Northwest Indiana elected officials have mixed reaction to liquor tax hike

By Patrick Guinane, Times of Northwest Indiana
patrick.guinane@nwi.com

INDIANAPOLIS | Northwest Indiana legislators and region mayors are expressing mixed emotions about a proposed doubling of state liquor taxes that advanced to the state Senate Thursday.

The proposal dangles $5.6 million in economic development cash to region municipalities being squeezed by state property tax caps, but lawmakers fear the public's reaction.

COMPLETE COVERAGE: Indiana contemplates liquor tax increase.

"I'm trying to decide today whether or not I might be able to go down to a local bar and get a beer," said Sen. Earline Rogers, D-Gary. "What are you going to say to Joe Six Pack and restaurant owners in your cities?"

The proposed tax increase would increase the cost of a 12-ounce beer by just more than a penny and 9.3 cents to a bottle of wine. The higher levy would raise $42 million a year for the state's cities and towns.

The Senate Appropriations Committee advanced the proposal to the full chamber on a 10-2 vote. Rogers voted "yes" to keep the proposal moving, while Sen. Karen Tallian, D-Odgen Dunes, opposed it, saying the legislation needs to be polished further, but added, "An extra penny on a can of beer is not going to break anybody."

House Speaker Pat Bauer, D-South Bend, said the proposal only proves his contention that the caps will force increases in other taxes.

Several mayors would prefer to use the liquor money to stem public safety layoffs. Legislators so far have only earmarked the cash for unspecified local economic development projects.

Valparaiso Mayor Jon Costas, said, "If I had extra dollars, one of the projects I would fund more is our business incubator. We reduced that funding by $50,000 this year, and I would like to restore that and add to it because we've got some great prospects of companies coming in."

Hammond, which stands to lose $4 million next year to state-mandated property tax cuts, would gain about $869,000 a year if the liquor tax hike becomes law.

But Mayor Thomas McDermott Jr. said the border city's bars and liquor stores then would be burdened by higher taxes than their Illinois competitors.

"In Hammond we have businesses on the border that thrive on the (tax) gap between us and Chicago. If that gap closes, it gives people in Chicago less incentive to come to Northwest Indiana to buy things like alcohol, cigarettes, fireworks. But at the same time, as mayor I'm looking at a $4 million deficit that I have to make up because of the tax caps."