KEARNEY — Voters in Kearney city limits will again be asked to approve a 3% use tax to be collected on goods purchased from out-of-state vendors currently not paying local sales tax.
The question on the November ballot reads, “Shall the city of Kearney impose a local use tax at the same rate as the total local sales tax rate, provided that if the local sales tax rate is reduced or raised by voter approval, the local use tax rate shall also be reduced or raised by the same action?”
If approved, it will mean purchases from out-of-state vendors delivered to a Kearney address will be taxed as an item purchased in a Kearney store is. The measure would generate roughly $600,000 annually for the city.
If the tax is approved, $150,000 would allow for hiring two police officers and providing them squad vehicles; $100,000 would provide for the city’s first animal control officer and needed equipment; $200,000 would help create Hall Park, a park dedicated to seniors, as well as fund new pickleball courts; and $150,000 would be dedicated to a Nation Road sidewalk that would run from Cottonwood Creek Avenue north to Woodridge Road.
“The city relies heavily on revenues from local sales tax to fund basic services,” said City Administrator Jim Eldridge. “Nationwide, ecommerce sales rose 14.9% in 2019, and represented 11% of total sales. In order to continue to provide the essential services and amenities that our residents expect and deserve, the city must adjust to this trend and modernize its revenue sources.”
Mayor Randy Pogue said if passed, the effort will level the playing field for local businesses compared to online retailers.
“A use tax, or a vehicle sales tax, must be adopted by a state-imposed deadline of November 2022 in order for the city to preserve current vehicle sales tax collections. Loss of this critical revenue source will have a detrimental budgetary effect on Kearney if not approved by Kearney voters. This will also provide new revenues to address critical infrastructure repairs, park improvements, added public services like animal control, police equipment, etc.,” Pogue said in a previous Courier-Tribune interview. “All these items effect property value, which in turn effects our entire community.”
Failure of the measure, the mayor said, means current revenue of about $200,000 the city relies is at risk. The city currently receives sales tax revenue when a resident purchases a car out of state. If a use tax is not adopted by November 2022, that revenue will be lost.
“It’s very important to pass this issue, not only because we’ll lose current funding we’ve received forever off vehicle sales tax if not implemented by the state mandate of November of 2022, but because we are losing money every day that we don’t have a use tax from the online retailer portion,” Pogue told the Courier-Tribune this week.
Pogue added city leadership is not “deaf to the fact that it didn’t pass the first time.”
“I don’t feel as a city we did a good enough job communicating our intended uses of the added funds,” he said. “If it doesn’t pass, we’re going to have to make budget cuts to the tune of almost $200,000 per year from what we would receive from the vehicle sales tax portion. People need to realize this isn’t just about the online sales tax piece of it. The same legislation is tied to the vehicle sales tax piece.”
If passed, the use tax would only be applied to purchases from out-of-state vendors for delivery and use in Kearney. The tax would be equivalent to sales tax applied to local purchases.
“It’s one or the other, never both. A purchase would not be taxed twice,” states the city release.