OMAHA, Neb. (AP) — The Nebraska Supreme Court on Friday rejected a challenge to Omaha's 2.5 percent dining tax on all restaurants within city limits.
The appeal came from two Omaha restaurants and restaurant owner Anthony Fucinaro Jr., who sued to stop the tax, saying it amounts to a sales tax that the city does not have the authority to enact without a referendum. Even if found to be an occupation tax, the restaurants argued it violates limitations in the Nebraska Liquor Control Act on the amount of occupation tax for liquor license holders.
Also, the ordinance setting up the tax is unconstitutional special legislation, the restaurants argued.
In April, Douglas County District Judge Marlon Polk dismissed the lawsuit, upholding the tax, which was imposed on restaurant, bar and catering bills. It went into effect in October 2010 and has raised millions of dollars for the city.
On Friday, the Nebraska Supreme Court affirmed the lower court's dismissal of the lawsuit, saying there was no merit in the restaurants' arguments.
"The restaurant ordinance is not an illegal sales tax, does not violate (state law) as applied to liquor licensees, and does not violate the prohibition against special legislation," state Supreme Court Judge Michael McCormack wrote for the court.
An attorney for the restaurants, Woody Bradford of Omaha, said Friday he had not had a chance to read the entire opinion and planned to explore options for challenging the ruling.
"We're obviously disappointed," Bradford said.
Omaha deputy city attorney Thomas Mumgaard did not immediately return a message left Friday by The Associated Press seeking comment.