Lodging tax OK'd; rate to be set later

McCOOK, Neb. — After mulling over various rates, the McCook City Council gave the green light Monday night for an hotel lodging tax to be implemented in the city.

The council will be asked to set a rate at the March City Council meeting, where city staff will present an ordinance outlining several rates and projected revenue gained from those rates.

The council has been exploring the implementation of an occupation tax since January and at Monday’s night discussion, all spoke in favor of it. City Manager Nate Schneider started off the discussion with hotel occupation rates in other communities in Nebraska, that ranged from 2 to 5 percent. A two percent rate would garner the city $65,000 per year; a 3.5 percent cent rate, $110-115,000 per year.

Council member Janet Hepp was the first to speak and said she was in favor of a 4 percent tax, similar to Red Willow County’s 5 percent lodging tax. Councilman Gene Weedin said he was willing to start at 2 percent and increase from there, “to see how it affects the lodging industry.” Weedin said the tax would be another source of revenue that could help out in upcoming street projects and for replacing machinery and equipment.

Councilman Jerry Calvin said he supported the tax as property owners have been “carrying the burden too much” in property taxes. He, too, supported a 2 percent occupation tax and then bumping it up later.

Council member Hepp said that starting with a low rate, with the idea of eventually increasing, was unrealistic. “The wheels of government are so slow....if we want to revisit it, who knows when that will be. Let’s get on with it.”

Schneider said the funds from the tax could be put into the general fund, or specified for a certain project.

In a report given to the council outlining occupation taxes in other first-class cities in Nebraska, the highest tax is in Alliance at 6 percent (with no county lodging tax), with proceeds going to the Alliance Visitors Bureau. North Platte has a 2 percent occupation tax, a 4 percent county lodging tax, with funds going to the Golden Spike fund; Holdrege has a 4 percent occupation tax and 4 percent county lodging tax. Norfolk has a four percent occupation tax and another 4 percent county lodging tax, ending in 2022, with proceeds going toward a water park.

In Red Willow County, a 5 percent lodging tax rate has one percent of it going to the state and 4 percent going to Red Willow County Tourism.

The City of McCook has a city sales tax of 1.5 percent. Combined with the State of Nebraska sales tax at 5.5 percent, total sales tax in McCook is 7 percent.

The average of all of the occupation taxes levied in first class cities like McCook comes to 3.5 percent, noted Councilman Calvin.

Occupation taxes are added on without most people realizing it, said Councilman Bruce McDowell. He recounted his own recent experience in booking a room online in Omaha, with room rates listed without occupation or city sales tax added on. But even if they were listed, McDowell said the increase was not large enough to make him change his reservation to a nearby town like Papillion or LaVista.

A room listed at $100 in Omaha, combined with the city occupation tax of 5.5 percent city, a city/state sales tax at 7 percent and a lodging tax at 5 percent, totaled $118.17.

A representative from the Cobblestone Inn at McCook questioned why the occupation tax was only on lodging and not on other entities, such as bars and restaurants. “It should be across the board,” she said, adding that her customers do check occupation rates.

The occupation tax is a way to capture revenue to help maintain parks and roads that visitors to the area use but don’t pay for, Schneider said.

Addressing the council was McCook business owner, Trevor Taylor, who was in favor of the tax. Cities with similar populations as McCook, such as Seward, Holdrege and Blair, all levy an occupation tax of 4.5 to 5 percent, he said, with visitors not questioning it.

Taylor said although the funds garnered from the tax could go to streets or tourism, “I can tell you, I take my kids at least three times (in the summer) to the pool in Colby, Kan.”

The 81-year-old McCook City pool, built in 1937, has been under discussion by the council during recent budget cycles for renovation/maintenance.