City Journal

Bettie Cadou
Innovator in the Heartland
Indianapolis is a city that works, but Mayor Stephen Goldsmith thinks it can work even better.
Spring 1994

When Stephen Goldsmith was elected mayor of Indianapolis in 1991, he didn’t inherit a city in trouble. The Indiana capital is an honors student in the classroom of urban America—its finances are basically sound, taxes aren’t nearly as high as in other metropolitan areas, the bond rating is triple-A, the streets are clean, and crime rates are low. But Goldsmith is trying to prove that “you don’t have to be on the way to the bottom before you wake up and try to turn it around.”

Of course, Indianapolis does have its problems. There are troubled inner-city areas, such as the Clearstream public housing project in southwestern Indianapolis, which in 1991 had some 1,500 calls for police service. There is a flight of residents and businesses to nearby suburban counties where taxes are lower. And there are the waste and inefficiency that seem endemic to government at all levels. These problems may be far less severe than in other U.S. cities, and Goldsmith says Indianapolis could “coast” and continue to be successful for the next five to ten years. “However, if we want to be successful into the next century, we have to change now, when times are good, in order to prevent ourselves from being in trouble down the road.”

Goldsmith has balanced deficits he inherited, including a budget that was $20 million out of balance. He has cut the city payroll, enhanced services, invested more than $500 million in rebuilding infrastructure, and taken steps to revitalize neighborhoods—all without raising taxes.

A Republican, he followed another GOP mayor who had spent four terms promoting economic growth and putting Indianapolis on the map as the “amateur sports capital” of the nation. But Goldsmith’s populist style has not endeared him to the Republican establishment. “There has been a small group of people who have traditionally been the decision-makers in Indianapolis, some in politics and some in business,” Goldsmith says. “These are folks who would use large amounts of my time, and that’s impossible for me if I want to stay in touch. There’s already insufficient time to spend with folks I want to visit within the neighborhoods.” The new mayor’s approach has served him well as he has battled governmental inefficiency and worked to revive Indianapolis’s most troubled neighborhoods.

Crusading for Efficiency

Goldsmith has applied a no-nonsense management style to identify where money can be saved by privatizing city services, reducing the size of the city payroll, measuring productivity, and eliminating waste.

Early in his term, he began asking questions: How much does it cost to collect garbage? How might it be done more efficiently? No one seemed to know. The managers and supervisors had four-color financial brochures but no information on the cost of doing city business. So Goldsmith hopped onto a garbage truck in order to see for himself. “I learned more in a half hour on the back of a garbage truck than reading volumes of reports and listening to managers blithering about their operation,” he says.

City employees began to adopt Goldsmith’s commonsense approach. One worker discovered a garbage truck that broke down so often and was so expensive to repair that it was costing the city $39 a mile to operate. “Taxpayers could have hired limousines to carry away their garbage,” Goldsmith said, awarding the employee the first in a series of “Golden Garbage” awards for identifying waste.

Many examples of waste are small. Take window washing. City crews had washed the windows of municipal buildings three times a year—no more, no less, whether they needed it or not. Now, a private company washes the windows only when they’re dirty.

City bureaucracy also costs the private sector money. Paul Veyer, an artist who owns a small graphic design shop downtown, decided to replace his twenty-year-old storefront awning. The materials cost about $150, and he figured he could do the job in a day or so. But by the time he had obtained five different required permits, hired an attorney, and submitted two plans to a passel of officials, six weeks had passed and his wallet was $1,000 lighter.

To help cut costs and weed out inefficiency, Goldsmith, created a panel called SELTIC—the Service, Efficiency, and Lower Taxes for Indianapolis Commission. Headed by former Reagan aide Mitchell E. Daniels Jr., an Eli Lilly & Co. vice president, the group consists of ten local business leaders and entrepreneurs as well as 150 volunteers.

Although SELTIC has no formal authority, Goldsmith has consistently followed its advice to open city services to private competition and to sell off city assets. Among its recommendations:

* Private management of the city’s two advanced wastewater treatment plants, a move that officials expect to save $65 million during the next five years. “This represents not only a massive victory for taxpayers, but catapults Indianapolis into national, and even international, leadership in the trend to reinvent government,” says Daniels.

* Competitive bidding among city crews and private haulers for trash pickup, which will save an estimated $15 million over five years.

* Privatization of sewer billing through a contract with the Indianapolis Water Company, to save an estimated $1.8 million a year.

* Elimination of full-service car washes for police and other public safety vehicles, saving about $10,000 a month.

SELTIC also persuaded the Asbestos Abatement Commission to abandon proposed regulations that would have made Indianapolis’s asbestos standards more stringent than required by the state and federal governments. This is expected to save the municipal government and local businesses between $16 million and $50 million a year.

One SELTIC proposal that wasn’t adopted was private management of two public housing communities. Goldsmith says the idea met with resistance from residents.

