The World-Herald asked Omaha's mayoral candidates for their views on several key issues facing the city.
Monday: Union contracts
Tuesday: Streamlining government
Thursday: Job creation
How would you approach taxes in your term?
We have a very narrow tax base in Omaha — it's primarily property tax — and a very narrow sales tax base. The more exemptions we remove, the more money will come into Omaha in the normal course, without having to do occupation taxes or restaurant taxes. You're raising taxes on restaurants, for example, because you don't want to raise property taxes, or for whatever reason. That doesn't stop people from going to restaurants, but it's just bad policy to hit one industry that way. You have to find efficiencies by removing redundancy first, but then you have to aggressively work with the Legislature to broaden the tax base.
One of the ways you get tax relief is you grow the economy, grow the population, so that you have many more taxpayers sharing the load of government. That's one of the outcomes of all the things I'm trying to do here. We also need to invest in growth and development, in selling Omaha better than we are. All that helps to grow population and get visitors in here spending money, paying local sales taxes. It all kind of goes together.
My goal is to reduce property taxes. My goal is to repeal the restaurant tax. We can achieve this by getting our union contracts under control and running all 13 of our city departments as well as we can, as well as being a more business-friendly community and attracting more businesses to the city. Then we can raise more revenue, to reduce property taxes.
You don't start with the taxes and figure out “are we going to raise them or lower them.” You start with what are the services you're delivering and that the people want to see, and where's the strike line between (that and) your affordability. That's what taxes are about. How do you cover the cost of the services that government has to provide and the citizens want? That's first. And two: How do you put tweaks in that tax policy to provide incentives to invest and create jobs? Those are the two things we look at.
As mayor I would do everything in my power to reduce taxes. That goes back to the idea of streamlining government. If you provide effective, basic public services and you are able to grow your city, you are going to be able to reduce the tax burden to the average Omaha citizen by spreading out the tax burden among more people. If we are able to control spending on our employee contracts and pensions, we will be able to reduce taxes. I would typically be in favor of temporary spending cuts over any increase in taxes.
What is your view of the restaurant tax?
We're tweaking around the edges when we try to fiddle with this occupation tax or that occupation tax. We have to provide for the city more development tools that don't directly impact property tax. (Tax-increment financing) directly impacts property tax. So we have to think about, in the Legislature, primarily, giving the cities more tools to develop, for example, the older sections of town, restoring tax credits, whatever it may be.
I feel like it will be 12 months, probably 18, before I can get rid of it. Here's the mechanics of how this works: I take office in June. I have to put together my first budget by July, so I'm going to spend my first few weeks trying to figure out what kind of mess we really have. I expect to start having some fruit from planning department changes by late fall. The performance audit team will probably be launched by August. The second budget is where we'll be able to start seeing the results of the reforms. And right about there we'll be able to look at eliminating the restaurant tax.
The restaurant tax should be eliminated, although it is bringing in almost double the revenue (expected). To repeal it, we will have to replace that $25 million with something else. With smarter budgets, decreasing spending and the city running more efficiently, we can accomplish this.
The restaurant tax was one of few available options to generate stable revenue and correct our financial crisis of 2009. It saved our city from bankruptcy, made solvent our pension obligations and restored our cash reserves. We now have a city that operates in the black and is providing the services that its citizens have asked for and deserve. We don't have to close our libraries or pools or jeopardize our public safety; and we can now fix and maintain our streets.
The city needs to eliminate the restaurant tax. I see it as being borderline illegal, as it appears to be an additional sales tax without the authority (for) the taxpayers to oppose it. Unfortunately, as a result of the rise in spending by the current administration ... that tax will have to be phased out over time in conjunction with targeted spending cuts.
How would you describe the attitude of Omahans toward the taxes they are paying for the city?
Because Omaha perceives itself as being a net payer instead of a net payee, Omaha is a big “get my taxes down” city. And for good reason. To get taxes down in Omaha, you have to shift away from sales tax exemptions to income tax and sales tax, and that would be a major responsibility for the mayor, to negotiate that deal for the state.
Very frustrated. Property taxes are nerve-wracking for everybody. I don't know that there's been any real attempt on a statewide basis to lower property taxes. The ones that have to go first are the restaurant tax and tobacco tax. Get rid of the restaurant tax and the tobacco tax, and you can start looking at property tax relief.
They feel like they're paying too much. And I agree.
What the public is telling me over and over again, and most of the restaurant owners, too, is that it's a no-brainer on the restaurant tax. It turned out to be a good decision. It wasn't a stroke of genius; it was a stroke of necessity. I thought through this whole taxing structure for five or six months. I sat by myself at the end of my conference table on July 1, 2010, making those choices between laying off 250 cops to make up for that $34 million shortfall, closing all libraries, lakes, parks, community centers, or facing the music and putting in place the restaurant tax.
I've hit thousands of doors and had over 100 meetings with business leaders. People from all walks of life in this city believe that they are overtaxed. I personally believe that the city is overtaxed. An overtaxed city is not one that creates growth in business and in residents. Therefore the city is currently going in the wrong direction.
When is it appropriate to start a new occupation tax?
I think you can do it in an emergency, but it needs to sunset. On the restaurant tax, it needed to be a five-year or a four-year sunset, and to continue it, it would have to have a vote of the people. My policy is to use occupation taxes only in an emergency ... and we need to broaden the tax base. Right now the pensions are the emergency.
I don't like them ever. And here's why. When you do an occupation tax, it creates extra revenue for a while, until businesses impacted by the occupation tax change their behavior. Maybe they close up. Maybe they move to another jurisdiction where this isn't a tax. But it also drives human behavior. It isn't such a big deal if you're paying a restaurant tax on a $30 lunch. But what if you have a $60,000 wedding, or a $100,000 corporate convention? Those companies are incentivized to do it in La Vista, or in Council Bluffs. So over time the behavior of the people that have to pay the tax changes, and you don't end up getting the revenue you thought you were going to get.
I really don't like the use of occupation taxes. I think they're being misused, because they target a narrow industry. And they seem like they have become the choice of least resistance when the city is looking for increased revenue.
Great cities are great because they invest in themselves. The funds collected from the tobacco tax will help bring a world-class cancer research center to UNMC and with it between an estimated 6,000 and 10,000 jobs citywide. This allows Omaha to be a vested partner with the private sector and gives us a share of the rewards. We've fixed the financial problems facing the city and now we have the opportunity to invest in our future with true private partnerships that encourage economic development and job creation.
I am not in favor of any new tax in the City of Omaha right now because I believe the city is overtaxed, and I think that is detrimental to the healthy growth of the city.