INDIANAPOLIS – The Senate approved an amendment Tuesday that removed a statewide alcohol tax increase and expanded a special taxing district in Fort Wayne that would aid a newly established local capital improvement board.

House Bill 1604 has two primary purposes: fix a $47 million annual operating deficit that the Indianapolis Capital Improvement Board is running and provide a future revenue stream for the new Allen County-Fort Wayne Capital Improvement Board.

A final Senate vote on the legislation is expected today and then it will likely go to a conference committee for final negotiations.

Sen. Luke Kenley, R-Noblesville, last week suggested doubling the statewide alcohol tax as one component of a solution for the Indianapolis improvement board problem.

But after much opposition, Kenley offered an amendment Tuesday to remove that provision while still providing a menu of options Indianapolis elected officials can implement to close the deficit. Those include increasing admission taxes at sports and convention facilities; car rental taxes; innkeeper’s taxes; and local alcohol taxes.

Kenley conceded that “when something like this comes along there is nothing more distasteful to have to work on,” but he added it is important for the legislature to help “sustain the vibrancy” of the capital city.

Sen. Mike Young, R-Indianapolis, spoke on behalf of the frustrated “Joe Sixpack” constituents who don’t want to pay more taxes.

“I’m tired of paying and paying and paying,” he said. “Pretty soon these pennies are dollars, and these dollars are hundreds of dollars. I paid for the stadium. I don’t want to pay for it again.”

There was no discussion, however, on the section of the amendment pertaining to Fort Wayne.

The bill renames the Fort Wayne-Allen County Convention and Tourism Authority the Allen County-Fort Wayne Capital Improvement Board of Managers and keeps the existing board structure.

The plan would have diverted half of the excess food-and-beverage tax money not currently used for debt-service payments at Memorial Coliseum to the new improvement board for future capital projects as well as money from the alcohol tax increase.

But because the alcohol tax increase was nixed, local legislators needed to find additional revenue for the board to use on joint projects. The amendment now expands the Allen County Professional Sports and Convention Development Area to include a portion of the Indiana University-Purdue University Fort Wayne campus.

The special taxing district around the Coliseum brings in about $1.6 million in yearly sales and income taxes – with most going to the Coliseum and a small amount going to Grand Wayne Center.

Under the amendment, the total amount in state tax dollars that could be captured annually is capped at $3 million. The first $2.6 million would go to the Coliseum for ongoing maintenance and capital projects. The remaining $400,000 would go to the new improvement board along with all of the excess food-and-beverage tax revenue.

The latter is expected to grow to more than $2 million annually in 2011 after a small bond is retired.

The bill still prohibits the local improvement board from using its funds on existing projects such as Harrison Square or for operational costs.

nkelly@jg.net