Members of the Revenue, Education, and Retirement Systems Committees heard more than six hours of testimony on a proposed property tax relief package on Wednesday. Most of the testimony was in opposition to the proposal. The package is found here, in AM1381 to LB289.

 

AM1381 would increase sales taxes by three-fourths of one cent to help fund more than $500 million in property tax relief through increased state aid to schools. Sales taxes would be imposed upon plumbing, moving, and certain veterinary services for pets, as well as soda, candy, and bottled water. Cigarette taxes would be increased by 36 cents per pack with the additional funds credited to the Property Tax Credit Cash Fund.

 

Property valuations would be reduced to 90 percent of actual value for commercial and residential property and to 65 percent of actual value for agricultural and horticultural land. Currently these properties are valued at 100 percent and 75 percent, respectively.

 

NACO testified that $28 billion in valuation statewide would be lost due to this reduction. In order to maintain the same level of funding under the reduced valuation, one county would have to increase its levy to 55 cents per one hundred dollars of valuation and the levy for five others would have to be increased to exceed 45 cents. Because counties are subject to a constitutional levy limit of 50 cents, the Legislature cannot adjust this minimum rate. A vote of the people is required.

 

An executive session of the Revenue Committee was scheduled for Thursday to consider advancing the proposal to the floor for debate by the full legislature. If this occurs, it is likely to need at least 33 votes to overcome a filibuster and then 30 votes to override a gubernatorial veto.

The Attorney General issued opinions on the constitutionality of two property tax proposals this week.

Senator Tom Briese asked whether LB183, which would provide for agricultural and horticultural land to be valued at 50 percent of actual value for purposes of school district taxes levied to pay principal and interest on bonds, is constitutional. For purposes other than school bonds, this land would be valued at its current rate of 75 percent of its actual value. The opinion examined whether LB183 violates the Nebraska Constitution's uniformity clause in Art. VIII, sec. 1.

 

The uniformity clause provides that taxes shall be levied by valuation uniformly and proportionately upon all real property and franchises unless otherwise provided by the Constitution. Agricultural and horticultural land is treated as a separate and distinct class of property and valued at 75 percent of actual value.

 

The opinion found that there is no precedent for creating different levels of value within the class of agricultural and horticultural land based on the purpose for which the taxes are levied. Because the Legislature has broad authority to tax and value such land in a way that results in values that are not uniform with other real property, the Attorney General could not clearly say that LB183 is unconstitutional. The full text of the opinion is available here.

 

Senator Ernie Chambers sought an opinion on whether AM1217 to LB512, which would allow county boards of equalization to adjust the valuation of property destroyed by fire or other natural disaster between January 1 and October 1, violates the uniformity clause. As advanced to Select File, LB512 contains some provisions that were originally introduced in LB482 and became part of LB512 through AM1217. AM1217 provides that the county assessor must report to the county board all real property that becomes destroyed. The county board of equalization must adjust the value of the property through a formula based upon the initial value of the property, the value of the destroyed property, the value of any replacement property, and the portion of the year applicable to each.

 

Because the Nebraska Supreme Court has not ruled on this issue, the Attorney General could not state that AM1217 is clearly unconstitutional. The opinion noted that it is possible that the Court could find that AM1217 establishes a second, non-uniform standard of value for destroyed real property. It is also possible that the Court could determine that a "substantial difference of situation or circumstances ... naturally suggest the justice or expediency of diverse legislation" providing for the creation of a different assessment date and adjustment of assessed value of the destroyed property on that date does not violate the uniformity clause.

 

The opinion recommended several changes to the bill. First, language should be added to § 77-1301(1) to exclude "destroyed real property" from the January 1 assessment date. Under § 77-1301, all real property shall be assessed at of January 1 at 12:01 and this assessment is used until the next assessment.

 

Next, the definition of "destroyed real property" should be clarified to address fires caused by natural disasters and whether a property is completely uninhabitable or unfit for customary use.

 

Finally, the bill would apply to property destroyed before October 1 each year. Because the assessor must learn of and report the destroyed real property, the county board of equalization must meet to adjust the assessed value, and notice must be given to the record owner before levies are set on or before October 15, the time frame may need to be extended. The full text of the opinion is available here.

 

Much of the legislative floor debate on LB472 focused on whether a vote of county residents should be required to impose the sales tax. Governor Ricketts focused on this issue in his veto message. He said, "Fear that the people will not vote to increase their taxes should not lead the Legislature to circumvent taxpayers by allowing a political subdivision to impose a tax without the consent of those taxpayers. This bill sets a dangerous precedent for authorizing a sales tax increase."

 

Senator Myron Dorn introduced LB472 to assist Gage County in paying a $28.1 million judgment for the wrongful conviction of six Beatrice residents. He has filed a motion to override the veto.

