Car Rental Still a Potent Tax Stream

The mix of Marion County and suburban tax collections from auto rental taxes, food and beverage, and more that pay the debt on constructing Indiana’s Lucas Oil Stadium and expanding the Indiana Convention Center are beating state projections.

Once the projects are paid off, the legislation that created the tax increases calls for them to expire.

Tax collections have held steadier than overall state revenue because food and beverage, innkeepers and auto rental taxes in Central Indiana have been more resilient during the economic recession than the statewide income and sales taxes that make up a majority of the state budget.

Before state financial officials drew up the stadium and convention financial projections in 2005, they reviewed 20 years of history on the Marion County food and beverage, innkeepers and auto rental taxes. Historically, those tax revenues had increased by an average of 3 percent to 4 percent per year, but state officials contemplated only a 1 percent annual increase in their projections.

But the state's projections for the suburban taxes, license plate proceeds and sports district turned out to be far less than what those three revenue streams have produced.

That additional money is being used to pay down the debt early as required by state law.

Ryan Kitchell, director of the state's Office of Management and Budget said, "If this keeps up, we could be in the rare position of a state that's actually paying something off early."

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