Message From Town Council President Rick Bella

Message From Town Council President Rick Bella

Merrillville's Food and Beverage Tax Explained: A Message from Town Council President Rick Bella

With the new year approaching, many might have already started considering their resolutions for 2024. As an elected official, I also have my mind on 2024, and financial growth is always among my goals for Merrillville. A food and beverage tax is on the table for the Town, and at 1% of prepared food and drink sales, it equates to a penny on every dollar spent.

The Republican-controlled State General Assembly approved House Enrolled Act 1454, a behemoth, 235-page tax measure that included state authorization for Merrillville to enact a local food and beverage tax. The legislation permits Merrillville to impose a food and beverage tax of up to 1% on all dine-in and take-home prepared food and drinks sold at Merrillville eateries, bars, and similar outlets. The tax legislation was cosponsored by State Sen. Lonnie Randolph and was approved 76-20 in the House and 35-15 by the State Senate.

The Town could then have funding to pay for an 18,000-square-foot expansion of the indoor recreational amenities at the Dean and Barbara White Community Center, particularly two more basketball courts and 4 additional volleyball courts for youth and adult tournaments and other sporting events designed to attract out-of-town visitors increasing tourism to Merrillville, one of the goals of the tax. Many other ideas are listed later on this website.   

It is hard to imagine that a penny can purchase much in today’s economy. Even “penny candy” costs more than a penny these days! A penny is our lowest U.S. monetary denominator. One cent is one-hundredth of a dollar, or in terms of percentages, it’s just 1% of a dollar.

But imagine if you had 100 pennies. Now that adds up to a dollar. That’s what savings was all about as I recall from my parents. Save a little each paycheck and it will someday add up to a great amount of savings for you. It also makes saving less painful if the amounts are very low and extremely affordable. So, each paycheck I always put ‘a little’ aside. Then one day I realized that I had enough to purchase my first $500 car! Yep, it was a used car that I purchased from my cousin. It was not luxury, but that 1966 Oldsmobile Delta 88 got me around town with no problem.

The experience taught me the value of a penny, and of money in general, and that without it, you will be very limited with what you can do, or purchase. That brings me to the topic of our Town. Unlike Lake County’s older communities like Whiting, East Chicago, Hammond, Gary, and Lake Station, the county’s oldest city, some of the southern cities and towns are much younger. Merrillville and Winfield are two of the youngest in the county. What that means is that much older cities have been able to grow their budgets each year and keep up with the growth of their communities. Younger towns like Merrillville incorporated in the early 70’s when watchful state legislators became mindful of tax rate growths and forced limits on tax levy rates. This hurt a community like Merrillville which began with very limited and conservative services during its incorporation. The frozen tax levy did not allow Merrillville to increase property taxes to handle the unprecedented growth that it has experienced for the past half-century. Population growth causes the need for additional town services, added police and fire protection, and all the expenses that come along with providing those services.

Merrillville has limited options as it relates to raising funds for services, parks, police, fire, and other services. The idea of the food and beverage tax was appealing when the idea of trying to present it to state lawmakers was discussed. Merrillville has in the past discussed this issue but was not, at that time, able to get the endorsement from state lawmakers. Today is different as it was already done in several other Indiana cities and towns (33 in total). These cities and towns levy a food and beverage tax: a 1% sales duty levied on businesses that sell or help sell prepared food and drink. In some localities, both the municipality and county have one, stacking up to 2%.

State lawmakers agreed with our request and granted Merrillville and the City of Jasper the approval to have a food and beverage tax allowed in .25% increments (twenty-five hundredths of a percent, up to 1% in total.)

Like a Sales Tax

Food and beverage taxes are like a sales tax. It is “imposed, paid and collected in the same manner as the sales tax,” and food that is exempt from the state sales tax must also be exempt from the food and beverage tax. However, retailers must use different returns for sales tax and the food and beverage tax.

When Merrillville decided to seek permission from the state to enact a local food and beverage tax, it was not done without much discussion. The Town’s Parks Department has always been a small program, but now with our population growth, residents are seeking more and more ways to keep active and in good health. Our neighborhood parks all need updates and modern equipment, but we have a very limited budget to support the needed upgrades. Also of concern in Town is the lack of friendliness toward pedestrians. With a booming business district, Merrillville lacks the needed infrastructure to allow visitors to walk in between businesses like local restaurants, bars, shopping, and other tourist-type attractions. Sidewalks, including crosswalks, streetlights to light the way, and proper signage to guide visitors around Town are sorely needed. A food and beverage tax can provide funding to allow for these improvements.

