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City set to hike entertainment, visitor taxes

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Indianapolis City-County Council leaders have agreed to increase visitor and entertainment taxes to avoid what one councilor called a drastic reduction in services.

Mayor Greg Ballard and Council President Maggie Lewis on Monday afternoon announced an agreement on the city's $1.1 billion budget that calls for raising local car-rental taxes by 13 percent and hiking the city's admissions tax by 66 percent.

After the increases, the total tax on a car rental would be 17 percent, and the tax on tickets to Colts and Pacers games would be 10 percent.

The proposed tax increases were introduced at Monday night’s council meeting and must be voted on by March 1.

The multifaceted budget deal averts a $32 million cut that was set to fall on Marion County agencies, which include the sheriff, courts, prosecutor and public defender.

“The city has two choices: either drastically reduce services or find other revenue sources,” said Council Majority Leader Vernon Brown, a Democrat who co-sponsored the tax-hike proposals with Minority Leader Michael McQuillen.

Brown said he had reservations about the tax hikes, but he agreed to them because they're levied primarily on people who come from outside the city and take part in voluntary activities. And he said it was the only way to restore funding to county agencies. Ballard vetoed $32 million in income tax revenue headed for county agencies in the council-approved budget, which spokesman Marc Lotter said left the city with a $35 million deficit and little savings.

The deal won’t mean the end of cost-cutting, though, as Ballard and Lewis said in a press release that they’re “committed to reducing 2013 operational spending by 5 percent.” Lotter said across-the-board reductions will leave the city with a much smaller gap, $6 million, and $42 million in reserves by the end of the year.

Ballard wanted to increase the visitor taxes because that revenue flows to the Capital Improvement Board, which oversees Lucas Oil Stadium, Bankers Life Fieldhouse and the Indiana Convention Center.

But under the deal, the first year's extra tax revenue, an estimated $6.7 million, would flow to Indianapolis' general fund. After that, 25 percent of the tax money—up to a maximum of $3 million—would go to the city’s coffers each year.

The CIB also will pay $5 million for public safety services this year. The agency had budgeted that money for repairs at the Capitol Commons Garage, and the city agreed to pay those bills out of its downtown tax-increment-finance district fund.

Brown said the deal also means the council's Democratic majority will drop its effort to levy a one-time, $15 million fee on the CIB. Council leaders saw the so-called payment-in-lieu-of-taxes proposal as a way to close this year’s budget gap and provide money for a police recruit class to replace retiring officers.

The mayor and CIB’s board of directors vehemently opposed the PILOT plan, and Brown called it a “looming legal battle no one has the will or finances to enter into.”

CIB President Ann Lathrop applauded the agreement, saying the board supported Ballard and Lewis' "hard work in crafting a budget that protects the fiscal health not only of the Capital Improvement Board, but all of city government."

The deal gives Ballard room to hire more police officers, but Lotter said there’s no police academy recruit class in the budget. The mayor may skip the academy process and hire trained officers from other departments, if more officers are deemed necessary, Lotter said.

The budget deal also could pave the way to a better working relationship between the Republican mayor and Democrat-led council.

They agreed to form a bipartisan commission to research whether to eliminate the homestead tax credit, an income-tax-funded subsidy for homeowners. (It is separate from the more-significant homestead tax deduction.)

The mayor and leaders from both caucuses will hold monthly financial meetings. They also will continue working to set up a “Public Safety Foundation” for 2013. The foundation, which has been under discussion for two years, would be a way for tax-exempt entities like Wishard Hospital or the CIB to make donations that offset the cost of public safety, which consumes the majority of general-fund revenue, Brown said.