Goldsmith calls SELTIC’s efforts “the most comprehensive competition and competitiveness effort of any major city or maybe any governmental entity in the United States.” But he is not ideologically committed to privatization per se. “I prefer the term marketization,” he says. “Everywhere that we can create a true market, we are trying to do so, both internally and externally with respect to government.” Thus, private companies compete with city departments to provide services most cheaply and efficiently.

Goldsmith is not without critics. His predecessor, William Hudnut, charges that the emphasis on bottom-line efficiency might be cutting crucial government services, and members of the Democratic minority on the City-County Council complain that SELTIC has usurped the council’s advisory role in some decisions.

Then, too, there are the thousand or so city workers who no longer have jobs. When the privatization of the city’s sewage plants threatened more job losses, local leaders of the Urban League and the NAACP protested that 28 percent of the jobs at stake in the municipal treatment plants were held by minorities. The American Federation of State, County, and Municipal Employees went to court, arguing unsuccessfully that its employees weren’t given a chance to bid on the sewage plants.

Goldsmith says he’s “absolutely impatient” when it comes to getting problems solved, a trait that has, not surprisingly, led to frustration in his dealing with the Federal Government.

His attempt to improve what he calls “the worst mass transit system in the country,” for example, ran into obstacles imposed by Washington. Goldsmith wanted to create a franchise system in which operators with vans or cars would be able to carry city bus passengers. “I can’t do that,” he explains. “Why? The Federal Government and Congress say the only way to compete out bus routes is if the bus drivers’ union agrees, a difficult if not impossible task.

“We were successful in getting them to agree to compete out the routes for the disabled,” the mayor continues. “The disabled in my city hate the bus company because they have horror stories about callousness on the part of the drivers. So we bid out this bus service and increased the number of rides for the disabled by 300 percent with the same dollars spent. Now we have a legal challenge because the union will not continue to consent to competition since it didn’t win.”

Goldsmith’s frustration with the Federal Government is also evident in his attempts to introduce privatization to the Department of Housing and Urban Development. He visited a public housing project for the elderly and found the rooms were badly in need of repainting. He discovered that HUD had money available for such renovations, so he went back to the project the next day and promised the residents that within ninety days every apartment in the 16-story budding was going to be repainted. “Those apartments could be painted in three hours’ time, and it didn’t seem to be a very difficult mathematical equation,” Goldsmith says.

Then he discovered that he couldn’t hire a private painting firm, so he went to the private-sector building trades union and asked what rate it would charge to paint the apartments. An agreement was reached, until the union discovered a catch. Its representative told the mayor, “No, we can’t do it. If you use HUD dollars, the Department of Labor in Washington must determine the painting rate in Indianapolis. And by the way, the painting rate for the first three floors can be residential, but we have a rule that if it’s over four stories tall, it’s a commercial painting rate.” That increases the cost by $10 an hour. “The top ten floors remain unpainted, and the people think I broke my word,” Goldsmith complains. “All I had to do was bid it out and I would’ve had swarms of private painting companies competing for business.”

Yet despite such problems, Goldsmith remains optimistic. “If we focus public policy arguments, we will win these battles. I have people living in poverty who can’t get jobs because I can’t compete out mass transit services. I have elderly people living in poverty and I’m not allowed to compete out the painting of their apartments. Every one of these anticompetitive restrictions, whether they be city, state, or federal, forces some group to live in a condition that they would not otherwise live in.”

Reviving Communities

Goldsmith is making a high priority of revitalizing struggling neighborhoods. He identifies four central elements in his approach: capital investment, job creation, values, and empowerment of residents. He says citizens need to “take back their neighborhoods, take back their government, take back their streets, and take ownership over their own problems.”

Community policing—in which officers develop relationships with their neighborhoods and walk local beats—is an important part of his strategy. And it is paying off.

Two years ago, Officer Mike Elder was assigned to patrol the crime-plagued Clearstream housing project. He set up an office in the project, got to know the residents, and acquired a beeper so he would be available when away from the office. Crime dropped dramatically: the number of calls for police service declined from 1,500 in 1991 to 800 in 1992 and 550 in 1993.

“Before Mike came in, I wouldn’t dare let my kids play outdoors because of the shootings and drug deals going down at all hours of the day and night,” says a single mother who lives in the project. “People living in projects want a normal life, too—and we’re getting there.”

Clearstream management helped the community policing effort by giving police an apartment in which to set up an office. Money was allocated so officers could work overtime, talking with residents and identifying problems. Additional funds come from a federal drug elimination grant. In the fall of 1993, Goldsmith announced he would put 117 more police officers into community policing, boosting the department’s street patrol strength by 20 percent. City officials are also awaiting word from the U.S. Department of Justice about a $1.3 million grant to pay for 18 additional officers. The grant, stretched over a three-year period, would pay for new officers for the city’s targeted high-crime neighborhoods.

