Update: Property tax hike, money transfer tax proposed by Grand Island Mayor

Grand Island City Hall (NTV News)

Grand Island's mayor said he's exploring a 3% fee on money transfers out of the country.

This, after Mayor Jeremy Jensen said G.I.’s police, fire utilities, wastewater and street department unions rejected the idea of a wage freeze to help with a budget shortfall.

"So I am left with an employee base that doesn't want to compromise wages, and voters that rejected a recent tax increase. In the end, there is only so much money to go around and we must now move on with what we can control," said Jensen in a statement released Monday, outlining his plan moving forward.

*But now the Grand Island Fire Department says they did not reject the wage freeze, and that they're being used as a scapegoat by the mayor for the city's financial problems.

Jensen also said property taxes will need to be raised.

“The property tax levy will need to be raised for the first time since 2009. I am recommending moving it up from .3241 to the 2004 level of .37154, giving us about $1.4 million of additional money in 2018. The maximum rate allowed is .4500,” said Jensen.

The full statement from Grand Island Mayor Jeremy Jensen is below:

“On July 18th, elected officials, city staff, and concerned citizens engaged in over four hours of discussion regarding the severity of our current and future budget problems. While many have just recently began to listen to the concerns, my team has been actively and openly discussing the topic since early 2015.

The decisions that we face today are complex and require thoughtful consideration to many variables. Our finance team has worked tirelessly to create tools that provide a guide to the future, and both elected officials and citizens alike should look at the data provided within this release to understand the magnitude of the problem, what solutions are viable, and understand why tough decisions will be required.

We have created seven separate scenarios to analyze and all are attached to this release. Please pay special attention and compare ENDING CASH – 2021 in each of the models to get a full view of the impact of any proposed changes. This figure will help you compare and contrast each of the different scenarios.

As you will see, one proposed option was a two-year wage freeze for all city employees. Both the audience the night of July 18th, as well as many citizens who reached out to me afterward, expressed that this option would be the most palatable. This wage freeze was not simply a way to prolong hard decisions or “kick the can down the road”, but actually does provide real economic benefits that would help to maintain a valuable cash position for the next several years. It is important to understand that no single solution is going to be the magic bullet that fixes everything; but in combination with other actions, this seemed to be a reasonably good next step in finding a path to sustainability.

On July 25th, I delivered a formal proposal to each of our four unions that represent seven separate contracts. I asked them to consider a city wide two-year freeze on wages, and to formally notify me of their answer by 3:00 pm on August 4th. With my proposal, I also committed to no reductions of staff over that two-year period. This meant no reductions of staffing to the police, fire, streets, library, parks, horticulturist, etc.

Unfortunately, the compromise was rejected by the police, fire, utilities, waste water, and street department unions. As presented, the wage freeze would have denied a cost of living increase to employees typically ranging between 2.5 – 5% per year but would have continued step increases for those not at the maximum compensation level. I’m disappointed that the insistency of our employees to receive a small increase in wages will ultimately result in others losing their jobs. Existing contracts, the Council of Industrial Relations, comparability, health insurance changes, current contract negotiations, payroll expenses from enterprise funds instead of general fund, etc. were all reasons that were given for the rejections.

So I am left with an employee base that doesn’t want to compromise wages, and voters that rejected a recent tax increase. In the end, there is only so much money to go around and we must now move on with what we can control.

So how did we get here? Our city had two major events that effected our ability to have a sustainable budget in the future. Not only did our community become a Metropolitan Statistical Area, but we also had a public safety study conducted that resulted in the hiring of approximately 15 additional employees to the Grand Island Police Department. At this time, additional revenue was needed to cover the additional costs to public safety, as well as all other positions throughout the city that seen substantial increases to pay with the new MSA status. This revenue didn’t come as our property tax levy is the same now as it was in 2010. Because of this, nearly 80% of our budget is now allocated to our personnel costs. The City of Grand Island spends over $1,000,000 per year on overtime costs. I have instructed our staff to cut overtime budgets in half, and only allow overtime to be approved by department directors. We can’t sustain ourselves with 80% of expenses being allocated to people given that estimated personnel cost increases of 6% per year going forward far outpace our anticipated revenue growth rates of 2%.

In 2015, our auditor applauded the financial health of our city’s finances by suggesting we could use available cash to pay down debt which was then followed by a councilman suggesting a possible reduction in the property tax levy. It became very apparent to me that we needed to make the long-range sustainability of our budget the primary focus going forward, and we immediately needed to start talking about it very openly – which we did as I began my first budget council session – resulting in an August 18, 2015 newspaper headline that read: Grand Island mayor says city headed for ‘dire straits' financially.

