Northwest Indiana Comical Politics

County Council tax cap plan amounts to pure genius

June 30, 2005

By Maurice M. Eisenstein
Post-Tribune guest columnist

Last week, I attended the meeting of the Lake County Council when it voted on the 2 percent property tax cap, county income tax and the food and beverage tax. It was a pleasure to, for once, experience a responsible political body functioning in Northwest Indiana.

The legislation for the 2 percent cap was genius in managing the runaway thievery of the northern cities. This was truly a unique event. It gave two wins to the taxpayers of Northwest Indiana. Taxpayers got property tax relief and they also got relief from continuing to fund bloated budgets because no new taxes were approved.Instead, every taxing unit will have to cut its budget to keep its expenditures within the 2 percent cap.

Brilliance, pure brilliance.

This meeting did not have anything to do with either north vs. south county or Gary against everyone else. Everyone at the meeting, those from north and south county, those from Hammond, Gary, East Chicago and every city and town down to Schneider, realizes that the political organizations of the northern cities are inundated with incompetence, lack of ethical behavior and, in some cases, corruption.

Even the northern cities’ own citizens did not try to make the argument that they have something unique to offer that everyone is after. Only fools would look at the last 20 years of development and see anything positive.

Put bluntly, no one was impressed with what you — northern officeholders — or any of your predecessors had accomplished. As a result, not one word was spoken at a truly democratic meeting, that even pretended to defend any of your actions.

Take note, public officials of Gary, Hammond, Whiting, East Chicago and Lake County — no one believes you have even tried making any credible reduction in your gluttonous expenditures. Gary Mayor Scott King and Hammond Mayor Tom McDermott Jr., who made verbal commitments to a reduction, have done little to implement the cuts. To use a common parlance, they lied or, at best, misled the public.

The expenditures of those two cities could be cut by tens of millions of dollars. This would require two things: first, hiring competent professionals, not friends, family and allies; second, stop spending millions on friends’ “welfare” at the expense of your citizens.

An example of the latter is McDermott’s $20 million budget for replacing the apartment complex at Kennedy Avenue and the Borman Expressway. Since, supposedly, there is no available money to do this, a bond will be floated to be paid for by future generations with interest. The $20 million includes $1 million for local lawyers to do the bond paperwork. This is second-year law student work.

By the time you read this, we will all know if what the County Council achieved is only a dream.By then, we will have the second reading, with a chance for the charlatans to affect the outcome. Their main concern, especially for the mayors and the state legislators, is the Regional Development Authority. The RDA is the new approach to transfer money from the citizens of NWI to special interests and friends of politicians. With bonding authority, the RDA will take the citizens’ money and enrich lawyers, consultants and contractors with no observable economic development.

This is not speculation; this is based on their past performance. At the meeting where democracy reigned, it was general knowledge.

Maurice M. Eisenstein is a professor at Purdue University Calumet. Contact him at [email protected]. His opinions do not represent Purdue University.

Poor ethics hurts area’s opportunity to lure business

Poor ethics hurts area’s opportunity to lure business

June 22, 2005

By Maurice Eisenstein
Post-Tribune guest columnist

Indiana University Northwest’s Local Government Academy director, Ed Charbonneau, has a daunting task: injecting ethical behavior into local politics. I admire his efforts, but I am concerned that it is going to be a monumental task to overcome the momentum of a political culture for which ethical behavior is considered an oxymoron.

Public ethics has to do with acknowledging one’s duty and performing accordingly. A public official has a fiduciary responsibility for the citizens and their property.

In Northwest Indiana, political behavior is either illegal, and can be so proven, or is permissible. There is no middle ground constituting ethical behavior, which is that vast arena between illegality and the duties of a public official. NWI public officials’ actions, during a time when illegal activity is under close scrutiny by the FBI and the U.S. attorney, clearly show this unethical culture.

A recent Post-Tribune story about the Gary/Chicago International Airport demonstrated unethical behavior by the board and leadership — director Paul Karas and his second in command. The board hired Karas to run the airport as his full-time job. He receives orders from the board and directs other employees at the airport, which is the common-law definition of an employee, according to the Internal Revenue Service. Why, then, is he being paid $145,000 a year as a consultant?

One possibility is the tax advantage to a consultant. Every lunch, every trip to the office, the use of a cell phone for business, among other things, are deductible as a consultant. That is, Karas gets to deduct these things from his consultant pay before he has to pay income taxes or Social Security taxes.