On Thursday, senators gave second round approval to LB237, a bill that would increase county commissions for collecting motor vehicle taxes. The commission would not increase the amount of taxes collected but would redistribute motor vehicle sales taxes that are provided to counties and cities through the Highway Allocation Fund.

 

Until 2002, counties, retailers, and others collecting sales taxes on behalf of the state were paid a commission of 2.5 percent on the first $3,000 of collections and 0.5 percent on amounts in excess of $3,000. The distribution was altered in 2002 so that only the 2.5 percent commission on the first $3,000 of collections remained, thereby capping the total amount of commissions at no more than $75 per month, regardless of the amount collected.

 

LB237, as advanced, would add an additional one-half of one percent commission on all amounts in excess of $6,000 remitted each month. Prior to January 1, 2023, the money would be divided equally between the county general fund and the county road fund in order to provide additional funds for repair of roads damaged by flooding. After January 1, 2023, 75 percent of the additional amount would be placed in the county general fund and 25 percent would be deposited in the county road fund. The bill would take effect on January 1, 2020.

After three hours of debate on decommissioning and reclamation requirements for wind energy projects, time ran out before a General File vote was taken on LB700. As introduced, LB700 would place responsibility for decommissioning or reclamation costs for removal of aboveground or underground equipment and restoration of land to its natural state to persons owning, operating, or managing a wind energy conversion system.

 

A Natural Resources Committee amendment would replace the bill. It would require information to be provided to landowners about the materials and equipment that would be removed from and that would remain on the property when a wind turbine is decommissioned. Wind energy agreements executed on or after January 1, 2020 would have to provide for the removal of foundation material and equipment below grade and restoration of any void to the condition of the land prior to the installation. Decommissioned turbines that are repowered within 24 months would be exempt from this requirement. Political subdivisions could enact standards that exceed the requirements of the bill.

 

Counties were brought into the debate through a discussion of county zoning regulations on wind energy. Some senators asked whether county boards and property owners that are considering wind energy projects have the expertise to negotiate decommissioning and reclamation beyond boilerplate contract language offered by producers. County boards would not know how zoning regulations compare to provisions in private contracts between landowners and wind energy companies.

 

The bill may reappear on the agenda if the introducer, Senator Bruce Bostelman, can show adequate support to invoke cloture and vote on advancement.

Bills Reported out of Committee

Committees continue to send bills to the floor. This week the Government, Military and Veterans Affairs Committee advanced LB267 and LB414, among other bills.

 

LB237 was introduced by Senator Kate Bolz on behalf of Lancaster County to allow counties to use bonding authority in § 23-120 to repair or replace bridges owned by the county that are deemed scour critical or structurally deficient pursuant to Department of Transportation standards. A committee amendment would require a two-thirds majority vote of the county board to perform any of the purposes set out in § 23-120, including acquiring, constructing, remodeling, and furnishing a suitable courthouse, jail, and other county buildings. The county board could, by a two-thirds majority vote and a resolution that an emergency exists, repair, retrofit, reconstruct, or replace any bridge owned by the county that is 1) destroyed or damaged as a result of a natural disaster for which a federal disaster declaration was issued by the President, or 2) designated as scour critical or structurally deficient pursuant to Department of Transportation standards.

LB414 was introduced by Senator Tom Brandt at NACO's request to eliminate unnecessary reports that highway superintendents must submit to county boards. The information is already provided in the One-and-Six Year plans and the Standardized system of Annual Reporting (SSAR).

 

Bills Advanced from General File

LB184 would create the Small Wireless Facilities Deployment Act to facilitate the rapid development of 5G wireless coverage in Nebraska. As advanced from General File, wireless providers would have the right to collocate small wireless facilities and install, maintain, modify, operate and replace utility poles along, across, upon, and under the public right-of-way. Such placements would be considered a permitted use and not subject to zoning review or approval. The bill sets out application fees, timelines for approval of applications, pole heights, and other details.

 

LB560 would revise tax credit provisions of the Beginning Farmer Tax Credit Act. A Revenue Committee amendment would replace LB560 as introduced with provisions from LB623. LB623 would make changes to the Act to mirror current practices on subsequent applications, defining rent agreements, and clarifying that tax credits are refundable.

 

LB179 would authorize the appeal of certain motions on sovereign immunity as final orders in response to a Nebraska Supreme Court opinion.

 

LB86, as advanced from General File, would create procedures for declaring an area to be extremely blighted for purposes of workforce housing development. Projects in extremely blighted areas would be given priority when grants and loans from the Affordable Housing Trust Fund are allocated. An amendment, AM1199, was adopted to incorporate LB694 and LB737 to exempt political subdivisions, local housing authorities, and nonprofit organizations from matching fund requirements. Other sections would increase transparency and annual reporting of Trust funds by the Department of Economic Development. As introduced, LB86 would have increased the documentary stamp tax on properties valued at more than $1 million with proceeds credited to the Affordable Housing Trust Fund. This provision was removed by the Revenue Committee amendment.

