Indianapolis City-County Council OKs hotel tax hike to 10 percent

The IBJ

The City-County Council voted 15-14 last night to approve raising the local hotel tax from 9 percent to 10 percent in a move intended to help the cash-strapped Indianapolis Capital Improvement Board close a $47 million operating deficit.

Earlier yesterday, members of the CIB passed a $63 million budget for 2010 that hinged on the City-County Council's approval of a hike in the hotel tax.

The tax is expected to give the CIB an estimated additional $3.4 million in annual revenue plus a windfall of funding from the state.

Tied to approval of the innkeeper's tax increase was $9 million in annual loans for three years from the state and $8 million in annual funding the city expects to capture by expanding the Professional Sports Development Area to include sales taxes generated at the new downtown J.W. Marriott hotel.

When including $17 million in cuts the CIB already has made, and other minor funding sources, the agency's projected deficit for next year still is $3.7 million.

The CIB hopes to make that shortfall up next year with additional revenue it could capture from the facilities it manages, if the economy rebounds. The CIB manages the city's professional sports facilities and the Indiana Convention Center.

"It's more of a survival-type of budget at this time," said Pat Early, who heads the CIB's compensation committee.

The 2010 budget includes no additional funding for any grants. Also missing from the plan is an extra $3 million the Indianapolis Convention and Visitors Association had sought for marketing purposes.

"It's unfortunate," ICVA Director Don Welsh said. "The timing couldn't be worse."

The not-for-profit faces a shortfall largely due to the additional $20 million required annually to operate Lucas Oil Stadium, which is much larger than the RCA Dome it replaced. The organization also expects to absorb $15 million next year in Fieldhouse operating costs.