Last September, a joint meeting of city and county officials was held about the convention center expansion. City councilmember Dave Rollo asked Bloomington’s financial advisor a question about the estimates for future food and beverage tax revenues:
“In the event of an economic downturn, have you factored in a drop in revenue? … Do you have a historical analog that you’ve considered, say 2008?”
The downturn the Bloomington area is now confronting, as a result of the COVID-19 pandemic, looks different from 2008—for small businesses and non-profits alike.
On Sunday (March 15), the Center for Disease Control announced a recommendation to cancel gatherings of over 50 people. The same day, Indiana University announced that classes for the rest of the spring semester would use remote instruction, and that residence halls would be closed.
Grass roots efforts, from Indiana University librarians to anti-racism activists, have sprung up to support the least fortunate.
Efrat Feferman, executive director of the The United Way of Monroe County, confirmed to The Square Beacon that the non-profit she leads has made requests of Bloomington and Monroe County governments as well as other funders to help meet the additional social services needs caused by the COVID-19 pandemic.
Over the weekend, a group of nine locally-owned bars and restaurants launched an online petition asking that some food and beverage tax money be allocated for relief of the businesses that collect the tax. As of late afternoon on Monday over 2,700 people had signed the petition.
On Monday, Indiana’s governor, Eric Holcomb, ordered that bars and restaurants close, except for take-out and delivery service. So future revenues from the food and beverage tax are expected to show a sharp drop. Petition author Kurtis Cummings, of Switchyard Brewing Company, said it’s the current balance of the fund he’s eyeing for small business relief, not future collections.
Based on the recently approved annual report of the food and beverage advisory commission (FABTAC), the unexpended portion of the city and county portions of the tax total around $5.7 million. The tax was enacted in late 2017 by the county council to pay for an expansion to the convention center. The expansion’s current cost estimate is around $44 million.
Emergency Social Services
The United Way’s request to Monroe County could see action by mid-week, according to county officials.
Feferman gave The Square Beacon one example of an unmet need: A person who has symptoms of COVID-19, but who has no permanent place they live. Where is that person supposed to self-quarantine?
County officials told The Square Beacon that a special county council meeting scheduled for Wednesday now appears that it will be not be needed. That’s because county commissioners have the authority to act, under the governor’s emergency declaration, to allocate some funds that are intended to soften the economic impact of COVID-19.
Those include funds to compensate county workers, including part-timers, during the county government shutdown that starts Tuesday, based on an emergency declaration by the commissioners.
Small Business Relief
County officials also told The Square Beacon that some kind small business relief is being explored. County commissioners have a regular meeting scheduled for Wednesday. Based on what county officials told The Square Beacon, the small business relief does not sound like it would tap food and beverage tax money.
What Cummings and other restaurant and bar owners would like to see is half the accumulation of unexpended food and beverage tax funds put towards relief for the locally-owned establishments that have been collecting the 1-percent tax since early 2018. The tax was enacted by the county council in late 2017 on a controversial 4–3 vote.
About the petition, Erin Predmore, CEO of the Greater Bloomington Chamber of Commerce, told The Square Beacon: “When we are asked to take a position on an issue, we typically have our Advocacy Council weigh in, then present the issue to the board for a final decision. This petition would go through the same process.”
Cummings is asking that food and beverage tax money be used for small business relief, not because he’s against expanding the convention center. In fact, Cummings said, he supports the expansion, because he knows of a pipe fitters convention that previously used Monroe County’s convention center, but outgrew it a few years ago and opted for Terre Haute.
Still, Cummings thinks a convention center expansion could wait another year, so he doesn’t mind using some of the food and beverage tax to support the businesses whose customers pay the tax.
Future revenues from the tax are sure to decline dramatically for sales made in March, which will show up in the May numbers reported to the county auditor’s office.
The anticipated diminished revenues and the lag time in getting a precise picture of the COVID-19 impact make county councilor Geoff McKim want to pause making a commitment on a convention center expansion, as well as on a separately proposed local income tax increase.