The current problems that we face cannot be fixed by just making cuts or raising taxes; it must be a combination of both. After our employees said no to the wage freeze option, we will now unquestionably be forced to reduce staffing – in many areas – including public safety. I have worked with our team and have revised staffing recommendations from the original examples – which will be discussed further at the committee level. The property tax levy will need to be raised for the first time since 2009. I am recommending moving it up from .3241 to the 2004 level of .37154, giving us about $1.4 million of additional money in 2018. The maximum rate allowed is .4500.

As many of you know, I firmly believe the passage of the additional ½ cent sales tax is imperative to our city’s future. This money would, by law, be used for capital, infrastructure, and equipment only. We have a tremendous need for those things and without this revenue source we will be forced to pay for it out of the general fund in the future. I was very pleased that during a recent meeting with the firefighter union leadership, they offered to help lead the initiative to promote the passage of this vital tax revenue. As you can see in budget models #6 and #7, there is a tremendous economic impact to the General Fund by passing this tax.

I’m also very interested in collecting a fee on the millions of dollars that are earned in Grand Island, but are electronically transferred out of the country. I have no issue with hardworking people supporting families abroad, however every dollar that gets sent away is a dollar that isn’t recycled through our local economy. Estimates show that each dollar typically is spent anywhere from 5-10 times in a local economy – which is why economic development and job creation is so vital to a community’s long-term financial health. I believe we need to consider the wealth of money that leaves our community daily, and target these funds as a viable revenue option to provide city services.

I am exploring a 3% fee on transfers of money out of our country that leave our local economy. That would be the equivalency of one dollar recycling twice through our stores and restaurants with our current sales tax rate of 1.5%. This would help pay for the city services that all of our Grand Island employment base are using such as roads, public safety, parks and recreational facilities, library, etc.

Does a “wheel tax” make sense? Perhaps. What about looking at our internal fee structure? Absolutely. All additional options will be discussed by the council members during the upcoming budget sub-committee meetings and open city council meetings where voting will take place.

I smile when I receive messages that put every stereotypical, anti-government catch-phrase on full display. If only all of those “guys leaning on shovels that do nothing in the street department” and “all of the overpaid paper pushers in City Hall” would be thinned out, then all the problems would be solved. Those “darn cops that are sleeping in their cars” and the firemen that are “out on joy rides in their brand new million dollar truck” apparently are hurting us too. Several have told me that I’m overpaid. Given that I have the biggest office and the smallest paycheck for the City of Grand Island, I smile as I make a whopping $16,000/year to serve our community as Mayor. It is a full-time responsibility, but certainly not a full-time job. I also don’t have the authority to dictate why GIPS is tearing down schools and building new ones, and I didn’t set the salary for our terrific new Superintendent either.

I know this, the city gets 16 cents of every property tax dollar that you pay, and we aren’t going broke because some of you believe that we are “giving wealthy people and developers handouts” in the form of Tax Increment Financing. I actually heard a constituent say that a potential drowning could be avoided if we didn’t use TIF as a tool for development. The truth is we are going broke because people don’t like to make tough decisions. In my line of work, that is simply called having a responsibility to the people that entrusted us with these jobs.

In conclusion, prior to the next city council meeting where we will discuss the General Fund budget on August 15th, our city council subcommittees will again meet to discuss our options. Nine of ten council members have been active participants in this process, and I have faith that these folks will be able to sift through the data and be able to come to an agreement that will get us pointed in the right direction. Councilman Haase chose to present his own budget amendment during our past public meeting, but I’m hopeful that he will now join his colleagues in an effort to work collectively on viable solutions that will lead us to fiscal sustainability.

Thank you all for your respectful consideration to solving our city’s financial challenges.”

The Grand Island firefighters union released a statement responding on Facebook Monday.

"We have not rejected the Mayor’s proposal of a wage freeze. It was made clear to Mayor Jensen that we are willing to consider his proposal as part of the overall package of our ongoing contract negotiations," it said. " It is disappointing that Mayor Jensen has chosen to make Grand Island Firefighters out as a scapegoat for the City’s financial issues."

Learn more about the Grand Island budget progress:

Grand Island to cut $4.8 million budget deficit for 2018 fiscal year

Grand Island leaders defend budget plan

Grand Island fire union reacts to proposed budget cuts

Police and fire unions question Grand Island's proposed budget cuts

Grand Island city employees consider pay freeze to avoid layoffs

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