The merits or demerits of a new city cell phone tax was the biggest topic Tuesday, when the North Platte City Council met to work on the budget.
A cell phone tax, commonly known as telecommunications tax, could help lower the property tax levy, councilman Jerry Stoll said. Stoll said a cell phone tax would improve tax fairness, since it creates “a funding stream” for the city from more than just property owners.
Stoll compared the proposed cell phone tax to a sales tax, paid by people who choose to use cell phones. He said there are a lot more of them than property owners, and he said property owners don’t have a choice to pay taxes.
But Councilman Tim Barrett said a cell phone tax amounts to shuffling money around, reducing taxes in one place and increasing them in another.
Barrett asked, “why can't we not come up with new taxes and not keep spending? Why can’t we just hold the line instead of spend, spend, spend?”
Councilwoman Judy Pedersen agreed with Stoll that a cell phone tax is more fair than a property tax because it’s not a tax, it’s actually a user fee. Pederson said the new revenue coming into the city would allow the property tax levy to be reduced, making North Platte more attractive to new residents and businesses.
Councilman Jim Carman said the public doesn’t buy the idea that another tax is a good way to lower the property tax levy. He said there are other ways.
Stoll handed out fact sheets, showing that Kearney, Grand Island and Hastings each collect from $440,000 to $600,000 a year from phone taxes, mostly from cell phones. North Platte collects only $77,000 a year from land line phones.
But Carman said just because other towns have instituted a cell phone tax, that’s not a good reason for North Platte to do it. And, Carman said a telecommunications tax should be up to the voters and not just the council.
Stoll asked, “If it goes to the ballot are we going to do it the same way the city sales tax was done, (and) guarantee that if it passes, property taxes won’t go up for 3-5 years?”
The council agreed that should be part of the considerations.
Reiterating that he despises a cell phone tax, Mayor Marc Kaschke suggested putting the cell phone tax on the agenda of the next regular council meeting Aug. 21, where the council could either vote on it or refer it to voters.
It was generally agreed that the proposed tax would be a leading item on the next agenda.
Capital from muni
Capital improvements were also discussed.
Pedersen expressed concern that capital improvements (major projects and equipment) might be funded by the cash reserves in the municipal light and water department.
“When we receive a list of capital improvements that are not included in the budget but funded through the water and electrical departments, it concerns me,” she said.
City Administrator Jim Hawks said that light and water rate increases are driven more by the cost of power than capital improvements.
Barrett pointed out the large cash reserves in the water, electric and sewer departments in the budget, and said “it kind of stunned me. I’m wondering where all that money is.”
Hawks told him that reserve money covers bonded debts and is needed to maintain the city’s bond certification (credit worthiness.)
Near the end of the session, Kashke said the cell phone tax would be one of the first action items on the council’s agenda next Tuesday. The city budget will be an action item near the end of that meeting.
Kaschke noted that a cell phone tax should come first, since it could change the budget picture.
When the council takes up the budget next week, it will be able to vote to modify budget items, but will not vote on the overall budget. Overall budget approval will come later, in September, following a hearing when members of the public can comment.