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Mayor's budget plan includes property tax hike

By NANCY HICKS / Lincoln Journal Star

Tax hikes and shifts

Operating budget

Property tax hike: A 2.8-cent increase, to almost 31.6 cents per $100 in assessed value. That adds $42 a year for city services onto the current $432 tax on a $150,000 home. The county and schools also contribute to the overall tax bill.

* Adds $4 million in revenue

Fees, fines: Doubling parking fine to $20; new $50 fee when city impounds a vehicle, higher fees for health department inspections and permits

* Adds $1 million in revenue

Fund shift: Requiring LES to pay for street lights

* Adds $3.2 million in revenue

Sales tax: No change. State law does not allow any increase above current 1.5 cents.

Total: $8.2 million

Capital improvement budget

Wheel tax: Additional $10 on cars, bringing wheel tax to $64 on cars

* Adds $1.2 million for first eight months;

What happens next?

Mayor Chris Beutler officially will present his $144 million budget to the City Council at 1 p.m. Monday afternoon.

The council will make changes to the proposed budget July 25, with a public hearing scheduled for Aug. 8.

Ultimately, the council must approve the final budget.

 

Mayor Chris Beutler proposes to fill a $9.3 million gap in the city's general fund budget with cuts in services, tax hikes and a shift in who pays for street lights.

"What do you want Lincoln to be?" That is the question for Lincoln citizens, Beutler said during an interview with the Journal Star about the budget Saturday.

Without some tax increases, "it won't be the Lincoln we know by a long shot," Beutler said.

There are some cuts in the Beutler plan. They include reduced library and bus service hours, reduced funding for economic development and the elimination of 35 city jobs.

Beutler expects about eight to 12 city employees may be laid off because of the budget cuts. But many department heads have kept positions vacant after people left to reduce the number of layoffs.

"They've known for four months this is going to be a bad year."

Those cuts would save about $2.2 million, a little less than one-fourth of the budget gap.

Another $5 million would come from a 2.8-cent hike in the property tax -- $42 a year for a $150,000 home -- and increases in fines and fees, including doubling parking tickets to $20.

Currently the owner of a $150,000 home pays $432 a year in city property taxes, about 13 percent of an overall property tax bill. The county gets a nearly equal amount and the schools most of the rest.

This would be the first property tax increase requested by the city since 2006. That year the city raised the rate marginally to cover voter-approved bonds.

Beutler also is proposing the wheel tax increase -- $10 for cars -- that will go directly to street improvements, providing an additional $1.2 million the first year.

This would be the first of a three-year wheel tax hike that would eventually add $20 to the $54 wheel tax for cars.

Switching street light responsibility to the Lincoln Electric System would free up about $5.9 million, and Beutler proposes splitting that between the city's operational budget and its street improvement budget.

He would use about $3.2 million in the operational budget to help close the gap. Another $2.7 million a year would be used for street improvements.

The tax hikes and cost shift to LES would reduce the stark cuts to general city services that Beutler described in late June.

Without that additional $5 million, the city would have to close three libraries and seven neighborhood pools, close most city parks and cut in half the social work and care management program for low-income seniors, according to the mayor.

Beutler's plan brings in more than the $9.3 million to close the gap.

And that extra money will allow the city to put about $500,000 into a rainy day fund that could be used to help the city in future recession periods.

Another $600,000 covers a larger gap that has occurred since December budget projections and it includes higher fuel costs.

The mayor's budget plan is a 2.66 percent increase over the current year and includes the cost of new voter-approved bonds for storm water improvements.

The cuts include closing the Air Park fire station, which receives about one call per day.

This closing is part of a larger reorganization that is being developed, Beutler said.

He said he is discussing the street light responsibility shift with LES, but the city can make the change without LES board approval.

In many communities, the electric utility either pays a franchise fee or pays for things like street lights, he said.

That switch, which includes paying for electric costs, maintenance and a street light bond, could mean an increase in LES rates.

The city has discussed the possible change with LES, and it ultimately will have to decide whether the costs can be absorbed, Beutler said.

For the first time in the recent past, the city budget will not be plugged by one-time funding, a stop-gap measure used for several years.

In fact, $4 million of the gap is the result of a one-time transfer last year. Most of that money came from interest earnings on a special assessment fund the city attorney said could be declared a surplus.   

About 70 percent of the city's general fund budget comes from property and sales tax. The rest comes from fees and fines.

There is some indication the recession is lifting.

Revenue from the city's 1.5 percent sales tax has risen by more than 4.6 percent this year.

That increase represents hope, but is not enough to save the city from budget problems, Beutler said.

The budget gap includes several factors the city does not control, a $1.8 million cut in state aid, court-mandated wage increases, and $1.1 million for firefighter's pension fund to offset losses from the 2008 stock market crash.

The three-year growth in city labor costs, controlled by state public union laws, were quadruple city revenue growth between 2007 to 2010.

The city cannot cover the employee costs and the rise in other prices with the current tax revenue, Beutler said.

"It is irreconcilable."

Cutting city services and city employees has been the solution for several years.

During Beutler's first four years as mayor, the city cut 116 net jobs, including 8,000 hours of seasonal parks department positions,

There are fewer bus routes, 64 parks are not mowed regularly, the Star City Holiday Parade was eliminated, downtown parking privatized and library hours cut.