LB 719A (1992)
April 6, 1992
SPEAKER BAACK: While the Legislature is in session and capable of transacting business, I propose to sign and do sign LB 1022, LB 1268, and LB 1292. Mr. Clerk, Select File, LB 719A.
CLERK: Mr. President, LB 719A was considered by the Legislature on Friday. At that time Senators Warner and Withem had an amendment pending, AM3834, found on page 1759 of the Journal. I do have amendments to 3834.
SPEAKER BAACK: Senator Warner, would you like to just tell us
what your amendment is that is pending right now so, we have an idea of that? Then we'll go from there. We'll go to the amendments right after that.
SENATOR WARNER: Mr. President members of the Legislature, I believe this is the amendment that would put in the statute the methodology which would, permit the tax commissioner to, authorize the tax commissioner to apply the requirements of the 4R Act to the personal property tax as it relates to railroads and carlines.
SPEAKER BAACK: Thank you. Senator Warner. Amendments to the amendment, Mr. Clerk.
CLERK: Mr. President, the first amendment to the amendment this morning is by Senator Wickersham. Senator, AM3988. (Wickersham amendment is found on page 1952 of the Legislative Journal.)
SPEAKER BAACK: Senator Wickersham.
SENATOR WICKERSHAM: Thank you, Mr. Speaker, members of the body, I have passed out again this morning, the amendment is AM3988. You should have it on your desk. Down at the bottom you'll see a little photocopy that contains a portion of the provisions of the 4-R Act and then the second page you'll find the 4-R Act set out in full. It seemed to me that we have spent a great deal of time discussing the 4-R Act. I did not know if all of you had had an opportunity to actually read the section itself to make your own determination of what you thought 'those words meant. Now I think in many cases the courts are going to tell us that those words mean something other than what you might think they mean just, by reading them, but at least you should have the opportunity to read them and to understand what the 4-R Act attempts to do.. I brought the amendment because it seemed to me that the definition of commercial and industrial property that was provided in the main amendment was defective in that it copied, to a large extent, the definition of commercial and industrial property found in the 4-R Act, as you can see down there by 3(c) at the bottom of the page. But they did leave off a couple of words and the words they left off were subject to property tax levy. You will find almost the exact definition that is in the small 3(c) in the amendment being offered to you, the main amendment, but they left off those words, subject to a property tax levy. Why did they leave them off? They left them off so that the definition of commercial
and in I industrial property for purposes of Nebraska State Law could include inventories, could include inventories. Why is that important? Because if you work through the ratios in the main amendment and you do not include inventories, or you do include inventories, you get radically different results in the valuation of railroad property, pure and simple.. The amendment is an attempt, the main amendment offered to you is an attempt to force us to value railroad property at a lower valuation because we do not tax inventories, pure and simple. I do not want to tax inventories in the State of Nebraska. I don't believe it is good tax or economic policy. I don't want to be forced to tax inventories by the railroads. I don't believe the rail roads are going to be discriminated against if we do not tax, inventories. Now I said that I don't believe that the railroads are going to be discriminated against if we don't tax. inventories and that's an important consideration for you this morning as we take up the consideration of the main amendment and this amendment because the 4-R Act has really two different sets of provisions. One, it has sections which would prohibit the State of Nebraska or any other state from levying against railroad property at higher rates than we levied against any other property. In other words, you can't have a discriminatory I levy. If you levy against all other property in the State of Nebraska at $1 per hundred, for example, you could not levy against railroad property at $2 per hundred, for example, if those weren't based on the local levies applicable to all other. property. Nor could you value all other property in the State of Nebraska at 50 percent of it's value and tax railroad property at 100 percent of its value. Those two kinds of discrimination are clearly prohibited by the 4-R Act. The other section in the 4-R Act that is important, and it was important in the State of Nebraska in the trailer-train case that began leading us to the crisis that we've experienced for the last couple of years is subsection (d), and you find that on page 2. And very simply it says the imposition of any other tax which results in discriminatory treatment of a common carrier by railroad subject to this part. Now, some people have said that that section doesn't apply to property taxes because the proceeding sections are the ones that really deal with property taxes and it does say any other tax. So you might read it and you might think that it isn't applicable. Well, it is because the courts have said that it is. So we can't discriminate, whatever that word means, in any way against the railroads and the taxation of their property, whether its real or personal. And I don't want to discriminate against the railroads. That
isn't the reason I brought my amendment. I just simply don't believe that we discriminate against the railroads by failing: to tax personal property inventories in the State of Nebraska. It isn't good tax policy, it isn't good economic policy. Railroads have inventories. as well as everyone else., I think that we cannot allow the consideration of the taxation of inventories to drive the valuation of the railroads' property. If I have misunderstood the effect of the main amendment that is being brought today, I'll be happy to 'hear about it, but I think if you work through the numbers, the effect is plain and simple. By failing to tax inventories in the State of Nebraska, if you use the ratios and the formula that is in the main amendment, it will result in a lower taxation, a lower valuation and lower taxation of railroad property. I do not and will not vote for that result.
SPEAKER BAACK: Thank you, Senator Wickersham. Senator Warner. Senator Warner Mr. President, members of the Legislature, Id rise to oppose the amendment. I appreciate that the basis in which Senator Wickersham has brought the amendment and his explanation. This is an area where each of us individually have, to make a judgment I suspect because there is not a hard and fast rule. As I understand it, however, as I Senator Wickersham pointed out and that the language that he wishes to include is, in fact, a part of, the 4-R Act but it is not a part of ,subsection 1(d) that defines the imposition of any other tax that discriminates against common carriers as a violation of the act and the fact is that the carlines and railroads have convinced a number of courts that the failure of the state to grant personal property tax exemptions given to other classes of taxpayers is also a violation of that subsection. Subsection (d) goes much further than the others and I am of the opinion that if we were to add this that it, based upon at least what has happened in other court cases, I think Senator Wickersham pointed out maybe that the fact has not ... this specific words have not had a court case specifically on them and that alone, but nevertheless, there has been included in a number of cases that in essence the courts have found that subsection 1(d) overturns the subject to a property tax language which is what he wishes to add. And the fact that it was added at congressional level in a conference committee after subsection 1(d) was already present in the bill and is a contravention of the basic rule of statutory interpretation that statutory language should not be interpreted in such a way to
April 6, 11992
render other language superfluous, nevertheless, I believe that if we add this that for practical purposes the probability of the state being able to win a case with these words added. are very slim indeed and then we go right back to the issue of whether or not we want to put the state in the position of, .losing that valuation and those tax funds depending on when the court case might be, filed, but either being in the position of refunds again with local governments not knowing and-not being, knowing whether or not that revenue is going to come particularly if the case is filed led after levies, are set and. they would be underfunded and I think it's an error on our part if we attempt to roll the dice, so to speak, of whether or not an estimated 5.5 million or 4.25 million or zero is going to be the amount of personal property tax paid by railroads and carlines. I am more comfortable with following the route in which there is, I believe, good assurance that we are in compliance as the amendment now stands without Wickersham's amendment. Without Senator Wickersham's amendment I believe we stand 'every probability then that there is no litigation and we'll have greater stability and I am concerned that if we do this...
