Tax refund lawsuit is dismissed

Thursday, April 1, 2010

The latest attempt to return unconstitutional property taxes collected three years ago under the water law LB 701 has sunk.

Red Willow County District Court Judge David Urbom has dismissed a case brought by the three natural resources districts in the Republican River Basin. The NRDs asked for a declaratory judgment allowing them the authority to refund about $2.5 million in property taxes collected in 2007. A lawsuit was filed and the taxes were ruled unconstitutional by the Nebraska Supreme Court in 2009.

Under state law, there is no mechanism to refund property taxes.

Two proposed laws that would have provided a mechanism to refund the taxes were shot down by the state legislature. One came from Gov. Dave Heineman in 2009 and another in this year's session by State Sen. Mark Christensen. Opponents said the laws could be used against other governmental agencies that use property taxes, such as schools.

Judge Urbom said in his March 19 decision that a declaratory judgement did not have the authority to refund the taxes and that there must be an judicial controversy to issue such a judgement. A judicial controversy was not proved by the NRDs, he wrote in his ruling.

He added in his decision, "If I had my druthers, I would order the plaintiff (the NRDs) to refund the taxes collected to all taxpayers. However, I believe this court is without jurisdiction to make such an order and that any authority to refund the taxes collected under LB 701 will need to come from the Nebraska legislature."

The NRDs had argued that there was a legal controversy, as they had received a letter from a taxpayer who threaten legal action if he did not receive a refund of his property taxes collected under LB 701.

"It would have been nice to have a good, clear decision," said MRNRD general manager Dan Smith, of the ruling.

He said it was disappointing in some respects, as it was board's intent to refund all the taxes, whether a tax protest was filed or not.

The board will evaluate its next step at its regular April 13 meeting. Smith said this could include a decreased property tax levy. It wouldn't add up dollar for dollar per taxpayer, he said, as some taxpayers paid more than others, but it would be one way to address the issue.

Respond to this story

Posting a comment requires free registration: