The Friends of the River are challenging the constitutionality of the property tax being levied for compact compliance with Kansas regarding the Republican River.
They are basing this challenge on the idea that the Nebraska Constitution prohibits the use of property tax dollars for state purposes. Most agree that compact compliance is a state responsibility. This seems to imply that the use of property tax dollars, as permitted in LB701, is unconstitutional.
However, Article VII, Section 1 of the Nebraska Constitution says:
The Legislature shall provide for the free instruction in the common schools of this state of all persons between the ages of five and twenty-one years. The Legislature may provide for the education of other persons in educational institutions owned and controlled by the state or a political subdivision thereof.
This clause in the Constitution makes the education of our youth a State responsibility. Schools are told what to teach, how long to teach, what credentials must be carried by teachers, and a myriad of other regulations controlling education. Teachers' pension funds and health care plans are controlled by the State. Yet, property taxes are the financial foundation of the educational system in Nebraska.
How does our government reconcile the prohibition of property taxes for state purposes with its obligation to provide free education to our youth while, at the same time, using property taxes to fund the educational system?
It does it by saying that property tax dollars for education can only be spent by the local board for local purposes and are under the control of a local board. Even though the state gives a large number of directives to a school board, the courts have ruled that, since the local board retains control, the property tax for a state purpose prohibition has not been violated.
A court case would need to not only show that compact compliance is a state purpose but also that the State is controlling the property tax dollars permitted in LB701. LB701 permits the NRDs to collect a property tax and use that money within their district or within an area subject to an interlocal agreement in order to comply with a state directive.
If the property tax portion of the bill is overturned, then it would seem that the financial foundation of our educational system would also be threatened.
While none of us like taxes, there is a concern that this is not as clear-cut of a case as it might first appear. Also, keep in mind that the new water tax on a $100,000 house maxes out at $100 a year while the per-acre taxes and fees paid on one typical center pivot will be about $1,550 a year.
While some argue that the irrigator is the beneficiary of the income produced by irrigation and that only the farmer should pay any tax for compliance purposes, the irrigator has a hard time understanding why he should pay 90 percent of the bill when he only causes 10 percent to 15 percent of the problem.
There are many who are not happy about the water issue and what it is costing us. Remember, farmers are the largest property tax payers already. And, irrigators are now getting hit with multiple new taxes while simultaneously having the morality of their livelihoods attacked. There are those who want irrigation shut down. If that happens, the irrigators see their ability to pay the taxes reduced.
Property tax payers are tired of paying all of the bills. When the state tells us what to do, when to do it, and how to do it, then the State should pay the bill. But, it is important that we have a solution, sooner rather than later. We are concerned that a lawsuit may cost our communities and schools much more than if an unfair tax is used.
But, if the state steps in and takes control of water policy by activating the Interrelated Water Review Board, then the State is in control. When that happens, both the property tax and the per-acre fees (a form of property tax) appear to be unconstitutional.
The property taxes and fees only appear to be constitutional as long the local NRDs retain control. The State can threaten as much as they want; but as long as the NRD makes the final decisions, then the taxes appear to be constitutional. However, if the State takes control of policy (some argue that it already is in control since it has to approve the NRDs' plans before they can be implemented), then it seems that the State has to pay the bill with something other than property taxes and per-acre fees. We just don't want to see the economy of the area destroyed while everyone argues about the best way to fix things.