SPEAKER BAACK: One minute.
SENATOR WARNER: ... then for all practical purposes we will find ourselves back in court and probably in a very weak position at least based upon the cases that I have seen.
SPEAKER BAACK: Thank you, Senator Warner. Senator Wickersham, you're next.
SENATOR WICKERSHAM: Thank you, Mr. Speaker. Senator Warner, if you would yield to a. couple of questions.
SPEAKER BAACK: Senator Warner, would you respond, please.
SENATOR WICKERSHAM: Senator Warner, the amendment that you have brought not only tracks some of the provisions of the 4-R Act, it also has to do a little bit with the calculation of the unitary tax, does it not? Would you mind describing that for the body.
SENATOR WARNER: Unit system for...
SENATOR WICKERSHAM: And you can do that on my time.
SENATOR WARNER: The unit ... the system that is utilized is the system that the Department of Revenue has used I believe the last two years and my understanding it was not I anticipated to change that system at least in the foreseeable future or the next couple of years.
SENATOR WICKERSHAM: And at least the change in the calculation of the unitary tax that you had proposed in this amendment As not mandated to the tax commissioner and in fact, you would anticipate at such time as we, might want to go back to some other method of calculating that tax, we'd be able to do so. Is that correct?
SENATOR WARNER: That would be... it's an authorization to continue that way. As a practical matter I assume that because it was authorized at the unit portion would probably be calculated as they have been doing it for the last two years but I would, agree that it does not preclude a change in that, at some point in the future and perhaps it would be best done by statute, but nevertheless, it does not preclude it.
SENATOR WICKERSHAM: All right. Are there more favorable ways to calculate, the unitary tax than is provided in your amendment?
SENATOR WARNER: More favorable way?
SENATOR WICKERSHAM: To the State of Nebraska. Would we have higher values?
SENATOR WARNER: Yes, I would agree that that's possible, Senator Wickersham. Whether or not those changes would also withstand a court test, I do not know because valuation is another factor in the 4-R lawsuits that becomes a factor in any future lawsuits.
SENATOR WICKERSHAM: All right.
SENATOR WARNER: I do not look on the concept with concern, however, since that is how the state has done it for two years and has indicated to me that in all likelihood we would at least continue that for some time, me, some point into the future.
SENATOR WICKERSHAM: I appreciate that, Senator Warner, and really the only reason I ask those questions is I want to, make it clear to the body that this amendment does several things and
it might not be readily apparent to some of you. One, it does propose to authorize a continuation of current policies with regard to calculation of the unitary tax but you should be aware that we have calculated that in a different way in the past We might very well wish to calculate it in a different way in the I future and I would not, if this amendment is passed, and of course I hope it is not, but, if it was passed, I would hope that those changes would not be considered permanent. The' main amendment also does some other things that I think are potentially hazardous to the State of Nebraska. It gives the railroads a state cause of action that looks like a 4-R Act that they would, action they would normally have to bring in the federal district courts. So they will be effectively given another forum to make their arguments and as always the case, if you can't win in one forum, you go to another forum. I am not exactly willing to give them another forum either. But back to the main point of my amendment and that is whether we would discriminate against ...
SPEAKER BAACK: One minute.
SENATOR WICKERSHAM: ... railroads by failing to tax inventories in the State of Nebraska. I will reiterate that I do not believe that that would be the case. If you look at the language in the original trailer-train case, I think you can read that in such a way that the main concern of the court in that instance was the exemption of agricultural, business property from taxation, not necessarily the exemption of inventories. Other courts have found that the exemption of inventorities does not offend the property taxation provisions of the 4-R Act. They have had concerns about the exemptions under the (d) section with discrimination, but to my knowledge there is no clear ruling on that issue and I do not want to give it away with the main amendment. And so again...
SPEAKER BAACK: Time.
SENATOR WICKERSHAM: ... I have brought my amendment to take that away and I just simply would urge your adoption of my amendment.
SPEAKER BAACK: Thank you, Senator Wickersham. Senator Schmit, you're next.
SENATOR SCHMIT: I'll yield my time to Senator Wickersham.
SPEAKER BAACK: Senator Wickersham, Senator Schmit has yielded his time to you.
SENATOR WICKERSHAM: Thank you, Senator Schmit. Again, I wish to state for the body that the main issue I as far, as I'm concerned with the amendment that I have brought is the taxation or the failure to tax inventories And the effect that would have on the valuation of railroad property for taxation. I do not believe we will discriminate against railroads if we continue to exempt inventories. My amendment is brought for the purpose of keeping their property valued in somewhat the same fashion as we would value any other property in the State of Nebraska if we continue to exempt inventories. I am afraid, quite frankly, that if we are forced to reduce the valuation of railroad property because we are, exempting inventories, we will eventually be forced to reduce other property for the same reason and it will become a self-perpetuating cycle. The structure that we have attempted to develop in 1063 will eventually fail and we will be back with no tax policy in the State of Nebraska if we pass the main amendment without my amendment. I am very concerned about that process. We have worked hard enough, we have debated long enough and we have reached what can be a workable solution if we do not tinker with it as is being proposed in the main amendment. My amendment will save the situation and I urge your adoption.
SPEAKER BAACK: Thank you, Senator Wickersham Senator Warner, you're next.
