Floor Transcripts

LB 1063 (1992)

General File

February 26, 1992


ASSISTANT CLERK:  Mr. President, Senator Baack would move to place LB 1063 on General File pursuant to Rule 3, Section 19(b).  That is found in the Journal on page 948.




SENATOR CONWAY:  Senator Baack.


SPEAKER BAACK:  Yes, Mr. Chairman and colleagues, I bring this motion before you, having not gotten up and spoken on the property tax issue thus far.  It seems to me that we have ...  we have progressed through LB 1120.  We worked for four days and are back on 1120 as it was originally introduced.  Not that we haven't made any progress because I think we have.  I think we have discussed a number of issues and brought a number of issues before the Legislature and some ideas and some alternatives that people want to see happen in the personal property have probably been rejected so far and they have got to start looking for alternatives.  And I was on the 3-R Committee, was there when we drafted the 3-R proposal, did not support the 3-R proposal out of the ...  out of the committee.  But I think that now is the time that we need to be bringing this to the floor of the Legislature.  I think it provides us with another alternative and one that we need to be looking at as we ...  as we discuss the personal property tax issue.  I'm not going to talk about the merits or demerits of LB 1063.  1 think it has some good points but I also think there are some things in it that need ...  that definitely need some work.  But I think that for us to continue to discuss this issue, my fear was last Friday when I filed this motion is that all.  of a sudden something would happen on LB 1120 and then we would have no bill before us to discuss the personal property tax issue on.  And I think it's important that we continue this discussion on a daily basis until we get to some kind of resolution Of this problem.  So that is why I am offering this motion to pull 1063 out of committee.  I visited with Senator Hall.  I know fie is not here this morning but I visited with him over the noon hour yesterday and he is in support of this motion.  In fact, after I filed the motion on Friday, he filed a motion just a few minutes later to do exactly the same thing.  So Senator Hall is in support of this motion.  I think we should pull this out of committee.  My plans are if we pull this out of committee, we will then ...  tomorrow on the agenda will appear LB 1120, which we are still on, because we're on that bill now as it was originally introduced in the




green copy form and we will still ...  we will continue to discuss LB 1120 until some resolution comes ...  till we come to some kind of resolution on 1120 and then we would take up LB-1063 following that and then we do have another motion this morning and if Senator Landis's bill is brought out of committee,.  that bill would follow 1063 on the schedule and then we would have the constitutional amendment.  I ...  I think it's important that -we discuss the statutory provisions of what we're going to do with personal property tax before we discuss the constitutional amendment.  I still think that we need to have something in place statutorily before we are going to have a good, sound discussion of the constitutional amendment that needs to go on the ballot.  That's why the bills are preceding the constitutional amendment.  I.  intend to do that as we proceed through the process that the bills will precede the constitutional amendment.  With that, I would just urge your adoption of this motion to pull LB 1063 out of committee.  Thank you.


SENATOR CONWAY:  Thank you, Senator Baack.  The order of speakers is Haberman, Lamb, Moore, Schmit, Hefner, Rod Johnson, Schellpeper and Warner.  Senator Haberman.


SENATOR HABERMAN:  Well, Mr. President and members of the body, you have been asked and you have probably been lobbied individually and they have said to you, look, you don't have to support the issue, you don't have to support 1063, just give us the opportunity of getting it on the floor.  And if you would like to oppose it then, you may do so.  Well, that's reasonable, you say to yourself, I don't want to support it, I don't...haven't made up my mind but we ought to have the opportunity to discuss it.  Well, don't fall for that.  Don't, in my opinion, don't fall for it.  I've seen that tried many, many, many times.  It's kind of ...  if you stop to think about it, they're handing out a lollipop that doesn't have a handle on it.  They're saying, well, you can have a lick of this, let's just put it on the floor but you won't be able to hold it.  Now the committee heard the pros and cons on 1063.  There were some members who were in favor of it but not a majority.  So we decided not to advance the bill.  But you're being asked now to .take the bill away from the committee and advance it to the floor.  So you could say, why have the committee structure if we're going to have tile committee have public hearings, if we're going to have the committee hear all of this information, make a decision, but we're going to throw it out now, we're going to




February 26, 1,992


throw out what the committee said.  We're going to yank this from them and take it to the floor.  But it's okay because the chairman of the committee says it's all right, that makes it okay.  Well, it doesn't make it okay, because the chairman voted in the committee not to advance it to the floor.  There was four ...  five votes not to ad ...  four and four.  So what I'm trying to do is say, look, folks, you're all adults, you've got minds, stop to think what they're telling you, look, we ought to have an opportunity to discuss this, just give us a vote to advance it.  Well, folks, they can take the bill that's before us and amend it anyway that they wish to.  They can amend 1063 into 1120.  We already have a bill before us.  So you see then Senator Lamb wants to do the same thing.  So there's some other bills in the Revenue Committee that probably we'll be' asked,.  let's just put it on the floor and talk about it.  I don't think it's necessary.  The proponents of 1063 can amend LB 1120, just like the proponents of 1120 tried to amend it so it would be palatable.  So I ask you, at this time, to stop and think and do not vote to pull the bill from the committee.  Thank you, Madam ...  or, Mr. President, or Mr. Vice President Conway of the committee.


SENATOR CONWAY:  You still have one long minute.  Senator Lamb.


SENATOR LAMB:  Thank you, Mr. President, and members, you will note...  you will note on the agenda today, if you look at the agenda, there's choice.  This is choice day.  First, you have the decision as to whether to bring 1063 out of committee and then right following behind that it is LB, 1150, a bill I introduced, which is a compromise bill.  It has some of the same things as 1063 except it would take the sales tax off farm machinery and it would exempt livestock, two differences.  Now also some of you have objected to LB 1150 because of the fact that the tech college proposal is in there.  I'm telling you right now I have an amendment coming down which will remove that provision of LB 1150.  We do not have to worry about the community colleges if you advance 1150 out of committee.  I hope...  I hope those of you who did not like the bill because of the community college provision in that bill would take note because I'm committing right now that I would take that out of there.  Now why am I supporting LB 1150 instead of 1063?  Because with 1063 we're buying a pig in the poke as far as I'm concerned.  We've heard a lot of rumors about it being amended to remove the sales tax on farm machinery but we don't have any commitments from anybody, certainly not the Governor.  We don't




have any commitments.  He says, well, we'll certainly work with you.  And I talked with one of his representatives this morning and it still seems to be the position, we'll work with you but there are no commitments, there are no commitments.  So you really are buying a pig in the poke if you're interested in...  in having agriculture come out of this without a big deficit.  LB 1063, as it stands, costs agriculture a lot of money and LB 1150 is...  is pretty close to revenue neutral.  Now, I have some questions and if Senator Warner would yield, I would like to ask Senator Warner some questions.


SENATOR CONWAY:  Senator Warner, would you like to respond?




SENATOR LAMB:  Senator Warner, first of all, in the rules it says if one senator asks another senator's bill to be pulled from committee, lie has to have permission from that senator.  I assume that you do ...  you have given permission for this bill to be pulled from committee.




SENATOR LAMB:  Yes.  Thank you.  The Clerk is pleased to hear that.  But let me ask you, Senator Warner, what commitments are there in regard to taking the sales tax off farm machinery if 1063 is advanced?  And the same question about exempting all livestock?


SENATOR WARNER:  Well, Senator, you would be correct that what commitments I cannot say there are any commitments on anything, as it was demonstrated on LB 1120.  We jumped from amendment to amendment, there apparently was no commitment to anything.  Everything that got tip was adopted, almost.


SENATOR LAMB:  Would ...


SENATOR WARNER:  So ...  but are you asking me, do I see a logic to addressing the issue of...of the total impact on agriculture and looking for ways that lessens that impact?  I think there is a realization in the body that such an approach needs to be looked at.


SENATOR CONWAY:  One minute.




SENATOR LAMB:  Specifically, Senator Warner, will you make a commitment that you're going to introduce an amendment to remove the sales tax on farm equipment?


SENATOR WARNER:  No, sir.  But that...  I will remind you that I did vote that way in the 3-R Committee.


SENATOR LAMB:  Okay, thank you, Senator Warner.


SENATOR WARNER:  But I would also assume that someone else might.


SENATOR LAMB:  Okay, thank you, Senator Warner.  See, that's my problem.  You know, that's my problem.  LB 1063, there is no commitment on any side that agriculture is going to come out of this anywhere near neutral.  Whereas, LB 1150, which is the next bill up if we advance it, those provisions are already in it.  So the burden ...  if 1063 comes up, the burden is going to be on me and some other people to amend it...




SENATOR LAMB:  ...  to a form that we can possibly support.  However, if LB 1150 comes out of the committee, it already has those provisions in there so then it's...  it's a burden of someone that doesn't like those agricultural provisions to amend them out.  And so that's ...




SENATOR LAMB:  ...  the reason why I'm supporting LB 1150 at this point.  I'm not supporting 1063.  1 might also say that ...


SENATOR CONWAY:  overtime.  Overtime.


SENATOR LAMB:  Overtime?  I will punch my light again, Mr. Chairman.  Thank you.


SENATOR CONWAY:  Thank you.  Senator Moore, you're next.


SENATOR MOORE:  Well, Mr. President, and members, as I begin, I will apologize in advance if I come uncorked and say some things I regret, because I've been on a slow burn for about the past four hours since I woke tip this morning and read the paper.  I probably was as angry then as Senator Withem was when the press




called him and Schmit and I accused the Omaha Chamber of writing the plan, probably similar to that, because if there's one thing...  all the days I stood at the bottom of the class in a 4-H beef show, you learn how to be a good loser and you learn how to be a good winner.  And I pick up the paper this morning and listen to the Governor's words and if he wants to spew out that rhetorical garbage in that corner of this building, I will stand here and spew it out on the floor too, about the little guy being saved and the process being worked and things like that.  And, I guess, maybe there's no little guys in Nebraska in agriculture.  Is there any of those, Governor, how about some of those?  How about your plan that will impose the tax on somebody that had nothing...  that had as much to do with this as anybody that has household goods or anybody that belongs to a church, or anybody that has ...  works for any corporation and has a...  has for ConAgra, or generally like that, the farmers are no more to blame for this than anybody else.  And his plan takes one segment and puts tax on those and, believe it or not, there are some little guys in agriculture.  There are some farmers in agriculture that don't farm a thousand acres and have four-wheel staggered tractors and are not making whole lots of money.  There are some of them that are just getting by.  And for the Governor to sit there and say, the process worked, the little guy got saved, and my plan, hallelujah, it's going to work, it's the best thing for Nebraska, the best thing for the little guy.  It shows how parochial his version of the little guy is.  And if he wants to play that spin on things, I mean, I didn't have the votes yesterday, it's that simple.  That's fine.  Now we need to move on, we need to solve this problem.  But both sides, you know, we have things we will disagree on, that we should disagree on very forthrightly, make our factual arguments, say why we feel that way.  Well, if we're going to sit here and say that, by golly, the Legislature planned it right in the 3-R plan, it's the little guy that's finally going to be saved, I think you need to take a good, hard look at this plan and I think some little guys are going to get harmed.  You've never heard me stand here and say that agriculture is going to be irreparably harmed by LB 1063.  1 don't think it's fair.  I don't like it.  I've never said that.  I never said that agriculture can't afford to pay some taxes.  I never said that either.  But if you want to use that rhetoric, if that's what we want to get this turned into, I'm certainly willing to do that.  Arid I certainly think the Governor needs to learn a lesson, if he's going to sit here and gloat over some victory in the Legislature and use rhetoric to gloat over, we can use rhetoric




over here too and I think we should.  I stand opposed to the amendment.


SENATOR CONWAY:  Thank you, Senator Moore.  Senator Schmit, you're next.


SENATOR SCHMIT:  Mr. President and members, I think that Senator Moore has touched upon something which, of course, is very tempting to me also and that is the matter of the position that agriculture is placed if 1063 comes before the committee, before the body its a whole.  I want to touch on something a little bit different.  Back in 1967, the people, by a constitutional amendment, changed the system drastically whereby we supported government.  They adopted the sales and income tax method of raising funds for state government.  We exempted personal household goods.  We exempted intangibles, stocks and bonds and we accepted the premise that property ought to bear a lesser burden for the cost of government.  I went back and reread Professor Peterson's argument about how income tax ought to support government.  That's what reinforces my conviction in that direction.  The point I want to make is this, that to bring 1063 to the floor is to revert back to a property tax system which has; failed, which we all acknowledge has failed and which does not meet the needs of the people of this state.  We recognized back in 1971, when we started to exempt personal property, that it was an unfair tax, difficult to administer and impossible! to be equitable.  In 1977, we took another step forward, we exempted personal property in the name of farm equipment, grain, seed, livestock, business inventories and we accepted it as a valid reason being that farmers cannot pass on the cost of their taxes and, number two, we exempted inventories because we said that it made it difficult for the businessman to maintain a businesslike basis of inventory.  On this floor, Senator Warner...  and I will paraphrase his remarks, said, agriculture does not say we do not want to be taxed, what we are saying is that we will be paying the tax in a different manner.  We will pay the income and the sales tax when we buy equipment.  We will pay income tax if we make any money.  As of this point in time today, if we were to bring 1063 to the floor and pass it in its present form, we are, number one, abolishing the equal and proportionate clause of the Constitution.  Why?  Because now we are embarked upon a scheme that will only do one thing, we need to raise $100 million.  I would suggest that we need not be concerned about the $100 million that someone says we'll lose at the state ...  at the local government level.  We cannot, after at




least the first year, guarantee that the money will go back to the subdivision which lost it.  So then it just becomes a state aid program to certain entities.  We ought to continue our policy of trying to establish an equitable and fair base for taxation for the State of Nebraska and we ought to move away from property as that base of support.  We ought not to go back and reverse our course and go back down that road which we abandoned back...


SENATOR CONWAY:  One minute.


SENATOR SCHMIT:  ...  in 1967, which we continued to move away from in '71, which we moved farther away from in '77, and which we ought today to totally repudiate by the total elimination of the tax on personal property.  There are many other arguments which will be' argued on this floor.  Some of them have been raised this morning, but those are peripheral arguments.  We are arguing about the $100 million.  Where does that come from?  That ought not to be the argument.  The argument ought to be why are we spending a billion, five hundred and sixty million at the state level and another several billion dollars at the local level and why do we continue to escalate those expenditures time after time after time in the hope that we can satisfy everyone?  It cannot be done.  A million six hundred thousand people cannot support a four billion plus tax base, whether it be on property, income, sales or any other kind ...




SENATOR.  SCHMIT:  ...  of base.  I suggest that we view the entire tax problem of the State of Nebraska and not look at it as just whether or not we need to raise another $100 million.


SENATOR CONWAY:  Thank you, Senator Schmit.  Senator Hefner, you're next, please.


SENATOR HEFNER:  Mr. President and members of the body, I realize that this is a complex issue.  We have spent, I believe, four one-half days on this issue and still we haven't reached a consensus and it will probably take a lot more than another four days to do this.  But now before us we have LB 1063 and a little later we'll have LB 1150.  Both are tax bills.  Both are personal property tax bills.  But the problem that I have with LB 1063 is one section in there that talks about breeding livestock.  We want to put personal property tax on breeding




livestock but not on feeding livestock.  And I wish somebody would address this.  Maybe Senator Withem or Senator Warner or Senator Landis would do this.  What's the difference between a cow that's on one side of the fence and a cow on the other side of the fence?  Now I know I've been away from the farm for a few years but when I was a small boy we used to have all kinds of COWS.  We used to have breeding cows.  We used to have feeding cows and we used to have cows that jumped over the fence and got in the other field.  So I wish they would tell me what's the difference of a cow on one side of the fence or the other one.  Okay, then I'm told that grain in storage will be exempt under 1063.  However, if you feed this grain to this one cow, this breeding cow, well, then it's not exempt.  So I would like a little clarification there.  What grain is taxed and what grain isn't taxed and will the farmer have to have one bin for one purpose, one bin for another purpose?  I don't believe that's very clear in the bill.  I feel that the bill has a lot of problems.  Also, how about farm machinery?  And I'm concerned about that small farmer that's trying to get started.  He goes out and buys...  probably doesn't have enough money to buy used machinery so he goes out and buys used machinery for a certain dollar amount.  Okay, first lie pays sales tax on that.  Then after lie uses it for the first year, then lie's going to pay property tax on that..  And certainly that's not going to help us get young farmers out there.  And I know in my district most of the farmers are a little older.  They're past the middle age.  They're getting gray hair.  And they want to start their sons out or talk some young person into starting farming.  So I think that if we go this route with 1063, we certainly need to get breeding livestock and also get the sales tax off of farm machinery.  It certainly wouldn't be so hard then.  But if we pass ...  if we raise LB 1063 out of committee and don't get some amendments on, it would be devastating, it would be devastating to our number one industry, agriculture.  This is why I didn't support it in committee.  I thought that 1120 was a better bill.  I thought 1120 was a better bill because it removed all personal property from the tax rolls.  Ladies and gentlemen, we're never going to tax railroads on their personal property.  It's just that simple.  They're not going to pay any personal property tax in Nebraska.


SENATOR CONWAY:  One minute.


SENATOR HEFNER:  So I think we need to think about that.  I have talked to this...I've talked to the Governor about this from




time to time and he says, well, I'll support taking the sales tax off of farm machinery.  He says if you can find the money.  But, so far, he has not made that announcement public and I think ...  I think that's wrong.  And he talks about hurting the small homeowners.  Well, the farmer and small businessman is a homeowner too.  They pay property tax on their homes.  So I don't think that's a good argument.  But I just say to this motion before us is that I would encourage you to vote against bringing 1063 to the floor and then vote for the next bill that follows this one.


SENATOR CONWAY:  Thank you, Senator Hefner.  Senator Rod Johnson, please.


SENATOR R.  JOHNSON:  Thank you, Mr. President, and members, I rise with great concern about LB 1063.  Earlier this week, I think this Legislature, through the adoption of an amendment I offered on sales tax and later amended by Senator Moore's amendment to spread the burden of this tax to sales and income tax was the right way to go, I felt at the time.  I'm not ashamed of the fact that I felt that these exemptions that we have given in the personal property tax law did not make sense.  I think they did make sense.  This Legislature, over the years, made those public policy choices for a reason and I'm willing, I think, as most farmers are, to pay our fair share.  We feel as if we are making a commitment to the state through real estate taxes.  But to ask us to pay on our machinery on the front end when we buy a tractor or a combine, then to pay to basically own it is something that is reprehensible to a lot of the farmers who own those pieces of equipment.  I understand what Senator Warner was saying the other day that we have to put a plan out there that the public will accept.  And I said at the time I wasn't sure that any plan we come up with will be a plan that the public will accept, but all I'm looking for in 1063 and also in Senator Lamb's motion on LB 1150 is fairness to those who are going to be put in a position to have to pay for these exemptions.  And that's what I'm looking for in this whole issue.  I, personally, believe Senator Lamb's proposal is better, at least one I can go home and convince my constituents that this was the best we could do for you.  But LB 1063, at this time, does not excite me, in fact, I probably will not vote to bring it out but I am convinced that it will come out today and we'll start the battle over how we shape 1063 into a bill that we're going to pass.  But there is great concern with the 3-R plan in the country and I think we need to recognize that




and I don't think those of us who are voting against 1063 today are simply going to roll over and give up.  We're going to fight as hard as we can to get that plan fashioned into an area that we feel is at least fair to the people we represent.  Mr. President, I would give the rest of my time to Senator Moore.


SENATOR CONWAY:  Senator Moore.


SENATOR MOORE:  Well, Mr. President, and members, now that I counted to ten again maybe I'll say a few more things about what was go ...  what's going on here and, I guess, once again it's the Governor's plan that the Governor has introduced, the little guy plan, supposedly.  But even though you look at the bill, you look at the property tax statutes in the State of Nebraska that LB 1063 amends and whose ...  what exemptions go away?  What exemptions stay there?  Section 7, which is business inventory, and Section 10, which are the 775 exemptions, those are the only two real exemptions, inventory in 775, that are going to stay exempted, where 8 and 9, farm machinery, things like that, those are the things that go back on the tax rolls in a depreciated fashion and I will admit in, a far superior fashion, Senator Warner, than if you just put them on ad valorem.  But, you know, that's the great bill for the little guy, where, you know, some farmer ...  you know, the ma and pa farmer, as well as the rich one that can afford to pay it but some ma and farmer that is struggling to make it, they're the ones that pay?  But this bill, is it great for the little guy, the only people that get continued exemptions are the businesses and the 775 people?  I mean, come on, get off it! If that's the way you want to sell this, help the little guy, think about it.  Now let's look at who's lobbying this bill.  I mean, yeah, it's an easy thing to say but many people have been critical of the farm lobby.  I mean, the farm lobby, individuals concerned about their bottom line, yes, concerned about...




