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Indianapolis Hotel Tax Will be One of Nation's Highest at 10%

By Francesca Jarosz, The Indianapolis StarMcClatchy-Tribune Regional News

Aug. 11, 2009--A measure to help the struggling Capital Improvement Board by increasing the county hotel tax squeaked by the City-County Council on Monday. But approval came with a consensus that the $21 million boost is not a complete solution.

Council members spent about a half-hour complaining about what all agreed was a partial fix but ultimately voted 15-14 to pass the measure. Marion County's hotel tax will jump to 10 percent from 9 percent, making it among the nation's highest.

"It's the only thing we've been given by the legislature. We have to use it for the time being," said Jackie Nytes, the lone Democrat to vote with 14 Republicans to pass the measure.

Christine Scales was the only Republican to oppose the measure.

The hotel-tax increase, which goes into effect in September, is expected to generate about $4 million in revenue per year. Passage of the measure also funnels $8 million a year to the CIB from an expanded Downtown sports district and another $9 million in state loans in each of the next three years.

Those funds could help float the CIB for the next couple of years, but city officials say more will need to be done to ensure long-term improvement. The CIB, which runs the city's stadiums and Indiana Convention Center, had faced a $47 million deficit.

With the funding passed Monday, the CIB will have about $3.5 million in expenses that exceed revenues in 2010, said Ann Lathrop, the board's treasurer. For now, at least, the CIB also will have to decline to fund $15 million to take over operation of Conseco Fieldhouse. It also will have to decline $3 million slated for the Indianapolis Convention & Visitors Association to help market the expanded convention center, and $4 million in debt payments, all of which had been contemplated as part of a long-range financial plan.

The hotel-tax hike was the only option the Indiana legislature gave the city to help the CIB during this year's legislative session. Mayor Greg Ballard said he expects the city will have to go back to the legislature eventually but wouldn't comment on whether that would be next year.

"This gets us a few years down the road, and then we'll have to see," Ballard said.

Council members made it clear Monday that the passage of a hotel-tax hike will come with greater scrutiny of the CIB. As part of the deal, the legislature required the CIB to come up with a long-range financial plan. Council members also took their own first step toward a broader solution by passing a resolution sponsored by Nytes to establish a task force to research regional approaches to addressing the issue.

"It's also, CIB, about sending a message," said Ben Hunter, a Republican who voted for the measure. "We're going to be fixing some problems, but we're going to be watching."

Others on the council said they opposed the measure on principle.

"This council and mayor should stand up and send this (proposal) back to the Statehouse," said Democrat Monroe Gray. "All we're doing is rubber-stamping something we have no control over."

Democrats immediately used the vote to criticize Republican council members and Ballard.

"This is a prime example of Republicans violating the commitment they made to the people of Indianapolis," said Ed Treacy, chairman of the Marion County Democratic Party, who attended the meeting. "These were people who pledged not to vote for tax increases."


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