Senate committee advances amendment to tighten oversight and add sunset for local food and beverage taxes; dozens of communities seek authority to raise inn‑tax

A Senate committee on a bill tied to the Department of Local Government Finance (DLGF) on Monday advanced an amendment that would require new reporting and place a statewide sunset on many local food and beverage and innkeeper taxes, and it heard testimony from more than a dozen counties and towns seeking permission to adopt or increase such levies.

The measure under consideration would (1) give some towns explicit authority to adopt their own food and beverage or innkeeper taxes in specified circumstances, (2) require the Indiana State Board of Accounts to annually confirm that localities have submitted required spending reports and that proceeds were spent according to statute, and (3) subject many local levies to a sunset of Dec. 31, 2026, except where taxes are pledged to pay outstanding bonds. The committee adopted the sunset language by consent after a motion by Senator Baldwin.

Why it matters: county and municipal leaders said the taxes are a critical local revenue tool for tourism, downtown redevelopment and, in some cases, to pay for services strained by visitors — while several senators said the state needs stronger transparency and tools to address localities that do not follow statutory spending limits.

The committee hearing opened with Senator Eric Gaskell presenting “amendment 13,” which he described as giving the town of Ellettsville the authority to implement its own food and beverage tax if it chooses and asking for stronger oversight. "Amendment 13 simply gives the town of Ellettsville the authority if they choose to implement their own food and beverage tax," Senator Gaskell said. Gaskell also told the panel the amendment would require annual findings from the State Board of Accounts on whether localities filed reports and spent proceeds according to statute.

Several colleagues pressed for stronger remedies if a locality fails to comply. Senator Shana Mishler (transcript: "Mischner/Mischler" in parts of the record) proposed that the State Board of Accounts be empowered to suspend a local food and beverage tax when funds are misused, rather than returning to the Legislature for corrective action. "If they're not using it correctly, they suspend the food and beverage tax," Mishler said. Other senators urged a compliance period or outreach before suspension, and some favored the suspension approach so the state would not have to reopen the statute repeatedly.

Committee action and process: Senator Baldwin moved language to add a sunset (targeted to Dec. 31, 2026, in committee discussion) for the relevant taxes except for those pledged to pay bonds; the motion was seconded and accepted by unanimous consent, producing an amended bill for further work and for insertion into the DLGF bill the following week. The committee did not record a roll‑call vote in the transcript; members agreed to continue drafting language and to bring the amendment back next week.

Local testimony: After the committee agreed to amend the bill, officials and local representatives from many counties and towns asked to be added to an amendment list (amendment 19) that would permit them to impose or adjust local innkeeper or food and beverage taxes. Testimony described a range of intended uses and local contexts:

- Brown County: Jimmy Tilton, owner of Grandwood Suites in Brown County, testified he opposed the increase now, arguing that raising the innkeeper tax from 5% to 8% could price some visitors out and that the county should review existing spending before raising rates. "When you go to 8%, there's gonna be more of those [lost reservations]," Tilton said. Kara Hemmings, a Brown County resident and lodging owner, said there is "not a shared understanding or consensus around why the innkeeper's tax should be increased," and that many suggested uses floated by the county (public safety, parks, courthouse renovation) are not clearly linked to tourism. Brown County Council member Scott Rudd said the council unanimously supports allowing local conversations about a 0%–8% rate and emphasized public safety and tourism infrastructure as likely priorities.

- Orange County: Senator Eric Cook and Orange County Commissioner Richard Dixon sought statutory removal of an exclusion that currently exempts a resort property from a county food and beverage tax, so the resort's sales would be subject to the tax. "The resort does not oppose the removal of that language," Cook told the committee.

- Wayne County: Jeff Plaster, president of the Wayne County Commissioners, asked that the county and 12 small towns be allowed to adopt food and beverage authority to implement projects identified in a multi‑community planning process. He said the county used ARPA funds and local planning to identify roughly $10–11 million of projects and wanted the option to keep momentum by using a local food and beverage tool if chosen.

- Switzerland County (Beebe): Mark Stutti (Schute in parts of the record), executive director of Switzerland County Tourism, asked for a 3% innkeeper tax to fund construction and ongoing maintenance of an amphitheater and pavilion at Paul Ogle Riverfront Park, to replace temporary event staging used for the county's Swiss Wine Festival.

- Madison: Mayor Courtney (last name not stated in the transcript) and others from Madison described long‑range planning and capital investment totaling about $300 million and said a food and beverage tax would help sustain tourism‑related infrastructure and reduce pressure on property tax and other local revenue sources.

- New Haven: Craig Dellinger, city council president, and Quan (transcript: "Quan Vongpachan" / variants) testified in support of enabling a 1% food and beverage tax to fund youth sports, downtown redevelopment and tourism initiatives. The New Haven witnesses said they had letters of support from local elected officials and business groups.

- Shelbyville: Mayor Scott Ferguson, who also operates a restaurant, asked for authority to use tax proceeds to convert a long‑vacant downtown building into a family‑oriented museum and activity center tied to the county's agricultural employers.

Other testimony came from local chambers, restaurant and lodging industry groups, and county officials; many speakers said the tax proceeds would be used for tourism amenities, downtown and waterfront projects, promotional efforts, or enhancements intended to boost visitor spending.

Limits and clarifications: Committee members repeatedly emphasized statutory limits on uses of particular local taxes. The chair reminded witnesses that innkeeper taxes have specific permitted uses; Senator Baldwin noted that under current code "public safety is not a permitted use of an innkeeper tax" (as discussed in the hearing). Representative Mayfield and others described a local example: Ellettsville has used proceeds to support an on‑demand transit service for elderly and vulnerable residents; the town has collected roughly $1.6 million in food and beverage receipts over seven years, and members said discontinuing the town's authority could jeopardize a modest transit program that costs roughly $70,000 for the most recent procurement.

Next steps: The committee said it will fold the amendments (including reporting and the sunset language) into the DLGF bill next week and continue drafting specific statutory language. Several senators urged a period of statewide outreach and a written reporting requirement before any suspensions would take effect.

What the committee did not do: The committee accepted the sunset language and produced an amended bill for further drafting, but it did not adopt final bill language on every amendment at the hearing nor did it record roll‑call votes on individual town requests. Many communities were entered for testimony to be included in amendment 19; final inclusion and the precise statutory wording will be decided in follow‑up drafting and votes.