Charlotte Bankruptcy Reports Indiana Governor: Bankruptcy law needed in case cities fail

May 1, 2010 - PRLog -- Gov: Bankruptcy law needed in case cities fail
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May 1, 2010

BY JON SEIDEL, (219) 648-3068
Gov. Mitch Daniels said Friday it might be time for Indiana to pass a municipal bankruptcy law in case Gary or another insolvent Hoosier city fails to prevent financial ruin in the future.

Such a law is a requirement for any city interested in pursuing bankruptcy, and he said it shouldn't harm Indiana's AAA credit rating, one of the best in the country.

» Click to enlarge image

Members of the Gary Chamber of Commerce and others listen Friday as Indiana Gov. Mitch Daniels speaks during the Chamber's annual membership luncheon at the Genesis Center in Gary.
(Stephanie Dowell/Post-Tribune)



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Hammond Mayor Tom McDermott Jr. raises his hand in hopes of getting called on during a question and answer period Friday during the Gary Chamber of Commerce annual membership luncheon at the Genesis Center.
(Stephanie Dowell/Post-Tribune)



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However, Daniels said he still hopes Northwest Indiana's largest city will be able to right its financial ship by developing the Gary/Chicago International Airport or a land-based casino. He even praised Gary City Hall for slashing its tax levy by 24 percent since 2008 with the help of the Indiana Distressed Unit Appeals Board.

"That's not easy to do even as you start, as they did, in a position of lots of excess," Daniels said. "That takes some gumption on somebody's part."

The governor made his comments while meeting with the Post-Tribune editorial board Friday. He sat down to talk about issues facing Northwest Indiana after visiting Banneker Elementary School and KIPP Lead Charter School in Gary.

Daniels also spoke at the Genesis Center during a Gary Chamber of Commerce luncheon. He told a packed house that Northwest Indiana, and therefore the entire state, has met federal air quality standards for the first time in history.

He also told the crowd how Indiana has become a leader in the Midwest in terms of attracting new businesses. Nevertheless, the national recession could ensure Indiana's rainy day fund will be gone by the time the General Assembly begins crafting its next budget in 2011.

That's despite a freeze on hiring and raises and a 50 percent cut in travel expenses, among other cost-cutting measures.

"That's a very sobering reality," Daniels said.

The Cline bridge
A question-and-answer session at the Chamber of Commerce meeting got a bit rowdy when Daniels was asked about the Indiana Department of Transportation's decision not to rebuild the Cline Avenue bridge.

Daniels said it would cost $200 million to replace the bridge exactly as it was.

"We are not spending that kind of money," Daniels said.

But members of the audience wanted to know how the governor calculated his numbers.

Later, Daniels said INDOT engineers estimated the cost.

"I'm reasonably confident it would have been at least that, probably more," Daniels said.

Illiana interest

At the editorial board meeting, the governor said "there are definitely people interested" in a public/private partnership opportunity created when the Indiana General Assembly passed an Illiana Expressway bill earlier this year.

The Illiana has been proposed as a highway that would connect Interstate 65 in Indiana with I-57 or I-55 in Illinois.

While he said he hasn't spoken recently to Illinois Gov. Pat Quinn about the project, Daniels said he's been told lawmakers are working "diligently" in Springfield, Ill., to craft a companion bill.

He also said support for the project should still exist even if Quinn loses in Illinois' gubernatorial election this year.

"I would hope this is one they wouldn't have any big debate over," Daniels said.

Consulting firm Landrum Brown is set to release a study Thursday outlining a strategic business plan for the Gary/Chicago International Airport. Daniels said he hasn't seen the report yet, but he's been told it might recommend against immediate privatization of the airport.

The governor, though, said he has a "bias toward action," and he'd rather pursue privatization now.

"My question is going to be, what would be the harm in testing the market?" Daniels said. "Somebody might come in and say, 'Well, if you did this and this and this, we'd be a lot more interested or our bid would be stronger.'"

Airport could save Gary

He also said development at Gary's airport could help the region and state find a solution to Gary's financial crisis. Another source of hope, he said, is a push for a land-based casino in Gary.

The governor said a proposal that dissolves one of Gary's two licenses could be a winner when the General Assembly returns next year.

Gary is mired in litigation with the bankrupt owner of its two licenses, Majestic Star Casino, which is also withholding millions of dollars due to Gary under a local development agreement.

Daniels said it will be up to the Indiana Gaming Commission to decide whether Majestic Star's licenses should be renewed in June. The Gary City Council is crafting a resolution to ask the commission not to renew them.

"Clearly, there are big, big problems with the current ownership," Daniels said.

Protest peaceful
Hammond Mayor Thomas McDermott Jr. joined protesters for about an hour outside the Genesis Center before Gov. Mitch Daniels arrived to speak Friday.

"We had a protest. It was peaceful," McDermott said. "I didn't get to talk to the governor. We were chanting and holding signs, that was it."

Talk about Cline Avenue dominated McDermott's radio call-in show in the morning, and McDermott remains critical of the state's plans to reroute traffic rather than rebuilding the bridge.

"They're spending $1 billion in money from the (Indiana Toll Road) lease to build an expressway from Indianapolis to Evansville. No studies are being done. They're not talking about pinching pennies in southern Indiana," he said. "You talk about doing something in Gary, Hammond or East Chicago and it's not even considered."

Daniels said he missed seeing the protesters. "Someone said there might be, that the mayor had rallied up a few people, which is appropriate," Daniels said, "but I didn't personally get to see them."


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