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Food, beverage tax proposal stalls

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For now, state lawmakers won’t be voting on whether diners will pay an added tax when going out to eat or picking up lunch or a drink in Greenwood and seven other cities and towns.

A proposal that would have allowed those communities to approve a local 1 percent food and beverage tax did not get a vote in the House Ways and Means Committee this week.

That means the bill has stalled and won’t go to the full House of Representatives for a vote, unless a state group finds a way to get it added as an amendment to another proposal.

If that doesn’t happen, the Indiana Association of Cities and Towns, which proposed the idea, hasn’t decided if the bill should be brought up again in next year’s legislative session.

Currently, the local food and beverage tax is a dead issue, director of government affairs and legislative counsel Rhonda Cook said. This summer, the organization might consider whether to push for it again in 2015, but it hasn’t committed to doing that, she said.

The proposal would have allowed Greenwood and a handful of other cities and towns to tax prepared foods that restaurants, deli counters and caterers sell.

Members of the city council approved adding Greenwood to the list of communities and wanted to use the income from the 1 percent tax — estimated to bring in about $700,000 per year — to pay for parks and recreation projects, such as extending trails, and salaries for new firefighters and police officers.

“I’m highly disappointed,” Greenwood Mayor Mark Myers said.

“We as a city are losing money every year, and we need to find ways to recoup.”

Because of property tax caps, the city’s revenue isn’t increasing quickly enough to cover the costs of city services for a growing population, he said.

Greenwood City Council member Thom Hord, who had suggested adding Greenwood to the list of communities, said the city needs the money to make up for tax dollars lost in recent years, such as to property tax caps that limit how much taxpayers pay.

Under the proposal, Greenwood, Angola, Danville, Elkhart, Goshen, Rockville and Rushville would have gotten the option to approve a local food and beverage tax if state lawmakers gave them the OK.

State Rep. John Price, R-Greenwood, a former county commissioner, proposed the legislation, which was considered by the ways and means committee this week. He said members of the committee were concerned that the ways some of the communities had proposed spending the money were too broad. Greenwood’s plans were not too broad, he said.

For Greenwood, not getting approval this week likely means another year, or more, the city won’t collect a tax that could’ve helped cash-strapped city departments, Hord said.

The parks, police and fire departments all have had their budgets shrink, and the fire and police departments haven’t been able to hire the recommended number of full-time firefighters and officers in years, officials have said.

“The state has taken away so many resources from municipalities. This would have provided us with a different resource to recapture those lost funds,” Hord said. “That doesn’t bode well for us in getting back to where we need to get.”

Due to property tax caps, which have limited how much local governments collect, Indiana cities do need the money, Price said. To get the bill even discussed in committee, he had to convince the chairman committee that the bill was important enough to be among about 25 discussed, he said.

“I was thankful to get a hearing, to be honest with you,” he said.

Proposals can take four or five years to get voted into law, so it’s a good sign that a committee discussed the local tax, Price said.

He said he would be willing to present the bill again or another similar to it in 2015. He added he wants cities to have the power to decide for themselves whether to approve a local food and beverage tax.

“Let them make the decision for what’s best for their jurisdiction,” he said.

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