Goldsmith’s critics say his hard-driving approach led police to resist community policing at first. “One morning the mayor was sworn in, and the next day he said, ’We’re going to have community policing. Go get it done!’” says Susan Williams, a Democratic member of the City-County Council. “Immediately we had frontline people digging in their heels with fists clenched.” Goldsmith admits his impatience set him back in the beginning. “We were changing 25 years of autocratic, paramilitary, lack-of-response policing. Officers were apprehensive and the mid-level officers were especially resistant. We’re doing better now. It’s sinking in, changes are being made, and it’s picking up momentum.”

And the mayor says his critics understate the urgency of the problem. During his 12 years as Marion County prosecutor, Goldsmith made it a point to ride with officers on their beats, a practice he is continuing as mayor. In one recent month, for instance, he spent 25 hours with 12 different officers working early-morning shifts in tough neighborhoods. “I made a conscious decision that I would spend all the available time I have, out and about. There’s only so much time to change the quality of life for communities that are in desperate straits. These same people who criticize could use their time more productively by spending a night out in one of the crack-filled neighborhoods, and then tell folks we need to move slowly.”

Goldsmith says his community policing program still needs a social-service component: “The police officer responds to a crime. There’s a man and a woman, not married, and the officer doesn’t know who owns the house. She says it’s hers, he says it’s his. There are kids running around and no one knows what the relationship is to the man. Who gets evicted? Where do the kids go? Yet, here are police officers who don’t have the resources to take care of all these needs. They aren’t social workers, and it’s a serious problem.”

Goldsmith has also embarked on a program called “Building Better Neighborhoods,” a major effort to improve Indianapolis’s infrastructure. He has identified four principles he says will guide the project: first, a strong commitment to existing neighborhoods, as opposed to new construction; second, a view of roads, bridges, sewers, and parks as assets that need sensible management; third, insistence that every project can be completed within three years and be fully funded; and fourth, a decision-making process that works closely with neighborhoods to ascertain their needs.

The project will devote $519 million over three years to 477 separate improvements that include the repair or replacement of 60 bridges, 64 miles of sidewalks and curbs, and 115 traffic signals; the building of eight police stations and ten fire stations; funding of wastewater treatment, sewer, and drainage projects; 99 improvement projects in fifty city parks; $17 million worth of public housing improvements; and $12 million in neighborhood and housing upgrading projects.

Goldsmith believes improving Indianapolis’s neighborhoods is essential to forestall the flight of residents and businesses to surrounding counties. When this happens, Goldsmith notes, the people left behind tend to be those most in need of government services—a process far more advanced in older cities like New York. “This creates pressure for more revenue and more temptation to raise tax rates,” Goldsmith says. “It’s an ugly downward spiral, and cities across the country have fallen victim to it.”

Skeptical Establishment

Goldsmith’s efforts have met with skepticism from some in the Indianapolis political establishment, including, not surprisingly, Democrats in this heavily Republican city. Councilwoman Susan Williams told Governing magazine that Goldsmith’s government has too many “bright, talented people who have never squashed a grape.”

Another harsh critic is former mayor Hudnut. A popular politician, Hudnut leveraged public money with private dollars to erect domes and arenas that attracted national athletic organizations to Indianapolis. He focused on bringing businesses to Indianapolis and reshaping the downtown area, as opposed to dealing with protests about trash and fighting crime in troubled inner-city areas. He views Goldsmith as a “technocrat” and is angered at the “downsizing” that has eliminated many of his patronage jobs.

Hudnut doesn’t attempt to hide his disdain. “Economic development, attracting jobs to Indianapolis, and promoting neighborhood revitalization are all important,” Hudnut says. “Steve claims he’s doing that and certainly there are signs all over the countryside saying, ’Building Better Neighborhoods.’ But I have to ask: Is this really happening? He’s doing some infrastructure work and there are a lot of promises. Someone said to me recently that if you stack up Steve’s promises they’d be about five feet high, but if you stacked what he’s delivered, it would be about five-tenths of an inch.”

But according to Brian Vargus, head of the Indiana University Public Opinion Laboratory, Goldsmith is one of the two most popular politicians in Indiana. The other is Democratic Governor Evan Bayh, who has also drawn opposition from his party’s establishment on some issues. Vargus attributes Goldsmith’s popularity to his outspoken conservatism and his up-front style. “When he was prosecutor, there was a sting on stolen cars that was botched and he immediately stepped forward, saying, ’Look, I screwed this up.’ He didn’t, but as the top man he unhesitatingly took responsibility and was respected for it.

“He carries with him the notion that ’I can get it done.’ People with diverse backgrounds like a no-nonsense guy, which Goldsmith is. He’s a formidable force with the voters. Any political leader who ignores Steve Goldsmith is doing so at the peril of alienating a lot of voters. The joke in the upper levels of the Republican party is that nobody likes him but the people.”

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