INDIANAPOLIS — More than a dozen Hancock County residents were at the Statehouse this week to debate a bill that would allow local officials to increase the tax diners pay at local restaurants.
House Bill 1096, authored by Rep. Bob Cherry, R-Greenfield, would increase Hancock County’s food and beverage tax to 2 percent to generate funding for the proposed new fairgrounds project.
Currently, Hancock County’s food and beverage tax is 1 percent — that’s a penny for every dollar — and the county collects half of the funding generated and uses it to cover a variety of county expenses. The other half is collected by the state to fund Lucas Oil Stadium in Indianapolis. It generates about $800,000 to $900,000 a year.
The bill was heard this week in the House Ways and Means committee, which is expected to debate several amendments that were requested by county officials and residents before deciding whether to move the bill forward.
The committee is also considering adding several other food and beverage tax increases for communities across Indiana to Cherry’s bill.
On Thursday morning, the committee took no action on the bill to move it forward.
County Commissioner Marc Huber told committee members he supported the bill — both the Hancock County Council and Hancock County Commissioners unanimously passed a resolution last year stating they’d enact the tax hike if legislators gave them permission — but he’d like the bill to phase out once the fairgrounds is paid for.
Huber said before the bill is passed and county officials decide whether to enact the increase, he wants to be sure funding generated from the increase is strictly used for paying for a new county fairgrounds, which is estimated to cost more than $30 million.
Currently, the bill includes language that would allow the county council to use money from the increase to fund public safety expenses.
Huber said increasing the county’s tax to 2 percent is probably the best way to help fund the fairgrounds and is one of the least invasive on taxpayers.
Still, he’d like to see extra 1 percent phase out once the funding needed for the fairgrounds is generated, he said during testimony this week.
Other residents asked the committee to vote against moving the bill forward or to strip language that would allow the county to use the funding on public safety.
As the bill stands, the county could use the money to fund public safety whether the fairgrounds project goes through.
Fred Dunlavy, a Center Township resident, said the bill gives county officials a lot of wiggle room in spending the funds.
“The drafters of this bill have opened up the process for pretty much anything and everything,” he said. “That’s normally a good thing. In this case, it’s a very bad thing.”
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.
Rep. Sheila Klinker, D-Lafayette, who serves on the committee, told committee members and residents she believes lawmakers should back the bill, especially after Hancock County enacted a food and beverage tax several years ago to help pay for the football stadium.
An increase in the tax would generate an estimated $900,000 a year for Hancock County. The tax could generate $470,000 in 2016 if it’s enacted by April. The law allowing Hancock County to increase its tax would go into effect immediately after its passage.
County councilman Kent Fisk, who sits on the nonprofit board overseeing the fairgrounds project, said a new fairgrounds is sorely needed for Hancock County, saying past fairs have been disappointing because of weather.
The horse and pony show, for example, was canceled multiple times because the arena was too wet for 4-H’ers to compete.
With funding from the tax increase, the project has a better chance of becoming a reality, he said.
“This is a great way for us to get this going,” Fisk said.