[July 15, 2013]Last Tuesday evening, talk in
Lincoln City Council chambers returned to the topic of implementing
a utility tax. Aldermen continue to hash out whether or not this is
a move they want to make.
While the council is currently somewhat split in their opinion of
implementing this tax, most aldermen seem to be in agreement that if
it is imposed, the funds should be designated to specific projects.
The tax was discussed at length recently as being a means to fund
the construction of a modern city safety complex, which would
include adequate space for both the city fire and police
departments.
In addition, it has been mentioned that excess funds could go
into the downtown revitalization projects. Bruce Carmitchel also
voiced a desire to see some of the money go into the city's two
pension plans for firefighters and police officers.
Last Tuesday evening, city administrator Sue McLaughlin showed
the council another plan for designating utility tax revenues that
included dollars invested in the pension plans.
In previous discussions, McLaughlin had used a 3 percent tax as
the ideal for the city.
In this scenario, she kept 3 percent for the safety complex and
downtown revitalization, but took an additional 1 percent to be
designated for the pensions.
She explained to the council that even if the city does go to a 4
percent tax, it will still be charging Lincoln businesses and
residents slightly less than Ameren's current rate for electricity.
When the city signed its agreement with Integrys as the official
provider of electricity for the community, the rate they locked in
was $0.03965 per kilowatt-hour.
This year Ameren requested and received from state officials the
right to impose a tariff on its electricity. This was automatic
statewide and raised the local rate to $0.04131 per kwh for people
buying from companies other than Ameren.
With a 4 percent utility tax, the rate in Lincoln would go up to
$0.04619 per kwh.
Currently customers who are buying their electricity from Ameren
are being charged $0.0466 per kwh.
McLaughlin said if the city would choose to go with the 4 percent
rate, the top 3 percent would total $1,000,704 in revenues for the
city. This is based on the tax being applied to both electricity and
gas service. That 3 percent would go toward making annual bond
payments for the new safety complex, as well as annual bond payments
for downtown projects.
The 1 percent would be designated to the pensions and would be
divided between the police and fire plans in appropriate
proportions.
It was brought to light that if the city went this direction for
fiscal 2014, they could meet and exceed the recommended contribution
rates in both of the pension plans.
Currently, the city is raising enough revenue in a year to pay
only 53.8 percent of the annual contribution for police and only
42.2 percent of the contribution for the firefighters. This has been
the case for the last several years. The money to balance the
revenue to the expense for the city has been drawn from the police
and fire investment funds.
Tom O'Donohue said he would not be in favor contributing more
than the state's recommended amount. Mayor Keith Snyder asked if the
recommended amount was a static figure and was told that it is not.
McLaughlin said that if the city does do the recommended amount
from now on, the pension funds should be 90 percent funded by the
year 2040.
O'Donohue commented on that, saying, "Not only will we not be
here then, but we have no idea what the state will do by then."
Melody Anderson said she would like to see the city be able to
contribute at least the recommended amount. She added that the city
has tried to throw bits and pieces of various revenues at the
pension fund, but this hasn't made much of a dent in it. She said
she sees no way the city can meet the recommended amount with the
way they are funding the pensions now.
Moving away from the pensions, Jeff Hoinacki asked about a $2
million bond proposed for downtown improvements. The bond, which
simply put would be a loan using the utility tax as collateral,
would be paid for over a 10-year period. Hoinacki asked what would
happen to that cash once the bond was paid: Where would the money be
spent then?
McLaughlin said that would be up to the city. She said the city
could put a sunset provision in the utility tax and revisit it at
the end of its term. Then they could keep the money and invest it
further in the downtown, designate it to something else or reduce
the tax.
After McLaughlin answered that question, discussion on the topic
died down, and the mayor moved on to the next item on the agenda.
The utility tax is still in discussion stages, and there has been
no indication as to when or if there will be a motion to implement
the tax.
