Local government leaders have an enviable dilemma this month — more money than expected for next year’s budget.
Total property values in Lincoln and Lancaster County rose more than expected, and are higher than the estimates used during preliminary budget discussions this summer.
* The city will have available $959,000 more each year, based on the current city tax rate.
* Lancaster County will have $386,275 in additional property tax revenue, based on the current tax rate.
* Lincoln Public School board will get an additional $624,109, based on the board’s contemplated tax rate.
City of Lincoln
Mayor Chris Beutler wants to save the additional money just in case city sales tax revenue continues to dip below projections. Revenue from the city sales tax funds about 42 percent of the city’s tax-funded budget.
For several months sales tax revenue has come in lower than predicted, and the city expects to see growth of just 2 percent this fiscal year, compared to 4 percent growth used in budget projections.
But if revenue from the sales tax perks back up, Beutler would use that $959,000 for street improvements during the second year of the two-year budget cycle.
This is not “found money,” Beutler said at a Thursday afternoon news conference.
The city's fiscal staff estimates future revenue conservatively for budget discussions to protect the taxpayer, Beutler said.
It doesn't look like Beutler will get much pushback from City Council members.
In a news release, Councilwoman Cyndi Lamm, who was part of a city citizens transportation committee, said she was pleased the mayor and his staff "have taken my previously proposed recommendation to prioritize roads. …"
"Applying sound conservative principles will always prevail for the people," she wrote.
Councilman Roy Christensen, however, said he is “disappointed the mayor is not considering a property tax reduction.”
The city tax rate could be reduced by almost half a cent and still bring in enough revenue, based on the $959,000 projection.
Christensen and other Republicans on the council have been unsuccessful in several attempts to reduce the tax rate during the summer budget discussion.
The city did reduce its tax rate last year after many home values went up during a countywide revaluation of residential property.
The council will make final decisions on the city’s two-year budget at Monday's afternoon meeting. Any changes for the second year of the budget cycle, including earmarking this revenue for streets, would require council approval, Beutler noted.
Lancaster County commissioners will make a decision later in the month on how to use the additional revenue, said Todd Wiltgen, County Board chairman.
Commissioners could reduce the levy, give all or some of the additional revenue to the county engineer to use on roads and bridges, or put the money into the county's cash reserve.
By applying all of the additional revenue for tax relief, commissioners could reduce the county tax rate by about 1/15th of a cent.
That reduction by the county would cut property taxes on an average $182,400 home by about $2.74 a year.
Budget director Dennis Meyer has recommended bulking up the cash reserve, which at the current $6.19 million represents 5 percent of the general fund budget.
The city has a policy requiring a 20 percent cash reserve in order to avoid cash flow problems and protect the city’s excellent bond rating.
The county has no policy, but Meyer is recommending a county general fund cash reserve of $11 million to $12 million, primarily to protect against any unexpected drop in revenue and for cash flow.
Last year the County Board reduced the tax rate to help offset higher home values.
Lincoln Public Schools
The Lincoln Board of Education's finance committee will meet to discuss what to do with the additional money, said Liz Standish, associate superintendent of business affairs.
Often the board has chosen to adjust the cash reserve when final property valuations differ from estimates used in building the budget, Standish said on Thursday. And in 2014, the district put $268,000 in additional revenue into its technology budget.
The money was part of a larger increase in money budgeted for technology used to implement a five-year plan that included giving Chromebooks to all middle and high school students.
The 2018-19 proposed budget already adds $7.3 million to the district's cash reserve, which is used to stabilize swings in revenue from year to year.
Whether the money could be used to further lower the tax rate would be up to the finance committee and, ultimately, the full board, Standish said.
As it is, the proposed budget would lower the general fund tax rate by 1 cent, to $1.04 per $100 of valuation. It also would lower the tax rate used to collect money for bond repayment by another half cent.
That means the overall tax rate to pay for public schools — without the extra money — would be $1.224 per $100 of assessed valuation next year. That’s an annual savings of $28 over the current tax bill for the owner of a $182,400 home, assuming the homeowner’s property valuation doesn’t change.
The board will vote on the budget at its Aug. 28 meeting.
Values ready early
Almost every year local governments find out at the last minute there will be additional revenue because the certified valuations are higher than the estimates used for budgeting.
This year, the assessor has the certified value available a little earlier than the Aug. 20 deadline, in part because there were relatively few valuation protests. So governments have more time to build the certified value into budget decisions.
The tax rates for the big three — schools, city and county — make up about 90 percent of the local property tax bill. LPS has the biggest impact, using almost 62 percent of local property tax revenue.