Tuesday, February 12, 2013

IMS Tax Givaway Would Affect Local Tax Revenues To City and (Gasp!) the CIB

A lot of misinformation is swirling, regarding local tax revenue implications of SB91, the $100 million giveaway to the Indianapolis Motor Speedway.

From the bill itself (page 6 of the pdf, lines 24-34):
Sec. 5. As used in this chapter, "covered taxes" means the part of the following taxes attributable to the operation of facilities located in a motorsports investment district designated under this chapter:
(1) The state gross retail tax imposed under IC 6-2.5-2-1 or use tax imposed under IC 6-2.5-3-2.

(2) An adjusted gross income tax imposed under IC 6-3-2-1 on an individual.

(3) A county option income tax imposed under IC 6-3.5.
(4) An admissions tax (if any) imposed under IC 6-9.
Unfortunately, no estimate of the fiscal impact has been done by the Legislative Services Agency.  But, out of respect to the taxpayers of Indianapolis, let's at least stop with the erroneous information that this is only a State Tax giveaway.


Gary R. Welsh said...

Thanks for sharing, Pat. The Star and the IBJ both quoted lawmakers as saying it involved only state sales and income tax revenues. When Amos Brown questioned Miles about its impact on local taxes, he couldn't answer definitively what the bill proposed doing. I'm also wondering about the impact on property taxes from the Speedway TIF that has already been created. They claim it doesn't impact local property tax collections, but that TIF is already impacting property taxes collected by local taxing districts. It makes sense that they included the admissions tax collections because I'm betting the Hulmans report little or no income from the Speedway--thus, they aren't paying income taxes. There have always been questions about how much of the cash sales at the track actually wind up getting reported to the tax collector.

Had Enough Indy? said...

If I understand how these sports districts work, it taps income taxes of all those WORKING in the district. Income taxes are usually collected by where you live. So, those who work a few days of the year at the track in support of a race team, just might be having some of their income taxes siphoned off are re-routed to the IMS.

That's where the LSA analysis can be helpful. They usually have a much clearer, plainer language explanation of a bill, along with their fiscal analysis.

So, long story short, it won't be the same as just forgiving the income tax obligation of the Hulmans.

Of course, it could get interesting if anyone in the government starts asking IMS how many tickets it sells....

Gary R. Welsh said...

Pat, Currently, the Admissions Tax does not apply to events held at the IMS currently. It appears to me that the IMS has agreed to subject the price of tickets to events at the IMS if this legislation is approved. By my calculation, you could raise the $5 million that the motorsports district would capture from the expanded admissions tax alone. I think that the inclusion of the admissions tax might just provide us a hint about the income and sales taxes currently reported by the IMS, or not reported, as the case may be.

NWIN Hoosier said...

I don't think a 10% admissions tax raises $5 million per year. I used Curt Cavin's 2004 figures for seating in each section, assumed a sellout of seats for the 500, plus 20,000 general admissions. Belskus has claimed attendance of 130k at the Brickyard in recent years; I multiplied that by the weighted average ticket price derived using Cavin's figures. I also included reasonable estimates for May practice and Pole/Bump/Carb Day attendance at published 2013 ticket prices. My understanding is that MotoGP attendance is not very high and the future of the event is in doubt, so I excluded it from my estimate. That totaled $34.8 million...not enough to generate $5 million/yr from incremental admissions tax revenue alone.

NWIN Hoosier said...

My other gripe is that the original IMS press release contained this statement: "IMS officials indicated that the Motorsports Investment District as proposed would not financially impact the local school funding formula because it would not be funded through property tax collections."

They might as well have said that it wouldn't impact the local school funding formula because the fish in the water hazards in Brickyard Crossing don't ride bicycles....

There has been no connection between local property tax levies in Indiana and funding of school operating expenses since the reform of 2008, in which school opex funding was transferred to the state general fund, bolstered by the increase in state sales tax to 7%.

I have been an Indycar fan for nearly all of my 55 years, but for IMS to throw out such a statement that's patently false smacks of either gross ignorance of the law, or the intelligence of the Indiana voter...and I have zero respect for the management there as a result.