SENATOR WARNER: I kind of want to respond that I do not believe that this carries on to other property. The constitutional amendment that is pending CA 1 was written very specifically to recognize the federal supremacy of law or Constitution so that to the extent that it affects what tax policy of the state that it can have, it does not then carry over onto other areas that are not covered by the federal supremacy and I do not believe that that's the case. I should also point out under the unit value, certainly the Department of Revenue can use other calculations for review and if it turns out that there are other methods which they do not plan to do now, but sometime in the future, that certainly could be recognized by court, by legislation and I should also point out that other alternatives which could be used would not necessarily bring a higher tax return. They may or may not, depending on how the calculation was done. I'm of the opinion that if you adopt the Wickersham
amendment we simply have guaranteed a court case and a court case which I think is highly unlikely to be successful from the state's viewpoint and if that happens, then we end up where I've said several times that we'll end up with for local governments having zero revenue from that source of personal property tax and particularly if this. happens after levies are set, then there is a simple shortfall of that dollar amount whether it be .5.5 million as it would turn out across the state which, then brings back to the Legislature the refund issue which is very difficult for us to deal with in any event, but I do not think it would be wise to add a clause which would, in effect, guarantee I believe litigation and litigation which we would Just as a state would... based on what previous decisions have been held although this specific question has not been litigated all by itself, but based upon other cases I think we would very likely lose and then they would be at zero.
SPEAKER BAACK: Thank you, Senator Warner. Senator Wickersham, yours is the only light on. Would you like to use this for your... oh, there's another light came on. Senator Wickersham.
SENATOR WICKERSHAM: Thank you, Mr. Speaker, I'll try to be brief. I just want to respond to a remark that Senator Warner made about CA 1 and the fact that, it would have protections built in so that we might not have to reduce the value of other property as a legal matter, and I agree with that and that language very craft... crafted very carefully and put in CA 1 for that purpose and it may very well serve that purpose. But, folks, how are we going to explain to other people that we had to lower the valuation of railroad property because we didn't tax inventories and we're still going to tax them at a full rate? We're going to have some explaining to do and I don't know if we'll be able to do it. That's the reason I think we'll have to lower the valuation of other property, pure and simple. Won't necessarily be a constitutional question, it will be a question of whether or not we can explain it and whether we can Justify it and I have my doubts as to whether or not we could do that. Now the other her day I think I indicated that I recognized that my amendment will bring on a court case and I think I also indicated that normally I'm not in favor of that kind of a process. Normally, I think you should be entitled to weigh the risks, take your chances and that very oftentimes you are better off with a settlement rather than litigating. This happens to be one of those instances in which I made the opposite judgment. I'm not willing to settle this. I think it needs to be
litigated. We need to find out what the rule is. One other thing I would point out to you that if this, the main amendment represents some sort of a settlement, there is no time limit on it. It might be good for one year, might be good for two years, might be good for three years, might be good for four years. When will the question come back to us as to whether or not the settlement is still appropriate and the railroads will bring an action in the federal district court or in the state court and undo the deal. Maybe somebody we don't even know about now, for or five years from now, will bring that action and the whole deal will come tumbling down anyway. Whatever kind of a proposal is written in the main amendment is not written in stone. It could still be challenged. I am unwilling to make any kind of a settlement, if you will, on that basis. I want to. see the question litigated. I think we need to know what the real parameters are for the development of tax policy in the State of Nebraska by the Legislature.
SPEAKER BAACK: Thank you, Senator Wickersham. Senator Schmit.
SENATOR SCHMIT: Mr. President, members, I will not speak long. I will surrender the rest of my time to either Senator Wickersham or Senator Warner. I believe this issue should be discussed in much greater detail. I have no doubt also that the issue is going to be taken to court. I'm sure there are many aspects of what we are doing. I on this legislation that is debatable. I certainly do not understand the impact of what Senator Wickersham is discussing at this time as thoroughly as I would like to. I would like to surrender my time. guess perhaps at this time to Senator Warner, let him respond to Senator Wickersham's later remarks if he would like to do so., please I believe it is imperative that. we understand. very thoroughly what Senator Wickersham considers to be a serious problem.
SPEAKER BAACK: Senator Warner, would you like this time?
SENATOR WARNER: Mr. President, members of the Legislature, I believe, Senator Wickersham, you indicated that obviously we are not going to preclude the possibility of future litigation and with that, obviously we'd all agree. Somebody can file a lawsuit on anything. But as of now, as of now based on what I have understood to be the various decisions that have come up it would seem unlikely that by adding this that these provisions that you are suggesting that the state would be successful and
my concern is that should that happen, which I think it's a likely thing to occur, then we're going to put local governments in this shortfall position by the amount of personal property tax that otherwise would have been paid by the carlines and the railroads. And I just simply don't believe at this point that that is a choice that we ought to make because of the need for some stability which I believe the amendment as written does provide and is in compliance and there may be some other option at 'some point that we could litigate, the state could litigate the issue without jeopardizing the revenue for local government which I think is what we're doing if we put your amendment in.
SPEAKER BAACK: Senator Kristensen, you're next.
SENATOR KRISTENSEN: Thank you, Mr. Speaker, members of the Legislature, Senator Wickersham, if I could ask you a few questions and attempt to try to maybe make it clear what we're really discussing here this morning. Your concern is that how do we value. railroad property and how do you determine what amount of the railroad holding is real property and what amount of it is personal property and we use that to try to determine how much personal property they have so they can be taxed and that's called the unit method of taxation. Is that correct?
SENATOR WICKERSHAM: That's one of my concerns about this amendment, yeah.
SENATOR KRISTENSEN: Okay. And in attempt to do that, we're going to say that when you compare the amount of personal property that the railroad has compared to the amount of personal property that's out in the State of Nebraska in general, you come up with a percentage and that you also have a percentage and what you do is take inventory out of that calculation. I'm trying to put this in as simple of terms as I can so if you get a confused look on your face it's because I'm not using the legal terms, I'm trying to put into terms that people can understand. You want to take inventory out of this calculation so it doesn't look as if it is so discriminatory, LB 1063. Is that a fair statement?
SENATOR WICKERSHAM: Well, I think quite frankly that Senator Withem did us a service when he handed out a little thing that he captioned up, steps to compute taxable value of railroad personal property and it looks like this.