SENATOR MOORE:  ...  taxes will go up.  Yes, that's a fair thing.  They exercise about that, but it's private individuals that are calling up, have a great amount of concern, that's a grass roots level if I've ever seen one.  Who are the people sitting here asking you to move this bill out of committee?  I (inaudible) the little guy, Governor Nelson, the Omaha Chamber, the State Chamber, people like that that have great concerns, I'm not




being critical of them, but let's talk about the little guy, if you want to talk about it.  Those are the people that want this bill out of committee.  They have varied concerns, as do 1, about the business climate in the State of Nebraska.


SENATOR CONWAY:  Time.  Thank you, Senator Moore.  Senator Schellpeper, please.


SENATOR SCHELLPEPER:  Thank you, Mr. Chairman, and members, Senator Moore, you're right on target.  I think that when you look at who's going to be affected by the 3-R plan it's definitely agriculture.  You can talk about the little guy, you can talk about the big guy, but the only one that's going to be paying new taxes is going to be agriculture.  The Governor said, I will not support any new taxes because it's not the way to go.  Evidently, he thinks the tax on agriculture is not any new tax.  They are not paying it right now.  If there's any industry in Nebraska that needs to have some help, it's agriculture.  That's the only industry that has to take whatever the people offer them.  It's the only industry that is operating with very, very little income and I think there's very few of those-large farmers, like Senator Moore has mentioned.  I certainly don't have any in my area.  I have a few large cattle feeders but they are not farmers, they are mainly just cattle feeders.  But I think when you look at the backbone of Nebraska, the economy,, it's agriculture.  Why would we put a tax on inventory...  or not inventory, on our business equipment when no other state does that?  We're putting our business and agriculture at an unfair advantage.  Inventory, I think we all will agree, should not be on.  That is not good for anybody.  But why would you tax somebody for doing business in Nebraska, on their business equipment?  If they make a profit, then take some of that profit, but don't tax them for doing business in our state.  it just doesn't make sense to do that.  I think Howard Lamb's plan is a much better plan.  I don't like it as well as I like the LB 1120, but it's much better than what 1063 is.  If he will take out the part about the community college, which he said he will, I can support that plan because at least it's a...  it's a more fair plan.  If you really take a look at 1063, it is not fair.  It's a very unfair tax.  I just received a letter this morning from the Norfolk radio station.  They don't like either plan.  They said you have to come tip with a different plan.  The 3-R plan and LB 1120, they don't like either one of them.  They said they're both very unfair, because you are taxing people for doing business in Nebraska with their business equipment and




that's wrong.  We need to find some way that when you make money you pay on what you make.  Thank you.


SENATOR CONWAY:  Senator Warner, please.


SENATOR WARNER:  Mr. President and members of the Legislature, I would rise to support the motion to place LB 1063 on General File and there's a number of points I would like to try and cover.  First, I would say is that as of now LB 1120 and 1063 have two basic fundamental differences.  And we think...  I think we need probably those two basic differences to work with.  And those basic differences, of course, is, one, LB 1120 would exempt all personal property and raise whatever method of additional revenue to replace local government, so that 100 million, that ninety-so million of that being raised from business equipment prior to last year is not shifted to the citizens generally or shifted to sales and income tax in some form.  And the basic provision of 1063 is that you establish two kinds of personal property, depreciable and nondepreciable, that you do not have the problem of a distribution formula for sending money back to local government, and, very frankly, under those ...  that ...  either of those, rather of LB 1120, when you get the schools, if you don't get equalization aid, you get nothing.  And that is more likely to adversely affect agriculture than anything else.  I think we need two bills for those basic different fundamental approaches to be ...  to be working with.  Senator Lamb inquired whether I would support something on exemption of sales tax on farm equipment.  I answered the question saying I had voted that way in the 3-R.  I can state that I have at least three different amendments drafted that addresses that issue.  There is a balancing issue that has to be looked at in this overall issue and that's the impact on the General Fund because anything that we do that reduces that revenue needs to be made up somewhere else.  Those of you, when we get to budget issues later on, fully know that next year we are faced with significant, substantial budget problems and that has to be taken into account as well.  The bottom line, however, with all this, to me, is one that I will say and repeat, and repeat again, and that is that if anything is going to be devastating to agriculture and to the economy of the state as a whole is to have implementing legislation which will result in a constitutional amendment not being adopted, whether it be May, hopefully, in May, that it will be on the ballot.  But if that happens, if that happens, then, in my opinion, then the devastation that you are talking about, in effect, will occur,




in fact, it's already here, because those items are now on the tax rolls via the decision of the Supreme Court last July.  I think that it's important then to raise this other option, basic difference.  Incidentally, I don't quite understand all of the criticism of 1063 when essentially that's the same thing that is in Senator Lamb's bill with the exception of the sales tax on farm equipment and livestock.  If 1063 is basically so bad, it's, hard for me to understand how it can be basically so bad when the only differences apparently are those ...  are those...


SENATOR CONWAY:  One minute.


SENATOR WARNER:  ...  two items.  But I would urge the body to put the ...  put 1063 on so that we can ...  we can address two fundamental different alternatives and work with a base bill that permits the variety of options that people want to deal with but not try to intermingle them as we are faced with in a problem if we only deal with one bill.  I would urge the body to support 1063, placing it on General File.


SENATOR CONWAY:  Thank you, Senator Warner.  Senator Peterson.


SENATOR PETERSON:  Mr. Chairman and members, I rise to oppose pulling 1063.  1 think we've got LB 1120 out here that we need to work on and find the funding for.  And I think that that's the story I'm getting from people across the state as that they would like to see us taking it all off, because the ...  I guess, 80, 90 percent of the people I've sent correspondence to and showed them the constitutional amendment that would go on the ballot and they say, in researching it, we don't need a constitutional amendment if LB 1120.  And if 1063 gets adopted, we do.  People out there, I don't know what the city folks are hearing but, boy, I crossed around, stopped in places and say, we want a sales and income tax, we don't want it, but, by golly, it's pure and simple way, we understand that.  Otherwise, you're going to mess around down there, adopt something we don't understand.  And so I ...  I favor that aspect of it.  I hear...and I'm sure the 3R Committee kept hearing and hearing time and again, cut spending but nobody listens in here in that regards, because a special interest comes in and nobody wants to buck special interests.  The time is going to come when you're going to have to cut spending, in the next year or two, in my estimation.  I did not agree, gosh, I'm far from...  just a country boy out there, but talking to one of the people who, on the Forecasting Board, disagreed with what they said, and I do




too, if anything is happening like it is in my district.  I have said it again and it's been mentioned on this floor and I keep hearing it from different sources time and time again that 1063 is an Omaha...  an Omaha Chamber of Commerce bill, pure and simple.  Why wouldn't they like 1063?  1 repeated it the other day.  By golly, business, like in Omaha, would have to pay very little.  The farmer out there would be the one that would pay more.  I'm coming to the conclusion that maybe one of these days I'm going to start supporting taking away some of the tax exemptions that we've given on 775.  I wonder which they would rather have.  But they want both, it seems.  And I will tell you this, that I ...  if 1063 goes, I will not be one of those supporting to put a constitutional amendment on the ballot.  I think that the Supreme Court told us that you take it all off or you ...  or you put it all on.  And what's happening on 1063?  You're putting some things back on, which I think is unconstitutional, you're going to have lawsuits.  And if you think you're going to get the railroads, as has been repeated in here, and if you do try to, they will file a lawsuit and they're going to win, pure and simple.  Maybe ...  there's some concern out there everything having to go back on.  Maybe that wouldn't be all so bad.  It might be devastating for this year but, by golly, it would wake tip people across this state, and the cities and the little communities and that would come and shake their boots and they would start listening.  And, for the first time since I've been in the Legislature, this tax proposal is finally waking up people across this state in regards to what is going on, in the Legislature.  And it's about time.  I've been harping at my people when I talk back home, you don't pay any attention to what's going on down there and it's time you do.  This has got their attention.  And, Senator Warner, I would like to ask you a question, if you would, please.  Senator Warner, you have not, in my mind, said exactly if I or somebody puts tip an amendment and 1063 gets on the floor ...


SENATOR CONWAY:  One minute.


SENATOR PETERSON:  ...  to exempt farm machinery and livestock, will you support it?  Yes or no?


SENATOR WARNER:  Senator Peterson, you know, over the years I have seen that tried time and time again.  I'm not...  I would not expect you to commit to an unwritten, unknown amendment, nor do I expect, nor could I honestly do the same because I don't know what it's going to be like.  I don't know what the impact will




be on the General Fund.


SENATOR PETERSON:  So you're hedging on this.  You're not saying you would support...


SENATOR WARNER:  I don't know how it's going to return to local government.  I have stated I voted to do that in the 3-R Committee which is an indication of my personal sentiment but I also am not going to make a commitment to support an un ...  an unseen amendment.


SENATOR PETERSON:  Okay.  Senator Landis is sitting there smoking his pipe, chewing on this.  Senator Landis, I would like to ask you the same question that I proposed.




SENATOR PETERSON:  If 1063 ...  yes or no ...  would you take...  exempt farm machinery?


SENATOR LANDIS:  You're going to get much the same response.


SENATOR PETERSON:  No, that's ...  yes or no.


SENATOR LANDIS:  You're going to get the same response, Dick.  I'll consider it but my guess is you wouldn't answer the question yes or no if you were going to vote for 1063.




SENATOR PETERSON:  I can tell you no.


SENATOR CONWAY:  Senator Elmer, please.  Senator Elmer.


SENATOR ELMER:  Thank you, Mr. Chairman, members, we know what we're talking about here.  We have two groups in this Legislature, one who would exempt all personal property and one who would not.  Personal property tax is an antique, obsolete, unenforceable type of way to go about taxing.  I think it's a moot point whether we have a constitutional amendment in the State of Nebraska because the Supreme Court is going to consider the Constitution of the United States in this issue.  If we exempt all personal property, it's my feeling, along with many other learned attorneys, that we need not even consider a constitutional.  amendment.  So my suggestion is let us address




whichever bill is going to be ...  going to be the one we put out.  It should not have any personal property tax in the bill and I will not vote for any bill that has any personal property tax.  If we put out a bill that has personal property tax in it, I think ultimately it will be stricken down no matter what we do with the Constitution; that if we put out a bill, if you feel better putting a constitutional amendment on, if we put.  out a bill exempting personal property, I would vote for the constitutional amendment.  Otherwise, not.  It just doesn't work.  You go to any district out in my area and universally it's said, it doesn't matter how you do it, raise the sales tax, broaden the sales tax, raise the income tax, whatever is necessary but do not put personal property on the tax rolls.  Do not put personal property tax on the rolls.  It's the biggest mistake this Legislature could make and will continue to have us in trouble.  We're just putting patches on top of patches on the old baling wire, on the old Model-T, and it's not going to go much farther.  We're going to have to look for some new tax bases and they are there.  They can be identified.  I'll be visiting with people about that because there are solutions that we could address that would fix our system, lower property tax and have a fair system.  But I would urge you to leave 1063 in committee.  If the committee can get together and decide to bring it to the floor, they can do that themselves.  We don't have to do it here on the floor.  Thank you very much.  And just a minute.  And I would yield the balance of my time to Howard Lamb.


