Hancock County officials support tax hike for diners; could raise $900,000 annually

The county is looking to the state legislature to approve a 1 percentage point increase in the county’s food and beverage tax, money collected from diners at local restaurants, to dedicate to the proposed new fairgrounds, a $30 million project that has been the subject of contentious debate at recent public meetings.

The Hancock County Council and board of commissioners agree the county needs to create a new revenue source to fund the project, which would move the fairgrounds to county-owned land along U.S. 40 between county roads 400E and 500E and significantly expand the facilities. Recently, those leaders signed a resolution dedicating funds from the tax hike, should it be approved, to the project.

Meanwhile, the commissioners have yet to approve a lease for the land with the nonprofit board overseeing the fairgrounds project.

Members of that board asked Rep. Bob Cherry, R-Greenfield, to propose legislation during the 2016 General Assembly that would enable the county to enact a 2 percent tax on diners.

Currently, diners pay 1 percent — that’s a penny for every dollar — on top of sales tax. It’s estimated the proposed increase could bring in about $900,000 a year — an estimated $18 million in new funding over 20 years.

Cherry said he’ll bring the proposal to the Statehouse, but he’ll depend on county stakeholders to speak before lawmakers to make their case for the increase.

Cherry expects the General Assembly will be receptive to the request, as the project is expected to promote tourism in the area.

A resolution signed by the council and commissioners in favor of using the tax money for the fairgrounds states the tax increase is the best way for the county to financially support the project, which officials say will be an economic development-driver and an asset to the community.

For months, county officials and community stakeholders have been working to create plans for a new fairgrounds that would double the size of the county fairgrounds and add a multipurpose exposition center, two arenas and six rental barns. A large outdoor amphitheater, a grand gazebo and sizable retention pond also are planned.

But organizers have yet to secure a way to fully fund the project, saying they’re looking at sponsorship, private donations and public funding as way to make the plan a reality. This year, the county council approved a measure to raise the innkeeper’s tax, a tax imposed on Hancock County hotel guests, from 4 to 5 percent, which will bring in an estimated $75,000 annually to be put toward the effort.

Kent Fisk, a county council member who sits on the nonprofit board, said Hancock County has one of the lowest food and beverage taxes in the state. Restaurants in Noblesville, for example, pay 2 percent — 1 percent is collected by the city and county each. And Marion County’s tax is 2 percent. Additionally, it’s not a tax imposed only on residents; anyone who eats at the county’s restaurants pays it, he said.

Imposing a higher food and beverage tax is the most effective way to raise a chunk of the money needed for the project, county council president Bill Bolander said. The council viewed the resolution as a way to show support for the project and to show, if approved by the state legislature, the county plans to impose it.

“We thought that would be a tax that’s not forced,” Bolander said. “Residents aren’t forced to go out to eat.”

Currently, the county keeps half of the money the food and beverage tax generates. The other half is used to finance Lucas Oil Stadium in Indianapolis. Often, the county taps the funds to pay for unexpected expenses, but it can be used in a variety of ways.

Bolander said the increased revenue would stay in the county.

While the increase would result in significant funding for the project, diners would see little difference in their bills. A large Coke at McDonald’s, for example, would cost $1.09 instead of $1.08.

“If you spend $2,000 a year on food, you’re only paying $20,” Cherry said.

It’s a tax increase county officials are in favor of, but that doesn’t mean state lawmakers will approve it, Bolander said. Proposed legislation for similar requests have been turned down by lawmakers in the past.

County Commissioner Brad Armstrong said the resolution, approved by the board this week, will make the county’s case for an increase stronger and should help secure the funding. It was a way for the commissioners to show support for the project while they wait for the fairgrounds nonprofit to finish crunching numbers on specific construction costs before the board approves the land lease.

He said the board expects to approve the land lease, which was first presented in August, in coming weeks.