The Herald Bulletin

October 8, 2013

Emmett Dulaney: Taxed pennies add up

By Emmett Dulaney
For The Herald Bulletin

---- — In a convenience sample of over 50 residents of Madison County, very few could correctly answer a question about something they contend with on a daily basis. The question was: “In Madison County, you don’t pay 7 percent on prepared foods such as that served at restaurants, but instead pay 8 percent. What does the extra 1 percent go to?”

A large number of those polled were unaware that they pay the extra percent and those who were cognizant of it often associated it to something other than what it is allocated to with charity and welfare programs being high on their guess list.

To arrive at the correct answer, it is important to understand how the tax came to be in the first place. Indiana has 92 counties but only 12 of them (along with 13 towns) have chosen to implement what is known as the food and beverage tax since it became an option in the mid 1980s. The Indiana Code (section 6-9-26-12) states that the monies collected “shall be used by the county solely to: finance, construct, improve, equip, operate, maintain, and promote first, a civic center, and then an economic development project, if there is money not needed for a civic center … [and] …retire bonds issued, loans obtained, or lease payments incurred … to finance, construct, improve, equip, operate, maintain, or promote first, a civic center, and then an economic development project …” This expands a bit under section 13 to say that if the monies collected are not needed for a civic center, a detention facility, or the retirement of funding, then it can be used for economic development projects that:

◆ “Attract new business enterprises to the county or retain or expand existing business enterprises in the county

◆ Benefit the public health and welfare and be of public utility and benefit.

◆ Protect and increase state and local tax bases or revenues.

◆ Result in a substantial increase in temporary and permanent employment opportunities and private sector investment within the county.”

Madison County was the fifth of the counties to implement the tax but since they didn’t see the need for a detention or civic center, it opted for the latter option: to fund economic development. Since its inception, the Madison County Council of Governments has reviewed and voted on applications based on (per their packet) whether or not the project will “promote the economic vitality of Madison County.” Project selection criteria include community need, job creation/retention, private leverage, and the use of other public money.

Benjamin Franklin was on to something when he realized how much those extra pennies can add up to. Almost $1 million (over $987,000) was awarded at the end of last year and Page 5 of the Madison County Council minutes from Dec. 27, 2012 (http://www.madisoncty.com/County%20Council/CCM122712.pdf) shows the complete list of allocations. While it is hard to be opposed to waterparks and sewer repairs, I am somehow missing the economic development part of the awards given. Not to be misunderstood, I love a rebuilt police station as much as the next guy and water tower repairs make me weak in the knees, but I’m not sure that the Frederick Douglas historic marker (awarded $3,550) is what the Legislature had in mind 24 years ago when they required Madison County McDonald’s to charge an extra 1 percent tax on every purchase for economic development purposes. Where is the attraction of business and the increase in employment that this tax was intended for? Do we need to implement yet another tax to finally fund those endeavors?

Emmett Dulaney is the author of several books on technology and an Anderson resident. His column appears Tuesdays.