Greenwood City Council members are considering a food and beverage tax months after lawmakers passed a bill allowing Greenwood and a handful of other communities around the state to impose it.
Mayor Mark Myers has been pushing for the tax since he took office nearly eight years ago. One of two bills that included it was approved by legislators in April, and 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.
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.
If the city approves the 1 percent tax, residents and visitors will pay a few extra cents at Greenwood eateries. But that difference 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.
"Because we are the fourth lowest municipal tax rate in the state, we do have a very large deficit when it comes to adding amenities to the city. The goal has always been to use it for public safety funding, because we have a shortage of officers — police and fire. But this gives us an opportunity to take that money and apply it toward various things," Myers said in April.
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. Both the police and fire departments have struggled to keep up with the growing needs of a rapidly growing community.
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 said last week 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 if the tax is approved, 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," said Greg Wright, city controller. "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."
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 said. 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.
"Additionally, we do know that down the road Fire Station No. 95 is going to happen, and we are going to have to put equipment in there as well," he said.
Fire Station No. 95 does not exist. It has been discussed in passing, but no development plans have come to fruition. 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 percent food and beverage tax, which means those who buy prepared foods and drinks in Greenwood will now pay a 2 percent 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 percent food and beverage tax. Other central Indiana municipalities that have a food and beverage tax include Carmel, Noblesville, Lebanon and Zionsville.
"We have a lot of people that come into the city limits to dine at the restaurants that we have here, particularly in the (Greenwood Park Mall) area and the (State Road 135) corridor, and we’re trying to draw more people downtown," Wright said. "Not all of those people are residents of Greenwood. They’re coming from other places. But while they’re here, they are driving on our roads, using police and fire if they need them, EMS if they need them … all of that comes from our citizens’ (tax) dollars."
Greenwood’s food and beverage tax was added to a wide-ranging bill that included several other local taxes, including county innkeeper’s taxes, and food and beverage taxes for other cities and towns, a different approach than in past years, and one that proved successful.
Even though state lawmakers approved the tax months ago, it has yet to be implemented. The city council has final say. The state law simply gives the city the option to implement the tax. And if the city council approves it in the coming weeks, the city wouldn’t see any of that money until 2020, as it takes 60 days after adoption, Wright said.
The city council will have final say on how the additional monies are spent.
"Since we didn’t know whether it would happen, we didn’t have it in the budget for 2020, so we would have to use the additional appropriation process to spend any of those funds," Wright said.
The tax would also help the city offset its circuit breakers, he said.
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.
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The Greenwood City Council will vote on the 1% food and beverage tax at its next two public meetings, unless it fails to pass on first vote. Those meetings are as follows:
7 p.m. Dec. 2, Greenwood City Center, 300 S. Madison Ave.;
7 p.m. Dec. 16, Greenwood City Center
To pass, the tax would require a majority vote.
If it passes, it would take effect 60 days after the final vote, and residents or visitors would begin paying a 2% food and beverage tax, similar to Marion County’s, in mid-February.
The tax would bring in an estimated $1.3 million to the city’s tax base, which leaders say could be used to fund additional police and fire personnel and equipment next year.
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