Tag Archives: budget

2026 – Managing Revenue from the Innkeepers Tax

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Last updated – Aug 18, 2025   

Posts at Brown County Matters (BCM)

Discussion – County Council Work Session, Aug 12, CVC Budget – Starts at 2:40:45

IC 6-9-14 Chapter 14. Brown County Innkeepers’ Tax. How to change?  The County identifies the desired changes and requests support for these changes from our legislature (House and Senate).  Indiana’s Legislative Services Agency (LSA) makes the final changes to the statute in preparation for a vote by the legislature.   It can help to have a lobbyist support the changes. Unclear why any changes that have been approved for other counties would not be approved for application in Brown County.

Tourism can also be broadly defined to include costs for services critical in supporting visitors and tourism, such as 911 services, for example. 

County Council Working Sessions: (This information posted  at BCM)

Who Decides? 

New Revenue and Big Decisions for the County Council and Voters – 4 council seats are up for election in the 2026 primaries. Citizens will have the opportunity this year to question and challenge how the revenue from the innkeepers’ tax should be spent in 2026 and beyond. The council is required to hold a public hearing on the budget – date – TBD

    • The four open seats: District 1 (Gary Hewett), District 2 (Darren Byrd), District 3 (Joel Kirby), and District 4 (Jim Kemp)
    • 2026 proposed CVC Budget for the Revenue from the Innkeepers Tax
      • Discussion on the topic: Quality of Life Committee – For the Record 
        • As Brown County prepares to begin state collection of its new 3 percent innkeepers’ tax, members of the Quality of Life Innkeepers’ Tax Steering Committee held a wide-ranging discussion on July 23 about how the revenue should be managed, monitored, and allocated in the years to come.

At this point, it appears that the County Council could approve 5% for tourism, and 3% could be transferred to the county. This would help cover some of the costs associated with tourism and/or provide funding for projects that more county citizens can enjoy.

For context, voters can think of themselves as jurists. What are the arguments for and against a decision? Is the position supported with an understanding of all the facts and available evidence?

Additional context below. The link is to the articles on the topic in the Brown County Democrat by Courtney Hughett.

What’s new?  The County Council’s increase of the innkeeper’s tax from 5 to 8% may help dispel the assumption that the revenue from the innkeepers’ tax must be spent solely “to promote the development and growth of the convention and visitor industry in the county.”    Other counties have been spending the revenue in various areas that are not specifically defined, including quality of Life (could include public safety?), parks, historic preservation, and economic development (infrastructure).

Economic Driver? Another myth is that “tourism” is the economic driver for the “county.” Our county is funded primarily by residents who do not have a financial interest in tourism. Tourism brings in around $21 million in gross income, and county residents contribute over $511 million of taxable income (gross minus deductions). The county is funded primarily by income and property taxes.

Inadequate Plans.  RepresentativeUnfortunately, the belief that tourism is the main economic driver guided the proposed 2025 revisions to the County Comprehensive Plan, as well as the 2019 Economic Development Strategic Plan. Neither of these plans was approved by the Commissioners.  Neither had wide-scale community input, involvement, and support.

Convention Visitors Bureau. (CVB). The CVB is a contractor. Other counties do not have a CVB. Their visitor center is staffed by county employees, who are funded through revenue from the innkeepers’ tax. The CVB renovated and purchased the Visitor Center. How is this financed? The CVC can also contract with a marketing company.

Background – Funding. The state is primarily funded by Sales and Income taxes. The state allows an innkeeper’s tax (that the county manages) to help promote tourism and increase sales tax. The state expects the counties to cover all the costs associated with tourism, including sheriff and emergency services (such as accidents, medical, and fire), justice center costs related to arrests, prosecutions, incarceration, probation, and necessary infrastructure (such as water, wastewater, safe roads, and bridges).

Collateral. Revenue from the innkeepers’ tax was used as collateral for the loan to build the Brown County Music Center (BCMC). When the Little Opry burned down in 2009, the private sector showed no interest in building another venue. In 2017, hotel and other tourism business owners determined that a music venue could be sustainable with the support of  taxpayers and volunteers.

Delegating Responsibility? County elected officials delegated their responsibility to citizens for managing the venue to non-elected officials. This management group can also help determine profit and allocate the excess revenue. On profitability, the options can range from booking only the most profitable acts as opposed to opting for break-even by offering as many shows as possible. The break-even option would help attract most visitors who may reserve hotel rooms and frequent the other tourism-related venues. Note that if 100% of the innkeepers’ tax was budgeted to the BCMC, this would reduce operating expenses and increase the distribution to the county.

Profits? The management group, through an Administrative Agreement, also determined that 75% of the profits (if legal) may be allocated to the Community Foundation and 25% to county taxpayers. The county taxpayers, not the Foundation, assume the financial risks of the venue. As a result of the economic decline due to COVID, federal taxpayers provided a $2.7 million subsidy, and county taxpayers another $239K.

