Madison County's food and beverage tax pulls in more than $1.7 million annually

The 1 percent food and beverage tax was implemented by the Indiana General Assembly for Madison County in the 1980s for a proposed hotel and conference center, which was never built.

Tax collected on food and beverages sold in local restaurants has generated almost $2 million on an annual basis.

Jerry Bridges, executive director of the Madison County Council of Governments, said in 2012 the Madison County Council, which approves all requests in the county, allocated more money than was available.

Bridges explained as tax revenues were received after 2012, the money went to pay for the projects approved by the council.

“We used to do a distribution every two years,” he said. “We’re going to accept applications sometime this year.”

The food and beverage tax generates approximately $35,000 to $40,000 per month for the county, Bridges said.

Currently, there is $321,892 available in the fund.

Bridges said the Transportation for Rural Areas of Madison County receives $150,000 to $200,000 per year.

“We try to provide funding for every community,” he said of the distribution system. “The funds have been used for good projects. It is one of the few taxes that provide funds for projects that community couldn’t do without the revenues.”

Bridges said the county’s share of the food and beverage tax revenues generally go to infrastructure projects such as design and as matching funds for grants.

Funds helped design the Main Street project in Summitville, the water tower at the Pendleton business park and to extend water and sewer lines in several communities.

“The funds are not used very often for street resurfacing or sidewalk replacement,” Bridges said. “They have been rarely used for park projects.”

Exceptions were the Mill Creek Civic Center in Chesterfield and Harrison Square in Alexandria.

“The food and beverage tax generates contributions from people who don’t live in the county,” Bridges said, noting they probably provide 20 percent of the revenue, usually by stopping at restaurants along Interstate 69. “The majority of the money is generated in Anderson.”

There has been some consideration to raise the tax from 1 percent to 2 percent, an action that would have to be approved by the Indiana General Assembly.

“It’s harder to get the percentage increase than it was 10 years ago,” Bridges said.

Greg Winkler, executive director of the Anderson Economic Development Department, said there have been discussions about raising the tax or to change the distribution formula to provide additional funding to the county.

“Either change will require strong support from our area lawmakers,” he said.

For the past four years, the tax has generated more than $1.2 million for the city of Anderson.

A portion of the funds are used to cover most of the expenses of the Anderson Economic Development Department. For 2016, the Anderson City Council budgeted $411,000 for salaries and benefits; $480,000 for business incentives; $482,000 for consulting work and $50,000 for travel.

The fund has been used to provide $120,000 on an annual basis to Anderson University for the Indianapolis Colts training camp.

Winkler said the department presented the 2016 budget, which was approved by the Anderson City Council.

He said in the past the economic development department was funded through slot machine revenues from Hoosier Park Racing & Casino, but it has been shifted to the food and beverage tax.

“We provide funding to support the Flagship Enterprise Center and the Corporation for Economic Development to support their job creation efforts,” Winkler said.

As first implemented, the city of Anderson received 80 percent of the revenues and the remainder of the county received 20 percent. The distribution was changed to a 60-40 split when Madison County constructed the juvenile detention center.

Once the bonds were retired by Madison County, the split was again changed with 70 percent going to Anderson and the remainder to the county.

Communities submit an application for funding to COG and a committee reviews them based on a scoring system. The committee makes a recommendation to the COG policy board which then forwards a recommendation to the county council.