Posted Tuesday, October 2
Those who buy tobacco products in Omaha will soon be paying more. On Tuesday, the city council approved a plan to charge an occupation tax as a way to help pay for UNMC's Cancer Complex.
The vote was 5-2 with Franklin Thompson and Jean Stothert casting ballots against the plan.
"We should delay the vote," proclaimed Stothert, who wanted to make sure the math was correct. She also reiterated her complaint that the city has much more pressing needs when it comes to debt without giving away money.
The council initially proposed 7% increase on tobacco products and then scaled that down to 4.5%. The one approved on Tuesday is 3%.
To read the proposed ordinance in its entirety, click here:
Sponsors believe it will bring in more than $35-million in the next decade. The money will go toward UNMC's $370-million project.
According to state law, if an occupation tax brings in $6-million or more annually, the issue is supposed to be decided by a vote of the people.
State senator Bob Krist argued before the council that this is a misuse of the occupation tax.
Posted Tuesday, September 25
Tuesday became the public's turn to explain why they support or oppose a tobacco/occupation tax to help build UNMC's cancer complex. They had a lot to say. The debate lasted 3-and-a-half hours.
On one side, those who believe the $370-million cancer complex will transform the area in research and patient care -- and bring, not only construction jobs, but high paying medical ones.
The council is considering levying an occupation tax on cigarettes that would add around $2.70 to a carton in Omaha. It's expected to raise $35-million over the course of the next decade and then go away.
"Cancer is a big problem and it should be the smokers that pay for this -- not the non-smokers," said Roger Welliver.
"If we could provide that treatment right here," said Ron Kaminski, "we'd be a leader in the nation."
Opponents of the project -- many of whom sell tobacco products for a living -- shared data that their customers will just go elsewhere to buy cigarettes.
"If you pass this and you ink it and legislate me out of business, as soon as it goes into effect, I will have to let go of two employees," said Bob Wagner who runs the Tobacco Outlet at 76th & Cass.
"You have other things you have to address before you start giving away $35-million," said Wayne Hughes.
"I've got approximately 16,000 signatures on petitions for people who are opposed to the occupation tax," said Ted Stessman as he held up the stack of papers.
Some members of the public suggested the council shouldn't give UNMC a dime -- believing the facility would just tap into some big donors to make up the difference.
"We are in a fragile phase of the fundraising now," said Bob Bartee of UNMC. "I think to say just ignore it because someone else will give them the money -- is not an Omaha value."
Council member Chris Jerram told the crowd that this is an important investment for the city and if it helps keep tobacco out of young people's hands because of the expense, it's "an added benefit."
The majority of people approve of the project. There was little discussion about that. Mostly, the debate centered on how to pay for it.
Council member Jean Stothert, who has been critical of using an occupation tax on this, said she also didn't think the council should be in the business of picking winners and losers with their decisions.
She pointed out the city has many of financial concerns that should be higher priority. "The city is $1.6-billion in debt."
Towards the end of the hearing, the finance director explained the reasons behind a last minute change. Early indicators had the tobacco tax at 7%. However, Pam Spaccarotella said her initial numbers were in the 5% range. The council president said the tax proposal now stood at 4.5%.
Spaccarotella was questioned as to whether the change was to keep the total under $6-million so that issue wouldn't be put to a vote of the people. She said none of the scenarios raised that much money to involve a public vote.
The Omaha City Council will vote on the proposal next week.
The city of Omaha will decide later this month whether to add an occupation tax to cigarettes to raise $35-million in 10 years for the same project.
The cost in fighting cancer is enormous -- but the fight Tuesday at the county board had to do with where that money should come from.
The university wants to build a center that would house research, treatment, diagnosis and clinics under one roof as a way to specifically target each individual's case of cancer.
Commissioner Clare Duda voted no. The rest of the board voted to kick in $500,000-a-year for the next decade.
"It's exciting and I wish them all the best," said Duda, "But I am not comfortable putting county tax dollars into the economic development of the University of Nebraska Medical Center and that's what we're being asked to do here."
"All the comments made were pretty reasonable," said Dr. Ken Cowan, director of the Eppley Cancer Center. "We understand the opponents comments. They all had good things to say about the project itself."
