A bill to allow Vigo County to impose a food and beverage tax of up to 1 percent is scheduled for a hearing this week in an Indiana Senate committee.
The measure, Senate Bill 35, sponsored by Sen. Jon Ford, R-Terre Haute, is the first item on the Senate Public Policy Committee's agenda for a meeting at 9 a.m. Tuesday in Room 431 of the Indiana Capitol Building.
The bill is designed to provide financing for a proposed convention center in Terre Haute.
Ford deferred comment on the bill until Tuesday's hearing. Judy Anderson, president of the Vigo County Board of Commissioners, said commissioners plan to testify in support of the measure.
“We are very supportive of Senator Ford and his willingness to carry a bill that is so important to Vigo County for our future and for the [Capital Improvement Board],” Anderson said.
She said a convention center “is sorely needed” to attract visitors to Terre Haute.
Commissioner Jon Marvel, president of the Capital Improvement Board, said the legislation is especially important now that Indiana State University has decided to proceed on its own with renovation of Hulman Center without including a convention facility.
“Obviously, it's going to take funding through a mechanism like the food and beverage tax. We feel that tax will maintain the operation of [a convention center]," Marvel said.
Mayor Duke Bennett pointed out last week that studies have found half of those who shop, obtain medical care and dine out in Terre Haute come from Illinois and the money they spend in the city does not directly support local government.
“They're not paying anything; people that are coming from other counties are not paying anything, so why not have a food and beverage tax here?” he asked during his annual “City Update” address to the Terre Haute Chamber of Commerce.
He noted the tax would amount to 5 cents for every $5.00 spent on restaurant meals.
“You need revenue to support [a convention center] besides us using our [economic development income tax] dollars,” Bennett said.
While 1.25 percent of Illinois' 6.25 percent statewide sales tax is distributed to local governments, none of Indiana's 7 percent sales tax is shared with cities, towns or counties.
In Indiana, 13 counties – eight in the Indianapolis area as well as Allen, Delaware, Henry, Monroe and Vanderburgh – and 14 cities and towns, including Rockville and Cloverdale, have local food and beverage taxes as well as the French Lick-West Baden historical hotels.
Dozens of Illinois cities, including Champaign, Urbana and Danville, impose food and beverage taxes and many counties, including Clark and Edgar, have local sales taxes for school facilities, public safety and other purposes.
An analysis by the Indiana Legislative Services Agency found a 1 percent tax would generate between $1.27 and $2.1 million per year.
It would be up to the Vigo County Council to approve a food and beverage tax and at least one public hearing would be required prior to council action.
State Rep. Bob Heaton, R-Terre Haute, has filed an identical bill, House Bill 1136. That measure has been assigned to the House Ways and Means Committee but no hearing has been scheduled.
Heaton was unable to advance a food and beverage tax bill in the House last year. In the closing days of the 2017 session, Ford was able to get it included in the Senate's budget but it failed to clear a House-Senate conference committee amid opposition from House Ways and Means Committee Chairman Tim Brown, R-Linden.
State Rep. Bob Cherry, R-Greenfield, introduced legislation this year to allow any county to adopt a food and beverage tax for a broader range of economic development projects, including fairgrounds as well as convention facilities. However, Cherry has since withdrawn his bill.