Mayor Chris Beutler today said he would reduce the City's property tax levy by three cents or more if voters approve a half-cent sales tax increase, an election that would be allowed by LB 956 now being debated by the Legislature. Beutler said recent state and federal action have resulted in the need for higher property taxes to fund local government, and passage of the bill would be a step in the right direction.
"The trend of passing the buck to local governments to solve national and state budget challenges has shifted the burden of taxation away from non-essential services to one of the most essential living expenses to any family - the roof over your head," Beutler said. "Sales taxes shift the tax burden from savings and investment to consumption, better rewarding those who work hard and make responsible choices. But the best feature of allowing people to choose the sales tax as a local taxing option is property tax relief."
LB 956 requires that the ballot language to increase the sales tax inform voters precisely how the new funds will be spent, and Beutler said that gives people greater control on local government spending without tying the hands of local officials. The Legislature's Revenue Committee is scheduled to hold a public hearing on LB 956 Thursday. A three-cent reduction in the property tax levy would be a 10-percent reduction in the City levy and would reduce the City's portion of the property tax bill by about $45 a year for the owner of a home valued at $150,000.
Beutler said State action last year that resulted in greater reliance on property taxes includes the elimination of State aid to municipalities and restriction on the ability of cities to apply the telecommunications tax. Those actions, he said, led to the City increasing its property tax levy from 28.8 to 31.6 cents per $100 of assessed valuation.
In the current legislative session, proposed bills would eliminate the inheritance tax which goes to counties and require a vote for any occupation tax imposed or increased after the effective date of the bill. Beutler said that would require Lincoln to have expensive elections on raising occupation taxes that generate a few thousand dollars. "The expense and complication of holding elections for every minor occupation tax would be clearly unreasonable and will simply force a shift to, and a greater reliance on property taxes," he said.
The federal government, Beutler said, has caused pressure on property taxes by sharply reducing the Community Development Block Grant and HOME programs to improve housing and revitalize neighborhoods and business districts.
Beutler said Lincoln has cut about $5.5 million in personnel spending, cutting the non-public safety workforce by 9 percent or about 132 jobs over five years. The City cut police officers in schools, bus routes, parks maintenance, library hours, senior centers and the retirement match for new employees.
"They were tough choices, but choices that had to be made for the survival of other key public services," Beutler said. "We did it because we strongly believe that a fiscally conservative approach was the right strategy in these times. And our reward for our fiscal prudence? A brick by brick dismantling of the property tax relief that was so carefully constructed by state leaders of the past.
"We need a better solution for local government than the increased property tax approach being advocated by recent state and federal revenue shifts," he said. "We need the fairer solution to the challenge of funding police, fire, roads and other critical local services represented in LB 956."