GUEST COMMENTARY: Put Hammond's debt in proper perspective

2013-05-05T00:00:00Z 2014-02-26T17:47:10Z GUEST COMMENTARY: Put Hammond's debt in proper perspectiveThomas McDermott Jr. nwitimes.com
May 05, 2013 12:00 am  • 

Bill Dolan’s April 28 article (“Lake County municipal officials turn to lenders for urban amenities”), is a classic example of “you can make numbers say whatever you want them to.”

The article alleges, “Hammond leads the city and town list (of gross outstanding debt"). The article fails to put these numbers in perspective. Comparing Hammond, the largest city in Lake County, to small towns such as Lake Station and Griffith is comparing apples to oranges.

The appropriate and more common approach to comparing municipal debt is to look at debt per capita, or the amount of outstanding debt for each resident. Dolan is fully aware of this measurement; however, he only uses it in his article to sensationalize Whiting's per capita debt. Had Dolan used this metric to measure Hammond’s debt, it would have made Hammond’s 80,000 residents feel differently about their city's debt load.

According to the Indiana State Board of Accounts' Gateway Database for municipal accounting and finance, the average per capita debt for Lake County cities and towns was $2,165 at the end of 2012. Hammond's per capita debt is $1,249, well below the county average. Additionally, of the 19 Lake County cities and towns, Hammond is literally right in the middle.

Dolan also incorrectly wrote that Hammond added "tens of millions more … to pay off a couple of lawsuits the city lost." Hammond settled two long-standing lawsuits for events that occurred long before my administration. One concerned a wrongful conviction for an arrest in 1978. The other was for the denial of a business license to a liquor store by the City Council in the late 1990s. This is Hammond's only property tax-backed debt and accounts for less than 4 percent of the total debt.

Further, Dolan failed to mention the Hammond Sanitary District is comprised of more than just the city of Hammond. The district is paid for with the property taxes of both Munster and Hammond, and treats the effluent waste of Hammond, Munster, Griffith, Highland and Whiting. Yet Dolan infers the district's debt belongs solely to Hammond.

The article also fails to address the fact that very recently, the sanitary district was obligated by the U.S. Environmental Protection Agency to fund a $55 million retention pond to help prevent future overflows of untreated stormwater into the Grand Calumet River. This $55 million debt was a result of litigation that began with the EPA in the late 1980s.

Finally, the article brushes aside the important fact that much of the “new” debt in Hammond is not backed with property taxes. This means residents will see no increase in their property tax bills because of this debt.

Instead, this new debt is backed either with Hammond’s gaming revenues, or the debt is tied to a TIF district and paid by the new businesses within that particular district.

I take our city’s finances seriously and felt it important to clarify this article that didn’t dig into the details or frame the city’s debt in the proper perspective.

The state’s Gateway database is a wonderful tool for taxpayers to help understand the financial condition of their community. When used improperly, it can skew numbers and mislead the public.

Thomas McDermott Jr. is mayor of Hammond. The opinions are the writer's.

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