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Proposed tax hike raises questions
January 15, 2016 Jerry Purvis   

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Although the Gering City Council has discussed the possibility of asking for voter approval for a sales tax increase, all that’s come up so far are a lot of questions.

In 2012, the Nebraska Unicameral passed legislation that allows municipalities to raise their sales tax by one-half percent to be earmarked for infrastructure projects such as streets and water systems, repairs that are much needed within Gering.

The tax hike can only be implemented after a vote of approval from city residents. If the initiative is rejected by the voters, state statute mandates the measure can’t be considered again for a minimum of two years.

A one-half percent sales tax is estimated to generate about $350,000 annually.

Before the legislation was passed in 2012, cities would prioritize infrastructure projects according to which ones were in the most need of repair or replacement, as well as which ones the cities could afford.

Most municipalities, including Gering, can only afford to take on two or three projects each construction season, depending on the size and scope of the work.

Problems arise when a project not on the priority list needs immediate attention. It could be a burst water main or a pavement failure on a city street. In either case, money budgeted for the “short list” projects must be spent elsewhere, delaying projects that were originally deemed as priorities.

City Engineer Paul Snarr said he hasn’t been in the position for long, but none of the city’s streets have been chip sealed during his tenure. He understands those repairs haven’t been made for years prior to that.

‘We schedule the projects we can afford during the budget process each year,” Snarr said. “It seems like the projects we have scheduled don’t get done

Snarr said one of the city’s biggest infrastructure problems is water lines, some of which were installed around 1920.

The city is currently preparing to advertise for bids for this year’s scheduled projects. They plan to completely replace a section of Country Club Road from 10th to 7th Street, a portion of Mark Drive in east Gering, and a section of 17th Street south of M Street in west Gering. Those account for about 2,500 to 3,000 linear feet of pavement.

“Depending on where the numbers come in for these projects, we plan to use any remaining funds for chip seal on other streets,” Snarr said. “Right now we are reaching a crisis because of the backlog of needed projects that have been put on the back burner every year, and they just keep growing.”

During an informal committee meeting on Jan. 6, Snarr presented a list of 38 needed street improvement projects and water and sewer repairs that should have already been done. The total price tag is in the $8 to $9-million-dollar range.

Gering Mayor Tony Kaufman said the crisis lies in the city having more infrastructure needs than its financial ability to keep up with them.

“If we don’t come up with a good source of sustainable revenue to address the infrastructure needs, we will continue to fall further and further behind,” Kaufman said. “The crisis we have is the need for emergency repairs, which takes money from repairs already in the budget. This makes it hard to have a sustainable program to execute infrastructure repairs.”

He added the proposed sales tax would be a consistent revenue source that would go a long way toward catching up.

“It all seems nice on paper, but it’s an additional tax burden,” said city council member Justin Allred. “That half-percent sales tax could go up in the future, increasing the burden on residents.”

Another challenge lies in the wording of the legislation. Part of the bill mandates the creation of an inter-local agency or inter-governmental group to act as an advisory board for how the funds are allocated. That board could include community members.

“Our staff is in the process of exploring what kind of board would best serve our needs,” Kaufman said. “There will be many more opportunities for open meetings to hear from the public. This initial meeting was just to get the issue out in the open and let council members hear about some of the initial work the city is conducting.”

Gering resident Ben Backus, who was also in attendance, said he had concerns about an advisory board. “I don’t know how much research has been done into it, but what we’re doing is taking a tax and then creating another government agency to administer the funds. That’s something we need to consider because an inter-local group might not have the same priorities as the city does.”

Kaufman said there are a lot of unknowns in how a board would be set up. The details still need to be explored and explained fully to the public before the city would be ready to place the initiative on the ballot.

“All we can do is ask the people to vote on it,” Allred said. “I don’t like the thought of the current 7.5 percent sales tax, but I see a huge need here for our infrastructure. When we earmarked $350,000 for ball fields, is that really a priority over streets? So I wonder just what our priorities are.”

Mayor Kaufman said the increase is a tax, but would be applied to all who shop in Gering. Those funds could be leveraged to complete more needed projects at once.

Whether the sales tax question goes on the primary or general election ballot in 2016 is still undecided. But council members did agree they would have to explain the possible tax more clearly to the public if the initiative is to be successful.

An additional challenge is the city’s existing one percent sales tax, which is up for renewal in 2016. Several council members said the voters might not be supportive of two tax issues in the same year.

No action was taken in the meeting, but council members agreed to continue studying
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