SENATOR KRISTENSEN: Yes.
SENATOR WICKERSHAM: That's what I'm concerned about.
SENATOR KRISTENSEN: I've got it in my head, your calculation. though would take inventory out of the...
SENATOR WICKERSHAM: Bottom part of number one.
SENATOR KRISTENSEN: Of number one which would be the denominator I assume of that calculation.
SENATOR WICKERSHAM: That's correct.
SENATOR KRISTENSEN: And the reason that you do that is so that when the court goes to look at this they don't take that, into consideration, you don't have 29 percent and in fact you'd have a higher percentage on that form.
SENATOR WICKERSHAM: Probably real close to 100 percent.
SENATOR KRISTENSEN: And thus, it would not look as discriminatory, at least on its face.
SENATOR WICKERSHAM: Well, Senator, I don't want to be argumentative but when you say look discriminatory, I don't think it is discriminatory. It would not only no look discriminatory, it would not be discriminatory.
SENATOR KRISTENSEN: But we're not going to tax inventory in any event, correct?
SENATOR WICKERSHAM: I hope not.
SENATOR KRISTENSEN: Okay, I agree, and so what I think that we're doing here, as I read the 4-R Act and Section D says any tax that results in it, they're not going to look at the face of it, they're going to look at the actual tax consequences that occur of taxing inventory or not taxing inventory. Would that be accurate?
SENATOR WICKERSHAM: Yes. I believe that the court will do that.
SENATOR KRISTENSEN: And so in effect it really doesn't matter
whether we have this amendment or not because the, court is going to look through this amendment and the court is going to say is there discriminatory tax treatment or is there not, and unless you make a different determination of taxing inventory or not taxing it, this amendment won't make a whole lot of difference to the court's analysis in my opinion.
SENATOR WICKERSHAM: Okay. Two things, one, this amendment would give a state court remedy where none is currently available and, secondly, we do not know how the federal district court will view the taxation or the nontaxation of inventories.
SENATOR KRISTENSEN: Exactly, but I mean we're I not...we are not changing the system of tax so the court is going to look and if I look in trailer-train it talks about 306-1(d) prohibits the imposition of any other tax that results in discrimination. The key is results in discrimination. That's what you're really getting after with the amendment. You, with this amendment, you're trying to focus and funnel ...
SPEAKER BAACK: One minute.
SENATOR KRISTENSEN: ... what that calculation by the court may be based on our state law.
SENATOR WICKERSHAM: Yes.
SENATOR KRISTENSEN: You're trying to tell the court, be it the federal court or the state court, here's the calculation you must use, when in fact, I suppose they're going to sit down and say well that's fine and nice, but here the bottom line is, does it result in discrimination or does it not?
SENATOR WICKERSHAM: Yeah. I simply don't want to give them an argument in the state courts, in part, and I do not wish to have us put anything in statute that even hints that we think that there was discrimination as I think that may give a leg up in any federal challenge.
SENATOR KRISTENSEN: And then that would bring me back to my consideration that it's not discriminatory at all to not include inventory in the taxation because there are really valid differences for taxing inventory or exempting inventory, excuse me, than taxing personal property because inventory is only held for resale. Inventory is not depreciable, not being use, it's
being held that they are legitimate and those are all those discussions we talked About in 1063 ...
SPEAKER BAACK: Time.
SENATOR KRISTENSEN: ... for nontaxing inventory. Thank you.
SPEAKER BAACK: Thank you, Senator Kristensen. Senator Rogers, you're next.
SENATOR ROGERS: I yield to, Senator Wickersham.
SPEAKER BAACK: Senator Wickersham.
SENATOR WICKERSHAM: Thank you. Senator Rogers had asked for an explanation of what the amendment did and I think maybe the discussion between Senator Kristensen and I helped a little bit. But again, I would refer people to the handout that Senator Withem presented us with last week and it's got, it's captioned up steps to compute taxable value of railroad personal property. The one that is of real concern is Item 1. At the top you have the numerator, all personal property taxed, net book value. That's 1063. Down at the denominator you would have all commercial and industrial personal property, actual value. Okay. You can just take out a pencil and you can work with the numbers. If all commercial and industrial property, the bottom number, is 100 because you've included inventories and the top number is 50 because you have only net book value, you're at 50 percent. If you change the formula as I'm suggesting in my amendment, then all commercial and industrial property actual value, the bottom part, would not include inventories and would be very close to the top number, I think. It would be much, much closer. That's it in a nutshell. Now, there is nothing in the main amendment that says inventory has to be included in commercial and industrial personal property. There isn't a definition that does that, but my guess is that it is, although that question might have to be litigated also. I simply don't want to give away the issue. Why should we give it away? Why should we give away that issue as to whether inventory is commercial and industrial personal property, give away whether it results in discriminatory taxation of the railroads if we do not include it in our tax base and give that particular industry another forum to beat us? They've already beat us a couple of times in the federal district courts. Why should we give them a state court forum to try the same thing? I am unwilling to do
April 6, .1992
SPEAKER BAACK: Senator Kristensen, you're next.
SENATOR KRISTENSEN: Senator Wickersham, if I could continue on with just what you were talking about because when you talk about giving it away, as I understand the Warner amendment it allows the state the opportunity to sit down with the railroad and say here are the methods that we can live with and a I agree to towards settling what your valuation will be. Would that be a statement that you'd be comfortable with?
SENATOR WICKERSHAM: Yeah.
SENATOR KRISTENSEN: It gives you that opportunity.
SENATOR WICKERSHAM: Yeah, the amendment is discretionary, however, I think discretion translates into do it.
SENATOR KRISTENSEN: But I mean it is discretionary.
SENATOR WICKERSHAM: That's correct.
SENATOR KRISTENSEN: And we're not mandating here's how you must, value rail property.
SENATOR WICKERSHAM: That's correct.
SENATOR KRISTENSEN: And so if you follow that logic, if it is discretionary, your statements that why give them the issue, you're not giving them that issue really.
SENATOR WICKERSHAM: Oh, you're certainly I giving them the argument in state courts that because of the discretionary... potentially discretionary on the part of the tax commissioner that it should have been done and that the tax commissioner abused his discretion if he did not do it.
