Indiana’s alcohol tax would be doubled under a Statehouse plan designed to bail out the financially struggling group that runs the professional sports stadiums in Indianapolis.
Sen. Luke Kenley, R-Noblesville, wants to add about 2 cents to the price of a shot of liquor and a penny to the price of a 12-ounce beer, starting July 1. Kenley’s plan would also provide money from sports fans, the city of Indianapolis, the NFL Indianapolis Colts and NBA Indiana Pacers.
“I feel like it’s a good blend,” said Kenley, who planned to announce his proposal at a legislative hearing Thursday morning.
The Indianapolis Capital Improvement Board expects to be $47 million short in its operation of Lucas Oil Stadium, the home of the Colts; Conseco Fieldhouse, home of the Pacers; Victory Field, home of the minor league baseball Indianapolis Indians; and the Indiana Convention Center. The board plans to cut expenses about $10 million, and Kenley wants the Pacers and Colts to each pitch in $5 million a year.
But that would still leave the board $27 million short.
Kenley said the city would raise $15 million by raising its ticket tax on events at the stadiums, increasing its hotel tax and raising food and beverage taxes. The state would pitch in $14 million by increasing alcohol taxes and allowing the city to take sales taxes at a new downtown hotel.
Doubling the alcohol tax statewide could bring in an extra $40 million a year, cash that would be funneled to cities and towns based on their population. The money would be used for local economic development projects, Kenley said, but Indianapolis’ share of about $8 million would go toward the Capital Improvement Board.
“We think that’s a fair way to do it,” Kenley said Wednesday. “You always approach the idea of raising taxes with trepidation.”
Indiana alcohol taxes are currently set at $2.68 per gallon of liquor, 47 cents per gallon of wine and 12 cents per gallon of beer.
Brad Klopfenstein, executive director of the Indiana Licensed Beverage Association, said doubling those taxes may not seem like a lot. But he said bars that now charge $3 for a beer are more likely to charge $3.25 a glass, not $3.01. The price hike could decrease sales at the 700 bars his organization represents, he said.
“When you’re talking about a discretionary product, any kind of price adjustment will have an effect on consumption,” he said. “We are an easy target, but one of the few industries that has an excise tax. Maybe they should look at the asphalt industry or the orange juice industry.”
Kenley noted that not everyone has to pay alcohol taxes.
“This is a voluntary exercise,” he said.
Indianapolis Mayor Greg Ballard said he would prefer not to raise food and beverage taxes in the city, but called Kenley’s proposal a good starting point.
“This is about downtown Indianapolis,” Ballard said. “We must maintain this economic engine.”
Kenley hopes to sell the plan to lawmakers from outside the city in part by emphasizing how important downtown Indianapolis is to state tax revenue.
“Part of our contribution here is based on protecting our return on investment,” he said.
Kenley said he would take public testimony about the proposal Thursday morning and hoped to have his Senate Appropriations Committee approve the bill the same day. The proposal could be changed as it moves through the Statehouse.
Republican Gov. Mitch Daniels said Tuesday that he was letting the legislative process work.
“I’m certainly listening and my sense is a workable plan is starting to come together,” he said. “It’s very important that this problem be solved.”
