1992 Primary and General Elections

Constitutional amendment No. 1 appeared on the 1992 Primary Election ballot through the passage of LR 219CA by the Nebraska Legislature.  LR 219CA was the companion piece of legislation to LB 1063, both relating to the personal property tax crisis of the early 1990s.

In July 1991, the Nebraska Supreme Court ruled that Nebraska statutes providing exemptions for certain classes of personal property (agricultural equipment, business inventory, farm inventory, livestock, and railroad rolling stock) violated Article VIII, section 1, of the Nebraska Constitution (the "Uniformity Clause") which provides that "taxes shall be levied by valuation uniformly and proportionately upon all tangible property and franchises ... and the Equal Protection Clause of the United States Constitution.

Since that ruling, efforts to avoid further lawsuits by "fixing" the personal property tax system have dominated the attention of the Legislature.  It appeared from the outset that the Legislature would either have to refrain from treating different classes of personal property differently (that is, taxing some classes while exempting others) or to amend Article VIII, section 1, of the Nebraska Constitution to render such differential tax treatment constitutional.

Previous decisions of the Nebraska Supreme Court had brought this problem to the crisis point.  In July 1989, the Nebraska Supreme Court ruled that Nebraska could not tax pipeline property differently from railroad property.  Railroad personal property had been largely exempted from taxation because it was felt that such taxation would violate the federal 4-R Act.

During a special legislative session in November 1989, LB 7S1 was passed in an attempt to create a special class for railroad personal property.  It was hoped that this would allow the Legislature to treat railroad property and pipeline property differently.  However, in March 1991, the Nebraska Supreme Court held that this law violated Article III, section 18, of the Nebraska Constitution which prohibits the passage of local or special laws "[g]ranting to any corporation, association, or individual, any special or exclusive privileges, immunity or franchise ...".

In its decision, the Nebraska Supreme Court indicated that LB 7S1 also violated the Uniformity Clause and explained that the federal 4-R Act did not prohibit states from taxing railroad property but only prohibited states from taxing railroad property in a discriminatory manner.  This series of legislative and court actions set the stage for the 1991 legislative session.

During the 1991 legislative session, LB 829 was passed as a short-term solution to the personal property tax crisis.  LB 829 created a one-year moratorium on the collection of personal property taxes and offset the resulting revenue loss to political subdivisions with increased state aid funded by a variety of state taxes and fees.  Governor Nelson also established the Revenue, Restructuring, and Revitalization Committee (3-R Committee) which was charged with the responsibility of developing a long-term solution to Nebraska's personal property tax crisis.

As a result of the 3-R Committee's deliberations, two measures (LR 219CA and LB 1063) were introduced at the beginning of the 1992 session.  LR 219CA presented the voters with a constitutional amendment eliminating the application of the Uniformity Clause to personal property, allowing a net book value approach to assessing personal property, and creating a special class for federally protected property.

It was argued that the adoption of this amendment would render existing personal property tax policies which tax some classes of personal property while exempting others constitutional, thus eliminating the primary legal arguments upon which recent successful personal property tax lawsuits had been based.  LR 219CA was adopted by the Legislature and approved by 58 percent of Nebraska voters on May 12, 1992.

Meanwhile, following lengthy debate and the introduction of numerous amendments, LB 1063 had passed with the emergency clause by a vote of 33-15-1 and was approved by the Governor on March 18, 1992.  Because the bill was adopted before the voters had approved the constitutional amendment, the bill contained language providing alternative taxation approaches, each of which was contingent on the outcome of the vote on the constitutional amendment.

That portion of LB 1063 which assumed passage of the constitutional amendment outlined revisions in personal property taxation whereby farm machinery and equipment, breeding livestock, and business machinery and equipment were taxed on a net book value basis (cost minus accumulated depreciation).  The bill also granted purchasers of farm machinery a 100 percent sales tax refund and imposed a new tax on fertilizers at a rate of $4.00 per ton sold.  The fertilizer tax is paid by the purchaser and collected by the retailer.

Additional provisions of LB 1063 included $3.5 million in reductions in state aid to counties and adjustments in the sales tax collection fee rates.  The new collection fee rates are 2.5 percent of the first $3,000 sales tax remitted each month and .5 percent on remittances of more than $3,000 per month.

It is important to note that the enactment of LB 1063 and the adoption of LR 219CA did not lay the personal property tax issue to rest.  The personal property tax crisis would continue to be one of the major issues addressed by the Legislature for several years after the 1992 Primary Election.

