The mayor of Carmel says of the city’s $1.4 billion total indebtedness, “Our debt is reasonable for our revenue.” So said the IndyStar Sept. 6.
The city’s budget is $141 million according to information it filed with the Indiana Department of Local Government Finance. The mayor thus thinks a 10 to 1 ratio is reasonable. In Westfield, the ratio is 4.4 to 1 ($145 million debt, $33 million budget), in Noblesville, 6.9 to 1 ($298 million debt, $43 million budget), and in Fishers 6 to 1($401 million debt, $66 million budget).
That’s 10 to one versus 4.4, 6.9 and 6 to 1 among our neighbors.
A different view was expressed by Standard Poors Global Rating service Nov. 14, 2017, when it said of its decision to downgrade Carmel’s bond rating:
“The downgrade reflects our view of the city’s rapidly increasing debt burden, with mounting leverage that can pressure flexibility and budgetary performance over time.”
Citing the 2015 financial flap when the general fund was tapped to pay debt, S&P observed that “this demonstrates the risk of high leverage and a heavy dependence on sometimes more volatile tax increment revenues.”
Potential investors in Carmel bonds were warned:
“Furthermore, the city doesn’t have a high reserve cushion, relative to the size of annual debt service, to carry it through extended stressful periods.”
Separately, the city must report debts to the state after issuance. The current report of $1.4 billion total outstanding debt obligations is 9.4 times that of Westfield ($146 million), 4.6 times that of Noblesville ($298 million) and 3.4 times that of Fishers ($402 million).
Looked at as a household and eliminating three zeroes, Carmel’s income is $141,000 and its debt is $1.4 million. Its debt is 9.4, 4.6 and 3.4 times its neighbors as shown above.
And, the health the mayor uses as an index is 10 to one versus 4.4, 6.9 and 6 to 1 among our neighbors.
I recall that famous country and western lyric: “Who you gonna believe? Me or your lyin’ eyes?”
What are we to believe? The opinion of an incumbent running for re-election or the facts the city embarassingly has to report to the State of Indiana?