Local Officials Should Prioritize Essential Services

Within Nebraska, local governments often see economic development programs as a viable tool for attracting business, tourism, and consequently economic growth. However, the long-term costs of these developments should be carefully considered by municipalities when a new project is proposed.

It’s not uncommon to see news reports about cities taking on developments including golf courses, arenas, convention centers, and athletic or aquatic facilities. These Shiny Objects may be nice to have, but they are not core government functions.

Besides these venues being potential competitors with private enterprise, they also come at a very public cost. In Columbus, Quail Run golf course has become a public investment of more than $1 million. In the past eleven years, it has not been able to turn a profit. Additionally, with the recent floods, half of the course may have to be reconstructed. In Ralston, the troubled Ralston Arena cost taxpayers $41 million, significantly above initial estimates of $25 million. The facility has also been unprofitable since opening in 2012.

Although city leaders campaigned on receipts from the arena enabling a reduction in property taxes, the need to pay the development’s debts have resulted in taxes being raised instead. Ralston residents are paying more taxes for the arena, while local officials have been forced to make fewer investments in police personnel and public libraries.

Even when these economic development programs are not directly financed by property taxes, they place an opportunity cost on local budgets and taxpayers that can contribute to making the property tax problem worse. A Platte Institute study in 2014 found that from 2004-2013, the median Nebraska city’s budget expenditures expanded by 37%. If a city decides to construct a public water park, as many local communities in Nebraska have, or another Shiny Object, like a golf course, the revenues that are used on that program cannot be used to fund core government services and offset local property taxes.

With Nebraskans already dissatisfied with high property taxes, it is doubtful that spending more on Shiny Objects will help Nebraska communities turn the corner. Beyond avoiding these developments, one solution may be to have core government services readily defined in each city’s budget. This would align with the Legislature’s recent adoption of Legislative Bill 445, which requires municipalities to provide annual reporting on the use of local occupation taxes.

Specifying which services are core functions and which are not could help the public and policymakers identify when their tax dollars are used or raised to finance non-essential services, and to know how to set the right priorities if local services like public safety or roads are in need of more support.