SENATOR CONWAY:  Senator Lamb, you have two minutes.


SENATOR LAMB:  Thank you, Mr. Chairman, members, I just wanted to respond briefly to a statement that Senator Warner made that he couldn't understand why I thought the bill was, I believe he said, basically flawed when I had many of those same components in my bill.  But I don't recall that I ever did say that the 3-R proposal was basically that flawed.  My opposition to it has stemmed primarily from the fact that agriculture pays more than I think it should under that bill.  And I think you will remember way last summer I ...  I said publicly that with certain amendments on it or certain other provisions that I could support that concept.  And so I brought forth the bill, LB 1150, which has those concepts in it.  And my problem now, of course, is that the Governor ...


SENATOR CONWAY:  One minute.




SENATOR LAMB:  ...  nor anybody else will indicate with any forcefulness that those provisions will be adopted in 1063.  And so I consider it very unfair, very unfair.  Although the concept is acceptable, the actual workings of the bill is unfair to agriculture at this point.  Now you have noted probably that I voted for the sales ...  the increase in sales tax and most of the other taxes on 10 ...  or 11...what's the name of that, 70...1120, on LB 1120.  But then yesterday, yesterday when the committee amendment did not advance, was not adopted, that's when I put my motion tip there to bring up LB 1150.  Not until then did I do that.  But I saw at that point that evidently LB 1120 was showing some weakness and, as I mentioned on my statement which you have on your desk ...




SENATOR LAMB:  ...that I thought then that was the time to...


SENATOR CONWAY:  Senator ...  Senator Lamb, time.


SENATOR LAMB:  Oh, thank you.


SENATOR CONWAY:  Senator Schrock, please.


SENATOR SCHROCK:  Mr. President, is that correct, and members of the Legislature, I don't believe now is the time to dig our heels in.  I'm not in love with 1063 and I may not vote for it.  But if we do accept that as the al ...  as our tax plan, there are some very important issues here that we need to look at.  Livestock being treated fairly is very important to me.  I don't think it's right that one farmer's cow should be taxed and another farmer's cow is not taxed.  That's not fair.  And I think our sales tax on machinery has hurt a lot of machinery dealers in the State of Nebraska.  And if the machinery dealer goes broke, and that's the only business you have in town, it's pretty devastating.  But a lot of farmers have gone across the border and bought machinery.  And I think it's not only hard on the farmers, it's hard on our machinery dealers, and nobody talks about the machinery dealers.  And it's time that they get a break, it's time they play oil the equal footing, the same playing field that the machinery dealer in Colorado and the machinery dealer in Kansas plays oil.  And so the livestock and the machinery end are very important to me.  Now it doesn't make a lot of sense to take sales tax off of farm machinery and not




take sales tax off of business machinery.  But, as a farmer, I own a lot of pieces of equipment and so do my constituents that we use 30 days out of the year.  The rest of the...  the rest of the year they're parked.  If you own a business in town, you're using your machinery year around.  But so much of our machinery is seasonal.  How many days out of the year do you use a combine?  Forty-five max, maybe.  A planter, three weeks.  But yet you have got that investment for the year around.  And so I would guess I would ask for some considerations on these two items.  I don't know how I'm going to vote on 1063.  Any farmer I talk to out there, personal property tax is very repugnant to them.  But I know the alternative, so we've got this axe hanging over our neck and I remember the cartoon in Senator Conway's office last year.  Remember the turkeys with all the ...  with the axe?  Well, that axe is still hanging over my neck on property taxes.  So ...  so I'm going to be interested to see how this turns out.  And there are some issues here that are very important to me.  So I hope that if 1069 (sic) is brought out that we do some changing on it.


SENATOR CONWAY:  Thank you, Senator Schrock.  Before we go to the next speaker, I would like to make some introductions.  Senator Byars has the doctor of the day, Dr.  Weldon, here from Beatrice.  If he would stand and be recognized by the body, please.  Also, under the south balcony is guests of Senator Byars as well, is John Moore, Dennis Schroeder and Gordon Michaelis.  Will they please stand, please.  And as guests of Senator Robinson we have Ed and Shirley Morrow of Tekamah.  We will now go to our next speaker, Senator Morrissey.


SENATOR MORRISSEY:  Thank you, Mr. President, and members, I initially pressed my button to discuss what Senator Moore had discussed, because when I read in the paper some comments it sort of irritated me, because you can talk about I'm standing up for the little guy, I'm standing up for the working stiff, I'm standing up for the farmer, I'm standing tip for the regular old homeowning taxpayer.  And we can argue that forever.  But when I stand up and say it I'm not going to indicate necessarily that the people supporting another plan are not trying to do the same thing.  I think we're all trying to do that, we just have very different visions of what we're ...  how we accomplish that.  I know where Senator Lynch is coming from.  I talked to Senator Lynch.  I know who he is trying to protect, who he is trying to represent.  And I know who I'm trying to protect.  They're both the average working class person.  We just have very different




visions on how that is done.  So let's not stand up here and demagogue on who is doing what.  I, very clearly know, who I think stands for the people in my district besides me and that line is usually very bright.  But, in this issue, that line is not bright at all.  The people that I would assume, in most cases would stand up for the interests of the people in my district, are all over the board on this issue.  They're all over the board on this issue.  So let's just discuss what we should be discussing.  crafting a fair and equitable tax policy.  Let's discuss crafting a tax policy that will take us into the future, not one that will get by the Supreme Court, not one that will get the railroads, get the phone companies, or get those farmers, but a tax policy that's fair.  Let's focus our discussion on fairness and equity in taking ourselves into the future with a tax policy that's good for all of Nebraska, business and labor, farmers, and urban people, fairness.  Now I'm very willing, as I stated two days ago, to run two plans.  I will support pulling this bill out of committee and I won't stand here and try and amend it and amend it and amend it to weaken to make my bill I support look better.  I will help you build it however you want to build it.  But let's not keep harping on who we're all trying to protect.  I know what I'm trying to do and this discussion of the little guy and protecting tile little guy is just getting a little old, a little tired, because I know most of us, most of us have the same goal in mind.  As far as Senator Lamb discussing choice, I'm probably supporting Senator Lamb in what lie is trying to accomplish, we're probably trying to accomplish very similar Lax policies but when the votes are 23 to 25 and 24 to 23 and 22 to 21, 1 don't know if we have room for three different proposals.  So I don't know that we couldn't come together around one or other...one or the other of these two bills.  I support LB 1120.  And another thing that I have heard, it's kind of disappointing me, is, well, sure, we understand, Spence, you've got to do that, you're running for reelection, which I am, but that doesn't matter.  That does not matter.  I've talked to the people in my district, some of them agree with LB 1120, some of the agree with 1063, and I will pay more taxes tinder LB 1120, and a lot of tile people that work for wages in my district and own homes will pay more taxes under LB 1120.  But they, basically, think that's fair.  They, basically, think that's fair.


SENATOR CONWAY:  Time.  Senator Schimek.  I don't see Senator Schimek so we'll move on to Senator Landis, please.




SENATOR LANDIS:  Last night I was in a meeting with Senator Wesely, Senator Rasmussen, Senator Bernard-Stevens had been there, Senator Moore was there.  It was a meeting between two long-standing contending parties before the Legislature, the ophthalmologists and the optometrists.  You know how hard that fight has gone on and how long it's gone on.  End of the meeting the ophthalmologists and the optometrists agreed in principle to a solution to their problem, on one area.  It's not done but it's there.  Earlier this year, the rural bankers and the urban bankers, some of whom have not talked to each other or been in the same room for 15 years, found agreement on some bank structure issues.  How does agreement come about?  It's something that I study and I work at hard and try to help happen.  It comes about by certain sets of behaviors and it's impeded by other sets of behaviors.  Let me give you some examples of things that help find agreement.  Howard Lamb standing tip and saying, look, with certain changes I can agree to this idea.  That's helpful.  Jerry Warner saying, I would consider tax changes to 1063 that would make it more reasonable.  That helps find agreement.  Ed Schrock saying now is not the time to dig in our heels.  That helps find agreement.  Spence Morrissey saying, I will help build a system that works, helps find agreements.  Let me tell you things that don't help us find agreements.  I want you to say yes or no whether you will commit on your side of the issue now but it doesn't make any difference whether you say yes or no, I'm still a no.  That doesn't help you find agreement.  Rhetoric that Scotty Moore has pointed out by the Governor does not help find agreement and I think Scotty and Spence have been right to call on I'm helping the little guy and you guys aren't.  That doesn't help us to find agreement.  Saying I won't vote for any bill that has personal property tax in it doesn't help find agreement because it only announces what you won't do.  What we need to do is to talk to each other about what we will do and see if we can find pieces from those things that we will consider in which we can find agreement.  Now, let me tell you what I will do.  Absent any specific commitment on some particular provision, I will help find a system that does not make a significant shift of taxes to a sector that is not now bearing those taxes heavily.  Now, I'm...  I also heard Howard say a very valuable thing.  I'm looking for a nearly neutral system.  His phrase was, I'm looking for something that's nearly neutral and here Howard Lamb and I can agree.  If that's the principle, I will help look for a system that is nearly neutral.  Can't be perfectly neutral, won't work for every taxpayer, but I




will look for a system that's nearly neutral and that, in the case of 1063, requires some adjustment because 1063 is not nearly neutral.  LB 1063 is neutral for the business community in that they keep paying taxes.  It is not nearly neutral for the agricultural community and adjustments realistically probably need to be made.  I will commit to the idea of searching for appropriate adjustments and looking for something that begins to approximate a nearly neutral system.  Am I going to identify what that is today?  No, I'm not.  Am I going to put this in the hands of people and...and make modifications to the provision I support by putting that provision in the hands of others who do not support it?  No, I'm not.  But I will, from this position, begin to entertain ...


SENATOR CONWAY:  One minute.


