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Council: Voters to decide sales tax hike

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Lebanon’s sales tax rate could climb by a half-percent while its property tax rate drops by as much as 30 percent if voters approve a plan unanimously adopted by city lawmakers on Tuesday.

On second reading, the Lebanon City Council approved an ordinance asking for voters’ support of a half-percent increase on the city’s local option sales tax – raising the rate from 2.25 to 2.75 percent – during a special election.

Should voters approve the sales tax hike, the trade-off would be a reduction in city property taxes of up to 30 percent, according to a separate resolution also unanimously endorsed by the council. Councilors said the move would help shift some of the local tax burden from residents to out-of-towners who visit, shop and dine in Lebanon.

“It is a way for us to address our issues that we’re going to have to address – our roads, our fire (protection) and a lot of other things. And I feel like it’d help having people who do not live here kind of help pay for their enjoyment of our amenities,” Mayor Philip Craighead explained.

The mayor estimated the sales tax increase could generate roughly $4 million for city coffers, while the reduction in city property taxes of “hopefully up to the range of about 30 percent” would equal roughly 18 cents.

Acknowledging the fact that voters have soundly rejected previous ballot initiatives to raise the local option sales tax, the mayor and councilors agreed education and communication would be imperative if the measure is to pass this time around. The most recent referendum to increase the city’s sales tax was held on Election Day, Nov. 6, 2012. The measure was defeated with 63.45 percent of voters casting a ballot against it and 36.55 percent casting a ballot in favor of the measure.

“We put that out there, and we said we were going to use it strictly for infrastructure … and we got our teeth kicked in 2-to-1,” Ward 3 Councilor Rob Cesternino said of the most recent such referendum. “ … If we don’t come up with a plan, we can’t be surprised when we get shellacked at the polls.”

Craighead agreed.

“We need to go out and talk to everyone that’s in every ward and talk to the papers, talk to the civic clubs – everyone that we can go to and explain what we’re wanting to do, the effects of it, the cost to them, but also the savings against their property taxes,” the mayor said. “It’s going to take communication.”

Cesternino said that, if the council is to reduce municipal property taxes upon voters’ approval of the sales tax increase, city lawmakers would need to begin planning immediately.

“We have to have a detailed work session. We have to have a conversation … what is our one-, three-, five- and 10-year plan? Because the last thing we want to do is give back 18 cents (via a property tax reduction) and then, 24 months later, say, ‘I need another dime,’” he said. “We’ve got to have that plan and be able to communicate that plan intelligently.”

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