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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowRaising local hospitality taxes and trimming funding to local cultural organizations are among the possible solutions the Capital Improvement Board’s finance committee identified this morning to help chip away at the organization’s looming $38 million budget deficit.
The CIB board will meet Monday to consider the options presented by the finance committee.
A 1 percentage-point increase in food-and-beverage, innkeepers and admissions taxes would raise more than $24 million annually, but rank the city as one of the costliest in the nation for the hospitality taxes.
Marion County hotel guests already pay 16 percent in sales taxes – a 9-percent innkeepers tax, plus the 7-percent state sales tax. An increase in the innkeepers tax would push the combined rate to a level matched in the Midwest only by Cincinnati.
Counting the state sales tax, local restaurants now pay 9 percent in sales tax. A push to 10 percent would trail only Chicago as the highest rate in the nation.
The hospitality sector vehemently opposes any increase. John Livengood, executive director of the Restaurant & Hospitality Association of Indiana, told the IBJ earlier this month that a potential increase “keeps me up at night.”
Any increase in the tax would need approval from the Indiana General Assembly and the City-County Council.
Local cultural organizations could feel the pain from CIB’s financial woes as well. The finance committee recommended a 13-percent, or $442,000, reduction in grant funding. The cuts would include $260,000 from local tourism and $130,000 from arts funding. A grant to the Central Indiana Corporate Partnership would be trimmed by $32,500 and another to the Indiana Black Expo by $19,500.
“We know that cutting some of the arts funding…and the other grants could be counterproductive,” admitted Ann Lathrop, CIB treasurer.
The CIB also is considering cutting $3 million in additional funding the Indianapolis Convention & Visitors Association had requested, and is negotiating with the Indiana Pacers and Indianapolis Colts to save more money.
The CIB expects to incur $15 million in Conseco Fieldhouse operating expenses next year due to a provision that allows the Indiana Pacers to renegotiate their lease after 10 years.
Some of the additional expense could be avoided if the team agrees to a stipend from the CIB to cover a portion of the costs, instead of having the CIB shoulder the full amount.
As for the Colts, the CIB hopes the team will forgo the $3.5 million annual payment it receives from the organization for non-Colts revenue. The $1.5 million the CIB reimburses the Colts for game-day expenses is on the table, too.
The CIB already has cut $5.8 million from its budget and has identified $400,000 in additional savings by negotiating lower health insurance premiums. The organization was expecting a 15-percent increase but got the increase lowered to below 5 percent, thanks to a smaller number of claims last year, CIB Executive Director Barney Levengood said.
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