LINCOLN -- Republican River Basin Natural Resources Districts were back in court Monday, defending the constitutionality of an occupation tax collected on irrigated acres in the Republican Basin in 2008.
A lawsuit filed by several Republican River basin landowners against the State of Nebraska and the Upper, Middle and Lower Republican Natural Resources Districts, claims that the occupation tax brought on by LB701 is unconstitutional, as it is only imposed upon residents of the Republican River basin while the returns from those taxes directly benefit the State of Nebraska by helping to achieve compliance with the Republican River Compact.
The suit went to trial in the Lancaster County District Court in Lincoln on Monday, Dec. 14; a decision from Judge Robert R. Otte is anticipated in early 2010.
LB701 was enacted by the Nebraska Legislature in 2007, granting both property tax and occupation tax authority to the NRDs; planning to utilize these tax proceeds, the NRDs purchased surface water for streamflow augmentation from more than 350 irrigators for a total of $8.8 million.
The challenging lawsuit was filed later that fall, and the property tax portion of LB 701 was ruled unconstitutional by Lancaster County District Court Judge Paul D. Merritt Jr. in May of 2008.
A constitutional ruling for the occupation tax would give Republican River NRDs a funding mechanism for future projects within the basin -- projects such as augmentation and conservation programs, which would decrease the risk of lowered allocations for basin irrigators.
On a related note, in an effort to legally refund property taxes that were declared unconstitutional, the NRDs are currently seeking a declaratory judgment from local district courts.