SENATOR KRISTENSEN: But if they go to court they're going to throw this negotiating point out anyway. I mean this is really a tool of settlement. This is not a tool of law, right? I mean if the railroads walk off and say we're done, we are done dealing with the State of Nebraska, we're going to court, the Warner amendment never comes into play.
SENATOR WICKERSHAM: That's correct.
SENATOR KRISTENSEN: It will never even, in fact, be an issue in court because you're never going to have, a calculation, evaluation under it.
SENATOR WICKERSHAM: That correct.
SENATOR KRISTENSEN: And so here you talk about giving the issue away, I ... I mean 1 understand, we had this discussion the other night in the hallway at I the hotel and certainly that set me to thinking because you do bring up the points of you put inventory in that calculation or not and you can make the numbers look worse or you can make them look better I suppose depending on what your point of view is. The bottom line is we're not going to change the method of property: taxation for railroads.
SENATOR WICKERSHAM: I hope not.
SENATOR KRISTENSEN: I agree. I agree, and that's the reason I guess I ... the Warner amendment is being discretionary will only benefit us, will only benefit us because if it all falls together or falls to pieces anyway we're going to be in court and you'll never ever see this calculation or this negotiation. And so I ... part of this is just to make sure that people try to understand what I think you're doing here is to in some form or fashion give the court something to look at, but what you're doing really is forcing the issue with that calculation. You're saying here's what we're going to live or die with, I think we can do those things anyway quite frankly. I mean there's a lot of different ways to value a railroad in terms of unit value and we'll probably continue doing what we've been doing in the past simply because it's easier and that's what we've done and so I don't...I understand the amendment a lot better now. I don't think ... I I'm not sure it does what... we may be chasing windmills at that point and jousting with them in the wind. I don't know, but I guess at this point I appreciate your other explanation and I'm uncomfortable with being able to support it at this time. Thank you.
SPEAKER BAACK: Thank you, Senator Kristensen. Senator Withem.
SENATOR WITHEM: I'd call the question.
SPEAKER BAACK: That will not be necessary. Yours is the last
light on. Senator Wickersham, would you like to close?
SENATOR WICKERSHAM: Thank you, Mr. Speaker. I will try to be brief. I appreciated the comments of Senator Kristensen. I think it did assist in clarifying this a little bit. The main amendment is discretionary, but I think discretion translates into something that you do in this instance and I'm unwilling to do what the main amendment would have us give the tax commissioner discretion to do on our behalf. I'm simple unwilling to do that in any shape or form and I think we do need to litigate the issue as, to whether or not we discriminate against the railroads when we fail or refuse to tax inventories in the State of Nebraska. I cannot believe the tax policy in this state should be driven to that extent by that piece of federal legislation. I think we need to find out the answer to that question and I'm normally I would say that we should compromise and we should accept the kind of proposal that is in the main amendment, but in this instance we have too much at stake and I'm unwilling to say that we should do that. My amendment will attempt to put the situation back to where the issue, if it is ever going to be litigated, is squarely whether the taxation of inventories discriminates against the railroads, that's the question I want to know the answer to and I urge your support and adoption of the amendment to the amendment.
SPEAKER BAACK: You've heard Senator Wickersham's closing on his amendment to the Warner amendment. We will now vote on that amendment. All those in favor vote aye, opposed vote no. We are voting on the Wickersham amendment. Have you all voted? Have you all voted on the Wickersham amendment? Have you all voted? Senator Wickersham. Senator Wickersham.
SENATOR WICKERSHAM: Could we have a call of the house and roll call vote, please?
SPEAKER BAACK: We have a request for the house to go under call. All those in favor vote aye, opposed vote no. Record, Mr. Clerk.
CLERK: 25 ayes, 0 nays, Mr. President, to go under call.
SPEAKER BAACK: The house is under call. All members please report to the Chamber and record your presence. The house is under call. The house is under call. All members please report to the Chamber and record your presence. The house is under
call. The house is under call. All members please report to the Chamber and record your presence. The house is under call. Senator Pirsch, would you record your presence, please. We need Senators Chambers...we are waiting for Senator Chambers. All members are now present and a roll call vote has been requested and we are voting on the Wickersham amendment to the Warner amendment. Mr. Clerk, call the roll.
CLERK: (Roll call vote taken. See page 1952 of the Legislative Journal.) 17 ayes, 20 nays, Mr. President.
SPEAKER BAACK: The amendment fails. The call is raised. Mr. President, the next amendment I have is by Senator Moore, AM4021, Senator.
SPEAKER BAACK: Senator Moore.
SENATOR MOORE: Mr. Speaker and members, you may recall on Friday I had an amendment that was defeated by the body which would have ... treated all centrally assessed companies including all public utilities the same as the railroads. That motion was defeated and the major thrust of the argument against that besides its cost was the fact that since we're using a prospective constitutional law here in LR 219 and the amendment was now amendment 1, that particular amendment would, in many people's minds, have been unconstitutional. And if you look at page 2 of LR 219, Section 1, subsection 7 where it talks about, well I will call it federal preemption for lack of a better term that allows, where the federal ... if the federal law, would guide our tax policy, that is a separate class protected under the Constitution as it would be changed, changed in our LR 219. Well the amendment I filed, since my amendment last week was unsuccessful, hearing those arguments this amendment simply would treat the airlines the same way as the railroads and the reason I do that is because it ... the constitutional argument put forth last week goes away then because the FIFRA act, the airport and airway improvement act from 1982 says there will be no discriminatory property tax since airlines, the airlines are arguably have the same protection the railroads do and given the constitutional change in amendment 1, this amendment is certainly in order. It actually, the cost I'm going to use the term minimal, there's not that much airline property in the State of Nebraska. I imagine ... 1, hope what is depreciable. I hope not all the airline property is depreciated. I'll be a little worried. if it is, but that's besides the point I guess,
but obviously there's riot much in Nebraska now. The major airline, carriers in Lincoln and Omaha do have some. They've not pursued it that much because it's not worth that much money. Obviously as Senator Conway has introduced in the past, the whole concept of locating a wayport in Nebraska, this may be something in. the future that may be more significant, but this time. it's not significant from a financial point of view. From a constitutional point of view, if you're going to use LR 219 as your constitutional yardstick, this amendment is certainly in order as that. It has the same, roughly the same protection as the railroads and so given those, since this defeats all the arguments given last week on, taking the entire class of public utilities, this is simply the airlines and with that I'd ask for the adoption of the amendment, Mr. Speaker.
