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Middle Republican NRD corrects news story, clarifies occupation tax issues

Thursday, December 16, 2010

CURTIS, Nebraska -- A recent story in the McCook Gazette reporting on the agenda items for the Tuesday Dec. 14 meeting of the board of directors reported that we were restating the occupation tax approved by the board for their 2010-11 budget.

This story implied that the occupation tax was being set at 4.9 cents per $100 valuation. This statement was wrong. The occupation tax is a fee associated with irrigation activity and it is being set at $4.90 per irrigated acre.

It is not being assessed on any other property other than irrigated acres. The statues indicate that an NRD with an approved Integrated Management Plan may levy an occupation tax upon the activity of irrigation of agricultural lands not to exceed $10 per acre. This levy applies to all irrigated acres, both surface water and ground water in the district with the exception of irrigated land enrolled in the CREP program.

Assessor records are being used for surface water acres and NRD certified acres are being used for ground water irrigation. The statutes also limit the use of this tax to specific actions of the district. These uses are referred to as River-flow enhancement projects.

The tax will not be used for routine operation of the district. It is not used to buy equipment, pay salaries or any other daily operational activity. The $4.90 levied by the district for the current fiscal year will generate approximately $1.5 million dollars and will be used for the leasing of surface water or ground water irrigated acres, permanent retirement of irrigated acres and for augmentation of surface water flows.

We have also established a compensation fund to be used for the mandatory shutdown of irrigated acres should that event ever need to occur. Not enough funds are available in this compensation fund now, but we will continue to build this fund and will work to develop a dry year lease that could be implemented in lieu of a mandatory shutdown. These are plans that will be developed over the next year.

Several calls have been received at the office concerning this occupation tax. Many people think this tax was found to be unconstitutional. The original authority for this tax in legislation passed in 2007 has been challenged. The district court said that the occupation tax was constitutional and the parties making the challenge appealed that decision to the Nebraska Supreme Court. Arguments have been made before the court but we have not yet received their decision. Those funds have been held in escrow awaiting that decision. When those funds are determined to be constitutional, they will be used to repay a state loan for water leased in 2007. The occupation tax levied this year was under a new authority passed by the legislature this spring. This new legislation changed the language that resulted in the challenge to the original legislation. This new occupation tax can be used statewide by any NRD that is declared to be fully or over appropriated and has implemented an Integrated Management Plan that includes the authority to use this tax.

Nebraska is in compliance with the compact. Over 100,000 acre feet of water was passed into Kansas that could have been used in Nebraska. This will give us a cushion over the next few years that will make compliance easier. We must still work towards developing plans and programs that can respond to a dry year. While our usage from meter readings have not yet been completely determined, preliminary calculations indicate that we will have stayed within our compliance standards. Usage will be below 9 inches for the 2010 crop year. Using the occupation tax to implement programs and projects to help reduce our consumptive use or lease water to place in the stream in a dry year will help us maintain reasonable allocations and keep the economy of the region viable. Without the occupation tax to help fund these projects and programs, our only other alternative may be to severely reduce allocations for all users.

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