Regardless of whether it is your preferred method for funding the two areas of need in safety, the City wants to hear more from you about a potential public vote on a temporary increase in sales tax rates to raise money for some of the City's needs.

Background:
Lincoln currently has a sales tax of 7% (7 cents per dollar) on retail merchandise and restaurant and bar food and drink. It does not apply to groceries, medicine, and a few other product categories. Of that 7%, most (5.5 cents) goes to the State of Nebraska and the remainder (1.5 cents) goes to the City. Bars, restaurants, motels, and car rental businesses have an additional occupation tax of 2% for the Pinnacle Bank Arena and West Haymarket redevelopment project on top of the 7%.

A half-cent of sales tax generates about $22 million annually for the city and a quarter-cent about $11 million. These additional funds can be used to meet City needs.

In order for people to vote on additional sales tax, the City Council must pass a resolution on the ballot language with five of the seven Council members voting in favor. The ballot language must specify the use of the funds.

At least 85% of the funding must be devoted to infrastructure (e.g., roads, sidewalks, fire stations, radio systems, and so on). Up to 15% of the sales tax may be devoted to non-infrastructure projects or spending such as economic development and Community Learning Centers.

A household with three people and a $65,000 annual income would pay an estimated $94 a year for an additional half-cent sales tax or about $47 per year for a quarter-cent increase.

The sales tax can be in effect for no longer than 10 years unless the funds are bonded. In that case, the tax would stay in effect for the length of the bond, typically 20 years.