Cities could seek voter approval for sales tax increases

Cities could implement a half-percent sales tax increase with voter approval under a bill discussed in a Revenue Committee hearing Feb. 16.

Currently, cities can levy a one and one-half percent sales tax. LB956, introduced by Omaha Sen. Brad Ashford, would allow cities to collect an additional half-percent sales tax if approved by a public vote. Cities wishing to levy the tax must be a member of an interlocal agreement with either a county or school district. Ashford named the proposal one of his priority bills this session.

“We are granting to our fellow taxpayers in cities an opportunity to actively engage in the process of governance,” Ashford said. “They will have the opportunity to vote on a revenue-raising initiative to fund needed projects.”

Ashford said requiring the cities to be members of an interlocal agreement fosters collaboration. He said there would be a 10-year sunset on the initiative, after which a city would have to bring a new vote to the people.

Ashford said the bill currently has no restrictions on how the revenue raised by the sales tax could be spent, but said he was willing to amend the bill if necessary.

Lincoln Mayor Chris Beutler testified in support of the bill, saying it offers flexibility to communities still rebounding from the economic downturn.

“This gives local voters an ability to relieve pressure on property taxes while allowing them to support what they deem to be important services,” Beutler said. “We think voters would be pleased to have the flexibility to make this decision.”

Representatives from smaller communities also testified in support of the bill. York Mayor Chuck Harris said the revenue raised by an additional sales tax could be used to decrease water fees in his community.

“This bill would allow us to stabilize what we pay for water,” Harris said. “It affects every single household and business in York.”

Rod Storm, Blair city administrator, said giving voters the option to raise revenue is important to cities regardless of size.

“The ability to have the local community option tax is important for every community, big or small,” Storm said.

No one testified in opposition to the bill and the committee took no immediate action.