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  • Ballard and Taxes
    I worked for Ballard in 2007. Never again. I can't begin to list all the taxes and fees he has raised while in office. He has had numerous chances to call the CIB on the carpet for lying about its finances and the Board's irresponsibility in handling public money and he doesn't. The CIB is not paying a penny for public safety.
  • Chris...
    It doesn't work like that. The fact that hotel rooms are cheaper in City A than City B doesn't mean that City A is then free to make up the difference in room rates with higher taxes. The rates in City B are higher for a reason. The City might offer more nightlife, might be be located on a beach or have warm weather during the winter. Unless you can magically offer those same amenities which account for the difference in the room rates between City A and City B, the higher taxes most definitely will affect tourism.
  • Recall?
    I blame Ballard being in offcie on the Democrats. I desperately wanted to vote for someone other than Ballard for these reasons. But the Dems ran such a weak candidate I could not vote for her. And yet...Ballard barel eeked out a win. I'm a registered Repub but will do all I can to vote against Ballard next time.
  • Silly ville
    What was I thinking when I moved back to Bug Tussell? Who builds their economy around tourism and conventions, industries notorious for high infrastructure costs and low wage jobs? Who actually believes that given a choice between South Beach, New Orleans, Vegas, Scottsdale, San Antonio, San Diego, Seattle, New York, even Chicago that people want to come here? The good news is that the rubes that run this place are absolutely determined to give out of towners the excuse they need to hold the next hardware show in Youngstown Ohio or Flint Michigan. They're even cheaper than Indy, and they have all the chain restaurants we do. This isn't going to work, and then the tax will fall on the poor fools who live and work in Going Around In Circles City. You deserve it. Mayor Ballast is you. Indy is you.
  • Unintended Consequences
    This is what happens with such narrow-focus tax policy. Indiana and all the locals need to seriously rethink their approach to revenue...and stop wasting money. Broadest possible consumption tax, on everything, even used goods, durable goods, food, meds, literally everything, makes much more sense, and would be a vastly lower rate. It's far past time to repeal all these nit-pick taxes and replace the whole lot with broader application of the sales tax and stop this madness.
  • Novel Idea
    I would venture to guess that all government officials approved raises for themselves over the past year. Why not decrease their own pay by 5% rather than taxing the people who elected them the extra 5%. I work at a hotel in Marion County that charges 17% tax now, not to mention the hundreds of thousands of dollars that are paid through property taxes. Then you have to pay the city again for liquor and food licenses.
  • Whew.
    Thank goodness I don't go to Pacers games and rent locally north of 96th Street.
  • Perspective
    2011 Team Revenue (Forbes) Colts - $252 Million Pacers - $95 Million Net Worth (Forbes): Herb Simon - $2.2 Billion Jim Irsay - $1.5 Billion Minimum Annual Salary (NFL,NBA,IPS,IMPD): Colt Player - $405,000 ($14 million max) Pacer Player - $474,000 ($13.7 million max) IMPD Officer - $39,446 IPS Teacher - $49,950
  • This is why I left Seattle
    This is the same thing they did in Seattle. The voters rejected new taxes to pay for stadiums, so the city council pushed them through and tacked on a 15% tax on tourism. I thought I left this kind of ridiculous taxation behind when I moved here. What's next, charging a tax on grocery bags? Don't laugh - they are already doing it out West to get rid of both paper AND plastic bags.
  • Entertainment taxes
    I LIVE in this city and never go downtown because of the expense and hassle of merely finding a parking spot. When the people who live here can't afford the extra expense to park their car downtown, why would anyone else? Next we'll be charging $6.50/hr like Chicago. When we stop getting all that out-of-town business maybe we'll wise-up.
  • Taking Names
    Time to recall Mayor Ballard and demote Maggie Lewis from City County Council leadership. Brian Mahern for Mayor He appears to be the only person with any common sense and his priorities in order.
  • Rip Off Alert!!!
    and what will be the benefit of this? more haggling over spending? where are the spending cuts? its getting to the point that only the rich are able to go to Colts games! if you are a family of 4, its nearly a $500 day!!! RIP OFF!!!
  • Priorities
