Lincoln aldermen consider a property tax increase for next year

 

[December 11, 2020] 

In response to the increased case numbers of coronavirus in Lincoln and Logan County, the Lincoln City Council has moved to meeting two times per month on a regularly scheduled basis with special meetings being called as needed.

The council is meeting on the first and third Monday of the month and holding a combined regular voting session and committee of the whole. Therefore, items on the agenda from December 7th included items to be voted upon and items to be discussed and voted upon at a later date.

Among the items discussed but not voted upon this week was a review of the city of Lincoln property tax levy. Each year in December, the city reviews the current tax levy and votes to maintain, decrease, or increase the share of the total bill received by Lincoln residents.

City Treasurer Chuck Conzo presented the council with four scenarios for property tax increases with the fifth, undocumented option to be to maintain the current rate for the new year.

Conzo began by discussing the tax rate and how the city determines its increases. According to Conzo, he bases the highest increase on the Consumer Price Index, which is a determination that reflects anticipated increases in the cost of goods and services in the coming year.

The estimated CPI for 2021 is 2.3 percent. Conzo prepared tax figures for the aldermen reflecting a 2.3 percent increase as well as a two percent, 1.5 percent and a one percent increase.

Tax levies can be confusing because they are always a year behind the calendar. The tax levy for 2021 will be applied to assessed values in 2020.

Conzo also shared information about past increases. In 2019 (the bills paid in 2020) the city opted for a one percent increase. In the overall calculation, that increase was $17,064.

The 2020 tax levy (for bills paid in 2021) at 2.3 percent increase would equate to $37,211. If the city chooses the two percent increase the levy would be $32,357. The 1.5 percent increase would come to $24,267 and the one percent increase would be $16,179.

Conzo also discussed how the levy is presented to the county and how it is reflected on property tax bills.

Once the rate is decided upon, it will be translated into a flat dollar amount. That amount will then be added to the last levy amount and submitted to the county. Therefore, the 2019 levy paid in 2020 was $1,617,857. If the council moves to go with the full 2.3 percent increase, the $37,211 will be added and the new total will be $1,655,067.

The county will then add that new total to all the other tax levies such as school districts, colleges, the Lincoln Park District, Lincoln Public Library, and so forth for the total property tax bill that goes out to residents and businesses.

The net percentage of the total bill will then be calculated by dividing the city share by the total bill. Conzo said that because of this, he couldn’t say for certain what the net percentage would look like on the actual property tax bills because it depended on the tax rates and possible increase for other taxing bodies within the city.

Conzo said he would like to recommend that the city go with the 2.3 percent increase. He noted that over the past several years, the city has maintained a liability in the police and fire pension funds. Each year the city has implemented property tax increases, the dollars gained have been added to the pension funds. Even so, the city is still running behind in getting that liability caught up and is facing a mandatory deadline for doing so from the state.

Conzo was asked if increasing the taxes would get the city in the right position for meeting those pension obligations. Conzo said it would help, but no, the city is way behind on getting those obligations up to date.

Alderman Kevin Bateman was absent in person but present on the phone for the Monday night meeting. He said that in the year the community has had, he could not justify a tax increase and would definitely vote no if this came before the council.

Bateman also mentioned that the city, when it approved the utility tax a few years ago had said one third of the tax would go to the pensions. He said that hasn’t exactly happened and it does need to.

Earlier in the evening, aldermen had heard from the city’s audit firm who had noted that the deficit in the pension plans were a concern though not an ‘audit finding.’

Comments from the audit plus knowledge of the state’s upcoming consolidated pension plan currently in the works appeared to motivate aldermen toward coming up with a solution for the pension problems.

Conzo was asked about the state’s new plan for a consolidated pension plan and has it had an impact yet on the city.

Conzo said that right now, there isn’t much going on within that new plan. He said he suspected the coronavirus was slowing down the process. He went on to say that it was his understanding that there would be a state commission that would investigate individual municipalities and look at unpaid obligations state wide, as it is a common issue state wide. He said that in the end, he expected that the commission would establish that each year, each municipality would be ordered pay into the consolidated plan a percentage of that years gross wages paid.

Steve Parrott said that he felt that it was very important that the city get a handle on the unpaid pension liability and that if there had to be an increase then so be it. He noted that too many times in the past the city has known they were going to be facing a challenge and had not prepared for it. He felt that the city had to do whatever it could to get in line in preparation for the state consolidation.

Sam Downs agreed with Parrott.

Conzo also noted that the consolidation could take as long as five to six years to go into effect.

The council was asked what action they wished to put on the next meeting agenda. Parrott said to put the full 2.3 percent on the agenda.

Conzo reminded the council that there has to be a public hearing prior to the vote for the increase in the tax levy.

The public hearing is scheduled to take place immediately prior to the next meeting of the city council on Monday, December 21st.

[Nila Smith]