By Scott Olson, The IBJ
solson@ibj.com
Local hospitality and convention leaders want more money to promote the city instead of a tax hike they contend could drive visitors away.
Their argument comes in response to a state lawmaker's plan to double Indiana's alcohol tax and raise local hospitality taxes to bail out the cash-strapped Indianapolis Capital Improvement Board, which operates the city's professional sports stadiums and Indiana Convention Center.
The proposal that passed the Senate Appropriations Committee yesterday on a 10-2 vote would increase the tax people pay for a local hotel room from 9 percent to 10 percent. Including the 7-percent state sales tax, the combined rate would rise to 17 percent, making it the highest in the nation.
The 2-percent food and beverage tax would climb to 2.25 percent. And the alcohol tax would add about 2 cents to the price of a shot of liquor and a penny to the price of a 12-ounce beer.
John Livengood, executive director of the Restaurant & Hospitality Association of Indiana, opposes the tax increases. He thinks the city could instead raise the funds to rescue the CIB by pumping more dollars into tourism efforts, which in turn would attract additional visitors and more revenue.
"What they're proposing to do is counterproductive," Livengood said. "My alternative is to give [the Indianapolis Convention & Visitors Association] the money [it] needs to adequately promote the city and get more money from the taxes that are already here."
ICVA is funded by hospitality taxes the CIB receives. The ICVA's current $10.5 million budget is set to increase by $3 million. But Director Don Welsh is pushing for a $5 million raise. The additional $2 million could come from other sources or some type of bridge loan, he said.
"It would allow us to have adequate media [campaigns] in key markets," he said. "We have all these great assets in the community. There's a lot to market in the city today.
About 22 million people visited Indianapolis last year - up 5 percent from 2007, according to new data from the ICVA - and opened their wallets despite the nation's financial woes, giving the local economy an estimated $3.6 billion boost.
That's good, but not nearly good enough for Welsh, who took over the tourism group in August. He wants to double the industry's local impact in the next 10 years. ICVA will roll out its "Indianapolis: Raising the Game" campaign this month.
Among cities Indianapolis competes against for conventions, only Minneapolis' convention and visitors association receives less funding. Bumping the ICVA to $13.5 million would put its funding level in the middle of the pack and on par with what associations receive in Boston and Seattle.
At the state level, Gov. Mitch Daniels, as part of his budget plan to cut the deficit, proposes slashing state tourism funding by half, from $4.8 million to $2.4 million.
Although it's state money, that money affects local tourism efforts, Livengood said.
"If they're promoting Indiana, they're promoting Indianapolis," he said.
The CIB expects to be $47 million short in its operational budget for Lucas Oil Stadium, the home of the Colts; Conseco Fieldhouse, home of the Pacers; Victory Field, home of the Indianapolis Indians; and the Indiana Convention Center.
The board plans to cut expenses about $10 million, and Sen. Luke Kenley (R-Noblesville) wants the Pacers and Colts to each pitch in $5 million a year.
That would still leave the board $27 million short. Kenley said the city would raise $15 million by increasing its ticket tax on events at the stadiums, increasing its hotel tax and raising food and beverage taxes. The state would pitch in $14 million by increasing alcohol taxes and allowing the city to take sales taxes at a new downtown hotel.