Restaurant tax eats away at Omaha mayor’s campaign promise

Joe Jordan | Nebraska Watchdog

OMAHA—Remember all the noise about the restaurant tax?

A member of the city council in 2010 Republican Jean Stothert voted against it, complained about it in 2011 and campaigned against it in both 2012 and 2013. So here in 2014 what does Mayor Jean Stothert do with that 2.5 percent tax? Is it part of her soon-to-be-announced 2015 budget or is her promise to get rid of it on hold until 2016? 2017 is election year.

EATING AWAY: Mayor Jean Stothert campaigned against the city’s restaurant tax. But can she eliminate it?

Several members of the city council tell Nebraska Watchdog it is not going away.

“That train has left the station,” says South Omaha Democrat Garry Gernandt, who will soon be staring at his 14th budget.

West Omaha Republican Aimee Melton would prefer a property tax cut to eliminating or cutting the restaurant tax. “People can choose where they want to eat, they can’t choose to pay their property taxes.”

But if you think that means Mayor Stothert’s proposed budget, set for release Tuesday, will be a homeowners’ delight, Democrat Chris Jerram isn’t so sure.

“Because of the largest items in the budget being personnel and benefits, and those not being flat or decreasing, I would be surprised if there is any property tax or restaurant tax reduction proposed but you never know until you see the budget.”

So right now most of the talk at City Hall is this: “Hey, at least taxes aren’t going up.”

Stothert declined to be interviewed by Nebraska Watchdog for this story. According to her spokeswoman the budget is still being “tweaked.”

That said, in early June the mayor gave the Omaha World-Herald a peek:

  • No lay-offs “not cutting back” on any personnel.
  • City departments, except for police and fire, have been told to do “more with less” cutting, on average, 1.25 percent.
  • 21 more police officers—825 total by the end of 2015.
  • “A little bit of growth” in the fire department while trying to cut overtime.
  • Total budget growth is “minimal.”

Stothert also said the city’s revenue picture hasn’t moved much. “Sales taxes are going up a little but property taxes are staying rather flat.”

Which, according to several council members, doesn’t sound like a property tax cut is on the mayor’s table.

As for the restaurant tax, although the mayor didn’t mention it in her interview with the paper, know this: It’s bringing in millions, several million more than initially expected.

Its first full year, 2011, it gobbled up $23.8 million. In 2013: $25.7 million and it’s on track to bring in $27.6 million by the end of 2014.

Among the things it’s been used for: police and fire pension payments, street fix-ups and offsetting cuts in state aid.

That’s why Councilman Gernandt says the tax isn’t going away.

Still, it was just 15 months ago at one campaign stop after another, that Stothert was shoving then-Mayor Jim Suttle’s restaurant tax right down his throat telling audience after audience, “Its just a narrow tax that only targets a certain industry.”

A year ago, when the tax showed up in the 2014 budget, a budget she inherited from Suttle with a $20 million shortfall, she told Nebraska Watchdog eliminating it would have increased the gap to $47 million.

Mayor Stothert: “If the economy is growing and more revenue is coming in then that’s when you really have the ability to reduce our taxes.

Nebraska Watchdog: Do you think the people who voted for you are going to be disappointed (that the restaurant tax is not being eliminated)?

Mayor Stothert: No, I have goals and I made pledges and I never do them if I don’t think I can deliver on them. But I also told them at the same time I can’t do everything overnight.”

Contact Joe Jordan at joe@nebraskawatchdog.org.

Joe can be heard on Omaha’s KFAB radio every Monday at 7:40 a.m. and KHAS-AM in Hastings every Wednesday at 7:30 a.m. and 12:45 p.m.

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