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Wednesday, May 4, 2016

Method uncertain for LB 701 refunds

Wednesday, February 11, 2009

CURTIS -- The Middle Republican Natural Resources District has collected about $2.5 million in property and occupation taxes under the law created by LB 701 -- but how the property taxes are returned to taxpayers in the district is unclear at this point, according to Dan Smith, MRNRD general manager.

A Feb. 6 decision by the Nebraska Supreme Court threw out the property tax authorized in LB 701 and ruled the tax unconstitutional, as it was used for a state issue, compliance with the Republican River Compact. The three-state compact allocates water usage of the river with Kansas, Nebraska and Colorado.

The recent ruling affects about $700,000 collected in property taxes in the MRNRD. About $1.9 million has been collected in occupation taxes.

Smith told board members at the regular board meeting Tuesday night that the decision was "narrow" as it did not address other projects the taxes would have paid for, such as augmentation.

"(The ruling) didn't answer any questions but generated a whole lot more," perhaps affecting other water agreements in the state, he said.

It was Smith's understanding that the attorney general would be in contact with local counties about refunding the property taxes, but he also said that the taxes may be used to pay back the state the nearly $9 million the three Republican River Basin NRDs borrowed in 2008, to pay irrigators for water purchased in 2007. The water was sent downstream to Kansas, to meet water allocations set under the compact.

Raising the current NRD property tax to pay back the $9 million owed to the state is not an option, Smith continued, as a tax cannot be levied to pay off another tax.

The occupation and property taxes collected so far by the MRNRD are being held in separate accounts, he said. The full amount will not be refunded, as county treasurer's collected one percent of all taxes levied under LB701, Smith added.

Although the property tax was eliminated by the Supreme Court ruling, NRD bonding authority and the occupation taxes are still intact, he said.

According to Smith, the occupation taxe is totally different than property taxes as it targets a specific activity. Under LB 701, occupation taxes are paid on irrigated acres; a lawsuit challenging that tax is still pending.

Board member Joe Anderjaski asked if the supreme court ruling jeopardized other taxing entities, such as schools, and Smith answered that that issue was addressed before in court.

Another board member Buck Haag, pointed out that local voters have a say in school bonding taxes.

The attorney general's office has 30 days from the day of the ruling to file a motion to reconsider, Smith said.

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