 

LB470, a bill to make changes to the Nebraska Educational Savings Plan Trust, was amended to include a property tax exemption for military housing before advancing from General File. The exemption was introduced by Senator Mike McDonnell as LB444. Due to NACO's concerns about treating such housing as a homestead exemption, the amendment to LB470 changed to taxation as personal property with a payment in lieu of taxes divided by schools and the county and the creation of an infrastructure development fund.

 

Legislators took up Select File priority bills on Tuesday and advanced the bills listed below, among others.

 

LB524 would require political subdivisions that annex property to report it to county clerks and assessors before July 1 if they want it to be included in the current year's certified valuation. Current law only requires that the annexation occur before August 1 in order to be included in the current year's valuation, and does not necessarily require notice to the county assessor. Senator Myron Dorn introduced the bill on NACO's behalf to create clarity in the process for notifying counties of annexations and provide more time to make changes to taxing district boundaries after an annexation. The bill carves out an exception for cities of the metropolitan class.

 

LB638 would change the guidelines for automatic transfers from the state's General Fund to the Cash Reserve Fund when tax collections exceed the certified forecast.

 

LB496 would increase penalties for tampering with witnesses, informants, juries, and physical evidence so that the tampering sentence would match the underlying felony charge. A technical change suggested by the bill drafting office was adopted before the bill advanced.

 

LB698 would prohibit commercial motor vehicles and trailers from traveling on highways unless the cargo or contents are property distributed and adequately secured to prevent them from falling from the vehicle. Violations are considered an infraction subject to a $200 fine for the first violation and $500 for a second or subsequent offense. The owner could also be subject to a civil penalty of $1,000. An emergency clause was adopted before the bill advanced from Select File.

 

LB641 would use money from the Health Care Cash Fund to operate the 211 Information and Referral Network for two years. 211 is a community resources hotline that is currently operated by the United Way of the Midlands.

 

LB663 would make corrections to like-kind exchange laws adopted last year. Last year's laws were intended to retain Nebraska's tax policy allowing the exchange of similar kinds of equipment despite federal tax law changes. However, further revisions were needed this year to clarify the process.

 

LB222 would transfer responsibility for certifying the list of volunteer emergency responders eligible for a $250 income tax credit from counties to the volunteer's fire or rescue department. The department's certification manager would file the information directly with the Department of Revenue and send a copy of the list, either by mail or electronically, to the governing body of the county, city, village, or rural or suburban fire district. The volunteer would claim the credit by including a copy of the certification with their income tax return. The bill would become operative on January 1, 2020.

 

LB23 would recognize the Property Assessed Clean Energy Act (PACE) as an economic development tool. The bill would set minimum and maximum periods of time that energy efficiency improvements could be financed by a municipality through a PACE district.

 

LB356 would create new wildlife conservation specialty license plates supporting sandhill cranes, bighorn sheep, and ornate box turtles. The distribution of proceeds between the Department of Motor Vehicles Cash Fund and the Highway Trust Fund would be standardized among types of specialty plates. The Department of Motor Vehicles would be allowed to cease issuance of certain specialty plates at the next issuance cycle if fewer than 250 plates were issued during the prior two-year period.

 

LB6 would change residency requirements for spouses and children of active duty military personnel who are assigned to duty outside of Nebraska. The bill would allow postsecondary students to be considered as in-state residents for purposes of determining tuition rates.

 

LB405 would update statutory references to the International Building Code and International Residential Code that are used by the state, counties and cities. Counties, cities, and villages would have to notify the State Energy Office within 30 days if they amend the local building code in a way that deletes portions of the state code. The bill would take effect on July 1, 2020.

 

LB130 would require new residential construction to use radon resistant construction standards.

 

LB177 would provide for a five-year extension of bonding authority for the Papio Missouri natural resources district.

 

Bills Signed by Governor Ricketts

On April 24, Governor Ricketts signed several bills impacting counties.

 

LB212 harmonizes deadlines for the publication of proposed budget statements by counties and other entities to match language adopted in 2017. It incorporates publication language from LB191 and LB239, which was introduced by Senator Myron Dorn at NACO's request. The bill would also expand the use of technology by certain public entities that are already permitted to conduct meetings by video or telephone conference.

 

LB320 revises the Pesticide Act by updating federal regulations and clarifying product registration requirements.

 

LB352 requires prosecutors to track the testimony of jailhouse informants who ask for or receive leniency due to their statements about inmates and other defendants.

 

LB390 requires law enforcement agencies that provide school resources officers and security agencies that provide security guards to schools to enter into memorandums of understanding about training, recordkeeping, and policies. The agreements must address the student actions that are resolved as disciplinary issues and those that are referred to law enforcement for prosecution.