A bill that would create tourism improvement districts (TIDs) around Indiana to attract in-state and out-of-state visitors failed in 2024, but its author says it will be coming back in the 2025 legislative session.
In this year’s session, in the House Ways and Means Committee on Feb. 14, Sen. Travis Holdman, R-Markle, discussed Senate Bill 61, which would have allowed people to petition their local governments to establish tourism improvement districts within their communities, enabling them to receive grants and certain funding from state taxes.
According to Indiana Tourism Industry News, a TID is “a supplemental funding mechanism for tourism promotion and destination development activities. Funds are raised through a non-tax assessment on business stays within a designated geographic area. Funds are used to provide services desired by, and directly benefiting, the businesses in the district.”
Carrie Lambert, executive director of the Indiana Tourism Association, said the assessment could be a fee or a percentage of the cost of a hotel room, food and beverage sales, or shopping sales.
This week, Holdman told TheStatehouseFile.com why the bill didn’t pass.
“I think there’s just some concern with small businesses shouldering some of the responsibility and the assessment,” Holdman said.
“Folks wouldn’t be limited in size in the district, so they could make the district rather large to make the impact rather small on local business and communities.”
Holdman said there are a dozen or more statewide communities that expressed interest in establishing tourism improvement districts. He said the Indiana Tourism Association is supportive of the efforts of communities to establish these districts.
Lambert gave an example of a tourism improvement district: Metamora in southeast Indiana, which includes the state’s only wooden aqueduct, Duck Creek Aqueduct, the oldest grist mill, and the Whitewater Canal.
“They at one point talked about, you know, it would be really cool if we created a tourism improvement district, and we would outline what business would be included, whether that would be lodging facilities or restaurants or retail shops, and they can create what assessment they like,” Lambert said.
She said there are other places in Indiana with tourism improvement districts, such as Fort Wayne and Shipshewana.
Lambert believes tourism improvement districts would work in Indiana. She said many states have had great ideas for development based on marketing, but they haven’t worked out for all of them financially.
“They haven’t been able to do it based on just funding streams and the capacity of what they’ve had with that recently,” Lambert said. “And there are grants that we know are available for different things across the state.”
She added: “Our Indiana Arts Commission has some grants. I know Indiana Destination Development Corporation has some grants. We feel like this is one more opportunity, as we say—another tool in the toolbox for our communities.”
Lambert also told The Statehouse File that TIDs allow more involvement from the businesses.
“What is unique is that people are gonna say, I’m gonna raise my hand and I’m gonna use my business to be assessed at what percentage,” Lambert said. “But then I’m also going to be on a committee that decides how those funds are going to be spent.
“They have a stake in what it’s going to be used on, which is a little bit unique than some other funding sources and mechanisms. So I love the idea. I mean, having the right legislation that local communities can then enact is really great.”
She explained that the additional percentage added on to the cost of a room is collected by the lodging facility and goes directly back to the county for funding its tourism marketing and development.
“It’s a really cool opportunity that I think can benefit not only our larger communities but some of our smaller ones as well,” Lambert said. “And I think that isn’t always the case with everything that can be transferable all across the board.”
In the February House Ways and Means Committee, the National Federation of Independent Business (NFIB), representing small businesses, opposed the bill because of increasing costs, high tax rates and inflation.
“It’s an increasing burden to small business owners. These districts essentially create a tax on top of a tax. This bill would allow TIDs to coexist with TIFs (tax increment financing), in which that could actually end up creating a triple tax for businesses and no caps in place on top of that,” Natalie Robinson, Indiana state director for NFIB, said.
“To say creating special taxing districts right now is bad timing would be a huge understatement. This is coming up at a time like property taxes are already soaring, health-care costs are skyrocketing, and all of that is layered on top of our record-high inflation,” Robinson said
According to Robinson, small business owners are under pressure from inflation and having to pass the increased costs to their customers.
“I urge the committee to consider the impact that these special districts have on the small business and help implement policies that help support them,” Robinson said.
Despite these concerns, Lambert said she’s optimistic for small businesses, especially those specializing in tourism.
“When I was at the Statehouse, some small businesses were against it—well, some small businesses that likely wouldn’t really ever opt in,” Lambert said. “The reality of this is that small businesses that would be a part of this are the ones that are heavily involved in tourism.
“So what I look at it as actually a promotion of small businesses and then being in the conversation of how these funds are being used and how it can benefit their community and quality of place overall,” Lambert said.
She added: “Because that’s really what tourism is about. It’s not just for the folks that are coming in, but it’s also for the residents that are there creating such a great environment for families and experiences for everyone.”
John Asplund is a reporter for TheStatehouseFile.com, a news website powered by Franklin College journalism students.
