It was only a penny.
The tax on a bottle of beer would have gone up just one cent under a legislative proposal to double statewide alcohol taxes to help bail out an agency that runs Indianapolis’ stadiums. But the tax hike with small consequences for many drew such big opposition that the plan’s sponsor said he’ll likely drop the idea.
Some lawmakers don’t support any tax increases. Others don’t want to tax “Joe Six-pack” in the middle of a recession. And some don’t want people in all corners of the state paying to rescue the cash-strapped Indianapolis Capital Improvement Board, which runs the city’s professional sports stadiums.
Senate Minority Leader Vi Simpson, D-Bloomington, said lawmakers understand how critical the economic health of Indianapolis is to the state. Marion County brought in 16 percent of the state’s sales tax revenue in 2007, according to the Indiana Department of Revenue, and city leaders say downtown’s economic engine is too important to stop firing.
But the alcohol tax still proved to be a tough sell.
“It is very difficult to go home to Princeton or to Bloomington or to Newton County and try to explain to people why we all have to have taxes increased in order to bail out the CIB,” Simpson said.
The proposal’s architect, Republican Sen. Luke Kenley of Noblesville, had hoped the alcohol tax increase would draw support for the plan. The alcohol money would have been funneled money to cities and towns around the state.
Indianapolis would have put its $8 million share toward its CIB, which expects to be $47 million short in its operation of Lucas Oil Stadium, Conseco Fieldhouse, Victory Field and the Indiana Convention Center. Kenley’s plan also included other funding sources for the CIB, such as sports teams and Indianapolis tax increases.
Some mayors liked the alcohol tax proposal and the prospect of bringing more money to city coffers. But critics didn’t buy the argument that the alcohol tax would benefit everyone around the state.
“This was born out of Indianapolis,” said Brad Klopfenstein, executive director of the Indiana Licensed Beverage Association.
He said supporters tried to pitch the plan to other areas “by saying, ‘Hey, we know that you never said you needed this tax, but we’re going to give you a whole bunch of money if you just say yes.’ I’m not aware of too many local governments that say, ‘Thanks, but no.'”
Indianapolis Mayor Greg Ballard hasn’t taken a stance on the statewide alcohol proposal, although he has said everyone who benefits from the CIB’s work should pitch in.
“Everyone has to have skin in the game,” said Ballard spokesman Robert Vane.
Bob Ostrander, who writes for Indianabeer.com, a Web site sponsored by a distributor, said he heard from plenty of people who oppose the alcohol tax increase. Some didn’t want to rescue a “brand new cathedral to football” and others didn’t want to pay more for beer, he said.
“It all adds up to hurt,” Ostrander said.
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. The taxes are mainly collected at the wholesale level and haven’t been raised since 1981.
Adding a penny of tax to the price of a beer may not seem like much, Klopfenstein said, but bars that now charge $3 for a beer are more likely to charge $3.25, not $3.01. Kenley’s plan would have brought in an extra $42 million a year.
“Forty-two million dollars is not a small sum of money,” Klopfenstein said. “Any time you double any tax, I would expect some pushback.”
The opposition may have been stronger than expected. Kenley said Thursday that he’ll likely drop the statewide alcohol tax increase, instead giving Indianapolis more local taxing options. That could happen as early as Monday, when the GOP-led Senate next meets and could consider amendments to Kenley’s proposal.
Senate leaders say Indianapolis and its downtown need to remain vibrant, and sports teams and conventions are a part of that.
“We know how important Indianapolis is to the rest of the state,” Simpson said. “If you want to have a first-class state, you have to have a first-class capital city.”