SENATOR LANDIS:  ...the brainstorming process of discussing how to find that system.  To my urban colleagues who believe that 1063, in its pristine form, is the answer...and, by the way, I'm going to run out of time and I hope the next speaker would consider yielding me some time.  You should take a look at this document.  We get so many glossy reports that we rarely take a look at them.  This is Nebraska's changing economy and I invite my urban colleagues to read some of these pages.  On page 12, it says that growth in manufacturing is an urban phenomenon.  Wholesale trade in Nebraska has gone down, the sharp losses occur in nonurban areas.  In the retail sector, 310 new retail establishments in urban areas, 277 retail losses in nonurban areas.  In the finance and insurance section there are 97.  new...




SENATOR LANDIS:  ...  establishments.  They're in urban areas.  There are 73 establishments that have closed.  They are in nonurban areas.  We cannot ignore...




SENATOR LANDIS:  ...  the rest of Nebraska.  We cannot ignore this phenomenon.  Where we will find agreement is by talking about what we will do, not what we won't do.  And I would suggest that we start with the principle that Howard enunciated which is to find as practical as possible ...


SENATOR CONWAY:  Senator Landis, time, please.




SENATOR LANDIS:  ...a nearly neutral system on the sectors of the economy and I will attempt to do that.  LB 1063 gives me the way in which I can begin.


SENATOR CONWAY:  Senator Schimek.


SENATOR SCHIMEK:  Yes, Mr. President, and members of the body, I yield my time to Senator Landis.


SENATOR LANDIS:  Thank you, (inaudible).  You only need to give me four minutes.  I will just summarize and then I will give this time back to Senator Schimek.  I was kind of racing through here.  There is much more information in here that should be digested by all of us.  And the tax burdens that we are about to impose probably should be done in a knowing context that includes this.  I don't think that 1063, in its present form, is the final solution.  What we will need to do is to take a model that we can begin with and start looking for adjustments, reasoned accommodations.  From my perspective, LB 1120 fails on exactly the principle that Howard Lamb identified.  LB 1120 is not a nearly neutral application of taxes.  A new sales and income tax is not a nearly neutral system to come up with a way of handling the problem.  It's a very real shift of taxes and the more that we use tax bases that provide wide ranging changes of responsibility, the more likely we're not going to find agreement, which is why I think 1063 is an appropriate model to use.  I urge you to begin the discussion of that topic and the best way to do that is to pull 1063 out of committee and for us to stop meeting in those meetings of the rural senators over in the lobby room..  and the urban senators in various parts of this Capitol, but rather that we start having some meetings between those two groups talking about the kinds of accommodations that we can do rather than the ways that we're going to stop the other group from winning.  Thank you.  And I will yield back to Senator Schimek the rest of the time.


SENATOR CONWAY:  Senator Schimek.


SENATOR SCHIMEK:  Thank you, Senator Landis, members of the body, I would just like to second what Senator Landis said.  And I would also like to explain to you the reasons that I am going to vote in favor of pulling this out.  You know, I'm thinking this is February 26th, by March 12th we need to have the constitutional amendment passed.  We have two weeks, ladies and




gentlemen, to come up with a tax plan and to get that constitutional amendment across.  So I think we're getting down to the wire.  I think it's important that we get this out here and that we have the discussion soon on this bill.  So, for that reason and that reason alone, I am going to suggest that we vote to pull LB 1063 out.


SENATOR CONWAY:  Thank you, Senator Schimek.  For planning purposes, so you will know the list is Senator Lamb next, then Senator Haberman, Coordsen, Withem and Will.


SENATOR LAMB:  Thank you, Mr. President.  I promise you this is the last time I'm going to speak on this bill.  But I was interested in Senator Landis ...  I haven't said much on LB 1120 all this time, but I want to comment on something...some of the things that Senator Landis says, and I agree, you know.  He said that some of us are looking for a proposal here that is essentially revenue neutral for the sectors.  Well, Senator Landis, way last summer when I was in Kearney at a meeting, I first proposed my plan, which is before you today, LB 1150, and it will save you a lot of time.  It's got it in it.  It's...all you have to do is take the sales tax off farm machinery and exempt livestock and you're almost revenue neutral.  And so I'm just way ahead of you.  I'm way ahead of you.  That's all you have to do is ...  is leave 1063 in committee.  That isn't the way it works, but, anyway, advance LB 1150 and that's my proposal.  See, I compromised way, way too early.  I should have taken your negotiations class.  because I compromised way back last summer and I had phone calls from all these rural senators that, Howard, what the hell are you doing?  One of them right up here; another one standing up back there.  But, you know, I thought that was fair, that was fair.  And so I was willing to make that suggestion.  And so that's where we are today.  I would also comment on what Senator Morrissey said.  He says we don't need three bills out here, which he meant LB 1120, 1063 and LB 1150, and I would agree.  We do need another bill, I would agree with that.  I think it should be LB 1150.  We already have LB 1120 on the ...  and we don't need 1063.  That's my point.  Senator Warner said that we have to have a ...  a zero impact essentially on the General Fund.  All right, in the bill I have here, that's what happens.  That's what happens, because I have taken Senator Landis's original suggestion that to fund the sales tax removal on farm machinery we cut state aid to counties and cities because they're going to gain, they're going to gain by the extra valuation they get, because of...  of farm machinery and




additional business equipment coming back on the tax rolls.  So they really come out ahead of the game, the cities and counties do under this proposal, just remove some of their state aid.  They're still ahead of the game, they get more money than they have in the past and the General Fund is not impacted at all, at all.  That was Senator Landis's suggestion a long time ago and I stole it from him.  So what I'm saying to Senator Landis is what he would like to do has already been done.  It's right there in LB 1150.  That's the bill that should be advanced.  Thank you.


SENATOR CONWAY:  Thank you, Senator Lamb.  Before we go to Senator Haberman, who is next, I would like to introduce, on behalf of Senator Carol Pirsch, Chris Duster, who is under the north balcony.  Is Chris still there, please.  Thank you for attending.  And also Senator Coordsen has a guest under the north balcony, Tom Tipton from Chester, Nebraska.  Thank you for joining us today.  Senator Haberman.


SENATOR HABERMAN:  Well, Mr. President and members of the body, I have here some information and some figures.  They have...  the figures have been agreed upon by the fiscal department of the Legislature and by the Department of Revenue.  What does 1063 do for Omaha and Lincoln and the big communities?  So what brought all this to my mind was I got to thinking why is the Omaha Chamber and the Lincoln Chamber and the Nebraska State Chamber and the business people, why are all of them in favor of 1063.  There's got to be something there.  So, in looking through my material, I find that LB 1063 moves from the actual figure of taxable personal property to the net book value.  According to the figures agreed upon by both the Revenue Department and the legislative fiscal office, the actual value of all business equipment in Nebraska is 9.5 billion, 9.5 billion.  The net book value of all business equipment, however, is 5.9 million, nearly 38 percent less, 38 percent less.  Why?  And what happens?  Well, for example, in Douglas County, for example, assuming the value of business equipment is reduced by 37.85 percent, which is the statewide average, the reduction in base would be more than $292 million or 2.3 of the entire property tax base in that county.  In Lancaster County, the figures are 176 million or 2.7 percent.  In Sarpy County, they are 22 million, .9 percent.  Well, what does this mean?  This means that when you lower the property tax value, when you lower the property tax value of which 1063 does, you have to increase the property tax, pick it lip.  You have to increase the property tax to pick up what they lost.  So go a step further.  Sixty percent of the actual




taxable equipment is not taxed.  LB, 1063 does nothing to increase this compliance rate.  And this report goes on and on and on taking out what is wrong with 1063.  It was furnished this body by none other than Senator Timothy J.  Hall, dated January 31, 1992.  It goes on to say, it is unlikely that the federal courts in this circuit would ignore the precedent-and uphold 1063 exemption schedule where at least 55 to 60 percent of the property is exempt.  The federal courts will not uphold 1063 where 55 to 60 percent of the property is exempt.  So, according to the Chair of the Revenue Committee...


SENATOR CONWAY:  One minute.


SENATOR HABERMAN:  ...  these are pretty harsh figures.  This is a pretty strong statement, which means that you can exempt part of personal property and not exempt it all.  LB 1120 exempts it all, 1063 doesn't.  You know, it's awful easy for the winners to stand up and say, let's compromise.  And it's easy for those who are going to gain to compromise as long as they are not hurt in the compromise.  So I would suggest to you one more time, let's stick with what we have on the floor.  Let's amend it and let's change 'it, let's argue, let's do whatever we have to do, we do not need two bills on the floor.  I ask you not to raise 1063.  Thank you, Mr. President.


SENATOR CONWAY:  Thank you, Senator Haberman.  Senator Coordsen, please.


SENATOR COORDSEN:  Thank you, Mr. Speaker, members of the body, this dialogue has went on for quite some period of time this morning and it's been interesting, good points made on each side.  But sitting in the back row, like we do, you have a little time on your hands and I suppose the issue before us is the burden of crafting a fair tax system.  Recall several years ago when Senator Withem and a number of other members of the body, including myself, were involved in the 1059 issue, which more than anything else was an attempt to find a fairer system than property taxes alone to support our K-12 elementary system in the State of Nebraska.  Is 1063 fair?  Based upon the dialogue at that time, it was felt that a fair system was one that was based, to a large extent, upon the ability to pay.  Last week the Department of Revenue circulated to all of our offices really a kind of an interesting little booklet, the 1990 Annual Report, which contains a whole lot of statistical information in tax year '89, information that is kind of useful




in assessing a level of fairness to 1063.  In my area of the State of Nebraska, and I just picked out several different counties, one county on all of the support of the property tax support of local government with the exception of city and village levies, 'the owners of agricultural property pay 82 percent of that support, and they do it with 22 percent of the income, 22 percent of the income in 1989.  Our most metropolitan county, the taxes Outside of the city taxes, agriculture provide or the owners of agriculture property provide 1.4 percent of the support and they do that with .16 of the available income in that metropolitan county.  What happens when a system like 1063 comes into place is that in all of these counties, from the most populous to the least populous, it results in a shift of the tax burden from the ability to pay to the ownership of property.  It sends a message to entrepreneurs in Nebraska that if you wish to invest in the future of Nebraska by buying a punch press, a commercial freezer, whatever it is that is going to allow you to expand and hire more people, that we're going to say, thank you.


SENATOR CONWAY:  One minute.


