New city budget includes property tax hike

McCOOK, Neb. -- The City of McCook property tax levy was increased for the first time in more than a decade Tuesday evening. City Council members unanimously supported the 2016-17 budget and included 3-cent levy increase, offering a variety of reasons for their support.

City Councilman Bruce McDowell said he believed citizens were getting a great value for their tax dollars and reiterated previous comments pertaining to McCook's property tax levy ranking when compared to other Nebraska first-class cities.

"We are the sixth lowest levy out of those 30 cities," said McDowell, adding the ranking looked even better when looking at the county. He said services provided and sales tax rates were similar for all the communities.

"And for us to be, you know, in the top echelon means we're doing a good job. And I'll dispute that with anybody, Dick," said McDowell, light-heartedly referencing and nodding at Gazette columnist Dick Trail. Trail was among three citizens attending Tuesday's final reading of the budget, a trio which included McDowell's wife.

McDowell went on to explain why a suggestion to reduce the $250,000 City Council contingency fund by $35,000 and forego increasing the General Fund Reserve by $75,000 was not preferred over increasing the property tax levy.

"I would like to point out at the end of the year council doesn't get to split that up and take it home. It carries over. And yes, we have not spent a great deal of that and there again I think that's a good thing. That means we're using common sense when it comes to expenditures out of there, however, contingency funds are for unforeseen circumstance or events. I believe unforeseen is the key word there. We're in a budget process now and what we're looking at we can see and I would challenge anybody to bring in their crystal ball and I'll match it with mine. None of us can, you know just because we haven't used it in the past, doesn't mean we're not gonna get slammed this next year. I hope we never have to use it and I for sure want to have it if we need it," said McDowell.

The city doesn't have enough in its General Fund Reserve to consider using that to cover the budgeted shortfall, according to McDowell. He referenced a recommendation from former Mayor Dennis Berry last week to cover the budgeted shortfall with reserve accounts, given the more than $600,000 in sales tax revenue that will be freed up in two years when debt from the new city building is retired. The budget approved Tuesday evening included an increase to the General Fund Reserve of $75,000 and setting it at $725,000.

"If we had $2,500,000 in our reserve fund I might look at doing that differently. This city went for years without any reserve fund, which was wrong and any financial expert would tell you that's wrong," said McDowell, adding the city was building the reserve account and this wasn't the time to stop doing that just to avoid a property tax increase.

"The median value of a home in McCook is under $90,000 a year, somewhere between 86 and 88, depending on whose figures you look at it. But, you know that's less, we're talking about $27 a year increase. That is not huge to do the things we need to do," said McDowell, adding he paid taxes just like everybody else and certainly supported the budget.

Councilman Jerry Calvin said he received a mountain of input on the budget and the only concern he had was the combination of trash, sewer and property tax increases on fixed income residents reliant on Social Security.

"It's a bite. It is a bite, that's my only hesitation. I agree 100 percent with Bruce [McDowell], in my heart, I understand it's necessary to be prudent and to be good stewards of the taxpayer's money we can't keep robbing from Peter to pay Paul. Like using a credit card to pay your bills, that'll get you in big trouble every time. Is it just the easy way to take it out of reserves? Yeah, it is but I'm just worried that when you do somethings going to happen and I really don't want to go to the bank and borrow money. I really, really don't," said Calvin.

The city has some major water and sewer bills coming in the future and may have to dip into the reserves at that point, according to Councilman Calvin.

"I think we painted ourselves in a corner by kicking that can down the road so long, that now we have to do what we have to do," said Calvin.

Councilwoman Janet Hepp said she agreed with Calvin and 12 years was a long time to go without increasing the property tax levy.

"Had we increased it just a tiny bit, as we're increasing the water and the sewer a tiny bit, we wouldn't be in this situation. If there's anybody out there that thinks their lifestyle hasn't gone up in the last 12 years, I'd like to see 'em, because everybody's expenses have raised over the last 12 years. And yes, I'm gonna pay property taxes on 14 different properties, so if anybody wants to come whining to me about it bring it on. And I'm on fixed income," said Councilwoman Hepp, adding everyone needed to pull together for the sake of the town.

The low property tax levy looks good when attracting business but it is time for the city to modernize priorities and increase the levy, according to Hepp.

"I think we need to get into a little bit more modern and some realization that it's not gonna work. 12 years, we've had a good run at, it's not working let's change it now before it gets worse," said Hepp.

Councilman Gene Weedin said he looked at all of the suggestions, some had merit, some didn't. He said taking money from the reserve accounts wasn't a wise fiscal move because it put city services at risk and he worried the city was also at risk of losing state funds if it didn't increase the levy.

"I don't want, as a council person, to risk providing services to the people of McCook. What we provide to McCook makes this place unique and I don't want to risk that," said Weedin.

Weedin also referenced a recommendation from former Mayor Berry that the city could take out a loan if a catastrophic event occurred.

"As a household, if I have a savings plan or savings put away I don't spend it and then go to the bank and say I need more money, no," said Weedin.

Weedin said his second reason against using the reserve accounts stemmed from the city being at risk at losing it's equalization funds if the levy wasn't increased.

"And I don't want to do that," said Weedin, adding the levy increase was the best solution.

Councilman Weedin's equalization funds reference was already clarified as a non-issue earlier in the meeting by City Manager Nate Schneider, who was responding to a question from Councilman Calvin. Schneider said the city was not at risk of losing equalization funds and indicated it was not a factor contributing to the recommendation for a property tax levy increase.

Councilman Weedin also indicated the levy increase could have been worse.

"People need to realize that we can go to 45 cents, we could raise it 14 cents, we're only raising it three cents and what you get for what you pay I think is outstanding in this community," said Weedin, adding he was also a property owner and didn't look forward to paying more but believed it was the best option.

Mayor Mike Gonzales thanked councilors for their comments and said he knew city staff did not spend money loosely.

"They squeeze money so hard that it gives Lincoln a migraine," said Mayor Gonzales, adding he had spent hours upon hours with city staff looking over options.

"I think the responsible thing is not to use reserves. It's not the way you fix a budget because it just kicks the can down the road," said Mayor Gonzales, just prior to City Council providing unanimous approval for the 2016-17 fiscal year budget.