Community Foundation leaders have defended their share of the profit. The Foundation manages 18 million in funds, and its goal is to reach as much as 30 million by 2030.

The management group consists of 7 members (originally, it was 5). Members include one representative from the county council (Darren Byrd) and one from the board of commissioners (Ron Sanders). Sanders, representing the commissioners’ position, proposed this year that 100% of the excess revenue be returned to the county. His motion was not supported by any other member, including Council Representative Darren Byrd. Bryd has stated he supports a 50/50 distribution, with his justification, ironically, being a lack of confidence in how the county or future council members would spend the money.

The Administrative Agreement was approved by the Building Corp Board (3 members), the Conventions and Visitors Commission (CVC) (5 members), and the management group, which consists of 7 members. This group must vote on changes to the Admin Agreement. This Admin Agreement can be terminated by the commissioners, with the council having approving authority over any changes (if any) to the financial agreements. 

    • Building Corp Members. Robyn Rosenberg Bowman, Mike Laros, Matt Gray.
    • CVC Members: Kevin Ault, Jim Schultz, Lance Miller, Andy Szakaly, Jimmie Tilton.
    • Management Group.
      • Kevin Ault, Co-president, appointed by the CVC.
      • Barry Herring, Co-president, member at-large, appointed by Maple Leaf Board of Directors
      • Jim Schultz, Secretary, appointed by the CVC.
      • Bruce Gould, Vice President, appointed by the CVB Board
      • Ron Sanders (commissioner appointment) – “Elected”
      • Darren Byrd (council appointment) – “Elected”
      • Diana Biddle, member at-large, appointed by Maple Leaf Board of Directors.  Was on the board of commissioners that approved the current agreements.

Accountability, Costs, Trust, Priorities.  Note that one of the justifications provided for the 75/25 split was that there was little trust in voters electing candidates who could determine the best use of the money. Thus, there was a perceived need for more capable and objective decision-making. The county has millions of dollars in unfunded requirements, with the major portion being for bridges and roads. Additional funds could also be used to cover the risk of rising employee health insurance costs and to make the needed increases to the Rainy-Day Fund. Other costs associated with tourism mentioned above include sheriff and emergency services (medical, accidents, and fire), provided to the state park and county, as well as justice center costs related to arrests, prosecutions, incarceration, probation, and necessary infrastructure — such as water, wastewater, safe roads, and bridges.

Indian Hill Railroad Crossing. The cost to re-open the railroad crossing on Indian Hill Road to current standards has been estimated at $1.9 million.   

Fiduciary Responsibility.

    • CVC appointees include 3 from the council and two from the commissioners. They are bonded and have a fiduciary (legal) responsibility for managing the revenue from the innkeepers’ tax.
    • Question: Do Council members, commissioners, and CVC members (all bonded) have a responsibility to help ensure that the revenue is efficiently and effectively managed? How will they know? What are the expectations of the voters?
      • What is required to remove a CVC member for “cause”?

Wild West?  What is the constraint on how the revenue from the innkeepers’ tax can be spent?  General categories identified for spending include “Quality of Life”  and “Economic Development.” These can be and are broadly defined by the counties.  The county, through the CVC, can also enter into contracts with both private and non-profit groups.   

The identification and prioritization of priorities, as well as the management of the revenue, becomes the wild west in terms of spending and priorities. Tippecanoe County has been referenced as providing the most detailed information on how the revenue would be allocated.

IC 6-9 ARTICLE 9. INNKEEPER’S TAXES; OTHER LOCAL TAXES. 

Tippecanoe County is among the most specific of counties in terms of revenue distribution.  Note that there are no specific definitions for the categories of spending that include Economic Development, Historic Preservation, Projects in the State Park, and Quality of Life.  

    • Ch. 7. Tippecanoe County Innkeeper’s Tax
    • Ch. 14. Brown County Innkeeper’s Tax

Economic Development Funding for private ventures?   The council has considered a proposal to fund an apartment project where the landowner wanted to lease the property and pass on the costs and risks associated with development to the county taxpayers. The hope was that eventually an increase in revenue from income and property taxes would provide a return on the county’s investment.  Note that one of the most successful commercial developments in Brown County is Hard Truth Hills.  They did not ask for any taxpayer support. 

The county has attracted commercial developments without having to provide tax subsidies or tax increment financing (TIF). 

Additional Information

County Council Special Meeting Notes, Jan 9, 2025. New financial advisor, Election for Council President.

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rock em sock em robots

County Council Special Meeting Notes, Jan 9, 2025. New financial advisor, Election for Council President.  

Note: Commissioners are the executives of the county and are responsible for vision and policy. The Council is in charge of the money.

“And in this corner:”  Do we need a Patton (Kemp) or an Eisenhower (Huett), the Marines (Kemp) or the local community organizer (Huett)?

An interesting meeting with a few fireworks and a smart bomb or two that may be boiled down to the campaign for the election of the next Council President and the financial viability of the county. 