    Bart Peterson was thrown out of office for raising property taxes to support more police officers. Greg Ballard wants to raise property taxes and for a second time raise hospitality taxes (ranking top in nation) to give it to billionaire sports team owners while promising to find tens of millions in cuts to essential public services. Mayor Ballard must think the public is stupid to accept this BS.
    • Just Say NO
      So instead of having the CIB cut operating expenses by having it tenants (Colts/Pacers/Mall Venders) cover thier own operating expenses, the politicians want to raise our property taxes through homestead tax elimination and give it to the billionaire sports team owners through a TIF? Property taxes have NEVER been used to support the CIB until Ballard came into office. Hospitality taxes have always paid the CIB bills until they cut the corrupt Lucas Oil Stadium deal and started giving the Pacers matching out of contract payments. This is not right.
    • City Losses on Sports
      The city LOST over $800,000 on the superbowl. That will never be recovered in taxes or other revenue... those who say it enenhanced the image of the city are dreaming. Those valuable $$ could have bebeen allocated to fire and police. I have yet to see a pro athlete run into a burning building to save someone. Most of them do not even live here. What ARE our priorities, anyway?
    • Jerry, You Need to Read Carefully
      No, I am right, Jerry. Again, my comment was not that Indianapolis has lower taxes than anywhere else but that the absolute sum paid for visiting is CHEAPER than New York, San Francisco, or LA. Here is a simple math hypothetical: New York costs $5,000 to visit for 7 days without taxes, and the tax rate is 5%--total cost $5,250. Indianapolis cost $1,000 to visit for 7 days with a 80% tax rate, total cost is $1,800. $1,800 is less than $5,250, so even with a dramatically higher tax rate, Indianapolis would still be much cheaper to visit than New York. To repeat, since we seem to have a slow crowd reading here: With respect to the total cost to visit a place, the tax rate is meaningless without looking at the BASE cost being taxed. You can have an extremely high tax rate and still be a very cheap place to visit, and you can also have an extremely low tax rate and still be a very expensive place to visit.
    • GET READY
      raising taxes has only just begun!
    • Wrong, Chris
      According to a travel association, Indianapolis was number 8 on the list of most visitor taxes. This tax increase will put us behind only NYC and Chicago. I don't know where the IBJ gets off reporting that the CIB is paying money for public safety. They're not paying a dime. They're just shuffling money around.
      • Not Quite
        Honey, go to New York, San Francisco, LA, etc. to find the "most expensive place" to visit. Indianapolis could raise its taxes about 20 times over and still not come close to being anywhere as expensive as many major cities. It is meaningless to talk about a tax rate without referring to the tax BASE (ie the amount being taxed).
        • Free market...not for sports!
          I guess rental car locations are spread through out the city & not just the airport since only visitors rent cars. STOP the sports madness or let the Colts & Pacers operate under the terms of the free market & get off the public subsidies.
        • ELECTED BOOBS
          These clowns have no grasp on reality for John Q Public. Continue to just steal from the publics pockets. Mayor Ballard is a charlatan. He is not a conservative republican and is not fiscally responsible. He takes from the citizens and gives the money to his cronies and grafters.
        • "Indy-Land"
          For those in decision making positions this new fiancial allocation structure will ensure at least 2-things for Indianapolis on a national scale: "Most Expensive Place to Visit" and "Least Desireable".

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          1. Really, taking someone managing the regulation of Alcohol and making himthe President of an IVY Tech regional campus. Does he have an education background?

          2. Jan, great rant. Now how about you review the report and offer rebuttal of the memo. This might be more conducive to civil discourse than a wild rant with no supporting facts. Perhaps some links to support your assertions would be helpful

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          4. Talking about congestion ANYWHERE in Indianapolis is absolutely laughable. Sure you may have to wait in 5 minutes of traffic to travel down BR avenue during *peak* times. But that is absolutely nothing compared to actual big cities. Indy is way too suburban to have actual congestion problems. So please, never bring up "congestion" as an excuse to avoid development in Indianapolis. If anything, we could use a little more.

          5. Oh wait. Never mind.

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