State lawmakers limited the use of the tax to these two main categories, Parks and Recreation, and Tourism. This allows the council to keep focused and use the tax to benefit the same establishments that are collecting the tax for us to use.

Different than a bond

When a city or town bonds for improvements, the entire residency and business community pay for that bond over the next several years, at times even 20 or 30 years, or until the bond is paid back. Some residents may be paying for a service that they may never use.

The food and beverage tax will have only those who are enjoying our restaurants and other prepared food providers pay into a fund that the Town can use for improvements to our Parks and Recreational facilities, even build new ones, as well as to enhance and encourage the tourism in Merrillville.

The Power of the Food and Beverage Tax… 

Visitors, not residents will pay a large portion.

It is believed that non-residents or visitors to our community will be providing much of the revenue since Merrillville’s population explodes each day to well over 100,000 people, although our residential population is (according to the last census) 36,400 residents. Travelers, visitors, workers, and others who may not live here will be contributing to the estimated $1.8M in annual revenue that the tax is estimated to generate. Those funds can provide a tremendous benefit to the community.

Living in Merrillville with an interstate highway and a state highway running through it can be both a blessing and a curse. Merrillville is blessed having Interstate 65, which offers a quick way to get north or south, as well as U.S. Route 30, which is a major east/west corridor that many of us use, some daily.

But there can also be a downside: Visitors also require services from the Town. Services that homeowners pay for through their property taxes. Business district roads need to be snow plowed just like neighborhood streets. Hotels call the police from time to time for service which is again paid for by property taxes. Business district roads are Town roads and need repair and repaving more than a neighborhood street which typically has less traffic than a busy business district area or the surrounding streets in or near a business district.

These services take funding away from the general fund of the Town. Police, Fire, Street Department, and EMS services are all paid for from Town funds. The food and beverage tax will allow these visitors to also pitch in to help the Town by paying their share when they use our restaurants, bars, or lounges in Merrillville. When many pitch in, it can make a huge impact in Town to enhance the quality of life for our residents who live here year-round. When many contribute with additional funding, we can use it for the betterment of our community like building more parks, adding sidewalks, or expanding recreational areas for the health and benefit of our residents. These amenity improvements naturally and importantly lead to increases in values of the property values of homes in Merrillville. 

It’s not a new idea… 

Thirty-three (33) other Indiana municipalities or counties have enacted a food and beverage tax. The City of Jasper’s tax will not begin until January of 2024, and it was approved along with Merrillville’s in House Enrolled Act 1454. They merged both Merrillville and Jasper into one bill since we both asked for approval at the same time at the beginning of 2023. The following is a list of other municipalities and counties with a food and beverage tax:

Allen County Cloverdale Hamilton County Madison County Plainfield Westfield
Avon Columbia City Hancock County Marion County Rockville Whitestown
Attica Danville Henry County Martinsville Shelby County Zionville
Boone County Delaware County Johnson County Monroe County Shipshewana  
Brownsburg Fishers Jasper (1/1/24) Mooresville Vanderburgh  
Carmel Greenwood Lebanon Orange County Hotel Vigo County  

Introducing a food and beverage tax in our Town is a fantastic opportunity to enhance our community without putting the burden on residents. By encouraging visitors to contribute through this tax, we can unlock resources for projects that would otherwise strain our general fund or existing revenue sources. This means we can significantly boost our Parks and Recreation Programs, creating more enjoyable spaces for everyone.
Moreover, this initiative is a win-win as it dovetails with our efforts to promote tourism. The increased tourism not only adds vibrancy to our Town but also supports our local businesses. With the revenue generated, we can develop and maintain attractive attractions, events, and facilities that benefit residents and visitors alike. It's a smart way to improve our community without placing additional financial pressure on those who call it home.
Many thanks to our state legislators for the opportunity. Merrillville can stand with 33 other cities and towns utilizing this approach. We will work with those who are using the tool for insights.

-- Town Council President Rick Bella