Land owners to get NRD tax credits

There will be no check in the mail for property owners who paid LB 701 taxes, taxes later declared unconstitutional by the Nebraska Supreme Court.

Instead, property owners in the Republican River Basin will pay a little less next year in their NRD taxes.

Sen. Mark Christensen said the property taxes will be refunded as an offset against taxes levied next year by the NRDs, instead of an automatic refund.

According to Christensen, this offset will be indicated in next years' summary tax statement.

Speaking at the Government Affairs Legislature conference call at the McCook Area Chamber of Commerce this morning, Christensen said a bill that would have authorized an automatic refund of the taxes was fought by other senators, concerned that it could lead to protests against other taxing entities, such as schools or counties.

"This was the only way we could come up with to get the money back to everyone," he said.

About $2.5 million has been collected by the three Republican River Basin NRDs since 2007, under the additional tax authorized by LB 701. A lawsuit filed by "Friends of the River" challenged the tax and in February, the Nebraska Supreme Court ruled the property tax levy unconstitutional, as it used local funds for the state purpose of compliance with the Republican River Compact

Occupation taxes on irrigated acres, also allowed under LB 701, have garnered about $6.5 million for the three NRDs. A lawsuit challenging those taxes has been filed in Lancaster District Court in Lincoln.

The occupation tax is still being collected by the Upper NRD; the Middle and Lower NRDs collected it for one year.

Christensen said the three NRDs will be looking at decreasing their budgets to pay back the nearly $9 million they borrowed from the state in 2008. Those funds were used to pay irrigators for water the NRDs purchased. The NRD's have until 2013 to repay the funds, Christensen said, but he personally felt nothing will be arranged until the occupation tax is settled.

Next year, he plans to forward two bills to address the issue, one to open up the closed class segment in LB 701, thus allowing occupation taxes, and another for forgiveness of the state loan.

Another bill regarding the bonding authority of NRDs was advanced in the Legislature this week and could have effects down the road for other NRDs, Christensen added.

LB 160 authorizes a natural resources district which encompasses a city of the metropolitan class, in this case the Papio-Missouri NRD in Omaha, to dedicate a portion of its existing tax levy to finance flood protection and water quality enhancement projects through the issuance of bonds. Introduced by Papillion Sen. Tim Gay, voter approval would be required if the bond levy rate were to exceed one cent and the county could override the bonding.

This is the second attempt to get bonding authority for NRDs, Christensen said, with the first try coming with LB 701. The passage of this bill could affect bonding ability by other NRDs, he said.