"In a time of tight budgets, the county has no business getting into this," said John McCollister of The Platte Institute. "The county isn't a charitable foundation. It's county government which provides essential services."
"I see the value in it," said Commissioner Mary Ann Borgeson, who said this fits into the private/public partnerships the board tries to foster.
"95-98% of the funds we distribute are earmarked for specific projects," John Niemann, Senior VP of the University of Nebraska Foundation told the board. He was responding to other speakers who questioned why the $1.7-billion in the foundation's bank account couldn't be used for the cancer complex instead of tax dollars.
A public hearing on Omaha's proposed occupation tax on cigarettes for this project will be held September 25.
Later this month, the Omaha City Council will vote on whether to raise the tax on cigarettes to raise $35-million in the next decade for the same cancer complex.
Some tobacco store owners have said the new tax could put them out of business because smokers will just drive out of the city to buy cigarettes.
Tax conscious organizations question why a foundation with $1.7-billion in the bank needs help from the taxpayer.
UNMC will appear before the boards to make the case why the project is worthy.
"Cigarette smoke is loaded with things that damage your DNA," said Dr. Ken Cowan, director of the UNMC Eppley Cancer Center said, "This project will help us transform the way we help patients in the future -- providing much more hope for them on an individual basis."
Cowan says while the University Foundation has money -- much of it is earmarked for specific projects -- and not the cancer complex.
"As it stands right now, we would definitely be opposed to it," said Chip Maxwell of the Omaha Alliance. He doesn't understand why government would spend millions to build the facility when the city and county have so many other glaring needs.
"It is the largest health care problem in Nebraska," said Dr. Cowan. "One out of two men -- one out of three women will be diagnosed with cancer in their lifetime."
UNMC says the complex would allow a whole host of specialties (inpatient rooms, research, clinics, diagnostics, etc.) to be housed under the same roof so cancer patients get quicker and more targeted treatment to stay alive.
The $40-million would be a part of the $200-million UNMC is arranging for the public/private partnership. The state of Nebraska will contribute $50-million. The cancer complex will fund the remaining $120-million with bonds. Total price for the project is $370-million. Ground is expected to be broken in 2013.
The public hearing on the cigarette tax before the Omaha City Council will be September 25.
The Nebraska Attorney General was asked if Douglas County can use Interitance Tax Funds in this way. A spokesperson for the AG office tells Channel 6 News that the question is about spending authority so it didn't offer a formal opinion. "We directed Douglas County to the statute outlining their authority to proceed."
This year, the restaurant tax is expected to put $25 million into the city's treasury. The tax sparked complaints that one industry was being targeted unfairly. The courts have ruled cities can do that.
The idea now gaining traction at City Hall centers on adding an Omaha occupation tax to every pack of cigarettes. How much is still being worked out, but the idea is to bring in $3.5 million every year for the next decade.
The money won't be used in the city budget. Instead, it would go towards the building of a cancer complex on the UNMC and Nebraska Medical Center campus.
Opponents believe there are better ways to pay for it. “We did a little research and found out that the University of Nebraska Foundation as of last year had $1.7 billion in its coffers,” says Doug Kagan with Nebraska Taxpayers for Freedom. “We believe that if it’s imperative in people's minds that we fund this cancer center at UNMC that they look to the NU foundation for funding."
Tobacco outlets have a hard time understanding why the industry is being targeted. At the Tobacco Hut at 84th Street and Park Drive in Omaha, the owner saw plenty of business leave his stores in Iowa when the tax was raised. He expects the same thing if Omaha goes along with a plan to hit cigarettes with an occupation tax. Smokers will just drive out of the city to make their purchase.
"The core functions of city government are police, fire and public works,” says Chip Maxwell with the Omaha Alliance. “You could also make the argument for parks, pools and libraries, which many families use, but now we're talking about another realm with the city forcing its taxpayers to subsidize medical research at the state university?”
Earlier this year, the plan, which includes the UNMC Cancer Center and other NU medical-related facilities in other cities, came with a $91 million request from state taxpayers. Eventually, taxpayers will kick in $50 million.
Opponents believe this occupation tax on cigarettes is the easy way to make up the difference.