Mayor Says Legislative Action Could Increase Local Property Taxes Or Lead To Major Cuts

February 3, 2011 – (RealEstateRama) — Mayor Chris Beutler today said cities are willing to do their part to help the State solve its budget crisis. But he called on the State Legislature to reconsider proposals that could force cities to raise property taxes and make major service cuts. He said the State, through a combination of actions and inactions, is in danger of creating a “destructively adverse” financial situation for cities and cited three areas of concern:

• The Revenue Committee has advanced a bill to end State aid to cities, a $1.84 million reduction for the City of Lincoln.
• Bills that call for eliminating occupation taxes include LB165, which would limit and eventually eliminate local taxes on telecommunications companies.. The Revenue Committee’s public hearing on the bill is Friday. Beutler said the City of Lincoln relies on occupation tax sources for more than $20 million dollars annually
• Beutler said the State’s failure to reform the Commission of Industrial Relations (CIR) has forced cities to allow sizable increases in salaries and benefits for employees even as cities are forced to cope with the State’s revenue cuts.

Mayor Beutler said the Legislature is reversing the direction of a partnership between the State and municipalities created more than 50 years ago to decrease property taxes in Nebraska. “Ending the State aid that helps reduce the property tax burden is a startling surrender by the State on this issue,” Beutler said. “If all the bills that threaten our property taxes pass, the City of Lincoln will be forced into the position of increasing our property tax levy from approximately 28 cents to about 42 cents, or making draconian cuts just to cover this year’s legislative action.”

Beutler said LB165 equates to a $7.8 million revenue loss when fully implemented – the equivalent of a nearly 20 percent increase in Lincoln’s property tax bills, or the closure of all City libraries. “All this devastation for a bill that does not have any impact whatsoever on the State’s budget crisis,” he said. “It simply takes money away from cities at a time when we need it most and puts more pressure on property taxpayers.”

The only way to deal with the proposed cuts, Mayor Beutler said, is to control employee costs, which make up 70 percent of the City’s operating budget. Beutler said he has eliminated more jobs that any Lincoln Mayor in history – the City has 120 fewer positions now than when he took office. He urged the Legislature to reform the CIR so cities can have more control over employee compensation. “With no Legislative action, City employees will continue to receive considerable salary increases and benefits at a time when private sector firms are watching every penny,” he said.

The Mayor said an example of the lack of control is his effort to lower the City employee retirement match. Three of the City’s four civilian unions agreed to lower the match, but the fourth took the issue to the CIR, which granted a “status quo” order preventing the change.

On Monday, the Business and Labor Committee will hear LB482, introduced by Senator Dennis Utter of Hastings. Beutler said the bill includes language to partially restore control of local government retirement benefit costs to the community’s elected representatives.

“We call on the entire Legislature to reconsider the fiscal storm they may create for communities across the State, including Lincoln,” Beutler said. “We urge them to reject LB 165, which will only create a greater fiscal crisis at the local level without solving the State’s problems. We ask them to pause before cutting State aid entirely. We urge them to reform the CIR so cities can make fiscally responsible decisions on employee costs. Our City taxpayers deserve no less.”

Contact:
Diane Gonzolas, Citizen Information Center, 402-441-7831