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About two-thirds of the $76.3 million in city sales taxes collected in Lincoln last year was paid by people who live within the city limits, according to a national firm hired to study the topic.

The rest of the money — about one-third of the city's annual sales tax revenue — comes from people who live in rural parts of Lancaster County or farther away. That includes people who visit Lincoln to shop or attend football and basketball games, concerts and conferences, the firm found.

That percentage of revenue from outside Lincoln is higher than the previous estimates and shows the city really is a regional destination, said Jon Carlson, aide to Mayor Chris Beutler. 

And it shows Lincoln residents that the sales tax is one way to get people who live outside the city to help pay for local streets.

The Citizens' Transportation Coalition, appointed by the mayor, has recommended spending more money on street improvements and suggested using an increase in city sales taxes to pay for the additional spending.

Beutler is considering asking voters to increase the sales tax by a quarter-cent or half-cent, to be used for streets and public safety when the current quarter-cent special sales tax expires.  

The city sales tax is now 1.75 percent, with a quarter-cent of that used for 911 and fire station projects. 

Lincoln’s comparative isolation works to keep residents' spending close to home, said Brian Duffany, senior vice president for Economic & Planning Systems, which did the sales tax analysis.

Lincoln doesn't have suburbs. So there is little retail leakage — a term used when people buy things just outside their community, Duffany said.

The company’s calculations assume 90 percent of Lincoln residents' spending occurs within the city limits.

That would account for about 60 to 63 percent of the city’s sales tax revenue, based on average household and per capita income.

About 5 percent of the revenue comes from people who live in the county but outside city limits, according to the study. 

The rest comes from people living outside the county.  

Lincoln is the largest shopping destination west of Omaha, and people who live within 50 to 75 miles, with no other major cities nearby, often shop in Lincoln, he said.

People who need prom dresses, wedding dresses, flat-screen TVs — many are going to drive east, and Lincoln is the first big stop, said Duffany. 

It's also common for people in other communities to come to Lincoln on a Saturday and load up on groceries and other essentials, to stock up for several weeks, he said.

Lincoln is the biggest game in the state west of Omaha. "That is what most of that 30 percent is," Duffany said in a telephone interview about his company's analysis.  

Lincoln is also a pretty big destination spot, with Memorial Stadium, Pinnacle Bank Arena and other venues drawing sporting events and big-name entertainers. People who come often stay three or four days, he said.

Plus, there are lots of conferences and statewide meetings in Lincoln because it's the state capital. That generates money from hotel stays and people eating at restaurants.

Economic & Planning Systems, hired as part of the team that compiled information for the Citizens' Transportation Coalition, used very standard methodology for this analysis, Duffany said. 

"Our firm has been around since 1983, and I've been with them for 15 years. We have looked at the way other firms have done this. It is a standard economic technique," he said.

Previous studies looked only at the sales tax revenue from University of Nebraska-Lincoln sporting events, and from Lancaster County residents who lived outside the city. 

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Those two accounted for about 5 to 6 percent of the sales tax revenue. 

Bob Caldwell, vice president at NEBCO Inc. and chair of the transportation coalition, said the study results did not surprise him, since Lincoln is a trade destination for the region.

The coalition identified a $22 million funding gap for roads and streets, he said.

"No one liked (boosting) the property tax. Nobody liked wheel tax. So the sales tax looked like the most viable alternative," he said.

The study shows Lincoln could have a sales tax to fix streets and residents would only have to pay 63 percent of that. "That’s a good deal for Lincoln citizens," Caldwell said.

"And it is fair for nonresidents. They are using the streets and they should contribute a little," he said.  

"We think the sales tax makes a lot of sense," said Carlson. The mayor's administration would like to put together a sales tax package that includes funding for both transportation and public safety, he said.

Getting the issue on the fall ballot would require approval of at least five of the City Council's seven members, Carlson said. 

In April 2015, Lincoln voters approved a quarter-cent, three-year tax that is being used to build three new fire stations, a combined police-fire station and put in a new 911 emergency radio system.

That special sales tax, which brought in more than $12.7 million last fiscal year, ends Sept. 30.

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On Twitter @LJSNancyHicks.



Nancy Hicks reports on Lincoln city government, but she’s been following the leaders of local and state government for more than 40 years.

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