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April 11, 2002
For More Information Contact:
Diane Gonzolas, Citizen Information Center, 441-7831

Wesely Says Cut in State Aid to Cities Could mean Property Tax Increases

Mayor Don Wesely today said the state’s 25 percent cut in state aid to municipalities could force Lincoln to consider dramatic service cuts and possible increases in property taxes. The State Legislature yesterday failed to override a Governor’s veto that included a $2.9 million cut in state aid to municipalities. Wesely said the cut equates to a $750,000 loss for the City of Lincoln, which is already planning budget cuts to close a projected $5.5 million shortfall in the 2002-2003 city budget.

"My goal is to not increase property taxes, and we are doing everything we can to avoid that," said Mayor Wesely. "This 25 percent cut came without warning and without discussion. The state is passing its budget problems on to the cities, and it will have a significant impact on our budget. The $750,000 equates to about 12 police officers or firefighters or more than a dozen public health workers. The amount also equates to the cost of several bus routes or the costs of operating all neighborhood pools for a year."

In March, the Mayor implemented a hiring freeze for the City of Lincoln to help reduce the potential for layoffs of city employees in the 2002-2003 fiscal year. Options being considered by the Mayor in developing next year’s budget include a reduction in capital improvement spending from the city’s general fund; a potential reduction in merit pay increases, if agreed to by the city’s Unions; retirement incentives; bidding out city employee health care insurance; potential staff reductions; and reductions in service. Wesely said fee and revenue increases will be the last measures considered.

Wesely said significant spending reductions will be necessary to balance the city’s 2002-2003 budget if sales tax collections continue to be lower than projected. Sales tax revenue makes up 43 percent of the tax-supported budget. As sales tax revenue slowed last year, Mayor Wesely imposed spending restrictions and held back about $5 million in authorized spending to ensure the city’s current budget remained balanced. Those measures included:

  • Putting on hold a majority of the current year Capital Improvement Program (CIP) projects that were to be funded from the city’s general fund. CIP projects slated for fiscal years 2002 through 2006 are to be moved back one year.
  • Eliminating discretionary travel for all employees. Exceptions are being considered for necessary employee training and for travel in which there is no city expense.
  • Declaring a moratorium on the use of re-appropriated funds in August 2001 and then removing from department budgets 90 percent of the re-appropriations from the previous fiscal year.

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