13 WTHR - Indianapolis News |Hotel tax increase moves forward in council

Hotel tax increase moves forward in council

Mary Milz/Eyewitness News

Marion County - A hotel tax hike is moving forward in the City-County Council.

A council committee voted 5-1 in favor of the one-percent increase meant to help bail out the Capital Improvement Board, which runs the city's sports venues and convention center, and faces a $47 million shortfall.

The full council will vote on the tax August 10. If approved, the increase would take effect September 15.

Most of the people who spoke Tuesday night were for the increase, but a few critics called it a bad move.

"If you're going to have a wedding and your friends and relatives come to town, they're going to pay that tax. If someone is from somewhere else in Indiana staying overnight, it's not just visitors to Indiana who have to contribute to that," said Sean Shepard.

"We're going to pay for these facilities whether or not this ordinance passes tonight. If we say we're not going to pass it and we close these facilities, we still have to pay for those things," said Tammie Jones, Greater Indianapolis Chamber of Commerce.

The tax increase may be the only way to keep Lucas Oil Stadium and Conseco Fieldhouse up and running. But City-County Council members are balking at the idea which could potentially make a bad situation even worse.

The tax was part of a legislative package approved in the Special Session to bail out the Capital Improvement Board. It must pass the full council by September 1st. If it doesn't pass, the CIB also loses out on a state loan and other tax revenue to help with its deficit.

Committee Chair Bob Lutz, a Republican, called it a hard sell.

"None of us wants to raise taxes, we pay them too," Lutz said before the meeting. "I haven't at this point made up my mind."

Lutz has heard the city's top leaders talk about what's at stake time and time again - 66,000 hospitality jobs, convention, tourism - but he also feels lawmakers backed the council up against the wall, still leaving them at least $12 million short.

The hotel tax "is what the general assembly dictated to us and unfortunately we don't have a lot of latitude here."

Lutz isn't sure how many Republicans will support the measure and he knows the measure isn't likely to get much help from Democrats.

Democratic committee member Angie Mansfield said before the meeting, "I am going to vote no. I really believe this is not the solution that will take care of things."

Mansfield admits she and fellow Democrats are still smarting from the voter backlash of 2007. They lost the mayor's office and their council majority after supporting an increase in the county income tax to pay for public safety.

Mansfield said, "We have a Republican mayor, a Republican council and a Republican governor who crafted this plan. They need to step up and take responsibility."

Paul Okeson, the mayor's Chief of Staff said he's been lobbying hard to ensure the tax passes. "The only way this situation could get worse is if we fail to act," he said.

Mansfield said there were alternatives to raising the tax. "I think there's an opportunity to go back to the state and get a solution that will work," she said.

But the day after the Special Session ended, the governor made it clear he didn't want to "see the CIB back again."

"The other option is to go insolvent or cut back other services in the city," said Lutz.

But CIB's already cut $13 million from its budget. It's cut back on routine maintenance, cut back on utilities, turned off the fountains in the Capitol Commons Park and even stopping planting flowers in the large planters outside the Convention Center and it still hopes to cut $4 million more.

Asked about furloughs and layoffs, Okeson said, "They're continuing to look at that."

Okeson said a "no" vote on the hotel tax would make the CIB's money crunch even worse.

"We would put at risk the viability of Indianapolis as a top tier city and contender for certain events," he said.