Kokomo Tribune; Kokomo, Indiana

August 28, 2013

CVB wants to maintain 5 percent hotel tax

Proposed change would give Kokomo control of board.

By Ken de la Bastide Kokomo Tribune
Kokomo Tribune

---- — Taxes that support tourism in Howard County are set to go down Jan. 1, but the Howard County Convention & Visitors Bureau hopes the Howard County Council will allow it to keep the current rate.

People staying in Howard County hotels, motels and bed and breakfasts are currently taxed 5 percent per night. The innkeeper’s tax is expected to generate $600,000 in 2014, but if the tax reverts to 4 percent, the CVB estimates it will lose about $150,000 a year.

“The loss of 1 percent of our revenues would not be a good scenario,” said Chris Hamm, president of the Greater Kokomo Economic Development Alliance. “The tax is paid by non-county residents. It would cut into the programming. Losing 1 percent of our revenues would damage our efforts.”

The tax was enacted by the Indiana General Assembly at 4 percent and was raised to 5 percent to cover the cost of bonds issued to buy the Kokomo Event Center. The bonds were paid off last year. After Howard County implemented the tax, the state created a law offering uniformity in how the tax is collected and managed. Under this law, the tax is set at 5 percent.

The CVB will ask the Howard County Council to allow it to operate under the state’s uniform innkeeper tax, instead of legislation that is specific to Howard County. Operating under the uniform law, however, would change the makeup of the CVB board, giving the city of Kokomo more seats.

Richard Miller, president of the Howard County Council, said council members are concerned about raising the tax, future control of the CVB board and how the CVB is spending the funds.

Michelle Martin, president of the board, said board members are not concerned about the future make-up of the board, just retaining the 5 percent tax. Hamm said the CVB board voted last November to follow the state’s uniform innkeeper tax instead of specific legislation for Howard County and Kokomo.

Hamm said the Howard County Commissioners will determine how many board members there will be, though the figure must be odd. The board is currently made up of seven members.

The county council will be asked to approve the change this month, Hamm said.

The county council has several options including elimination of the tax; doing nothing, which will lower the tax to 4 percent; or approving the change to follow state law.

The CVB currently has reserve funds of about $500,000.