Constitutional Amendment No. 1
LR 219CA, a constitutional amendment to separate tangible personal property from the uniform and proportionate provision applicable to real property, to provide for the valuation of taxable tangible personal property at depreciation cost or at actual value uniformly and proportionately, to provide for the separate classification of property and franchises protected by federal law, to harmonize a provision relating to the limitation on county taxes, and to provide that legislation passed in the regular 1992 legislative session shall be effective January 1, 1992, and is ratified and confirmed by this amendment.
County	For	%	Against	%	Voting
Adams	4,672	74.84%	1,571	25.16%	6,243
Antelope	524	21.12%	1,957	78.88%	2,481
Arthur	31	16.49%	157	83.51%	188
Banner	230	75.91%	73	24.09%	303
Blaine	169	48.84%	177	51.16%	346
Boone	592	32.69%	1,219	67.31%	1,811
Box Butte	2,002	63.31%	1,160	36.69%	3,162
Boyd	260	22.77%	882	77.23%	1,142
Brown	495	36.91%	846	63.09%	1,341
Buffalo	5,627	72.09%	2,179	27.91%	7,806
Burt	1,252	55.35%	1,010	44.65%	2,262
Butler	956	42.43%	1,297	57.57%	2,253
Cass	2,393	56.23%	1,863	43.77%	4,256
Cedar	1,296	47.23%	1,448	52.77%	2,744
Chase	563	44.16%	712	55.84%	1,275
Cherry	1,148	57.31%	855	42.69%	2,003
Cheyenne	1,591	75.55%	515	24.45%	2,106
Clay	1,242	55.10%	1,012	44.90%	2,254
Colfax	1,113	44.70%	1,377	55.30%	2,490
Cuming	1,277	53.75%	1,099	46.25%	2,376
Custer	2,671	71.34%	1,073	28.66%	3,744
Dakota	1,663	74.74%	562	25.26%	2,225
Dawes	1,472	63.75%	837	36.25%	2,309
Dawson	3,269	76.56%	1,001	23.44%	4,270
Deuel	347	57.17%	260	42.83%	607
Dixon	996	56.11%	779	43.89%	1,775
Dodge	5,037	54.54%	4,198	45.46%	9,235
Douglas	48,462	59.81%	32,563	40.19%	81,025
Dundy	444	46.30%	515	53.70%	959
Fillmore	1,311	60.39%	860	39.61%	2,171
Franklin	762	62.98%	448	37.02%	1,210
Frontier	637	55.10%	519	44.90%	1,156
Furnas	864	53.47%	752	46.53%	1,616
Gage	3,054	64.25%	1,699	35.75%	4,753
Garden	524	58.09%	378	41.91%	902
Garfield	199	25.61%	578	74.39%	777
Gosper	401	67.39%	194	32.61%	595
Grant	186	60.19%	123	39.81%	309
Greeley	422	44.33%	530	55.67%	952
Hall	7,309	66.72%	3,646	33.28%	10,955
Hamilton	1,278	52.14%	1,173	47.86%	2,451
Harlan	914	66.42%	462	33.58%	1,376
Hayes	194	39.51%	297	60.49%	491
Hitchcock	462	39.90%	696	60.10%	1,158
Holt	590	16.61%	2,962	83.39%	3,552
Hooker	186	65.26%	99	34.74%	285
Howard	961	62.32%	581	37.68%	1,542
Jefferson	1,904	63.96%	1,073	36.04%	2,977
Johnson	735	52.16%	674	47.84%	1,409
Kearney	1,238	65.36%	656	34.64%	1,894
Keith	1,034	47.89%	1,125	52.11%	2,159
Keya Paha	240	57.55%	177	42.45%	417
Kimball	929	78.13%	260	21.87%	1,189
Knox	798	33.76%	1,566	66.24%	2,364
Lancaster	27,681	56.46%	21,349	43.54%	49,030
Lincoln	7,494	69.86%	3,233	30.14%	10,727
Logan	185	58.54%	131	41.46%	316
Loup	106	36.81%	182	63.19%	288
Madison	1,514	24.93%	4,559	75.07%	6,073
McPherson	162	59.78%	109	40.22%	271
Merrick	906	51.74%	845	48.26%	1,751
Morrill	981	68.84%	444	31.16%	1,425
Nance	518	53.07%	458	46.93%	976
Nemaha	1,011	49.73%	1,022	50.27%	2,033
Nuckolls	829	54.86%	682	45.14%	1,511
Otoe	2,674	61.71%	1,659	38.29%	4,333
Pawnee	579	50.52%	567	49.48%	1,146
Perkins	437	42.02%	603	57.98%	1,040
Phelps	1,948	72.04%	756	27.96%	2,704
Pierce	561	27.08%	1,511	72.92%	2,072
Platte	3,258	51.80%	3,032	48.20%	6,290
Polk	764	44.14%	967	55.86%	1,731
Red Willow	1,322	39.90%	1,991	60.10%	3,313
Richardson	1,708	58.84%	1,195	41.16%	2,903
Rock	316	42.99%	419	57.01%	735
Saline	1,276	47.08%	1,434	52.92%	2,710
Sarpy	9,450	57.92%	6,866	42.08%	16,316
Saunders	2,214	42.82%	2,956	57.18%	5,170
Scotts Bluff	5,300	71.84%	2,078	28.16%	7,378
Seward	1,584	46.06%	1,855	53.94%	3,439
Sheridan	1,093	64.33%	606	35.67%	1,699
Sherman	465	47.69%	510	52.31%	975
Sioux	362	63.62%	207	36.38%	569
Stanton	198	15.69%	1,064	84.31%	1,262
Thayer	1,087	50.68%	1,058	49.32%	2,145
Thomas	243	72.32%	93	27.68%	336
Thurston	719	57.80%	525	42.20%	1,244
Valley	629	40.76%	914	59.24%	1,543
Washington	2,236	60.38%	1,467	39.62%	3,703
Wayne	904	43.07%	1,195	56.93%	2,099
Webster	761	59.73%	513	40.27%	1,274
Wheeler	59	19.03%	251	80.97%	310
York	1,687	47.20%	1,887	52.80%	3,574
TOTAL	204,147	56.70%	155,918	43.30%	360,065