The next Council Meeting is Jan 21, 2025 at 5:30.  Should be pretty interesting. Tickets are still available (satire).

The play-by-play 
This post at Brown County Matters

New Financial Advisor.

The council contracted with Reedy Financial Group, which can provide additional support to help identify the systemic improvements needed for the county to better manage our finances and budget.  Kemp led this initiative.  I participated in the interviews and am confident the commissioners can get the help we need to include managing capital improvements and better management reports. 

The county is going through a major financial transformation. Over at least the past 10-15 years, the budget was developed with a one-year perspective. It is pretty easy to submit a balanced budget with the state: Overestimate revenues, underestimate expenses, and jump through hoops over the next year to cover needed and unplanned expenses. These could average anywhere from 400-600K per year. Over the last few years, the Rainy Day fund was reduced from around 2.5 million to as low as 70K, and money was drawn from other funds as well. This situation contributed to reducing the county’s credit rating, 

As a result of COVID-19, the county received an influx of federal dollars that masked, if not exacerbated, our financial challenges.

Kemp led the charge to develop and get agreement on the following goals:

  1. Maintain 15% cash reserve balances 
  2. Annual expenses not to exceed 90% of revenues
  3. Highway and Health Departments are required to operate within their own budgets 
  4. Rainy day fund balance of $2.5 million 
  5. Health fund 4700 with a reserve balance of $1 million 

Capital Improvement.  County elected leadership (council and commissioners) have refused in the past to develop a capital improvement plan for needed repairs and replacements.  Commissioner Sanders started work on developing this plan, starting with identifying the property that we are insuring.

PLAN, WHAT PLAN? A five-year comprehensive “financial plan” was developed a few years ago  (by the commissioner’s office) at the cost of 30K that sat on a shelf and, after one or two annual updates, was abandoned. I never heard it discussed at a council or commissioner meeting.

CAN YOU SPARE A DIME?  The county routinely borrows money (3 million last time, 4 million last year) to cover capital improvement expenses. The debt is funded through higher property taxes, and since the tax rate remains relatively the same (referred to as tax neutral), taxpayers do not notice any changes.

POWER Corrupts. We have a one-party monopoly on political power, and the lack of competition contributed to the election of a few candidates who did not have the passion, interest, time, or insight to understand what was going on. The centralized power in the hands of the few influences who can run for office, get selected for boards and commissions, and even get a county government job. Those who go along to get along can have jobs for life and avoid being shunned or blackballed.   

ELECTION – COUNCIL PRESIDENT

Jim Kemp started his term on council in 2022 and has a financial background. He may be one of the few elected officials who understand the concept of modified accruals.  The county government operates on a cash (fund) accounting vs. accrual basis. Accrual basis accounting is the common method in the private sector. Modified accruals support identifying the expected expenses in the following years.

For instance, assume you have a 5-year, 500,000 contract that is payable at 100,00 a year. The budget will only show the one-year liability – not that you still have another 400K to go.

GOALS. Kemp actually identified specific financial goals in his campaign strategy. I am not aware that another councilman has ever identified a “DOCUMENTED strategy but some can talk it to death.  Anecdotes and hyperbole are the strategies chosen by a few. If you are a preferred candidate of the local GOP, you get elected without breaking a sweat or being held accountable for results.

The exception to this situation would include Commissioner Ron Sanders and myself. We are definitely not on the preferred candidates list.

Kemp also developed a financial strategy for the county; No one questions his commitment, competence, and passion for getting us on solid financial ground. But we all have our downsides, and sometimes his passion can come across as anger to some. And he does tend to use more words than may be needed to make a point.  If his comments were recorded and transcribed, we would have a few pretty good books on the strengths and weaknesses of our culture and our financial system and challenges.

Kemp and Huett pointed out each other’s respective strengths and weaknesses.  Huett considers himself as a ‘facilitator.”  He likes working quietly behind the scenes. Huett provided support (the 4th commissioner) to the commissioner’s office which did not include the participation of Commissioner Sanders. Huett was involved in the staffing changes in the commissioner’s office, highway department personnel changes, recruiting and contracting for a construction manager (owners rep), the initiation of the county comprehensive plan, and liaising with the various interest groups in the county, such as the Brown County Community Foundation. The BCCF has opted to get more involved in local politics. Kemp reinforced that these are more liaison functions and not the primary responsibility of the Council President.

These liaison activities by Huett contributed to a situation where a 2025 budget was submitted to the state before the county council voted to approve it. The lack of attention to the job also led to non-compliance with previous policies regarding the process for reviewing the timely review of the budget.

Even more concerning, end-of-year appropriations were not passed by the end of the year, which leads to the reporting of account deficits that will be an audit finding that will reflect badly on the auditor. The auditor, repeatedly called out the council for not making timely decisions that caused chaos with the financial reporting and took time away from addressing more critical needs within the office.

The Council will have a choice to make on the direction of the county in 2025. It should be a good meeting – Jan 21, 2024, 5:30-7:30.