The Hammond City Council gave initial approval to a 1% food and beverage tax Monday that would go toward expanding the Hammond Sportsplex and building a downtown South Shore train station.
The Indiana General Assembly passed a bill this year that would allow Hammond to place a 1% tax on prepared food and beverages, said Hammond Mayor Tom McDermott. The tax would be added on to the state’s 7% sales tax, he said.
Gov. Eric Holcomb signed the bill into law stating the tax can go into effect July 1, McDermott said, though it will take 120 days after the council gives final approval for the Indiana Department of Revenue to prepare for the tax.
The city can utilize the tax for 20 years, and it cannot increase beyond 1%, McDermott said. The tax would not be added to a grocery bill, McDermott said.
The state has directed that the funds collected through the tax can go toward three projects: expansion of the Hammond Sportsplex, construction of a downtown South Shore train station on the West Lake Corridor, and expanding the Pavilion at Wolf Lake, McDermott said.
It is estimated that the tax will generate $2 million a year for 20 years, McDermott said. Given the cost, McDermott said the city would only allocate money for the sportsplex and the train station.
Each project will likely cost more than $10 million, he said, not including financing costs.
“We feel pretty confident there’s not going to be much money left for the pavilion expansion, which, I love that idea. But I think that’s a much bigger discussion. We’re not going to be able to finance that on our own in Hammond,” McDermott said.
Ahead of the vote, Councilman Dave Woerpel emphasized that the tax, under state law, could not be increased over 1%, would sunset after 20 years, could only be spent in three areas and would not apply to groceries.
The council voted 9-0 on first and second reading of the ordinance. The council also scheduled a public hearing of the ordinance for 5 p.m. June 24 at Hammond City Hall, 5925 Calumet Avenue.
