Council members inquire about one-percent levy on restaurant products

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Kokomo Common Councilman Dave Capshaw is concerned the City of Kokomo is running short on money. He was one of five councilmen who voted against a $10 trash fee last month, but on Dec. 9, he proposed an alternative: a one percent tax on food and beverages served at local restaurants.

During the council’s caucus prior to its regular meeting, Capshaw brought up the prospect to his peers and Department of Development Director Wes Reed. The topic received a warm reception.

“We know that the city needs more money like the trash fee,” said Capshaw. “I was told roundabout that some things might need to be cut because we didn't pass it. So, why don't we -- and it's too late now, the deadline is October – put in a food and beverage tax, so we sort of generate income from people from out of town that are using our services?”

Councilman Tom Miklik eagerly recounted to Capshaw how the city’s previous attempt to enact a food and beverage tax in 2022 failed.

“We can give you the short answer,” said Miklik. “The short answer is that has to go through the state. The longer answer is (State Senator) Jim Buck, the council president for the county, and several others did not want a food and beverage tax because they didn't think it was justified to pay so much money for a piece of food and then have to pay a one percent tax on top of it. Our state legislators would not take it to the Statehouse to promote it.”

Miklik went on to explain that seven Indiana cities did get approved for such a tax in 2022, though Kokomo was left out, in part, because it scrambled late in the process to put together a proposal.

“Those cities got their food and beverage tax, but our state legislators now would have to carry that paper separately,” said Miklik. “We had hoped that maybe at the end of the year they would put it in their big Christmas present bill, but I don't think we got it.”

Capshaw acknowledged the political pressure surrounding such a measure but still voiced support for pursuing the tax.

“I know last year was an election year, and nobody wants to raise fees in an election year,” said Capshaw. “Next year, we have until October. Would that be something to pursue?”

Miklik wasn’t optimistic about a food and beverage tax being officially proposed.

“I've been told that they won't do it as long as there's one elected official in this county that doesn't want it,” said Miklik. “I'm all for it. I think we should do it. I thought we should do it a year ago. But there are certain people in certain places in state government that really didn't support it.”

Reed spoke up for the city administration at that point to explain what happened in 2022 and the continued support for the tax within the administration.

Food and beverage taxes, anytime they go to the state, take two or three rounds before you get one,” said Reed. “Every community has been that way. When we researched it the last time and considered it, it was really late in session, so it was not received well because of how late into session it was, which is understandable.

“We did not pursue it this year because we pursued a trash fee. We weren't going to focus on multiple things. I think it’s worth studying and worth understanding.”

Reed explained that a community can receive no more than a one-percent food and beverage tax by state statute, and he stressed that the fee would only apply to prepared food and beverages, not groceries.

The primary reason the city administration wants the food and beverage tax is the report from Championship Park organizers who claimed more than 500,000 people visited the community last year for baseball and softball events at the complex, Reed said.

“That's the real reason Chick-fil-A wants to be here,” said Reed. If you get one percent on that, you would have to designate what the money would go to. You could say roads, streets, and parks, because those are affected (by visitors).

“It would be a good thing, but it would obviously propose challenges. too. I think it's worth studying. That is my unofficial statement.”

Councilman Jeff Plough mused upon the impact of the tax, underscoring its optional nature.

“A food and beverage tax is not an obligatory tax that absolutely has to be paid,” said Plough. “You're making a conscious decision whether you're going to eat out or not.”

Capshaw stated his preference that the tax be studied and considered. Councilman Matt Grecu also expressed support the tax.

“I think we ought to do it,” said Grecu. “It's just not something we can accomplish alone.”