Food and beverage tax group to meet: Relief for some businesses impacted by COVID-19?

R Bar Chart of Food & Beverage Tax through 2019

The impact of the COVID-19 pandemic on local area businesses has prompted a special meeting on Tuesday next week (March 24) by the food and beverage tax advisory commission (FABTAC) to consider a request from Monroe County’s board of commissioners.

The board voted this past Wednesday to ask that Monroe County be allowed to use $200,000 in already-accumulated revenues from the 1-percent food and beverage tax to support businesses that collect the tax or that promote tourism.

Updated numbers from the Indiana Department of Health on Saturday morning indicate the number of confirmed cases in the state has more than doubled in 2 days, from 56 on March 19 to 126 on March 21 (today). The number of tests also doubled during that period, from 380 to 833.

On Monday, Indiana’s governor, Eric Holcomb, ordered that bars and restaurants close, except for take-out and delivery service. The week before, some Bloomington establishments reported their business was already down by 50 percent.

The $200,000 requested by county commissioners would come from the county’s share of the tax revenue, not the city of Bloomington’s share. According to the resolution approved by the county commissioners, the money could provide grants or interest-free loans to businesses located outside Bloomington city limits.

The resolution approved by the board of commissioners also urges the city of Bloomington to use some of its portion of the food and beverage tax revenues to provide relief to businesses inside the city limits.

Under the state statute that allowed Monroe County’s food and beverage tax to be enacted, the FABTAC has to approve requests from either Bloomington or Monroe County to use the tax money.

President of the county council, Eric Spoonmore, sent a letter dated March 19 to the FABTAC encouraging the group to approve the $200,000 requested by commissioners: “I write to strongly encourage your swift action and support of the Monroe County boa of commissioners’ request to use food and beverage tax dollars to add local workers of county restaurants, bars, and establishments.”

The county commissioners action was in part a response to an online petition launched a week ago, which as of Saturday morning (March 21) has more than 7,000 signatures.

The FABTAC is a seven-member group made up of Bloomington and Monroe County electeds—two apiece from the city and the county—and three owners of businesses that collect the 1-percent food and beverage tax.

President of the FABTAC is Bloomington city councilmember Steve Volan. Vice president is county councilor Cheryl Munson. The meeting, scheduled for 2 p.m. at the courthouse in the legal department’s conference room, is planned to be conducted remotely, with just one member of the FABTAC participating in person. That’s consistent with Indiana governor Eric Holcomb’s order from this past week, that alters some of the requirements of the state’s Open Door Law.

Based on emailed communications, it appears it will be Munson who anchors the meeting to the physical place. The business owners who are members of the FABTAC, and who might stand to benefit from the $200,000 in relief funding, would likely need to recuse themselves from a vote, according to Munson.

A key question the FABTAC is likely to confront at its Tuesday meeting is whether it is legal to use food and beverage tax revenues for relief of businesses impacted by COVID-19.

The food and beverage tax was enacted by the county council in late 2017 to pay for the convention center expansion. The expansion’s current cost estimate is around $44 million. 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.”

It’s the final clause involving “tourism and economic development projects” the county commissioners are eyeing as the legal basis for COVID-19 relief.

Under that clause, FABTAC has already authorized the county to use $500,000 of its revenue share to use for a limestone heritage destination site.

County attorney Jeff Cockerill told The Square Beacon this past Thursday he believes providing relief to businesses is a legal use of the tax money. Cockerill said he’d made an initial inquiry with Indiana Department of Revenue and was expecting to hear back from a follow-up by early next week.

Volan told The Square Beacon earlier in the week he was 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). Governor Holcomb has asked the SBA to issue an Economic Injury Disaster Loan declaration supporting small businesses in Indiana impacted by the COVID-19 outbreak.

Volan wants the possibility of using food and beverage tax money for business relief to be considered at a public meeting. Tuesday’s FABTAC meeting came about with his support. In a statement posted on his Facebook page, Volan said, “I will be moving, as chair of the Monroe County food and beverage tax advisory commission, to convene it to address the issue at the earliest possibility, which should be by the first half of next week.”

About the use of food and beverage tax money to provide relief to businesses, 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.”

Jen Pearl, president of the Bloomington Economic Development Corporation, told the Square Beacon her organization is gathering more information on the proposal to understand how it would work. But the BEDC does not currently have a position on the proposal to use food and beverage tax revenue for economic relief businesses impacted by COVID-19, Pearl said.

Details on how the proposal would work aren’t yet worked out. On their webpage, commissioners posted a link to an online survey they’d like businesses to fill out, in order to gauge the level of need.

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. Most of that is the city’s share. Bloomington receives 90 percent of the revenue. About 330 establishments collect the food and beverage tax countywide.

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.

Of the $700,000 in tax revenue accumulated by the county, $500,000 has been approved for the county’s planned limestone heritage designation site. Asked by The Square Beacon on Wednesday why the commissioners’ request was not for more than $200,000, board of commissioners president, Julie Thomas, said that figure could be increased, if needed.

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