City’s LB840 talks will continue into the future

YORK – Recently, discussions were held regarding whether or not the city should pursue putting a LB840 measure on the Primary Election ballot.

As of this past week, it appears the theory will remain a conversation into the future although the measure probably won’t be placed on the May ballot.

The Local Option Municipal Economic Development Act – also known as LB840 –authorizes incorporated cities and villages, if approved by local voters, to collect and appropriate local tax dollars, including sales and/or property tax, for economic development purposes.

To implement a LB840 program, communities formulate a written economic development plan, which, if voter-approved, becomes the foundation for the collection and expenditure of local tax revenues for economic development under which the municipality’s LB840 program operates.

The earmarked tax dollars can be used for things like direct loans or grants to qualifying businesses for fixed assets and/or working capital; loan guarantees for qualifying businesses; grants for public works improvements which are essential for the location or expansion of a qualifying business; grants or loans for job training; the purchase of real estate; grants or loans for a variety of purposes.

Again, it all has to be approved by voters through the election process.

“It has been a successful tool with many communities, where they use sales tax, which we can’t do,” explained Mayor Barry Redfern as the city is already maxed out with the amount of local sales tax that can be collected.

When the LB840 conversation started recently, the theory was that extra revenue generated by the existence of a new business endeavor could be earmarked for LB840 purposes – however, that private business endeavor is still in the very early stages and the expected revenue is not yet being generated.

“I think this might have some legs due to another revenue source (other city sales tax) but that other revenue source hasn’t proved to be much so far,” Redfern said. “So if this would be put forward, it would have to come from the general fund. The ordinance committee could look at this first, but I have a couple initial concerns,” mostly being that there are already budgeted expenses and the reallocation of funds would likely be problematic if that specific new revenue source hasn’t shown its maximum benefit yet.

“I think it’s great to consider but since the revenue source hasn’t been proven yet, maybe this is a little ahead of the horse. We might have to work on this further and just wait,” said Councilman Jerry Wilkinson.

Redfern also noted all the details would need to be completely worked out before presenting it to the voters, if the desire would be for it to pass.

“I’m all for economic development and the city has shown that,” Redfern said. “If we can make that work, it is a great tool, but I want to make sure we have the money.”

“The public also needs to know we cannot raise the sales tax, there needs to be education about that which will take some time,” Wilkinson said.

Councilman Stephen Postier, who started the conversation before the council, noted the city has been receiving record amounts of sales tax revenues “and we will have more revenue (with the other project). I think it is a solid program. I think going to the ordinance committee would be a great step. I do think it is too quick to get it on the Primary Election ballot. We could have a special election (in the future) which would give more time to educate the public that this would not mean higher sales tax. Yes, it would be too quick of a turnaround (for the Primary).”

“I just felt the timeline is important,” Mayor Redfern said. “Let’s keep an open mind and send this on to the ordinance committee.”

The council members agreed. So the LB840 conversation will continue.

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