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City considers occupation taxes to build up its general fund

January 8, 2019

SCOTTSBLUFF — As sales tax revenues for the city remain flat, members of the Scottsbluff City Council discussed possible ways to build up the general fund.

Last November, Scottsbluff voters rejected a proposal to add one-half cent to the city’s sales tax to pay for extending the biking and hiking pathway, repaving several city streets and possibly offering some initial support for a proposed aquatic center.

One idea later proposed by city officials was a 1 percent restaurant occupation tax, which would generate about $343,000 a year for the city’s general fund.

Scottsbluff City Manager Nathan Johnson said that after some research, he learned it would take an additional full-time employee to administer the tax. He recommended against implementing the tax.

But there was some discussion about the restaurant tax. Council member Terry Schaub said, “My ears are bleeding today from people telling me they don’t want more taxes.”

He wondered how the city could support all the groups that ask for funding from the city. Most of the input he received from residents was the city needs to work within the money it has available.

Fellow council member Scott Shaver agreed that no one wants more taxes. But he said it takes a certain amount of taxes to run a city.

“If you talk to the same people who don’t want taxes, they want a new pool or a new park,” Shaver said. “Everybody wants something but they don’t want to pay for it. Either we stop spending money or we find a way to pay for improvements. Those are our two choices.”

Mayor Ray Gonzales said he was concerned about the effect of an additional tax on restaurants when many of them have been closing in the past few years.

Shaver said there were similar concerns when Scottsbluff implemented an occupation tax on hotel lodging.

“People were saying travelers would stay in other towns, but it didn’t happen,” he said. “Gering has lower rates at their new hotel but people still stay here in Scottsbluff.”

Johnson said that if a restaurant occupation tax were passed, it would need to be tied to specific projects, not just going into the general fund.

The council asked for more information, including the cost of hiring a new person, before they would continue discussing the proposal.

Another possible occupation tax on cell phone usage also came up for discussion at the council’s Monday meeting.

The only other Nebraska municipality of similar size that implements such a tax is Beatrice. That city levies a 5 percent on cell phone bills.

Johnson said he hasn’t heard back yet from that community’s city administrator about projected revenues.

“This proposal is brought to you with the idea of maybe starting with 1 percent and seeing what it generates,” Johnson said. “The phone carriers would administer the tax for us so we wouldn’t have the expense of hiring someone.”

Because so many different cell phone area codes are in use locally, billing would have to be done by physical address then remitted to the city.

Again, council members asked for more information prior to further discussion.

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