Come February, residents and visitors will fork over a little more dough at Greenwood eateries.
The Greenwood City Council on Monday approved a long-discussed food and beverage tax on a 7-2 vote. Council members Bruce Armstrong and Dave Lekse voted against the new tax, which state lawmakers gave Greenwood the freedom to impose earlier this year.
Mayor Mark Myers has been pushing for the 1% tax since he took office nearly eight years ago. It could add about $1.3 million to the city’s tax base initially, and an estimated $2.5 million a year after that, proponents say.
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Myers says the tax is needed because the county does not have economic development or public safety income taxes, and because many of the city’s departments — most notably police and fire — are understaffed.
The additional income to the city’s tax base will be enough to pay for more police officers and firefighters, which is needed if the city hopes to keep up with its rapidly growing population and national public safety standards it is urged to meet.
“This frees up much-needed money that our city can use to its advantage,” Greenwood resident Justin Kloer said during a special city council meeting to discuss the tax Monday night.
“It’s a voluntary tax. It doesn’t impact people adversely, in different economic classes. … Although I personally don’t normally like taxes, this is one I can really get behind, and I’d like to ask for all of your support for this tax.”
The city has long planned to spend the money collected from the new tax on additional police officers and firefighters and equipment for those individuals.
The city recently passed its 2020 budget, which included funding for six additional full-time firefighters and four new police officers, and a 15 percent increase to the Greenwood Parks and Recreation Department’s budget.
Myers has said the food and beverage tax would help fund more police officers and firefighters and allow the city to spend more on parks and recreation. But that would not happen immediately.
The 2020 budget will not change, said Terry McLaughlin, deputy mayor. But, come mid-year, if the city has collected enough additional revenue to add more to police and fire, they would go before the council with a proposal to do so, he said.
According to state guidelines, the additional monies must be kept in a separate fund, and can only be used for parks, capital projects and equipment, and economic development. Initially, public safety was included.
Now, it will take more strategic planning on the city’s behalf to get more money to police and fire where it’s needed.
“Our intent with this would be to direct most of our parks spending from the food and beverage fund … which then would allow us to shift property taxes away from parks operating and back into the general fund,” city controller Greg Wright has said. “That allows us to put more money toward the police department, but also allows us to shift some of the local income tax from the general fund to the fire department.”
Those maneuvers by city staff are what led Armstrong to vote against the tax.
“State law requires us to use this for parks or economic development projects, not for police. So what we’re doing is we’re playing a shell game to get the money from where it’s allowed to be to where we want it to be. I understand it’s legal, but it doesn’t seem to be ethical,” Armstrong said.
The city’s fire department’s assessed value is about half a billion dollars less than the rest of the city due to White River Township Fire Department covering parts of the city and circuit breaker tax credits, city officials have argued. Circuit breakers are tax exemptions, or credits, for low-income, elderly or disabled property owners. So moving local income tax to fire is the only way to get more funding to the department, Wright said.
Greenwood Fire Department is going to need to purchase a new ladder truck and fire engine within the next year or two, Wright said.
“I look at this (tax) as a way for us to help fund police and fire,” council member Bob Dine said. “There is a plan in place. There is money that is going to be used for parks, and there’s going to be money used for public safety. One of our concerns is the southeast part of the city where a new firehouse is going to be needed, plus the equipment for it.”
City leaders know there will be a need for another fire station on the southeast side of the city in the coming years.
Johnson County already has a 1% food and beverage tax, which means those who buy prepared foods and drinks in Greenwood will now pay a 2% tax. For example, it would raise the tax on a $10 meal to 20 cents from 10 cents, on a $50 meal to $1 from 50 cents, and on a $100 meal to $2 from $1.
Greenwood residents who dine across the county line in Indianapolis already pay a 2% food and beverage tax. Other central Indiana municipalities that have a food and beverage tax include Carmel, Noblesville, Lebanon and Zionsville.
“We go just a mile north of here in Marion County and every restaurant up there has the same tax. That hasn’t put any of them out of business. It’s better than throwing a blanket tax out over the entire city and making every citizen pay for this. So that’s why when people come to the mall — when they come from Richmond, Columbus or wherever — those people are paying this tax along with the Greenwood people,” Dine said.
The tax will take effect in 60 days. The city won’t see any of that money until the end of March. The city council will have final say on how the additional monies are spent.
Opponents of the food and beverage tax say the city’s many tax increment financing, or TIF, districts are the reason such a tax is needed. TIFs redirect tax dollars in economic development areas to infrastructure improvements in those areas instead of to other public entities that would traditionally split those tax dollars, including police, fire, schools and libraries.
With each new tax, officials say they’re only raising taxes a little bit, but it adds up, said Dale Marmaduke, Greenwood resident and former mayoral candidate.
“State law says the food tax cannot go to police, but the city accountant says we can do weasel accounting to pay for police,” Marmaduke said.
Lekse said he voted against it because it would put an undue burden on local businesses.
“All taxes are ultimately paid for by the consumer; all taxes ultimately hurt businesses,” he said.
