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Fair budget must absorb old sales taxes

Wednesday, September 1, 2010

McCOOK, Nebraska -- Red Willow County, Nebraska, commissioners declined Monday morning to add more money to the 2010-11 budget for the county fairgrounds, although the fair board must come up with about $7,000 to pay five years of sales taxes that it should have been collecting but didn't.

Fair board secretary Deb Lafferty told county commissioners during their weekly meeting Monday morning that in the 18 years that she's been secretary, and even before that time, the fair board has never charged sales tax on tickets sold to attend events on the fairgrounds.

Now, the Nebraska Department of Revenue wants the sales taxes for gate receipts for the past five years. Lafferty is estimating gate receipts -- to county-sponsored events in the grandstand or the Kiplinger Arena -- at $100,000, and sales taxes (at 7 percent) of $7,000.

People who have plugged their campers/trailers into the county's electricity or rented stalls that used electricity will also have to pay sales tax on the electricity, as well as a lodging tax. Lafferty said it will be difficult to figure past sales tax on the electricity, because her bookwork charges for "stalls and electricity."

Lafferty said that concessionaires on the fairgrounds and people or organizations that rent county property for their own events -- such as the stock car races or roping or barrel-racing events at the Kiplinger -- will also be contacted by the Department of Revenue about whether they've paid sales taxes on sales and/or gate receipts, and, if not, how they intend to pay the back taxes.

Lafferty said that her books have been audited by the state for years, and the question about not paying sales tax has never come up. She said that the county's auditor questioned the lack of sales tax a couple years ago, but she said she thought then that agriculture societies had to pay sales tax, but county fair boards didn't.

"We did look into it," Lafferty assured commissioners.

"We owe it; we need to pay it," Lafferty said. And she plans to charge sales tax on gate receipts from this point on.

Lafferty said the Department of Revenue will allow the county to make payments until the back sales taxes are paid in full. Lafferty said she and a DOR official are working together to determine the amount that the county owes, and should have a figure yet this week.

The county will not be expected to pay penalties, Lafferty said.

Lafferty also asked that commissioners add $4,000 for a new air conditioning unit to her 2010-11 budget, as an AC unit went out at the Community Building.

At their meeting Monday morning, commissioners decided not to add the sales tax figure or the air conditioner replacement to the fairgrounds' budget of approximately $579,600. "We were as bare as we could get it" Lafferty said of the fair budget, which is down from $609,900 in 2009-10.

"That's the dilemma," said commission chairman Earl McNutt. "We tried to work with people (county officials) and not call everyone in for a budget hearing, and still stay at (a tax levy of) 39 cents."

McNutt and fellow commissioner Steve Downer agreed that "it's kind of late in the game," to rewrite the fair board's budget, and it probably can't be done without having to increase the tax levy.

Fellow commissioner Leigh Hoyt made a motion to leave the fair's budget as it is, adding that commissioners will work with Lafferty if she should run short at the end of the budget year. McNutt said, resignedly, "Any officer in this county knows we'll bail 'em out." And Hoyt said, "We've never let anyone down."

Commissioners have in the past borrowed from the county's inheritance tax fund for the self-insurance fund. But those loans have to be paid back in the following budget year.

McNutt stressed to Lafferty, "Try to run a little leaner" to allow for the two new expenses within the budget she's already written. He added, "This'll require us to cut a corner or two that we didn't intend to cut."

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