LINCOLN, Neb. (KOLN) - Mere days after a ballot sales tax question was passed by voters during a city primary election, the Lancaster County Canvassing Board certified the election results.
Nearly 50,000 voters marked the ballot question, passing it by a slim 650-vote margin.
Revenue will be generated from the increase starting October 1, and once in place, will bump up Lincoln's sales tax rate from the current 7 percent, or seven cents on the dollar to 7.25 percent, or 7.25 cents per every dollar spent within the city.
Miki Espisito, Director of Lincoln Transportation and Utilities, said it’ll be about 2.5 cents on a ten dollar purchase.
City leaders have said the money is necessary to fund street repairs, with the tax estimated to generate about $13 million a year over a period of six years.
Espisito said a standard mile of new road construction costs about $12 million and added that about 42 percent of streets need reconstruction or rehabilitation, which costs and estimated $600,000 per lane mile. With 2,900 lane miles, or 1,400 regular miles, Espisito said the cost will be much more than the roughly $19 million dollars a city wheel tax brings in annually.
"Its specifically for street purposes, and even more specifically, its meant to address pavement condition, from curb to curb," Espisito said. "It won't be used on things like sidewalks and trails and bike lanes, or even traffic signals. This is specifically to address our deteriorating pavement condition."
In Nebraska sales tax is tacked onto many purchases, including both in store and soon-to-be online with a bill making its way through the legislature.
The state sales tax rate stands at 5.5 percent, or around five and a half cents for ever dollar spent. In Lincoln, another 1.5 percent, or one and a half cents, is added for a city sales tax, which will increase to 1.75 percent once the quarter-cent sales tax takes effect.
That does not include Lincoln’s occupational taxes approved in 2011 to pay for bonds to help build Pinnacle Bank Arena, which includes a 2 percent tax at bars and restaurants and 4 percent tax on car, hotel and motel rentals. Shoppers at SouthPointe Pavilions also pay an extra cent per dollar to fund the eventual construction of a nearly $20 million parking garage.
Espisito said it’s costing people more on their bill, but also bringing visitors to Lincoln to spend money, like concerts at PBA.
“It’s attracting these visitors which helps again with that sales tax piece so it all really works together," Espisito said. "So when we talk about a 7.25 percent sales tax, that's about $377 million that's generated annually."
Other Nebraska cities have similar sales taxes in place, including Omaha, which has a 2.5 percent occupational tax in place for restaurants, which is in addition to a 7 percent sales tax.
Grand Island has a one and a half cent food and beverage tax on top the city's 7.5 percent sales tax. Bellevue on the other hand has 7 percent sales tax but no occupational tax.