City leaders eye property tax increase
McCOOK, Neb. -- City leaders appear to be on the verge of increasing McCook's property tax levy for the first time in more than a decade. They indicated earlier this week they could also become the first in recent memory to successfully lower the levy in 2018, once debt for the multi-million dollar city building is retired.
City staff is recommending a 3-cent property tax levy increase to cover a $118,000 budget shortfall and City Council appeared supportive of the idea Monday.
Councilman Bruce McDowell said increasing the property tax levy seemed like what the city needed to do and the city wasn't gold-plating services. He said city leaders prided themselves on being good stewards of the public's money.
McDowell also indicated the budget was a complex set of numbers and part of the duties of city staff was to understand those numbers. "I can't say I understand it all," said McDowell, after indicating he took the time to look through the entire 258 page budget.
Mayor Mike Gonzales said the city auditor was always telling city leaders to bump up the levy or risk losing state support for being too low. Gonzales also said the 3-cent increase may not cover the budget shortfall if valuations came in lower than anticipated. "It may go up or down," he said, indicating a higher than 3-cent levy was a possibility, as was a lower than 3-cent increase.
In January, the city auditor said McCook was outperforming the norm when it came to receiving state allocations, such as municipal equalization funds and highway allocations. Terry Galloway with accounting firm Almquist, Maltzahn, Galloway & Luth praised the city's financial performance at-the-time and indicated fiscal prudence on the part of the city was resulting in a tax savings for residents.
Galloway said McCook serves as a retail hub for Southwest Nebraska, which attributed to above average sales tax receipts. McCook received $340 in sales tax revenue per-person during the fiscal year ending in September 2015 with other cities of similar size generating $275. He said the additional sales tax revenue was reflected in lower property tax when compared to city's of similar size.
Galloway said tax payers in other communities were paying approximately $210 annually in property tax and McCook residents paid $142.
The numbers indicated the city received $68 less in property tax and $65 more in sales tax than other communities.
McCook's equalization funds totaled $44 per capita when compared to a $15 best practice in other communities. McCook similarly outpaced other communities with $107 in per capita highway allocations compared to other communities.
"So we're capturing everything. We're doing good in the way of grants and contributions," said Galloway in January.
City Council ultimately parked the property tax increase idea Monday evening, on a recommendation from City Manager Nate Schneider. He said final valuation numbers from the county could change the situation. After discussion between city staff and City Council, it was communicated the proposed increase would be brought back on the final reading of the budget, leaving little time for public input once a decision is made.
City leaders also indicated Monday they could decrease the levy in two years, once bonded debt for the multi-million dollar city building built in 2013 was paid off. Retiring the debt is anticipated to free up more than $600,000 annually in 2018.