A Statehouse proposal to bail out an Indianapolis sports agency is loaded with potential benefits for other cities and counties — but taxpayers could have to open their wallets to pay for some of the perks.
A bill moving through the General Assembly would allow local tax increases in Morgan and Monroe counties, and would give Fort Wayne and Evansville more leeway in how they use existing tax money. The proposal would double alcohol taxes statewide — funneling cash to every city and town — and would allow tax Indianapolis to raise taxes to help rescue its struggling Capital Improvement Board.
Throwing in new tax options for several cities may help win votes for the proposal, which critics see as an effort to save the Indianapolis agency at the expense of the rest of the state.
Sen. Luke Kenley, a Republican from Noblesville who created the bailout, said the proposal started as a way to help Indianapolis. But the discussions soon turned to finding ways to provide economic development around the state.
“It all fits together in that sense,” Kenley said.
So lawmakers consolidated other legislative proposals into the plan, creating a larger bill that could garner more support since it affects many cities. The bill as it stands now would, among other things:
_ Allow Monroe County to adopt a 1 percent food and beverage tax, with money from the tax going toward economic development or tourism projects.
_ Allow Morgan County to adopt a 5 percent hotel tax, with proceeds going toward parks and recreation.
_ Allow Fort Wayne to direct some of the money it collects through existing food and beverage taxes to a new capital improvement board, which could spend the cash on future projects.
_ Allow Evansville to direct some of its food and beverage tax money toward a new downtown arena.
_ Allow Indianapolis to raise its hotel tax, food and beverage tax and ticket taxes on stadium events.
_ Double alcohol taxes statewide. That would bring in more than $40 million, which would be distributed to cities and towns based on population.
The Capital Improvement Board expects to fall $47 million short in its operation of Lucas Oil Stadium — site of the 2012 Super Bowl — and Conseco Fieldhouse, Victory Field and the Indiana Convention Center. Kenley’s plan would fill that budget gap with money from many sources, including the alcohol tax increase, money from the Indianapolis Colts and the Indiana Pacers, budget cuts, higher Indianapolis taxes on hotel rooms, food and beverages, and tickets to stadium events.
The proposal to raise state alcohol taxes hasn’t proven popular so far, but some local officials are excited about the prospect of increased revenue coming to their cash-strapped cities.
Evansville Mayor Jonathan Weinzapfel told lawmakers this week that his city wants to use some of its food and beverage tax money for a new downtown arena instead of directing it all toward a convention center as current law states. Weinzapfel said the arena project would create more than 600 construction jobs and could spur more than 500 jobs in the area after completion.
“We look at this as part of our stimulus plan for Evansville,” he said.
Morgan County Commissioner Norman Voyles said money from a hotel tax could benefit parks in his county. But he’s not sure whether the county would approve it or he would support it.
“My gut feeling is there’d probably be quite a bit of opposition,” Voyles said. “I don’t know how the general public would accept that. Several of them feel like they’re being taxed to death.”
Aaron Smith, who founded a tax advocacy group called Watchdog Indiana, said increases in local food and beverage taxes would hurt working families.
“Taxing yet more what families eat to benefit developers and sports millionaires is reprehensible and abhorrent,” he said.
House Speaker Patrick Bauer, D-South Bend, said it would be difficult to pass a statewide alcohol tax. And Republican Gov. Mitch Daniels said the alcohol tax increase could be changed.
Kenley predicted the alcohol tax increase will have to stay in the bill because it helps bring in votes. He and other supporters say lawmakers need to help downtown Indianapolis because it’s an economic engine that provides tax revenue for the entire state.
“There needs to be some solution to these problems,” Kenley said.
Kenley’s bill cleared its first Statehouse hurdle Thursday and now heads to the full GOP-led Senate for consideration. It could be changed as it moves through the General Assembly.