SPEAKER BAACK: Senator Warner, would you like to address...
SENATOR WARNER: Mr. President, members of the Legislature, this amendment, if I understand, I don't have it here in front of me, but as I understand from Senator Moore, is to expand airlines which, in fact, do have some federal protection although as I understand it they do not have the (d) clause that is some more, so much broader that we face with carlines and rail companies. I understand it's been litigated in at least maybe two states, at least it has in North and South Dakota and in one case it was a federal court I believe in North Dakota where the airlines won and in South Dakota I believe it was the state court and they lost. I think it's probably unclear at this point, certainly the constitutional amendment as written will allow where the federal supremacy comes in, but until there is a longer list of litigation, I'm riot so sure that we should make this move at this time. But in any event, I don't believe the dollar impact on local government would be anywhere near as close as this one as in the case of the railroads, the shortfall, and I'm hesitant to make that addition now although frankly it may not make that much difference in the event that there are further lawsuits. It may be something we need to do but I'd be hesitant to do it yet.
SPEAKER BAACK: Thank you, Senator Warner. Any other discussion on the Moore amendment. Seeing none, Senator Moore, do you wish to close?
SENATOR MOORE: Mr. Speaker and members, Senator Warner has opposed the amendment. I guess I would ... it was a lot weaker
than his opposition last week, at least the tone of his voice was and so if you measure it like that, 1, understand why Senator Warner is, opposed to it, but also I hope you listened to what he said that this amendment. in all likelihood is in order. He's certainly correct, you don't have to do it yet I There is some question of whether or not their federal protection is as extensive as the railroads, but nevertheless, I guess if, we're in the business of trying to preclude lawsuits, which I think what Senator Warner's amendment in I itself is trying to do, we might. as well, since we know the airlines have federal legislation protecting them, at least similar to the railroads and since we have the Constitution change that allows it to happen, I guess it only makes sense to me to do it sooner rather than later. And, as Senator Warner also mentioned, the cost is something that is, I guess we'll put it in the category of not I necessarily significant since there's not that much being airline property in the State of Nebraska. I realize this particular issue I'm on the other side of the fence, but I think this amendment, at least if you're going to go clown the route of Senator Warner's amendment, it's perfectly in order. It makes sense. It was within the guidelines of the Constitution and if the whole purpose is to try and stifle a lawsuit before 'it begins, I think this amendment would bring the airlines in as well and obviously to date they're the only two that have any sort of federal protection. And so instead of waiting on this one and doing it later if we need to or instead of waiting until July when everything is changed and the airlines all of a sudden, for whatever reason, they think this is worthwhile and they are perfectly within their power to litigate, if the thrust of the Warner amendment is a preemptive strike against that I would only ask this amendment be included as well and include both those federally protected entities in the same fashion. And, so with that I'd ask for the adoption of the amendment.
SPEAKER BAACK: You've heard Senator Moore' s closing on his amendment to the Warner amendment. We will now vote on that amendment. All those in favor vote aye, opposed vote no. We are voting on the amendment offered by Senator Moore. Have you all voted? Senator Moore. A call of the house has been requested. All those in favor vote aye, opposed vote no. Record, Mr. Clerk.
CLERK: 13 ayes, 0 nays to go under call.
SPEAKER BAACK: The house is under call. All members please
report to the Chamber and record your presence. The house is under call. Members, please report to the Chamber and check in. The house is under call. The house is under call. Members, please report to the Chamber and record- your presence. The house is under call. Senator Lynch, would you check in, please. Senator Landis, would you check in, please. Senator Morrissey, Senator Rasmussen, Senator Wickersham. We are looking for Senators Morrissey and Rasmussen. Senator Moore, Senator Rasmussen is on her way up. Can, we go ahead? We are voting on the Moore amendment to the Warner amendment and a roll call vote has been requested. Please keep your conversations down so we can hear the responses. Mr. Clerk, call the roll, please.
CLERK: (Roll call vote taken. See page 1954 Of the Legislative Journal.) 18 ayes, 13 nays, Mr. President.
SPEAKER BAACK: The amendment fails. The call is raised.
CLERK: Mr. President, I have nothing further pending to the Warner-Withem amendment.
SPEAKER BAACK: We are now on the Warner amendment. Anyone wishing to address that? Senator Warner.
SENATOR WARNER: Mr. President, members of the Legislature, I'd move adoption of the amendment. Indicate that the purpose of adopting or offering the amendment is to, I believe, to avoid litigation and avoid revenue shortfalls depending on when suits might be filed for local government in order that stability for this year could be more likely attained, so I hope the amendment would be adopted.
SPEAKER BAACK: Thank you, Senator Warner. Senator Moore.
SENATOR MOORE: First off, a couple questions for Senator Warner.
SPEAKER BAACK: Senator Warner, would you respond, please.
SENATOR MOORE: First question, Senator Warner, while you're coming to the mike, something has been intriguing me for the last 10 days or so. Why ... we knew there was a threat of litigation long ago. Could you explain to me why this particular avenue or why there was no discussion with the railroads prior to the passage of LB 1063 and why are we doing
this now when we always knew that there was, nothing has changed since November and why was it until after March 12 I that we ever thought about doing something this? Why was it never thought of when the bill was originally drafted or at least originally introduced by yourself, Senator Landis and Senator Withem?
SENATOR WARNER: Senator Moore, I can only speak for myself on this issue. I indicated on the floor the other day that it was my understanding, and I can't put everything into an exact time frame, but since the commencing of the session that there had been suggestions, I was not specifically aware, but generally aware, that there was an interest from carlines and railroads at one I tie point to put language into the Constitution specific, our Constitution which did not seem wise tying it to a specific federal act. Secondly then I had understood there was interest. in mandating that the tax commissioner do what is now authorized in the amendment that is pending. In my own case I've... the issue had not at least been elevated in my own mind until it was too late to consider an amendment to 1063 constitutionally in order to bring it back and have it reprinted if the bill was, to be enacted prior to the CA 1 being adopted or LR 219CA.
