CARMEL – Mayor Joe Hogsett, come with me into the Howey Politics Indiana Way-back Machine ... to June 2005. But this is no Twilight Zone; Rod Serling will not step out from behind the salad bar with an ominous observation. This was a true, true story. There, coming into focus are large swells of people – Republican – at a Golden Corral in Shelbyville, in a Noblesville Council Chamber, and other doughnut outposts such as Greenfield and Lebanon. There’s a figure of slight physical stature, but with the tenacity of a champion flyweight boxer and an intellect that, if parlayed into physical mass as George Will once suggested, would be huge. This figure looks like ... Gov. Mitch Daniels.

There were well-tailored men standing in the wings, Joe Loftus and Bob Grand, among throngs of Republicans who had issues fathoming the phrase “tax increase” that would go toward building a new football stadium ... in Indianapolis.

This way-back trip is relevant after Mayor Hogsett, facing a potentially tough reelection battle, used his State of the City address last week to drop what has been described in Doughnut Land as “a bombshell.” He proposed a nine-county “infrastructure fund” fueled by enhanced income tax revenue (or, bluntly, an income tax hike).

“The concepts you’ll find there do not redirect one dime of revenues currently enjoyed by our city or by our neighbors,” Hogsett said. “Rather, it would seek to dedicate a portion of future income tax growth to a regional infrastructure fund. With the income taxes paid by these commuters exclusively benefiting the counties where they live, Marion County taxpayers bear the brunt of the financial burden for infrastructure which serves the entire region.”

The thrust of Hogsett’s pitch was augmented by an Indiana Business Research Center dataset showing 161,500 people who work in Marion County but commute from surrounding counties. Their cars and trucks contribute to the wear-and-tear of Indy’s long-neglected roads and Hogsett believes Marion County taxpayers are disproportionately burdened with building, maintaining and replacing its roads and bridges.

Potholes are indiscriminate, mindlessly willing to take out an axle or the rim of a motorist from Beech Grove, Cicero or Bargersville. Hogsett may be right on the policy, but the politics are another matter.  

Hogsett appeared to be banking on the good will of Central Indiana Conference of Elected Officials (CICEO), led by Fishers Mayor Scott Fadness, to work regionally. It’s a concept that has slowly developed, then enhanced with Gov. Mike Pence’s “Regional Cities” program that has prompted three regions of the state to paddle in the same direction to the tune of $44 million each. When the Amazon HQ2 project surfaced, we saw further evidence of county lines becoming the invisible things that they are to the naked eye as Hogsett and mayors from Boone and Hamilton counties worked in concert to land the big opportunity.

Landing with a thud

But Hogsett’s proposal landed with a thud. “I’m perplexed by Mayor Hogsett’s proposal that is not consistent with the work the Central Indiana Conference of Elected Officials has been doing collectively over the last year,” Fadness said. “While I agree that regionalism is important, I believe we need to find a solution that will transcend political seasons and ensure the long-term sustainability of our region.”

“I was very surprised by Mayor Hogsett’s proposal, as were many of my fellow mayors,” Westfield Mayor Andy Cook told the IBJ. “He has been right there with us as we’ve discussed this larger, regional approach.” Greenwood Mayor Mark Myers added, “It doesn’t reflect the conversations many mayors and town leaders have been having about ways to collaborate and invest in transformative projects.” 

Fadness told the IndyStar that Hogsett mentioned the concept to him 18 months ago, wherein Fadness “summarily dismissed it,” adding, “I haven’t talked to him about it since and had no advance notice it was coming.” Fadness told the Star that a truly regional approach “has to outlive us individually.”

Hogsett’s timing was politically charged. He faces a potentially tough race from State Sen. Jim Merritt. The suburban mayors, too, are facing reelection (Noblesville Republican nominee Chris Jensen is a shoo-in), though none appears to be in serious danger of losing in November. But that could change by the 2023 election cycle, when many of these cities will take on a more purple hue, as evidenced with Democrat J.D. Ford winning a Senate seat partially located in Carmel and Zionsville, while Merritt’s own Senate district straddling Marion and Hamilton counties is also becoming more competitive.

Daniels 2005 doughnut tour

This is where Hogsett would do well to study what Gov. Daniels did in 2005. Then-Indianapolis Mayor Bart Peterson ran into roadblocks to fund what would become Lucas Oil Stadium. His city owed the Colts $48 million, the Republican majority General Assembly was reluctant to lift a finger, and Los Angeles looked predatory toward the city’s NFL franchise. There was fear that Peyton Manning would be flinging TD passes as an LA Colt.

So Daniels did one of the things he does best, which was to build consensus. The June 9, 2005, edition of the Howey Political Report led off: “Mitch Daniels is not only governor of Indiana, but he is a listener, an empathizer, an innovator, a solution-seeker ... and a tax hiker. The ‘town hall’ circuit he has conducted this week in the ‘doughnut counties’ surrounding Indianapolis has become not only an extension of his historically successful 2004 gubernatorial campaign, but a release valve. Most of the folks showing up for these town halls voted for Daniels in 2004. Until now, not only were they some of the most ardently reliable Republican voters in the nation, they were also for small, efficient government and low taxes.”

He was confronted with headlines like this one from the Greenfield Daily Reporter: “Don’t force-feed food tax, citizens warn governor” and its lead story began, “A vocal group of Hancock County residents told Gov. Mitch Daniels Monday they object to a 1% food and beverage tax being shoved down their throats.” 