SENATOR COORDSEN:  And, by the way, you're going to receive the honor of paying personal property tax on that for as long as it's in use in your business or until it's depreciated out.  Folks, I know at some point in time we will have to find some fair, reasonable middle ground.  I believe that it is an essential burden on this Legislature to follow the paths of those that have went before and to try to craft a system that is fair based upon the ability to pay those taxes.  And an investment in business equipment, an investment in farm equipment does not necessarily carry with it the ability to pay




SENATOR COORDSEN:  ...  the property taxes on those.  Thank you, Mr. Speaker.


SENATOR CONWAY:  Thank you, Senator Coordsen.  Senator.  Withem, you're next.


SENATOR WITHEM:  I will call the question.


SENATOR CONWAY:  The motion is to call the question.  Do I see




five hands?  I do.  All those in favor of ceasing debate vote aye, opposed nay.  Have you all voted?  Mr. Clerk.


CLERK:  13 ayes, 12 nays to cease debate, Mr. President.


SENATOR CONWAY:  Debate is not ceased.  We will move on to the next speaker.  Senator Will.


SENATOR WILL:  Thank you, Mr. President, and members of the body, I rise in support of the motion to place LB 1063 on General File.  I think the issue has been discussed rather thoroughly.  I do think that in discussing this we need to take a step back and away from the specifics, away from the rhetoric and just think about where we are in the process.  You know, we can argue all day about whose bill is more beneficial to the little guy and I'm sure we will have that argument somewhere down the line to a greater extent even than we- have this morning.  But I think, in a larger context, we need to look at the process we've gone through on the personal property issue.  Obviously, last session, last special session we went through some gut-wrenching debate on the issue, *did not reach a resolution but did establish the 3-R Committee that went through a very extensive process in developing a piece of legislation which is represented by LB 1063.  Even though that wasn't ...  the committee was not in consensus on that bill, I think it's a viable piece of legislation that deserves to be placed on the floor and debated on the floor.  I think that, in general, the Legislature has dealt fairly responsibly with a very difficult problem in the issue of personal property tax.  The Revenue Committee, this session, heard 1063, heard LB 1120, heard Senator Lamb's bills, heard a number of other bills dealing with the ...  dealing with the issue.  We went through a lot of debate within the committee, beyond the public hearings, beyond Executive Sessions.  We talked informally with one another.  We did end up advancing LB 1120.  As a member of the Revenue Committee, I was in the-minority in voting against that and in supporting 1063.  But I think, at this point, we've gone through a number of the issues on LB 1120 that needed to be debated, that needed to be discussed.  We talked very thoroughly about increases in the sales and income tax as an alternative, ultimately rejecting those in a vote yesterday.  I think we've come to a point now where it's important that we continue to maintain what I see as progress on the issue and I think we do that by voting to put 1063 on the floor, by debating that bill on its merits and by demonstrating to ourselves and to the




people of Nebraska that we're willing to move forward on the issue.  I think that regardless of whether you could support LB 1063 in its current form, regardless of whether you need amendments, regardless of whether in fact you can support LB 1063 at all, by way of demonstrating that the process is going on, that the Legislature is continuing to examine new angles on the issue, I think that we treat the people of Nebraska responsibly today by voting to put 1063 on General File.  I would urge your support for this motion.  Thank you.


SENATOR CONWAY:  Thank you, Senator Will.  Senator Wehrbein, you're next.


SENATOR WEHRBEIN:  Mr. Speaker and members, I'll be brief because I'm not great on rhetoric and maybe we've had a lot of conversation this morning, but I simply want to say I'm going to support pulling 1063.  1 could give a lot of reasons philosophically but if nothing else, I think it may be the fair thing to do is to finally consider it.  I really support Senator Lamb's bill.- That is what I really want and I will be working to amend 1063, but my real point is I think it's time to face reality.  Reality is that we had a chance yesterday in 1120 to do what many of us would like to do.  That is considered the ultimate by many including many across the state.  I recognize that.  The real world is that we did not get enough votes for that and I don't see that we've got enough votes to get to that point.  My fall back position, if You Will, is 1063 and have it amended so that it is what is perceived to be fair for all.  One of tile real frustrations I have in all my times here is the fact that we have to deal with perception many times rather than reality.  It seems to me sometimes in politics reality becomes perception, perception becomes reality and I think that I...I wish that there was a way that everyone could have heard the debate the last few days all across the state so that everyone would have the same understanding as to what is being faced here as we debate these issues.  Many times I think when we start out with faulty premises we're going to come to an illogical conclusion.  There are those even today that think that agriculture is not paying its fair share and I would say based on faulty premises.  For example, ag land is valued at 80 percent, that is true.  It is not true that residen ...  farm residents are taxed at that same basis.  Farm residents, I will repeat, farm residents are taxed at the same value as they are anywhere in the state whether it be city or rural.  That is a fallacy to think then that there is a break there but I have




heard that expressed and I could go on with some others.  The point is that we seem to have different ideas of what is fair and what isn't.  I think it's time to get on to, something that we can agree on because I think the real thing that we need to do is to get a tax base in Nebraska that is at least perceived to be fair by everyone and we may not get to actual fact.  I'm reluctant to admit that.  But I think we do need to get onto to something and we have time is of the essence to quite a degree.  We have just a few more days if we are to have a constitutional amendment put on the ballot.  All Nebraskans want us to get a solution and move on and I think it's time that we do that.  I think the debate is served to help that purpose.  I'll repeat, I only wish that everyone could have heard the debate as we've had it.  I do not consider it a waste of time as many...  as we've had some editorials insinuate at least.  I think it needs to be done and I think that we need to move on, but I would say that each of us needs to realize that some of the votes that we have wanted to come to fruition and they were not what we wanted to do.  I think we need to look on to something else and see where we can find a consensus and get with it.  And that is my premise, and I will vote for 1063.  1 would also, like I said, like Senator Howard Lamb's proposal.  I'm willing to work with 1063 to perhaps expedite the process and with that I'll conclude.


SENATOR CONWAY:  Thank you, Senator Wehrbein.  Senator Schmit, you're next.


SENATOR SCHMIT:  Mr. President and members, back in 1978 or '79 President Carter said that he had a plan to solve the energy problem.  Eighty some percent of the people applauded President Carter and supported him very overwhelmingly.  Then someone asked a question, would you support a massive increase in the federal gasoline tax and 65 percent of the people said absolutely not, and that was the crux of President Carter's plan to solve the energy crisis.  That is the.  crux of the problem here, ladies and gentlemen.  Governor Nelson's tax plan provides a return to the taxation of personal property.  I will guarantee you that if you were to ask the people of the state, do you support the 3-R plan?  They may say, yes, it looks like a good idea.  But if you were to say do you support Governor Nelson's tax plan which returns to the taxation of personal property, I will be willing to wager you that the overwhelming response will be no.  It's all in how you phrase the question.  And I think that it's time that we phrase the question that way.  I think




it's important that you recognize something else.  Senator Warner has warned us of the problems and the dire consequences of doing nothing.  Ladies and gentlemen, the court did not rule on 829.  The court has never ruled on that statute.  The constitutional amendments we have adopted states that the Legislature may exempt all personal property from taxation and the court has never ruled on whether or not we could do that.  Number two, the consequence which Senator Warner refers to of everything going back on the tax rolls is partly true also.  775 exemptions do not go back on the tax rolls.  They are exempted by contract.  Household goods does not go back on.  What does go back on, there's inventory, livestock, farm equipment.  I would suggest that if inventories go back on this Legislature will address the issue promptly and expeditiously because we know then that the major businesses in Omaha and Lincoln which carry large inventories will reason with their legislators in a manner which will make it seem less favorable to tax personal property.  What we are doing if you advance LB 1063 to the floor is that you accept the premise that we are going to once again tax personal property.  The taxation of personal property has been repudiated by the people, by the Legislature and by the courts in the manner in which we have done it.  The 3-R plan supported by the Governor is recreating a system that has failed on all counts.  It has failed on the basis of fairness.  It has failed on the basis of ability to be administered and has failed on the basis of ability to pay.  A personal property tax is the dinosaur of taxes and if this Legislature recreates the personal property tax, we are recreating the dinosaur of the tax program.  Governor Nelson, certain members of this Legislature want to buy time.  Previous governors have attempted to buy time.  It is not the way to proceed.  We started down the road more than 20 years ago to phase out personal property taxes and to rely less upon property taxes to support government.  We should continue that direction.


SENATOR CONWAY:  One minute.


SENATOR SCHMIT:  Those who say the Scotty Moore amendment failed on a 23-25 vote and therefore it is done, many, many times on this floor, ladies and gentlemen, each of us have had much, many fewer votes than 23, but have still prevailed eventually.- I suggest that the Moore amendment, Rod Johnson amendments all have merit.  I would just suggest that perhaps Senator Landis, and I know that when I sit down to negotiate with Senator Landis, he is the master, but Senator Landis is correct, but,




Senator Landis, I would hope that we would all come to the table with an open mind and a clear conscience because to return to the taxation of personal property is a step in the wrong direction and it is a repudiation of a system which ought to...it is a reenactment of a system which ought not to be...




SENATOR SCHMIT:  ...  reinstated.


SENATOR CONWAY:  Thank you, Senator Schmit.  Senator Moore.  Senator Moore passes.  We'll move to Senator Robinson.


SENATOR ROBINSON:  Mr. President, members of the body, I know there's an individual lurking out there some place and we call her the fat lady.  Whether we like it or not, she's cleaning out her vocal chords because the fat lady is just about ready to sing, isn't she, John?  I can tell by the look on John's face.  Our noses are down oil the pavement whether we like it or not.  We're saying to ourselves we got to cut our losses and run, but I just want to make a few comments.  I stand to oppose 1063, but I stand in favor of Senator Lamb's proposal.  live heard personal property tax till it's running out of my ears, but let's talk about what is personal property tax?  Wily do we have personal property tax?  So we can fuel the bureaucracy.  That's the only reason we have it.  We don't talk about that.  We should just tax people on sales and income tax.  We haven't talked about cutting the big trough that we run or saying no to the feds back in Washington.  If you don't think so, sit on the Appropriations Committee.  I got lobbied six times.  We had a brief break in the Appropriations Committee yesterday.  I walked down one end of the hallway back there.  I got lobbied six times by those little guys that the Governor talks about.  I want to talk about those little guys.  They're all my friends too, I want you to know that.  They're the lawyers, they're the bankers, they're the lobbyists, they're the college professors except Senator Hartnett, CPAs, the insurance executives, ConAgra executives, telephone executives, government employees, those in the higher echelon of salaries, air force officers, nice guys, but, mail, they do okay; newspaper people and chamber of commerce executives, they're the little guys, they're the little guys that Senator (sic) Nelson is talking about.  Couldn't help...  I listened to ...  listened and then I watched the debate the other night oil TV.  I was razzing my good friend, Senator Landis.  You know, I can't say that.  I got something I should say, but he




sitting there ...  no, he doesn't have callused hands, I was going to say sitting there with cal ...  and he was talking to old Baba up there at McLean, Nebraska, big guy, and you know who Baba is, he's that mythical character that's in the...has the pickup truck, no seat belts, Senator Horgan, got some boots on, got a little manure on his boots.  That's...  but you know Senator Landis brought tears to my eyes when he was trying to tell Baba up there at McLean, Nebraska that he ought to pay more taxes.  Now he really got to me.  You know, it's one of the few times that Senator Landis has gotten to me, but he really got to me that time.  But we talk about cutting, cutting our losses.  We're there, folks, we're there, whether we like it or not.  Go back to 1120.  Senator Robak says I would not tax myself.  I'd get in that booth, I would never tax myself.  Oh, I forgot to add one other of the little guys.  I'm the little guy, little old gray-haired guy, but I've got enough courage, Senator Robak, to come up and say I would, I would vote for a tax, and I don't use the word, equal.  It's right to take it off.  You know it and I know it and most of the people know it in here.


