City budget includes reduction in property taxes

City manager Gary Person presented a significantly bigger than usual city budget for approval at Tuesday's city council meeting.

The council approved the finished 2013-2014 budget that night, as well as the new, slightly lower tax levy.

"We're pleased to announce the proposed budget will reduce the property tax levy for the 5th consecutive year," Person said. "Albeit, it's a small margin, but it's still going in the right direction."

Many other municipalities in the surrounding area figure budgets backwards, determining the maximum level that they can tax, and then decide where to allocate the dollars, Person added.

"That's not the way that we've ever approached the budget," Person said.

This year's budget is larger than normal, Person admitted. It usually ranges in the mid to upper 20 millions, but this year's is $37 million due to many large projects on the horizon. Last year's budget was $28 million. A significant portion of the money will go toward street projects such as roads for the East Sidney development and projects on the north side. A new substation and the continued underground conversion downtown take up much of the electric department's budget.

The value of the underground conversion was demonstrated on Monday night, when those who'd already undergone the conversion were only without power for a short time, while others had to wait many hours, Person said. Although the electric department makes up 30 percent of the city's expenses, it also takes in the same percentage of the city's revenue.

The city plans to use borrowed money and grants for many of next year's street projects. Sidney is hoping to get almost $2 million in grants for upcoming storm water management projects, as well. The mill levy, or the rate that the city could charge in property taxes per $100, when bonds and indebtedness are included, is around 57 cents.

"Our proposed levy this year will be a little over .41 when it could be almost .58," Person said.

The city plans to collect $1.7 million in property taxes next year when it could have generated $2.4 million, if desired.

"We're very, very fortunate that we've been in a situation due to the due diligence of elected leadership and also a good growing economy here that we're able to use sales tax in a lot of different manners to help keep property taxes down," Person said.

Major street projects will take up a large amount of money.

"Citizens have been clamoring for a long time," Person said. "They want to see more street improvement in the community."

Person expressed his displeasure at state wide incentive programs which take property tax dollars from Sidney and give them to other cities.

"Too many other people are being rewarded and we're being penalized for our hard work and success," Person said.

Hastings has gotten over $14.7 million in this money, while Sidney receives nothing, Person said.

"They call it state aid, but they shouldn't," Person said. "They should call it robbing from other communities to give to others, because they put a three percent local sales tax surcharge on our local sales tax, so that we can subsidize Hastings, and Lexington and South Sioux City and Grand Island and Beatrice and Fremont, and on and on."

Sidney is in last place for these incentive programs and Person doesn't think that the city will ever be reimbursed the money put into them. The city must refund money every year to the Nebraska Department of Revenue due to the state Employment & Investment Growth Act. The city has lost more than $5.2 million due to this act since 1988, according to Person.

"We all understand why there are incentives and why they're good and why we need to be proactive as a state to be competitive in the economic field," Person said.

However, these incentives favor some cities, while taking large amounts of funds from others, Person said.

This year the city only lost around $200,000 in sales tax refunds to the state, while four years ago, Sidney lost around $750,000. This hurt the city's budget pretty badly and caused them to make some painful cuts.

"We can't get lulled to sleep thinking this is more of the norm now," Person said. "We're already aware of about a quarter of a million dollars in refunds that are gonna be requested in the first four months of our next fiscal year."

Just within the boundaries of Sidney, a person with $100,000 worth of property will pay around $2,300 in property taxes next year and around $411 of that will go toward the city of Sidney.

The city has voted four times since 1980 to raise sales taxes, including the extra half cent tax which went into effect this summer.