SENATOR MOORE: Okay, thank you, Senator Warner. That at least...though I still ... once again, because you're the person answering the questions, it seems like my frustration is with you. It's not with you but I've always, not always, it's one of those things that we knew was a problem a long time ago. I do not understand why the promoters of, LR 219 and LB 1063 and now this measure waited until after the measure passed when we knew it was a problem long before that. Second question, Senator Warner, And you mentioned it when you I used that word "may", is there ... I guess I have a concern about unlawful delegation of authority to the tax commissioner. If you could briefly respond to that concern without expending all of my time at least ... touch, obviously you don't... you're offering the amendment, you don't think there is a constitutional problem with giving the tax commissioner that authority to set tax rates.
SENATOR WARNER: In my opinion, Senator, the authorization of the tax commissioner is not that much discretion, and that amendment spells out specifically what conditions have to exist, methodology, the percentage of deviation in order for them to act and tinder that restriction would be, my opinion at least, that it's not an unlawful delegation of authority. If it was
more open, then I would share your concern but I believe it's restrictive enough that the guidelines are definitive enough that it does not become a constitutional problem,
SPEAKER BAACK: One minute.
SENATOR MOORE: Thank you, Senator Warner. I guess I don't necessarily share your opinion on the last. as I think there is still a problem but nevertheless, as I mentioned on Friday, I respect Senator Warner. He is basically saying we can get them to agree to $4 million. If we do nothing they may litigate $5 million and we may lose it all. Obviously the prudent thing to do is to get $4 million supposedly in taxes paid by the railroad and get the lawsuit to go away and I respect him for that and from a budgetary, perspective I guess I probably support that. But I guess the bigger problem I have as I articulated the other day is that what this is a shiny example of the problems I have with LR 1 and LB 1063 and that someone breathes the fire that we're going to 'sue you, the state has the flexibility in its new Constitution to make adjustments. And Senator Warner did not like the word preferential, but I guess he'd have to agree that a certain different treatment than anybody else and now the only people getting different treatment are certainly the corporate jets, the main frame computers and now the railroads. And the constitutional amendment that this body put forth to the voters, supported by the administration, is one that allows this Legislature to do these type of things. That causes me great concern. This is just a, like I said, just a shining example of the type of chicanery that I think is going to be allowed and encouraged by threat of a lawsuit and at this point I'd like to make it clear to the voters that we're not going to do that....
SENATOR MORRISSEY PRESIDING
SENATOR MORRISSEY: Time.
SENATOR MOORE: ... we're going to stand our ground. I'd prefer to litigate than to roll over like this amendment to LB 719 proposes to do.
SENATOR MORRISSEY: Thank you, Senator Moore. Senator Schmit.
SENATOR SCHMIT: Mr. Speaker and members, a question of Senator Warner if he would yield, please.
SENATOR MORRISSEY: Senator Warner.
SENATOR SCHMIT: Senator Warner, much has been said about the reduction in the taxes that would be paid by the railroads from approximately five and a half or five and a quarter to $4.25 million and that this language that's, included would result in the avoidance of a lawsuit. Has there been any kind of concrete agreement as-to the dollar amount in taxes which the railroads cumulatively will pay?
SENATOR WARNER: No but to be specific, I don't know what you mean by concrete agreement. What I do know is that using the methodology as outlined in the amendment, that it is the belief that it would meet the... it would avoid the necessity of a lawsuit whether someone conceivably would file, obviously they can. We tend to speak of railroads and carlines as relatively few in number. As I understand it there's probably 300 or more, 350 when you ... carlines are thrown in because some of them could be a very small potential for a lawsuit by one of them, certainly I assume is there, however, it is also my understanding that the larger carlines as well as the railroads would ... are... consensus at least is that this provision would avoid the necessity of litigation.
SENATOR SCHMIT: Well, thank you, Senator Warner. Ladies and gentlemen, I want to say this, that I really believe that the Legislature is doing something which we cannot do, that we are giving to the tax commissioner responsibility which exceeds his authority. I do not think that lie can sit down and negotiate as is indicated here with the railroads what tax they will pay. I will predict that if this does, take place with the existing personnel in charge, that the dollar figure will be considerably less than 4.25, four and a quarter million dollars. Another thing that I predict will happen will be that nothing ever remains constant in politics and although the best intentioned plans of the Governor and certain legislators and certain railroaders may be that this agreement would hold forth ad infinitum, we all know that will not happen. Another Governor will come forward, another tax commissioner will be in place. Another individual will be in charge of the railroad and someone will say, why should we do this, we obviously do not need to do it. More than anything else, I believe the adoption of this amendment will guarantee the failure of Constitutional Amendment 1 because it is perceived, whether it is true or not,
the perception across the State of Nebraska will be that notwithstanding all of the other concessions that have been made, notwithstanding all of the other shifts that have been taken care of, notwithstanding all of the other taxes that have been imposed , that certain exemptions were not even sufficient in this instance for railroads and, therefore, after the fact,...
SENATOR MORRISSEY: One minute.
SENATOR SCHMIT: ...after the bill was passed and after 219 was passed, before it was signed by the Governor, the railroad said, we're not going to play in your ball park and we will take you to court, and at that, time discussions again arose and a special, deal was cut. Well, if I were the railroads I'd do the same thing, except that I would go to court or I would rely upon the 4-R Act and I would pay no tax. I predict the railroads will pay little or no taxes and I would believe that this will probably be challenged and the entire issue will be back before the court. Most of all, the Governor said himself this deal stinks less than the rest of them. Ladies and gentlemen, the odor continues to increase and, as it does, it guarantees the failure of Constitutional Amendment 1. Thank you.
SENATOR MORRISSEY: Senator Withem.
