LINCOLN — Two newly passed legislative bills are throwing a $6 million monkey wrench into the City of Omaha's $300 million general fund budget.
On Wednesday, state lawmakers voted 37-4 to give final passage to a bill outlawing Omaha's effort to impose a commuter wheel tax on people who live outside the city but drive in each day for work.
That measure, likely to be signed into law Thursday by Gov. Dave Heineman, would eliminate $2.8 million in revenue from the city's public works budget. That comes on top of a $3.3 million hit last week, when the Legislature slashed state aid to cities by a total of $22 million per year.
In the State Capitol on Wednesday to ask lawmakers to consider giving cities additional sales tax authority, Mayor Jim Suttle said he's interested in protecting Omaha's financial health for the long haul. He said Omaha can cope with the reduced revenue for the time being.
“It'll work,” he said. “We'll put it together to make it work. It's a $6 million dilemma, but we will make adjustments.”
In comments earlier Wednesday, Heineman suggested Suttle cut spending without looking for more tax revenue.
“The mayor needs to learn how to cut expenses,” he said. “The City of Omaha should follow the lead of state government and balance its budget without raising taxes.”
Suttle, however, said Omaha already has made millions in cuts. Omaha leaders are striving to create a stable budget with revenues and spending in long-term balance, he said.
“I'd like to have the governor read the City of Omaha's budget,” he said. “He needs to read the city's budget and the budgets of other cities. In solving the state's problems, don't shift it to the cities.”
Suttle and the Omaha City Council have until next year to decide how to respond to the reduction in municipal aid, said City Finance Director Pam Spaccarotella. The cut won't affect the city budget until 2012, she said. That's because the city had already received its state aid allocation for the current year.
However, the $3.3 million reduction in state aid is roughly equal to the cost of operating three libraries or of employing 52 police officers, she said. It exceeds the cost of operating all city swimming pools.
Suttle said street resurfacing projects will be the first to go on the chopping block as a result of Wednesday's vote.
Facing a $10 million backlog — nearly 500 city blocks — of streets in need of resurfacing, the city had planned to nearly double its spending to repave residential streets in 2011, said Omaha Public Works Director Bob Stubbe.
Omaha had planned to collect an additional $2.8 million from the $50 commuter fee, which would have applied to commuters who live outside of Omaha but drive in each day for work. Omaha planned to use the money for street maintenance.
Employers were to be given the task of collecting the fee from their workers, with the first payments to be sent in April 1. However, Suttle announced last week that he would not require employers to move forward because the Legislature was about to eliminate the fee.
Stubbe said about half the commuter fee proceeds would have been used to increase resurfacing spending, from $1.5 million 2010 to $2.9 million in 2011.
Now the program will be returned to its 2010 level, saving about $1.4 million, he said. Smaller cuts throughout the remainder of the Public Works budget, including not replacing retirees and leaving vacant jobs empty, will make up for the rest of the $2.8 million loss in anticipated 2011 revenue.
The roads budget could get even tighter in 2013, when the Legislature also ends the city's authority to charge a wheel fee on those who live within the three-mile zoning jurisdiction outside the city limits. Omaha has had that tax, which generates about $3.2 million annually, in place for five years.
State Sen. Abbie Cornett of Bellevue, who introduced Legislative Bill 81, described it as a policy decision by the Legislature to limit municipalities' taxing authority to within their municipal borders.
Several metro area residents said the Legislature made the right call.
Bellevue City Councilwoman Carol Blood, leader of a coalition opposed to the commuter fee, said her group had been prepared to go to court if the Legislature didn't act.
She said the fee could have led to an “arms race” between Omaha and its suburbs, with other cities in the metro area imposing their own fees on commuters in retaliation for the Omaha fee.
Joe Dyrda lives outside of Bennington within the city's zoning jurisdiction. He said he, too, is glad the Legislature has acted, even though he will have to continue to pay $50 wheel taxes on each of his four cars until Jan. 1, 2013.
“Most of the roads I drive on a regular basis aren't maintained by the city,” he said. “They're maintained by the county and the state. The unfairness comes in because we don't have any recourse with the city to address our concerns.”
Bellevue resident James Glover, a college student, said he was troubled by the fee because it appeared to be a stopgap measure that didn't address Omaha's underlying budget problems.
“You should try to save money where you can — not hit up the out-of-towners,” he said.
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