Bureau of Business Research


Date of this Version



A Bureau of Business Research Report From the University of Nebraska–Lincoln. Prepared for the Lincoln Chamber of Commerce by Bureau of Business Research, Department of Economics, College of Business Administration, University of Nebraska–Lincoln.


A growing economy and population in Lincoln, Nebraska have generated an expanding tax base for the city. Growth has been especially rapid in the property tax base. As noted in a recent report by the UNL Bureau of Business Research (2005), the average new housing unit generates annual property taxes for the City of Lincoln substantially greater than does the average existing housing unit. This additional property value is referred to as the “growth dividend” in the Bureau of Business Research report. This growth dividend is available for a variety of uses, including capital outlays on infrastructure, tax relief, or increases in non-capital expenditures by the City of Lincoln. This report examined how the city’s growth dividend has been allocated. The main findings of the report are as follows:

• Government expenditures rose at roughly the same rate as personal income in Lincoln during the 1990 to 2005 period. In other words, city government is approximately the same share of the Lincoln economy in 2005 as it was in 1990.

• There was a significant decline in the City of Lincoln’s property tax levy during the period. The city’s wheel tax, however, increased in the mid-1990s.

• At the same time that expenditures rose and property tax rates fell, the city also was able to rapidly increase capital outlay on infrastructure beginning in 1999. Much of the increase in capital outlay was for road infrastructure. Capital investment in roads occurred in both new neighborhoods and in existing areas such as downtown neighborhoods surrounding the Antelope Valley Project.

• Lincoln’s property and sales tax base, including the growth dividend, contributed to capital outlay for parks, fire, library, storm sewer infrastructure, and street lights, but did not contribute to other types of infrastructure for streets and highways.

• The increase in capital outlay for streets and highways was largely fueled by rapid increases in intergovernmental transfers to the city, although local funding sources also expanded during the 1990 to 2005 period. The city raised the wheel tax, instituted impact fees, and increased property taxes for the county-wide Railroad Transportation Safety District (RTSD). Part of the increase in wheel tax, however, was devoted to fund snow removal, rather than street infrastructure.

• Options to maintain capital spending at the current level could include efforts to maintain recent large increases in intergovernmental transfers. Another approach would be for the City of Lincoln to allocate a larger portion of the growth dividend toward funding street and highway infrastructure while continuing to also use a portion for tax relief or non-capital expenditures.