McKim commented on Facebook:
I would assume that there will be no attempts to either raise the LIT [local income tax] or make convention center expansion commitments until we can both get through this and have time to assess the damage?
City councilmember Dave Rollo responded:
I think that goes without saying, Geoff. But, I’m pleased that you said it.
The 50-percent figure mentioned in the petition would work out to about $2.9 million in relief. The petition calls for the allocation to be in the form of grants or zero-interest loans. If the roughly 330 establishments that collect the food and beverage tax received an equal amount, they’d each get around $8,800.
Bloomington currently has about $5 million of unexpended funds in its share of the food and beverage tax. Monroe County has about $700,000 in unexpended food and beverage tax money.
But Bloomington’s city council has already appropriated $6,250,000 of the food and beverage tax money. That appropriation would go mostly for architectural fees, if the current negotiations between city and council officials ever put the chosen architect under contract for the final design work.
On the county’s side, the food and beverage tax advisory council (FABTAC) has authorized the county to use $500,000 of its revenue share to use for a limestone heritage destination site.
The food and beverage tax was enacted to pay for the convention center expansion. But the tax has uses specified in the state statute and local ordinance that are somewhat broader: “…to finance, refinance, construct, operate, or maintain a convention center, a conference center, or related tourism or economic development projects.”
The county’s limestone heritage site gets analyzed as “related tourism or economic development projects.”
Relief for restaurants and bars would presumably have to get analyzed in a similar way.
County councilor Geoff McKim told The Square Beacon, he supports the idea of allocating some of the food and beverage collections to an emergency relief fund. There are details to be worked out, he said, “But in principle I am committed to using food and beverage to ensure the survival of Bloomington’s local restaurants that are so critical to our local tourism industry…”
President of the county council, Eric Spoonmore, told The Square Beacon he supports using food and beverage tax money to provide relief to local businesses. He also suggests that the tax itself be suspended until the pandemic emergency is over. In the current situation where there are few visitors, it will be locals who pay the tax, Spoonmore said. Spoonmore was one of the three county councilors who voted against the tax in late 2017.
In light of the 90-10 city-county split of the tax revenue, Spoonmore said, the question of providing relief will be mostly a question for Bloomington’s city officials.
Bloomington city councilmember Dave Rollo, who asked the question last September about forecasts for food and beverage tax revenue, told The Square Beacon, “I think that this petition is well-warranted under the circumstances.” City councilmember Isabel Piedmont-Smith called the idea of small business relief using food and beverage tax money “an idea worth exploring.” But she deferred to council president Steve Volan as the city’s representative on the food and beverage tax advisory commission about the best way to investigate that option.
Reached late Monday, Volan told The Square Beacon he is sympathetic to the situation of bars and restaurants. But he is not sanguine about the prospects of using food and beverage tax money in the way the petition asks. Volan is not persuaded that the kind of relief called for in the petition fits the description, “related tourism or economic development projects.”
Volan also expressed concern that allocating relief from local sources could put at risk any emergency aid from the state or the feds that might be available. It’s a sentiment included in the administration’s official statement to The Square Beacon about the petition: “An important consideration in any decision … is not to jeopardize our county’s qualification for federal aid by extending emergency assistance locally.”
Some of the federal aid could come from the Small Business Administration (SBA). Cummings expressed some skepticism about how long it might take for the SBA to provide the needed relief, saying the SBA has “a lot of red tape.” Local action can be a lot faster, Cummings said. The situation is urgent as far as just being able to make payroll, he said.
Cummings said Switchyard sales had been down 50 percent in the last week, even before governor’s order on Monday shutting down restaurants for everything except takeout and delivery. That meant Cummings had already had to cut taproom hours and lay off staff. He called it “heartbreaking” to have to people off.
Adam Quirk, of Cardinal Spirits, said his own business was also down about 50 percent in the last week. He said the retail bottle sales help give the business some stability.
It’s crucial to act now to keep local bars and restaurants alive, Quirk said, adding, “It’s really hard to open a business back up, after it’s been closed down.”
Any bar or restaurant that goes out of business won’t be able to pay the F&B tax. Let’s help them stay in business