Is The Airport Authority Indy's Next Problem Child?

Indianapolis' Capital Improvement Board has been running deficits for a decade and is now demanding a $48 million a year bailout from the state legislature. Gov. Daniels and Mayor Ballard plan to announce tomorrow that controversial tax and spend plan they plan to shove down the throats of legislators at next week's special session as part of the state budget. The Indianapolis Water Company is facing rising, uncontrollable debt that may well end in a bankruptcy. And now the Indianapolis Airport Authority is complaining about a $15 million shortfall in this year's budget, raising serious questions about whether it can afford the brand spanking new $1 billion midfield terminal that just opened late last year.

The Star's Brendan O'Shaughnessy reports that the airport authority's new CEO, John Clark, said layoffs and tapping into the authority's $200 million reserves are not off the table. Clark backtracked on an original assertion he made to a Star editorial board that the authority currently was running a deficit:

"If we look back at projections of growth and the number of flights and passengers, clearly we're way off," Clark said in a meeting with The Indianapolis Star editorial board. "The challenge is to look at our business model and see how we can become more efficient."

Clark told the editorial board that the airport faced a deficit of $15 million and provided other budget numbers that an airport spokeswoman later said were errors.

The spokeswoman, Susan Sullivan, said the airport projects revenue to be $15 million less than expected but still expects to have more revenue than expenses.

Instead of ending 2009 with $68 million in operating cash, Sullivan said, the airport now expects to end up with $53 million. She said that would still be $4 million more than at the start of this year.

Clark acknowledged late Tuesday that he miscommunicated the airport's financial situation to the editorial board.

Here's what really troubles me. The airport authority's entire budget is $170 million; however, $100 million of that amount represents its fixed debt service costs. That means the airport authority would have to slash its operating budget by over 20% to make up for the loss of revenues it is currently experiencing. O'Shaughnessy's story indicates air traffic at the airport is down 10% this year. Clark tells O'Shaughnessy that tax increases are not an option, but he had few answers about how to deal with the problem. It is disturbing that none of the board members O'Shaughnessy attempted to reach for comment bothered to return his call. Selling off unused land may be an option in the short-term to shore up the authority's finances. The authority already jacked fees to the airlines to help pay for the new terminal so it might be cutting off its nose to spite its face if it attempts to raise those fees even higher. Parking and concession revenues aren't as high as what had been expected. Maybe the airport authority should stop giving out free parking to all of the politicians to help shore up those numbers.

The bottom line folks is that the City of Indianapolis has been living way beyond its means for too many years. The City's approach has been to build the biggest and greatest stadiums, convention centers and airports whether the money is there to pay for it or not. It keeps plowing tens of millions of dollars into private, downtown development projects, coupled with tax abatements, that force the City to take away from other valuable services simply to look impressive to the outside world. At some point, it has to end. We simply can't afford to continue spending like drunken sailors.