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Sales tax, not cell, will fund equipment
McCOOK, Nebraska -- After announcing last week the proposed 2012-13 McCook city budget included the creation of a new 6 percent mobile phone tax to finance needed capital outlay projects, while leaving $401,797 of sales tax revenues uncommitted, city staff announced last night that the sales tax funds would instead be used. The change came after feedback from citizens prompted several city councilors to request city staff take another look at the budget and research opportunities in advance of Monday's regularly scheduled meeting.
Prior to a scheduled public hearing to discuss the proposed budget City Manager Jeff Hancock announced the change and said that $150,000 in budgeted street improvements and $40,000 in drainage improvements would be shifted to receive their funding from sales tax revenues, freeing up room in the General Fund to finance the capital equipment that was previously described as being the need for the new phone tax.
Several citizens voiced their criticism of the proposed mobile phone tax, even after Hancock's announcement, with one saying he was glad they dropped it and hoped it didn't come up again. It came up later that same meeting when councillors and city staff expressed their concern that the existing land-line tax was not fair and Mayor Dennis Berry ultimately proposed the creation of the mobile phone tax at a reduced 1.5 percent. Berry described it as an effort to promote further feedback from citizens on the tax. The item was combined with a decrease in the land-line tax from 3 percent to 1.5 percent and passed its first of three required readings.
Hancock read in his prepared statement that of 38 Nebraska cities surveyed by the Nebraska League of Municipalities only three have an occupation tax solely on land lines.
"Generally speaking one could argue that individuals in those three cities that only have land line phones are paying a tax that mobile phone users are not currently paying," Hancock said.
"It would be more fair to reduce the land-line to line up with the mobile," said Councilman Mike Gonzales.
Citizens attending Monday's meeting argued not to implement any mobile phone tax, with one land-line user saying he had looked at a local bill that reflected 22 percent in taxes and fees already being charged.
"Forget trying to put a tax on cell phones," said John E. Hanson, "You're getting sales tax on them already."
Hanson said he believes there is no question if same percentage of tax on mobile phones would result in a revenue increase over the land-line tax, since the vast majority of citizens had a cell phone.
Darrin Karr added that anytime you taxed a behavior it tended to decrease. Karr explained that a year after a mobile phone tax was implemented individuals would drop the number of phone lines they had or take other cost-cutting measures to reduce their total bill, the item would then be considered a decreasing tax revenue similar to the land-line scenario and require another tax to compensate for it.
Councilman Jerry Calvin said the message he received over the last week was loud and clear, "people do not want any tax on cell phones."
Mayor Dennis Berry replied that he didn't hear that specifically and would like the tax proposed in an effort to hear more input from citizens.
Councilors all agreed the feedback received had been constructive and communicated in a respectful manner, which they thanked citizens for and said they hoped even more attended the next meeting to provide further feedback on the budget.
Berry proposed a mobile phone occupation tax be created in the amount of 1.5 percent and the land-line phone tax be reduced from 3 percent to 1.5 percent. The item passed on a 3-1 vote with Berry, Gonzales and Councilman Bruce McDowell supporting and Calvin the lone dissenting vote.
The creation of the new mobile phone tax and decrease of the land-line tax will be considered for its second of three required readings at the councilors' Aug. 20 meeting.