Communities across the region are taking a hard look at an opportunity in which to create a Municipal Improvement Fund that can utilize sinking funds for city repairs.  Without having to raise property taxes, municipalities are asking their residents to vote at the polls for a Local Option Sales Tax initiative to provide additional funding to make necessary repairs and improvements.    There is increased strain upon municipality budgets each year to fulfill the responsibility of needed repairs.  The adoption of a sales tax for qualified sinking funds which has specific guidelines of use may be an opportunity for your community.  When adopting a plan it is important to note the local option sales tax will not affect the lid on the property taxes if a Resolution is adopted for the qualified sinking funds. 

According to Title 316 of the Nebraska Department of Revenue, Chapter 9 of the Local Option Sales and Use Tax Guidelines, any city may authorize and impose a local sales and use tax by ordinance after such tax has been approved by a majority of the votes cast in a regular election held within the municipality.  The local tax applies to the identical transaction subject to the state sales and use tax, with the exception of direct-to-home satellite programming.  The local sales and use tax will be collected and administered by the State Tax Commissioner and shall be governed by the sourcing rules in sections 77-2703.01 to 77-2703.04, and remitted to the adopting municipality. The definition of retail sale and all other definitions shall be those prescribed by the Nebraska Revenue Act of 1967, as amended, unless inconsistent with the provisions of the Local Option Revenue Act.  Such local tax must be set either at the rate of 1/2%, 1%, or 1 1/2% on retail sales within the borders of the municipality.

The election required for approval of a local option sales and use tax may be part of any regular city, county, or state election held within the municipality and open to all qualified electors. The question regarding the choice of imposing or not imposing a local tax shall be submitted to the voters in the required statutory language (Section 13-322), upon approval of a Resolution. The question may be initiated either upon order of the city officials or upon petition by qualified electors to the governing body. Notice of the impending question shall be given by publication, as required by Section 77-27,142.02, of the Nebraska Revised Statutes. If the majority of the voters do not approve the imposition of a local sales and use tax, then the question shall not be submitted to the voters again for at least twenty-three months.  Keeping in mind that any time an initiative is placed on the ballot, there will be a charge to the municipality from the election commissioner for the coding of the same.  In the event a special election is held, the cost will be greater than if held during a primary or general election. 

WCNDD has compiled approved plans and assisted communities across the region with the adoption of a local option sales tax.  We can provide you conservative estimates on returns, based upon an analysis of past net taxable sales.  Let us know if a local option sales tax initiative is right for your community.