LINCOLN -- Residents of Southwest Nebraska who paid millions in property taxes under part of a water law deemed unconstitutional by the state Supreme Court could get their money back.
On Thursday, State Sen. Mark Christensen of Imperial said he would introduce a measure to the Legislature requiring that residents of the Republican River basin be repaid the roughly $2 million to $2.5 million in property taxes.
"I believe a refund of all property taxes ... is an honorable thing for the Legislature to do," Christensen told the Legislature's Natural Resources Committee at a hearing for another bill he has introduced, LB 651.
The ability of natural resources districts in the river basin to collect more property taxes was granted by state lawmakers in 2007, at the same time Kansas was complaining of Nebraska's overuse of Republican River water.
Kansas says Nebraska has violated the agreement in 2005 and 2006 by using billions of gallons more than Nebraska had any right to. Now, Kansas wants millions of dollars from its northern neighbor.
Natural resources districts in the Republican River basin already set property taxes, but the 2007 law gave them the authority to collect more.
That money was supposed to repay bonds that would finance measures to send Kansas the water it is owed in future years. Those measures included buying water from farmers, paying farmers to take land out of irrigated production and maybe even pumping groundwater into the river to send to Kansas.
But the Nebraska Supreme Court said earlier this month that the additional property taxing authority was primarily for state, not local, purposes and was therefore unconstitutional.
Still standing is a per-acre tax on irrigated land, but that, too, is being challenged as unconstitutional.
While it may seem obvious that residents of the basin would be refunded property taxes they paid under a law ruled unconstitutional, Christensen said it appeared that only those residents who formally protested payment of the taxes might get their money back.
Under the amendment he plans to attach to a bill (LB 651), residents would be refunded the money even if they hadn't filed a formal protest.
Several testified for and against LB 651, which creates the Water Resources Revolving Loan Fund, where NRDs can borrow money to pay for projects in their district. The fund is to be initially financed by the $9 million owed to the state by the three Republican River Basin NRDs, who borrowed the money last year to pay for water they purchased in 2007. That water was sent to Kansas to help comply with the Republican River Compact, an interstate agreement between Nebraska, Kansas and Colorado that allocates water usage from the river.
Those testifying in favor of LB 651 included Dan Smith, Middle Republican Natural Resources District manager, Jasper Fanning, Upper Republican Natural Resources District manager and Dean Edson, the executive director of Nebraska Association of Resources Districts, a group that provides governmental assistance for Nebraska NRDs.
Those testifying against it were James Uerling and Buck Haag, both board members of the MRNRD, Claude Cappel, a rancher from McCook and Brad Edgerton, manager of the Frenchman Cambridge Irrigation District.
Smith and Fanning supported the bill as a viable way for NRDs to help finance projects that otherwise could not be funded. These projects could include studies about groundwater supplies in addition to infrastructure costs and augmentation, when water is piped. LB 651 would allow NRDs not to have to cut into budgets to secure funding, they said.
In speaking against LB 651, Haag said it added another layer to bureaucracy to an already complicated situation and that more money made available would just be more money spent. Instead, he advocated sustainability by reducing allocations, so the same amount of water pumped out is put back in.
He also asked for an amendment that would prohibit water purchases, that he called a "stop-gap" measure that doesn't solve the problem.
Cutting allocations to sustainable levels would be painful but not impossible, he added.