How many of you would like to deduct the cost of traveling to and from work and the cost of buying lunch before taxes are deducted from your paycheck? Get the picture?

This is not to benefit Gary’s citizens, but to fleece the citizens of taxes owed. This is unethical. When public officials serve as employees, then ethically, they must be paid as employees.

In Hammond, a medical insurance contract is awarded by Mayor Tom McDermott Jr. to a company partially owned by his father. Because of incompetence, the grant later was canceled.

This level of unethical conflict of interest would result in most mayors in America leaving town with their tails between their legs. But the mayor strong-arms Woodmar Country Club in the interests of another company that is paying his dad a commission — a textbook case of conflict of interest.

Then, using $100,000 of city funds, the mayor endows a professorship named after Dad. Neither the mayor nor Dad put in one penny of their own money. Naming it after the city of Hammond would have been ethical, since the money belongs to all the people. But, the mayor and his dad used public money for their family’s gain. That is unethical.

Unfortunately, in a lowering of its own standards, the university also cooperated in this unethical behavior by accepting public money to promote a private individual.

Until people like Charbonneau can make progress changing the millennium-old cultural trend in NWI, it will not make any difference what new plans are put in place for economic development. The knowledge-based, information-age businesses so desperately needed in NWI will not be moving here when they have other locations to choose from, where public ethics is valued.

Maurice Eisenstein is a professor at Purdue University Calumet. Contact him at [email protected]. His opinions do not represent Purdue University.

NWI Incompetents Get More Funding = Insanity

Giving more tax revenue to 'incompetents’ seems insane

June 6, 2005

By Maurice Eisenstein

The last savior for Lake County’s economic sanity now is the Lake County Council. It may pass two taxes raising more than $40 million for Northwest Indiana economic development — a county income tax and a food and beverage tax. This would transfer more money to the county’s three largest cities and, just like the Regional Development Authority, will ensure the rest of the county continues to pay for the financial disasters of the incompetents and thieves of north Lake County.

Regrettably, there is nothing else to call it. The thievery continues to be established by the U.S. Attorney’s Office. This level of thievery is not going on everywhere and, despite protestations of innocence, it is concentrated in the northern part of Lake County. It is endemic to the individuals populating the local ruling political party, the Democrats.

Incompetence, including lack of ethics, is also concentrated in the northern part of Lake County — in part because they have the money and most of the projects that permit them to show their incompetence. Again, despite protestations otherwise, it is difficult to find other areas with such universal incompetence concentrated in one local political party.

During the past 20 years, despite huge sums of money coming into county and city government, I am not aware of a single successful economic development project that has been undertaken.

Municipal governments have raised their levies almost to the maximum each year, state government took over more of the local education funding and NWI has received more than $1.5 billion in gambling revenue since 1996. The consequence of these revenues is that NWI is the crime capital of the country, while producing functional illiterates out of its educational systems. The area qualifies for quality-of-life rebates and the young people who are able to are leaving as fast as possible.

No citizen can determine whether this misery is caused by illegality and/or incompetence. U.S. Attorney Joseph Van Bokkelen must sort out that question and prosecute when necessary. But every NWI citizen, even those with a vested interest, must recognize that those are the only two options. Our leadership is functioning illegally or incompetently; there is no third option.

The Democrats have always prided themselves with removing unethical behavior from the federal government and sending the perpetrators to jail. The Tom McDermotts, father and junior, are indicative of the unethical leadership that ails NWI.

With the father being paid an hourly fee by Cabela’s and the son threatening retaliatory action against private entities on behalf of Cabela’s, it is the very definition of a conflict of interest. They do not recognize that ethical standards require that the father not have any interest in a company doing insurance business with the city. Now, these two people want the rest of the citizens of NWI to support Hammond’s incompetent, unethical leadership through a countywide increase in taxes.

How many times must the citizens of NWI be fleeced before they say no?

I challenge anyone to name a project that has been carried out by these leaders, elected and civic, that is a success when compared with the public money expended. Now, the County Council wants to turn over more money to these same people? That is the true definition of insanity — doing the same thing over and expecting different results.

Maurice Eisenstein is a professor at Purdue University Calumet. E-mail him at [email protected] comments do not represent Purdue University.

Published in The Post-Tribune