Tuesday, January 15, 2013

Bill to Be Introduced to Sunset New CIB Tax Increases

A Republican source indicates that a bill is being introduced in the Indiana General Assembly to apply a ten year sunset to the City's proposed increase in the car rental and admissions tax.
The CIB operates Bankers Life Fieldhouse among other facilities.

To recap, a week ago last Monday an ordinances was introduced in the Indianapolis City-County Council to raise the car rental tax from 4% to 6%, raising the total taxes paid on rental cars from 15% to 17%.  Another ordinance was introduced to raise the county admissions tax from 6% to 10%.  According to estimates, the tax increases in the first year alone will raise $6.7 million dollars.

In a deal between Republican Mayor Greg Ballard and Democratic leadership of the Council, it was announced that, after the first year, 75% of the revenue from the tax increases would go to the Capital Improvement Board with the remaining 25% going to public safety

When the original deal was brokered in 2009, the legislature gave the council the authority to raise the car rental and admissions tax.  However, according to the source, those taxes were only to be increased if necessary to pay back the $18 million loan that was part of the 2009 deal.  Interest payments have only been paid thus far on the loan. Beginning this year, the City will begin paying back the principal as well.  Repayments are scheduled to take 10 years, hence the reason for the sunset after one decade.

The source said he doubted the CIB needed the tax increases to repay the state loan and that, since the 2009 deal was cut, the CIB's finances proved to be in much better shape than the pessimistic projects CIB officials gave the legislature nearly four years ago.  Certainly, according to the source, the legislature never agreed for these tax increases to be diverted to public safety.

At $6.7 million dollars per year, it shouldn't take long to pay off the $18 million state loan.   While the ten year sunset is good, I think it could easily be shortened to five years.  Better yet, the taxes shouldn't be raised at all.  Indianapolis already has some of the highest visitor taxes in the country and is quickly earning a reputation of being less than friendly when it comes to the tax burden imposed on those who come to the city.


Had Enough Indy? said...

The deal cut by Vaughn and Lewis splits the proceeds of the new taxes between the CIB and the City. Never been a greedier City than the one we now have. I can only imagine that is not playing well with the Legislators who erroneously thought they were doing only what was needed to keep the CIB afloat.

Paul K. Ogden said...

The CIB's balance sheet turned out to be over $30 million more than they claimed it was in 2009 when they went to the legislature. I think some of the legislators are peeved that they were lied to by the CIB. Then when the legislature gives the City the authority to raise two taxes to pay off the CIB loan, city officials decide to max the taxes out and use the money for other things.

Imagine if the legislature had not capped the taxes. How high would the City raise them? The sky is the limit.

Jon said...

The CIB will keep raising taxes and redistributing that money to billionaires until we smarten up and disband the CIB. Out of one side of their mouth they plead poverty and out of the other side of their mouth they bequeath tens of millions to sports magnates. They cry to the legislature that they are drowning in debt and then presto change-o the next time you look they are suddenly solvent and paying out more money to team owners.

Screw sunset laws on CIB taxes, kill the CIB.

Paul K. Ogden said...

I totally agree, Jon. I think there is such a sentiment at the legislature. There are some key people standing in the way though. But the best thing the General Assembly can do is to completely disband the CIB.