CURTIS -- How to refund property taxes collected under LB 701, taxes later ruled illegal by the Nebraska Supreme Court, will be up to a judge to decide.
Board members of the Middle Republican natural resources district voted Tuesday night at its regular meeting to retain a lawyer, who will ask for a declaratory judgement from the district court as to the responsibilities of the NRDs in repaying these taxes.
The court order will give the NRDs guidance as to how to refund these taxes as currently there is no procedure to do so, said Dan Smith, MRNRD general manager. Under state law, the taxes can be used only to issue a bond or to pay back the state, he said.
In February, the Nebraska Supreme Court declared that the taxes were unconstitutional as the state constitution prohibits the state from collecting local property taxes to pay for a state purpose or responsibility, in this case, Nebraska's compliance with the Republican River Basin compact.
The NRDs had hoped to have Legislative guidance on how to repay the taxes but a bill introduced this session was never advanced.
Options that were discussed by District 44 State Senator Mark Christensen this year included an offset from next year's tax levy or a direct check.
Smith said property taxes collected under LB 701 are now in separate bank accounts of the Middle, Upper and Lower NRDs. The property taxes are also being kept separate from the occupation taxes collected under LB 701.
About $2.5 million in LB 701 property taxes were collected by three NRDs in the Republican River Basin. Occupation taxes on irrigated acres, also allowed under LB 701, have garnered about $6.5 million for the three NRDs.
A lawsuit that contends the occupation taxes are illegal is pending in Lancaster District Court.