The Most Powerful City in the United States
It's Omaha, Nebraska. No, Omaha hasn't supplanted New York City as the world's financial center, nor displaced Washington, D.C., as our capital. But NYC ...
But NYC and D.C. can only wish (and do wish) to have the same power over their suburbs that Omaha possesses over its own. That's one thing I discovered when writing a feature on commuter taxes and annexation for the April issue of Governing.
Omaha recently completed an annexation that a couple of experts told me might not be possible anywhere else in the country. The city gobbled up Elkhorn (population 8,200).
Elkhorn was an incorporated town and, in most states, two incorporated municipalities can only combine through a consolidation approved by both of them. Elkhorn didn't want to join Omaha. However, under Nebraska law Omaha can annex an incorporated town without its consent, so long as the town's population is less than 10,000.
That rule prompted Elkhorn to pursue a fruitless quest to engage in annexations of its own to boost its population over the 10,000 threshold (way to sacrifice the moral high ground, Elkhorn!). In March, the non-consensual consolidation became reality.
Omaha's tax powers are just as unusual. Last year, the city extended its car registration fee to some surrounding unincorporated areas. This revenue didn't go to a regional taxing authority, but rather straight to Omaha's coffers. Nor is any of it being returned to the areas outside city limits. And Omaha didn't start providing any services to these places either.
In other words, the city simply started taxing people outside of its jurisdiction, people who hadn't voted for any of its elected leaders. State law simply says that the tax can't apply to anyone who drives fewer than 30 days a year in the city. For now, Omaha is using its power magnanimously, allowing anyone to fill out a form and opt out.
That fact might provide little solace for folks in these unincorporated areas. If they need a silver lining, this will have to do: They'll be annexed soon.
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