SENATOR CONWAY:  One long minute.


SENATOR ROBINSON:  One more minute.  I don't know if I can go that long.  Who said that?  Senator Lamb has put a lot of thought into this bill.  We ought to dump 1063 and we ought to go with Senator Lamb.  No use to taking that bridge in between.  Let's go with Senator Lamb's bill and I will put my light on again because I have something, another issue to talk about.  Thank you.  And I know you'll be looking forward to it.  Thank you.


SENATOR CONWAY:  Senator Robak, please..


SENATOR ROBAK:  Thank you, Mr. Speaker, members of the body, that's a tough act to follow so I don't know if I could do it justice, but I wasn't even going to speak on this but I have been accused on the floor and since Senator Robinson is mentioning names, Senator Schellpeper just yesterday told me that I listen to the wrong person, that's the trouble with me, I should be voting for the rural people.  Well I represent both rural and urban and I thought that I was really doing my best and I think that at least I'm open to listening which I decided that Senator Schellpeper must not be open to listening, and he accused me of just listening to one -side or giving in to a person who is.  a special interest.  Well, nobody..  we all know




that Senator Schellpeper listens to special interests too if you follow some of the bills that he has proposed on this floor.  So that's my little pitch, but I'm going to steal a line from Senator Kerrey who is our former governor, who incidentally won the gold yesterday in South Dakota.  lie said, I heard him say time and again, why waste time arguing with somebody that is going to disagree with you in the end?  And that's pretty much my message, but I do have a legitimate question from some of my rural constituents that agree with the 3-R committee plan and realize that this is probably the only one that that we'll accept, but they do have some questions and I would like to ask somebody on the committee if they could answer that question and I hope filtered through me that the question is understandable.  Senator Warner, would you tell me so I can tell my constituents about the tax on farm machinery.  Could that possibly be some day another liar's tax?


SENATOR CONWAY:  Senator Warner, would you like to respond..


SENATOR WARMER:' Senator, the amendment that was adopted conceptually in the Revenue Committee sets up a system where the depreciable value is a uniform method for all equipment, is tied essentially to a system where the reporting of the date and the purchase price is recorded.  I do not believe it, as it is structured, becomes a liar's tax for the simple reason that...


SENATOR ROBAK:  Where would it be recorded?




SENATOR ROBAK:  Where would it be recorded?


SENATOR WARNER:  On your income tax.


SENATOR ROBAK:  And who could audit this?


SENATOR WARNER:  Who'd audit it?


SENATOR ROBAK:  Yeah, I mean are we sure that it will be recorded properly?


SENATOR WARNER:  Well obviously it could be a couple of places, one, the local assessor has authority to look at the depreciation of equipment under the legislation.  obviously the Department of Revenue in the normal auditing of any income tax




would have that so there is a possibility for cross check.


SENATOR ROBAK:  Would you have to be audited then in order to have somebody find out if you're doing an accurate report?


SENATOR WARNER:  I guess any system that you have, Senator, depends on auditing for compliance, for 100 percent compliance by everybody on any tax system we have.  You know, that's true on collection of sales and income tax, somebody can cheat.


SENATOR ROBAK:  Thank you.  That was one question that they would like answered.  Thank you.


SENATOR CONWAY:  Thank you, Senator Robak.  Senator Schimek.  Senator Elmer, please.  I don't see Senator Elmer so we'll move to Senator Hefner, please.


SENATOR HEFNER:  Mr. President and members of the body, I just have a few brief comments to make, but I believe that if we go with LB 1063 that it would be unfair competition to our Nebraska farmers and here's the reason why.  Take Iowa for instance.  I'm not too far from the Iowa border.  Iowa does not have a sales tax on farm machinery nor do they have a personal property tax on farm machinery.  So here we're putting our farmers in Nebraska at a disadvantage and so I think ...  I don't think we want to go with 1063 unless we can get at least the sales tax off of farm machinery.  Also we must remember that our farmers need to have a very large investment.  Could I have the gavel, please?




SENATOR HEFNER:  Thank you, thank you.  Our farmers need a very large investment.  They need a large investment when they start farming.  They need a large investment to continue farming.  And when they make a large investment, if we put personal property back on this machinery, it's ...  they'll just have to pay a lot more taxes and I don't think that's fair because a lot of people don't need to have a large investment to make a living where a farmer does.  And so I think we should consider that.  Now Senator Landis says well, we need to keep this as neutral as possible.  Well, I don't know how we're going to keep it as neutral as possible.  But right now the farmers are not paying personal property tax on their farm machinery and we're adding this on.  So I would say that's an additional burden to our




farmers.  Senator Landis, were you at the Norfolk meeting that the 3-R committee had?  Did I see you there?  I don't remember anymore.


SENATOR LANDIS:  I was at the Falls City one, but not the Norfolk one.


SENATOR HEFNER:  Okay.  Senator Landis said he was not at the Norfolk hearing that the 3-R Committee had, and I just want to tell you a little bit about this meeting.  We had over 1,500 farmers and small businessmen there, mostly farmers.  And Senator Hall and Tax Commissioner Berri Balka remarked to me, they said to me, well, how did you get that many people there, 1,500 people?  And I said well this is nothing.  I said had the weather been good we would have had over 2,000 and the reason for this is because the farmers are fighting for their survival and they wanted to get to Norfolk to tell their story to the 3-r Committee, and I think they did get Senator Hall's attention because Senator Hall hasn't been supporting LB 1063.  In fact, lie helped LIS (jet LB 1120 out of committee so we could debate that on the floor first.  And I realize that the 3-R Committee says we want to put farm machinery back on the tax rolls so we can get at those centrally assessed property owners.  Well, folks, like I told you before, I don't believe that we'll ever tax our railroads on their personal property.  I believe that they have the federal act that will keep them from paying this, so we need to consider that.  As to some of the folks that are supporting removing the sales tax on farm machinery like the state chamber and the Governor, but we can't get them to put it in writing.


SENATOR CONWAY:  One minute.


SENATOR HEFNER:  I think that we need to get those to put it in writing.  And, Senator Landis, did you hear me talk about the two different cows a little earlier?




SENATOR HEFNER:  And I never heard anybody explain to me what's the difference of one cow on one side of the fence and the cow on the other side of the fence?  So if they get -in opportunity to do this, why I'd certainly like to hear this.  And, folks, I realize that we need to work out a compromise here because it would be devastating to our economy to not do anything, but




let's be fair when we work out this compromise.  Thank you.


SENATOR CONWAY:  Thank you, Senator.  Senator Haberman.  We'll move in to Senator Lynch.


SENATOR LYNCH:  Mr. Speaker and members, I intend to support moving 1063 to the floor and I intend to support an effort by Senator Lamb to move his to the floor as well.  We're talking about all of them at the same time.  We all know that now.  But we have to talk and have to understand we need a vehicle to accomplish whatever we want to accomplish and I think it's best that all of the possible vehicles exist on the floor for our consideration and with that I would yield the rest of my time to Senator Landis to answer the cow question by Senator Hefner.


SENATOR C0NWAY:  Senator Landis, for the cow question.


SENATOR LANDIS:  Thank you, Senator Conway.  Let me get back to the topic that Senator Hefner raises.  How is it that cows can be treated in a different way for tax purposes?  Imagine a store in which somebody sold cash registers.  They have a cash register that they use to ring up the sales and you walk in and buy a cash register.  Got 100 cash registers in the place, one of which they use to ring Lip the sales, 99 of which they sell.  But you've got 100 cash registers.  Those cash registers get treated differently for tax purposes.  One of them gets taxed as personal property, 99 of them don't get taxed and yet they're all cash registers.  Why?  Because one of them is there being used as business equipment and 99 of them are there because they are inventory and are being ...  are there for the purposes of being sold.  They are held for the purposes of resale.  The difference between the two is the intent of the temporary owner who happens to be the person who is selling the cash registers.  He intends to keep one, he intends to sell the rest.  Intent is the difference between the same act which may result in a death and in one case might be an accident but in the other case might be murder.  Intent proves to be the distinguishing characteristic between things that otherwise similar.  You can have a window air conditioner.  That window air conditioner can either be sold as part of a fixture of a house because it's meant to be permanently attached, or it cannot be a fixture and it's personal property because it is intended to be moved.  In the case of the cow, the cow is different in the...  with respect to whether it is intended to be sold or part of inventory or whether it's held as a part of an income producing mechanism




that you have kept on the farm for the purposes of producing more cows.  It is possible for the same object to be treated differently under our tax laws based on the purpose to which the object is put and the intent of the owner.  For example, in the sale of coal, if you are buying coal as an input in manufacturing you don't pay sales tax on it because you are not the ultimate consumer and we have a system that says you don't tax it as an input to manufacturing, but if you have a coal burning stove and you are the ultimate consumer, you pay to sales tax on that and yet the item is the same.  It is coal.  The question is the use to which it is put and the intent of the owner.  Those elements make taxing different for different circumstances even though the object is the same as it moves through the line of commercial transactions that it experiences.  We tax at different points in that line of commercial transactions and we refrain from taxing at different points in that line of commercial transactions and we do it, by the way, with every good, whether it's a cow or not, that we make those kinds of judgments about.


SENATOR CONWAY:  One minute.


SENATOR LANDIS:  If you ask, by the way, that we simply decide the basis of what we tax on the identity of the good, we will go into Chapter 77 and rip out page after page after page of our existing tax code because we change how we tax a good as to where it falls in that line of ultimate commercial transactions and who is responsible for it and the intent with which it's held.


