State Rep. Karickhoff files innkeeper's tax legislation for Howard County

Karickhoff’s decision to file the legislation came after the Kokomo Common Council passed a resolution Monday in support of the innkeeper’s tax, albeit on slightly different terms than previous measures taken by the Howard County Council and Board of Commissioners.

Despite the disagreements, Karickhoff said in a text message Tuesday that he filed legislation “because all groups agree on the substantial matter of having the option to increase the innkeeper’s tax.”

In addition to the three aforementioned groups, support for an innkeeper’s tax was also given by the Howard County Conventions, Visitors and Tourism Commission – also known as the Convention and Visitors Bureau – and Kokomo Mayor Greg Goodnight, who signed the Common Council’s resolution.

Previously, Karickhoff had said that if an agreement was not reached, he would not file a bill at the Statehouse. The deadline for filing House bills is today, according to the General Assembly’s online calendar.

If passed, the legislation will give the county council the ability to raise the innkeeper’s tax from 5 to no more than 8 percent, likely to help fund a new convention center in Kokomo.

Last year, the tax brought in $585,863, according to Howard County Treasurer Wes Reed, who is the collection agency for the CVB. Through the first 10 months of this year, the tax brought in $565,893. Reed said collections for the months of November and December should amount to another $80,000 to $100,000.

Therefore, an increase of the innkeeper’s tax from 5 to 8 percent could bring in another $350,000 to $400,000 annually. Currently, the CVB also has a cash balance of over $1.3 million.

Effectively, the innkeeper’s tax is charged to people who book rooms in Howard County hotels, motels, bed and breakfast spots and other lodgings. The tax is collected, similar to sales tax, when a customer pays for their stay at a specific location.

The tax is approved for collection by state legislators and is specific for each county.

As a tourism tax, the amount collected through the innkeeper’s tax fluctuates, in part, with the economy and is dependent on how much people can pay to stay in hotels, motels and other lodging rooms.

Much of the disagreement has come down to whether the county council should have the ability to approve large-scale capital improvement project expenditures made by the CVB.

Karickhoff’s legislation gives the county council the ability to approve capital improvement projects like a convention center. It also allows the CVB to ask for $275,000 each year to spend on projects without obtaining specific approval from the county council.

In relation, some have argued that the county council, as the body that would approve a tax increase, should have the power to appropriate capital improvement project spending related to the tax increase.

Others, however, have said the county council shouldn’t be able to make decisions on projects that have been headed by city officials and are likely to be developed within city limits.

Those differences were highlighted in what was approved by the county and city governmental bodies.

While the county council and commissioners threw support behind legislation that read, “in the case of an expenditure payable from the tourism capital improvement fund, the specific project for which the expenditure will be made has been … recommended to the county fiscal body by the commission; and approved by the county fiscal body,” the Common Council's resolution excluded that language.

The Common Council’s resolution said the attached legislation best represented what was agreed upon by various local officials at a Dec. 5 meeting about the innkeeper’s tax, while county officials promoted a Dec. 20 version of the bill.