say it.” Believe me, if you really know what you are talking about, you can say it. If you can’t say it, if you can’t communicate it, then you really don’t know it.

Good leaders have other, less-easily defined characteristics. Good judgment is very important. (For example, people with good judgment don’t tweet pictures of their bodily parts.) So are integrity and intellectual honesty. And no one has ever gotten into trouble by saying “I don’t know.” The desire to impress people will get you in trouble more quickly than you can imagine. None of us has the answer to all questions, and admitting you don’t know something doesn’t make you look dumb—it makes you look smart.

Good leaders—and good people—are open-minded. They aren’t judgmental. They make decisions and take positions based upon evidence rather than ideology. They recognize that most issues are more complex than most people realize. And they are genuine—authentic–rather than phony.

Some of us are born with these characteristics, but most of us have to work hard every day to learn, to grow and to listen.

You are doing that work now, just by being here.

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