In Shelbyville, Daniels found a laid-off sixth-grade teacher wanting more funds for school children, not NFL linebackers. “I would rather see that 1% tax go to our schools. If you need a new roof, you don’t go on vacation,” Betsey Treon told him. Daniels empathized, saying, “Frankly, it was a problem I didn’t want to deal with. I didn’t dream this thing up. It’s not my idea; not my design.” As that exchange ended, Daniels told Treon, “Thank you for teaching.” Treon responded, “I wish I could.” 

In Noblesville, he heard from a man who had just lost his $80,000 job and didn’t want to pay more taxes. “State and local officials need to stop taxing people. It’s not in our budget,” the man said. Daniels listened and commiserated. “I agree we have a tax problem,” Daniels answered. “For many, many years – for decades – we were a low-tax state. Indiana governors bragged about this. Total taxes, if you put them all together, were always in the low 40s (out of 50 states). Then we were in the 30s for a good part of the last decade. Last year, we were 16th. I thought, wow, I must have taken my eye off the ball.” 

Said Boone County Councilman Butch Smith, who opposed the new tax, “You’ll notice I called it the Indianapolis Colts, not the Indiana Colts, not the ‘Doughnut County Colts.’ It is the ‘Indianapolis Colts.’ It is an Indianapolis problem.”

There were other headwinds, such as a sixth Colts player making the news with an arrest, not an interception. There was the historic “Indianapolis gets everything” sentiment you can hear out-state folks complain about in bars and restaurants adorned by Colt and Pacer logos.

As Howey Politics reported: “From the governor’s perspective, timing is everything. Pushing a stadium tax he didn’t want comes almost three years before he earnestly begins campaigning for reelection. Today’s stadium tax will probably be forgotten as few of us add up all our restaurant tabs.”

When the votes were tallied that late June, Daniels was able to persuade seven of the eight counties. Morgan, the furthest out, was the lone holdout. It passed by a 4-3 vote in Boone County, 6-1 in Johnson, 23-5 in Indy.

In our June 2005 analysis, there was this assessment: “The people loved this governor coming to their hometowns to sell and defend something that would have been unfathomable in times gone by. Many of them didn’t agree with him on the tax hikes. But few were rolling their eyes or spewing under their breath as they left. The press found this to be a spectacle, a Republican governor going to seven base counties selling tax hikes he agreed to after legislative Republicans cut off the options. There is no doubt the governor has some real gonads. But it was striking that legislative leaders who brought this spectacle on were missing. It wasn’t too long ago that legislative leaders would have leaped at the chance of sharing the limelight with their governor. Perhaps they thought the doughnut kitchen during Gov. Daniels’ salad days would be too damn hot.”

Lessons for the mayor

The lessons for Mayor Hogsett?

1. Surprises are bad, baaaad. At least courtesy calls should have been made to his mayoral colleagues.

2. Timing is everything. Springing a tax hike to improve Indianapolis roads in an election year was a blunder. None of the suburban mayors will likely pay a price this year, but as noted above, the political dynamics are likely to shift in a coming cycle or two.

3. Some mayors are open to the concept. Greenfield Mayor Chuck Fewell told the Star he needed more time to review and said, “It is widely known that given the current restrictions on tax revenues to counties, cities, and towns throughout the state, all of us struggle with having sufficient funds to maintain our infrastructure. I will continue to review and consider any proposal that fairly and equitably distributes tax revenues for infrastructure needs, and benefits our community.” Carmel Mayor Jim Brainard added he needed more time to study Hogsett’s strategy before ensuring whether it acts in the “best interests of residents of both Indianapolis and Carmel.”

4. As Daniels demonstrated in 2005, a political figure who listens, commiserates and can state a clear case of mutual interest can succeed. 

5. Hogsett needs to recognize the historic animosity in out-state Indiana toward its capital city. Beyond Sen. Richard Lugar, mayors Bill Hudnut, Stephen Goldsmith and Hogsett himself have all lost statewide races.

6. Thus, it may be impossible for an Indianapolis mayor to lead such a charge. If there were discussions in the wings, and a consensus of three or four suburban mayors joining to form a common front, the more likelihood for success. 

7. During the funerals and memorials for Sens. Birch Bayh and Lugar, Hogsett appeared several times with Gov. Eric Holcomb. The current governor learned at the master’s knee Daniels’ ability to engineer asset management (e.g., the Major Moves toll road deal) and form consensus. It was Holcomb who was Daniels’ point-man with the unions on Major Moves and his successes were conspicuous. At the 2008 Democratic Jefferson-Jackson Dinner that featured keynoters Hillary Clinton and Barack Obama, the two union sponsors with banners flying above the stage had both endorsed Daniels for reelection, a fascinating juxtaposition.

Holcomb is bounding toward his own reelection, handing out $1 million Next Level road checks to places like Brown County (population 15,000) and Ellettsville, while Indianapolis also got $1 million. These funding ratios don’t reflect population and use. But Holcomb is an Indianapolis area homeowner, knows the streets in his capital are bad, and learned the art of political capital expenditure from Daniels. A successful Holcomb reelection will give him more latitude to spend the political capital he has accrued. Future political ambitions could warrant the notion of better political traction in the capital city.

Mayor Hogsett might be wise to shift this notion to the back burner, then build consensus and find political partnerships, should he earn a second term. But the die is cast and this becomes a major issue this year and heading int
o 2020.