Mayoral candidate Jean Stothert is making a powerful pitch to voters in her campaign against an incumbent who raised local taxes: Roll back those tax hikes.
Behind that pitch lies stark financial implications: Stothert's administration would have to find tens of millions worth of city expenses to cut.
The Republican, a member of the Omaha City Council, wants to scale back the property tax levy for the city's general fund by 15 percent. She hopes to eliminate Omaha's occupation tax on restaurants.
Those two steps, if applied to the city's 2013 operational budget, account for about $37 million worth of revenue.
At the same time, Stothert is campaigning on a platform that includes improving city services and hiring more police officers.
She has been careful in how she phrases those ideas: They are goals and hopes, rather than plans and promises.
But the idea of cutting taxes and cutting expenses, while still managing to spend more in certain areas, has led to criticism that Stothert's proposals are contradictory and vague.
Stothert maintains that making her proposals happen is simply a matter of priorities.
“It can be done if it is the mayor's goal, and it hasn't been the mayor's goal,” Stothert told The World-Herald.
But realizing both Stothert's tax cut goals and some of her other policy ideas would present an immense challenge.
“Bottom line, it would not be easy,” said Kenneth Kriz, a professor at the University of Nebraska at Omaha who specializes in municipal finances and is a former member of the city's civilian pension board.
The city is coming to rely on a restaurant tax that is shaping up to be its fastest-growing revenue source.
Reducing general fund expenses enough to offset some of that cash would almost certainly require cutting employees. That could make it difficult to maintain or improve on city services.
“That's a sizeable chunk of what the city is getting,” Kriz said of the restaurant tax, which was forecast to draw in some $24 million last year.
“That would be painful. Cutting $24 million out of the budget is no easy trick.”
That's partly because the bulk of the city's operational budget is tied up in employee wages and benefits, some of which are codified in union contracts and subject to labor negotiations still controlled by the City Council.
Stothert says the tax cuts would require long-term efforts to streamline city operations, as well as new labor union agreements that would reduce the city's health care costs and stabilize its pension funds.
Stothert told The World-Herald that she's also willing to consider privatizing some city services — including, perhaps, city ambulance services.
City operations must run lean, she said. “If we want to run leaner, we have got to make sure that every city department (has) the best director we can in place, we have performance standards in every department that we can evaluate all of our employees, and we got to make sure they're running as efficiently as we possibly can,” she said.
On the campaign trail, Stothert has tried to appeal to voters upset with higher taxes. She argues that Mayor Jim Suttle has responded to the city's financial challenges with new taxes and fees.
Her published plan for the city's future says Suttle campaigned on lowering taxes, only to embark “on a two-year binge of new taxes: massive property tax increases, a new restaurant tax, a new occupation tax and a hike in the wheel tax.”
Stothert's plan argues for cutting spending and lowering property taxes, followed by long-term reform of city government.
During the primary, Stothert announced a proposal to permanently reduce property taxes in conjunction with Gov. Dave Heineman's proposal to eliminate various state sales tax exemptions.
That idea has gotten more difficult to accomplish. Heineman's proposal would have meant a stream of new sales tax revenue for Omaha, but went nowhere in the Legislature.
Since then, Suttle has criticized Stothert's tax plan by saying that it lacks specifics on how to replace what he described as $60 million worth of lost revenue.
“What she is proposing now is to cut those very same revenue streams by $60 million, cut spending and balance the budget. How are you going to do that, Jean Stothert?” Suttle asked during The World-Herald's televised debate between both candidates.
Two of Stothert's top priorities for cuts are the city's Planning Department and Fire Department.
Nearly 60 percent of the city's $321 million general fund budget for this year is dedicated to the city's Police and Fire Departments. Each of those departments' budgets devote around 90 percent of their funding to wages and benefits.
The Fire Department's current ranks are also protected from layoffs through the end of the union's current contract in 2014.
Staffing guarantees in the latest fire contract were crucial to obtaining a deal, the City Council's labor negotiator has said. It's unlikely that the union will race to give those up.
“I think they can run a lot leaner and a lot more efficiently,” Stothert said of the Fire Department. “I think we've got to be a little creative in the way that we look at how we're running the Fire Department.”
Immediate substantial cuts to operational expenses probably can't come from public safety agencies. A more likely source is approximately $65 million in funding reserved for city administration and the Public Works, Parks, Library and Planning Departments.
Kriz said scaling back property tax rates and eliminating the restaurant tax would make it nearly impossible to maintain the current level of city services.
“You'd have to make really draconian cuts in other places,” Kriz said. He said he was skeptical of Stothert's recent statement that she wants to “improve on city services, not reduce them.”
“If they had the magic math that can make that happen, then I wish they would tell us all because that would be a heck of a trick,” Kriz said.
Stothert acknowledges her goal is “easier said than done.”
“You can't do it until you reorganize and you make sure that each department is running efficiently, and you get control of the pensions and you get control of the health care costs.”
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