SENATOR CONWAY:  Thank you, Senator Landis.  Next speaker is Senator Withem, please.


SENATOR WITHEM:  Mr. President, members of the body, last time up I called the question and there were some things I wanted to say, but I thought to expedite things along I would call the question.  It was improper to do that because there were others that wanted to speak and I do want to speak a little bit about 1063, why it should be on the floor, but maybe more about our.  .  .  one of the threads of conversation that has developed here this morning is our process of seeking a solution to the problem and, first of all, I'm very pleased to hear us doing that.  it is essential that we do that and I think most people looking at the political realities that are out there, that 1063 is going to be a better vehicle for doing that than would be 1120, and




frankly, I think also would be a better vehicle to do that than Senator Lamb's bill.  So I think 1063 does deserve to come to the floor.  I've heard some people this morning begin to utter the concern of maybe we ought to just let everything go back on and I would urge you, don't utter those statements unless that is something that you've thought through very thoroughly and would find that some of these other alternatives actually would be worse than that alternative.  I've thought that through and I know where the various alternatives stand in my mind and I'm not going to stand and do any issuing of threats or anything along that line, but be very careful in your mind about what it is you're actually going to be able to go back, tell the citizens in your district that you supported and what you didn't.  One of the concerns I have and I'm one of the three cosponsors of 1063 and the constitutional amendment.  One of the things I'm concerned with the line of conversation is it's almost like the whole concept of sales tax on farm machinery now becomes a given and that it's going to happen and I just want to throw in a little dissenting opinion on that particular issue.  if Senator Peterson would have asked me how 1 would have voted on that, I would have given a very frank, forthright opinion.  I would have voted against doing that.  If it were a motion that would simply repeal the existing sales tax on new and used farm machinery, I would have voted against that.  I've heard some of my colleagues make the statement to me before when I've asked them this question about what can you do for a sweetener?  Is there anything we need to do with 1063 to put it in form where people can go back home in their district and say it was a compromise.  Their response to me is 1.063 is a compromise.  if you realize that we start with the one position where we tax everything, inventories and equipment, livestock, the full gamut of what the Supreme Court struck down with MAPCO and the other extreme is 'that we don't tax anything in the personal property line.  1063 is already a middle point.  Frankly, it's a further middle point.  than I thought I was going to be ready to go because of the manner in which we value that property.  If you recall, Senator Beutler, during the special session offered an amendment to exempt inventories but to go ahead and tax machinery whether it be business machinery, centrally assessed machinery or farm machinery.  That was my position.  Frankly, that would probably be my preference if I could write an ideal bill, using a valuation system that taxes that on real ...  on actual value, oil as close to market value as we can figure.  1063 moves beyond that to a more favorable approach and it's an approach that ...




SENATOR CONWAY:  One minute.


SENATOR WITHEM:  ...  was suggested to us by the ag community, that you don't tax it based on an actual valuation, you tax it based on a depreciated value and we've moved to that middle ground already.  Now I'm not naive enough to think that 1063 is the final position.  We probably are playing this game where we compromise, we compromise and we compromise.  There probably is more that needs to' be done, but not the outright repeal of farm machinery, not any of these other things that further waters and waters down the tax problem or shifts the inequities that some of us have seen in our property tax system over to our income tax system.  So we do need to talk and I appreciate Senator Landis's remarks about needing to talk, but don't draw the conclusion from those remarks that okay, now we have repeal of a sales tax on farm machinery, what else can we get is the game we're playing because that is not a done deal and I think there are very strong policy reasons not to take that particular step.




SENATOR WITHEM:  1063 needs to come out of committee and I'd urge you to vote for it and, Senator Conway, I did hear you say "time".  Unlike others who went over your admonition, I'm going to relinquish the floor right now.


SENATOR CONWAY:  Now you're over.  Senator Morrissey, please.  Senator Morrissey calls the question.  Do I see five hands?  I do.  The question is, shall debate cease?  Has 'everyone voted?  Mr. Clerk.


CLERK:  26 ayes, 0 nays to cease debate, Mr. President.


SENATOR CONWAY:  Debate is now ceased.  We will turn to Senator Baack for closing.


SENATOR BAACK:  Yes, Mr. Chairman, first of all, I would like to ask for a call of the house and then as the members are coming in I will do my closing, but first of all, I would like to request a call of the house.


SENATOR CONWAY:  There has been a request for a call of the house.  All in favor signify by an aye, opposed nay.  Mr. Clerk.




CLERK:  26 ayes, 0 nays to go under call, Mr. Preside-it.


SENATOR CONWAY:  The house is under call.  Will all members return to the Chamber and register your presence.  Okay, Senator Baack.


SENATOR BAACK:  Yes.  Mr. Chairman and colleagues, I will proceed with my closing as members are coming in.  I think that we've had a good discussion here this morning.  It took a little longer than I anticipated, but I think it was a good discussion.  There have been.  .  arid I'm not going to discuss the merits or demerits of LB 1063.  1 was not a Supporter of 1063 as it came out of the 3-R Committee and I have not necessarily switched to being a supporter of 1063.  That's not the reason I bring this motion.  I bring this motion because I think we need to have this option out there for the Legislature to discuss.  There has been a lot of rhetoric on the floor and I think that Senator Landis expressed it very well, some of it helpful, some of it not so helpful, arid I hope the administration is listening, the executive side is listening because there is some rhetoric coming from that side that's not very helpful either in this issue.  Some of the things that the Governor said about his plan helping the little guys and the other plan is not helping the little guys, I think are very, very harmful and very devastating to the discussion here.  We all need to remain flexible.  We don't want to dig in our heels at this point and say the only plan I'm going to accept is my plan.  That's not the way we get there.  We've got a long ways to go in this body arid we have a problem here that we simply have got to solve this session.  it is not something that can linger on for another session.  We have to come to resolution of this problem and the only we're going to come to a resolution on this problem is by all working together arid being flexible.  There certainly is no reason for either side to be gloating at this point.  If they are paying attention at all to the process arid they have noticed that this body is very, very evenly divided, oil most issues one or two votes determines how we go in this body.  That certainly is nothing for anyone to be gloating over- and I think the executive side took a little bit of a Posture of gloating yesterday after some of that arid I think that that ought to stop.  We don't need that right now.  That's not helpful right now.  It's also not helpful right now to have the executive side out there saying, well, 1063 stinks, but it stinks less than the other side.  That's not helpful.  That's not helpful to coming to resolution of this problem.  It's not helpful when we're going to have to




put a constitutional amendment on the ballot and have the people of this state accept that constitutional amendment.  What we need to be saying is, we need to be saying that we're working towards the best solution that we can come up with and the fairest most equitable plan that can pass this legislative body.  That's what we need to be saying, not that it stinks less or stinks more than the other plan.  I think it's time for us to be positive about this.  We can solve this problem.  It's a very big problem, very complicated problem but we can solve this problem.  Bringing 1063 to the floor helps us because it gives us another alternative to look at and we need to look at that alternative.  I think that tile thing for you to consider is, what are the alternatives that we have?  We have 1120 out there.  We've discussed a number of alternatives on 1120.  A number of things have failed oil 1120.  That does not mean that I'm ready to give tip oil the fact that I want to.  exempt all personal property.  Personally that's my position.  I think that's what we ought to do, but I'm also not going to tell you that I'm going to vote against something that does tax personal property in the end.  I can't tell you that right now and I think it's bad for people to dig in their heels and say that right now because what they are saying is they are going to tax personal property.  If you say you're not going to vote for any kind of bill that puts personal property on tile tax rolls, what you're saying is I'm willing to vote that all personal property gets put back oil the tax rolls.  That's what you're doing.  You're not taking it all off.  You're voting to put it all back on.  That's what present law is.  You put it all back on the tax rolls.  We cannot do that in this body.  I think that's devastating to the economy of the state, in all sectors of the economy.  We do not need to do that at this time.  At this time I would simply urge you to bring 1063 to the floor.  We will continue discussion oil LB 1120.  That will be tile bill that will be up first and then the discussion will take place on 1063 after some action has been taken on 1120.  1 would encourage you to vote for this motion and bring 1063 to tile floor.  Thank you.


SENATOR CONWAY:  Thank you, Senator Baack.  The motion is to place 1063 oil General File.  There is still one person who hasn't checked in, Senator Baack.  lie says to proceed, so all those in favor of placing LB 1063 oil General File vote aye, opposed nay.  [lave you all voted?  A record vote has been requested.  Have you all voted?  Mr. Clerk.


CLERK:  (Read record vote.  See pages 1005-06 of the Legislative




Journal.) 33 ayes, 13 nays, Mr. President, on the motion to place the bill on General File.


SENATOR CONWAY:  The motion is approved.  Mr. Clerk, we'll move on to Senator Lamb's motion to place LB 1150 on General-file.  Senator Lamb.


SENATOR LAMB:  Mr. President, I would ask to pass over that.


SENATOR CONWAY:  It will be passed over.




SPEAKER BAACK:  The call is raised., Items for the record, Mr. Clerk.


CLERK:  Health and Human Services Committee chaired by Senator Wesely reports LB 1234 to General File, LB 1076, LB 1077, LB 1078, LB 1079, LB 1080 all indefinitely postponed, those signed by Senator Wesely.  Retirement Committee reports LB 1196 to General File with committee amendments, signed by Senator Nelson.  Urban Affairs reports LB 1248 to General File, LB 1251 to General File, LB 1252 to General File with amendments, LB 1247 indefinitely postponed.  (See pages 1006-08 of the Legislative Journal.


SPEAKER BAACK:  Thank you, Mr. Clerk.  We will now proceed to Item 8 on the agenda, General File and LB 1178.


CLERK:  Mr. President, LB 1178 was a bill introduced by Senator Hillman, Bernard-Stevens, Beutler, Chizek, Horgan, Land is, Moore, Nelson, Rasmussen, Schrock and Wickersham.  (Read title.) The bill was introduced on January 21 of this year.  At that time it was referred to the Transportation Committee.  The bill was advanced to General File.  I do have committee amendments pending by the Transportation Committee.


SPEAKER BAACK:  To the Chair of the Transportation Committee, Senator Kristensen.


SENATOR KRISTENSEN:' Thank You, Mr. Speaker and members of the body, LB 1178 was brought to the Transportation Committee by Senator Hillman.  It dealt with the commercial driver's licenses and putting the anatomical gift information upon those driver's licenses.  The committee amendments basically adopt the whole