INDIANAPOLIS – Dick Hickman traveled to the Statehouse from his home in Angola on Wednesday, hoping lawmakers finally had an appetite for an item long on his menu - a local food and beverage tax.
A four-term mayor, Hickman echoed the sentiments of others who represent cities and counties and want the General Assembly to cede control over who may impose a local tax that could generate millions of dollars for cash-strapped communities.
“I’d just hoped you’d be getting tired of special legislation coming before you every year. You guys have enough stuff to do,” Hickman told a legislative study committee looking at the issue.
It’s a request that’s fallen on deaf ears in the past. Nor did it seem appealing yesterday to skeptical lawmakers – or restaurant owners whose customers would have to eat the added cost.
State law requires any city, town or county that wants to tax tabs to first get lawmakers' permission. But only 26 communities have been approved in the 30 years since lawmakers granted the first food and beverage tax option to Vanderburgh County in 1985.
Hickman, past president of the Indiana Association of Cities and Towns, said local officials are wary of begging the Legislature. Local voters should be able to make the decision instead, he said.
In Angola - a popular tourist spot of 8,000 people surrounded by lakes and summer homes - capturing a few more pennies from each dollar spent in a restaurant could help pay for public services including repairs to a century-old Civil War monument.
Those who represent community leaders say a small tax could raise big bucks for local governments that have lost about $250 million a year since the state’s property tax caps were imposed in 2009.
Another 1 percent on a $30 restaurant tab, for example, in addition to the 7 percent state sales tax, adds on another 30 cents.
On Wednesday, the Indiana Legislative Services Agency, the non-partisan research arm of the General Assembly, said a 1 percent food and beverage tax, if adopted by 79 counties that don’t have one, would generate more than $75 million a year.
But familiar questions, voiced repeatedly in the past, arose again.
State Sen. Brent Hershman, R-Buck Creek, a key gatekeeper as chairman of the Senate Tax and Fiscal Policy Committee, said communities that impose a tax would be taking money from non-residents who eat in their restaurants without giving them a say in how the money is spent.
“Isn’t that taxation without representation?” he said.
House Ways and Means Chairman Tim Brown, R-Crawfordsville, asked whether restaurant developers would simply put businesses just over the border from communities that impose the tax.
The most vocal protests came from restaurant owners and their lobbyists, who say a tax unfairly burdens those who depend on restaurants and fast-food vendors for daily meals.
“You’re being asked to study a regressive and often punitive tax on families, in a specific industry. This is a ‘family meals’ tax," said Patrick Tamm, representing the Indiana Restaurant and Lodging Association.
Tamm said families with making $30,000 or less a year spend more than twice of their income on eating out than do families that make $100,000.
“Many more Hoosiers can’t afford to pay more to feed their families,” he said.
Brad Cohen, owner of the Lafayette-based Arni’s restaurant chain, also voiced objections. Lawmakers should keep control over who imposes the tax, he said, adding that they understand local government finances better than local voters do.
He also questioned why restaurant patrons should have to cover the added costs of local public services.
“If it’s good for the community, then everybody should pay for it,” he said.