How Much More Would You Pay For That Burrito?

July 29, 2009 at 7:15pm By: Mr. Wilson Posted in The Lincolnite Blog

Jack Mitchell posted an interesting tweet earlier today:

Mayor Beutler revealed on our show that the arena financing plan will likely include a city-wide restaurant tax.  Uh-oh.

He followed not long ago with:

Being told now by city insiders that the restaurant tax is nothing new.  I’m pretty sure it wasn’t public knowledge though.

Just how “new” is the possibility of a restaurant tax, and how widespread is public knowledge of it? I decided to do a little research.

I found nothing via the Journal Star’s website, which wasn’t a huge surprise considering their recent switchover to a new content management system. I did, however, manage to find a copy of the relevant article on Sen. Bill Avery’s website (“Consultant finishes arena analysis”). That article says:

Kaatz said the city of Lincoln has done its homework, and the project is financially feasible if the city succeeds in obtaining the bulk of a list of 17 possible revenue sources. Some of those sources are big ifs, though, since they require legislative or voter approval.

The city is looking at everything from an increase in the hotel occupancy tax to a general obligation bond to naming rights to generate between $11 million and $18 million annually to pay off the projects.

Kaatz said the city has tapped all the typical funding sources. The only other idea he suggested is to do something like Oklahoma City did, by convincing voters to agree to a temporary 1 percent increase in the sales tax to do a laundry list of projects, including schools.

I also found a relevant KLKN report:

John Kaatz a consultant hired by the city to determine if a new arena and convention center was feasible, reiterated to city leaders it is.

To do it he’s proposing the city increase the hotel tax by 4 percent, the city’s car rental tax by 4 percent and for those living in Lincoln an increase in restaurant and bar sales by 1 to 2 percent.

All of that would generate around 8 million a year.

...

In addition to a restaurant and bar tax, the consultant group also says the city should consider an entertainment tax, a tax on things such as movie theatres and bowling alleys.

Next I was able to dig up the consultant’s report itself (PDF). The funding analysis is section IX beginning on page 93 (page 108 of the PDF).

Beyond those sources, I haven’t seen much, if any, chatter about the taxes that may be required to pay for a new arena. I think most everybody knows some sort of tax will be required—unless, by some miracle, the City opts to take the “modest” route rather than the “biggest and baddest” approach—so from that perspective Jack’s “city insiders” are correct. But as for Lincolnites as a whole understanding that their next Runza (and rental car, and pair of bowling shoes, etc.) may cost an extra nickel apiece? I don’t think that has sunk in just yet.

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The Comments

beerorkid July 29, 2009 at 8:03pm

You so sleuthy.

JackM July 29, 2009 at 8:25pm

Great Work Mr. W. 

The bottom line is that all of these financing options may have been discussed by Kaatz and other ‘decision makers’, but they’ve been portrayed as just that…options.  The level of misinformation about this financing plan among the public is fairly staggering (and may doom the project), so anytime we’ve got some hard information, it’s worth a special note.

The Mayor said today “I’m not sure we’ll be able to do it [the arena] without that (a city-wide restaurant tax)”.  I’m fairly sure that’s a new revelation.

Last month I did get a some pretty good information on exactly how the financing plan will look during a conversation with the city’s finance director, but my blog isn’t exactly as popular as the LJS, so it didn’t quite get the reads.  Here it is:  http://jackandjohn.wordpress.com/2009/06/24/a-preview-of-the-arena-financing-plan/

At that time there was only mention of a car rental and hotel occupation tax (two of the three the Kaatz report mentioned above).

The other thing that probably deserves mention is that I believe the involvement of Kaatz and the discussion of funding sources at that time pre-dates what has now become an assumption that this project only has legs if IMG/ISG gets invovled and shoulders a huge portion of the funding (and operation).  Since that development, the hope is that some of the funding sources discussed at that time won’t be necessary, which is why I found the Mayor’s comments today so interesting.

In any case, thanks for your interest—in the end, I’m interested in trying to start get a picture of what this financing is going to look like so the city can actually make an informed decision, rather than make overreative assumptions (which is happening now).  I know the city wants to sit on this information b/c they’re waiting to put a full package together to present publicly, which will depend heavily on their ongoing negotiations with IMG/ISG.

Fletch July 30, 2009 at 5:11am

I’d kick in a half cent per dollar to fund the arena.

Dave K July 30, 2009 at 5:21am

Sweet. 

These days it’s cool to support raising taxes on other people (‘the rich’ nationally, and visitors locally), but the restaurant tax can’t be argued as something only ‘outsiders’ will pay. So this is now officially interesting. I can’t wait to hear Don Walton explain how all of these tax increases would be great for the city.

jake rhymes with cake July 30, 2009 at 6:36am

legalize gaming. stop coming up with 1001 ways to tax Nebraska residents.

Mr. T July 30, 2009 at 1:17pm

Hey Jake, you should open up comments on your blog dude. Now you can’t comment unless you have a google blogger account.

jake rhymes with cake July 30, 2009 at 3:36pm

i’ve been nailed with spam and LOTS of anonymous “haters” lately who like to use tons of profanity, so i decided that going this route for commenting was the better option; rather than blocking comments altogether.

i haven’t checked the settings in a while, maybe there are new options; i’ll see what i can do for ya wink

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