SENATOR WITHEM: Yes, Mr. President and members of the body, I support the Warner amendment. Believe it is the prudent thing to do. Senator Moore, you asked the question that I think is a very fair, air, gosh, I I'm saying something nice about Senator Moore .and he's not even here to hear it, I think it's a fair question and that is the timing of this amendment, and from my point of view, I'll be very blunt and honest with you, with all of the complexities that we were dealing with LB 1063 and the constitutional amendment and all, we probably, we, collectively the railroads, the sponsors of the legislation and the Governor's Office, probably did not give the degree of attention to the rail problem that we should have as the bill was going through. In my case, it's that simple. It's something we probably should have dealt with but we didn't. Fortunately, we have an opportunity to deal with it and I think the fact that we did not deal with it before is not a reason for not dealing with it now. As I became more and more aware of what the federal 4-R Act actually says, and that's one of the reasons, I know, I was gone on Friday and was not here as part of the discussion but I
did ask that some handouts be put out. When you look at the actual 4-R language which was passed out, and I don't know how many of you had actually read the bill before, my case I had read accounts and characterizations of it, but when it makes a reference of comparing the tax liability of railroads to, commercial and industrial property in the state. I think it makes it pretty clear that we have to take the federal 4-R Act into account as we tax, the railroads. I wish we didn't have to.. I wish we could treat railroads exactly as LB 1063 treated all other property, but I think we need to. It's interesting the floor debate on LB.1063. We had senators, such as Senator Schmit, saying we can't tax the railroads because of the 4-R Act. We had senators, like Senator Hefner, say, well, folks, railroads will not pay any personal property tax in Nebraska. it's just, that simple and I don't think any way that we structure 1,063 that they will pay. Senator Moore made reference to all of the lawyers for the railroads going into court and keeping the railroads from having to pay anything. I'm surprised, I guess, that I come back and I find that we have an amendment that will guarantee collection of, I shouldn't say guarantee because I don't think you can guarantee numbers, but based upon the numbers as they existed in the year in which Department of Revenue did their ... did their analysis that they'd pay four and a quarter million dollars of property taxes on personal property in Nebraska, that that's somehow a concession to me. These people who are saying that, before, saying we're not going to get a nickel from them, now when we're paying, now when we have an amendment that will get four and a quarter million, dollars from them based upon the calculations in property as. they existed in the year in which the calculations were done, we're somehow caving in to them. I just don't understand that. This is an amendment that will take account of the fact that there is a federal 4-R Act, take advantage of the provisions in LR 219CA that says when there's a federal act that treats property differently that we, as states, whether we want to or not, have to take account of that, and will be a provision that will keep railroads paying personal property taxes. it's that simple and I guess it's that simple a decision and I don't care a lot whether the members of the body uniformly adopt this amendment or whether they don't. If you want to roll the dice and say you would rather run the risk of losing...
SENATOR MORRISSEY: One minute.
SENATOR WITHEM: ... 5 million dollars worth of property taxes,
you I can roll those dice by voting "no" on this amendment. I think what Senator Warner's bringing to you is an amendment that will give you the opportunity to keep the tax base as broad as we can make it. One point Senator Schmit made was that, at least the way he was describing it and I don't, know if he meant to describe it this way or, not, it appeared as though his understanding of the amendment is the Tax Commissioner does all' of these calculations, and then sits down at the railroads and says, well, what do you guys want to pay, and they say what they want to pay and, then the Tax Commissioner negotiates anything he wants to. As I read this amendment, the Tax Commissioner is restricted to either what the railroads would pay under a 1063 calculation or under this ratio calculation, but he certainly can't just sit down and play poker with them and make a decis ... and decide with them whatever it is that they want to, pay. Maybe Senator Warner at some other time can discuss that point on...
SENATOR MORRISSEY: Time.
SENATOR WITHEM: ...what flexibility the Tax Commissioner does have. I support the amendment.
SENATOR MORRISSEY: Before we go to our next speaker, would like to announce that Senator Schellpeper has some guests in the south balcony, 12 seniors from Clarkson High School, with their teacher. Would you folks please stand and be welcomed by the Legislature. Thank you for coming. Senator Lamb.
SENATOR LAMB: Thank you, Mr. President and members. Weil, I...I feel ... I feel that I'm forced into roiling the dice, as Senator Withem says, because I'm reading... I'm reading from the World-Herald on March 18 and that, of course, was before 1063 was passed. Nelson and other backers of LB 1063 have said that the new depreciation-based tax system could stand up against a 4-R challenge. The state would not be treating railroad property, personal property differently because all personal property being depreciated would be taxed regardless of 'who owned it, they said. So I voted for LB 1063. Then I'm reading, I'm reading from the... from the World-Herald dated April 2, last Thursday, after the vote on 1063, and I'll quote one little paragraph. "Nelson said he also supports an amendment to the new tax plan that will be offered in the Legislature this week that would change the way railroads are taxed." I voted for 1063 on one basis and then we're coming back saying, well, no,
that wasn't quite right, we're going to change it. The railroads, were paying almost 10 million dollars in personal property taxes before they challenged the law in 1988. Under 1063, the present form, the estimate is they'll pay five and a half million, but with Senator Warner's amendment it will be one and a quarter million less down to four and a quarter million So we have...we're coming down I own from ten million down to four and a. quarter million instead of five and a half million, so what's reasonable? I don't know what's reasonable, but I'm not going to vote for this because I voted for .1063 and I can defend that vote and will try to defend that vote, but I can't defend this vote where we're saying now that the railroad suddenly, the day after the bill was passed, said we're going to challenge it or we'll probably challenge it, then suddenly we come in with another amendment that says, well, we better back off and let the railroads have what they want, so I'm not going to vote for it. Thank you.
SENATOR MORRISSEY: Thank you, Senator Lamb. Senator Warner. Senator Warner.
SENATOR WARNER: Are there more lights or...
SENATOR MORRISSEY: Quite a few, Senator.
SENATOR WARNER: Well, let me comment again at this point. Again, I would move adoption. Shall clarify some things Senator Withem pointed out in his comments, that the amendment, as it's as it is being presented, is not a case of negotiation. There's a specific methodology that is spelled out that is to be followed and,, incidentally, also, I believe Senator Withem, pointed out the Tax Commissioner now has the authority to determine value. That's not new. That's the way it's been for a long time. And I also share the frustration that Senator Withem pointed out that the opponents to the constitutional amendment repeatedly said that under it railroads would not pay. Admittedly, maybe I got misled by those comments because I thought to come back with an amendment that specifically would give every probability that they would pay was a better public policy than to leave it hang out there, that it may ... may not finally...the impression is or we've given the impression I think that carlines, railroads, will pay nothing or very much Jess. They pay somewhere in the vicinity of 15 million in property tax now. We're talking in the vicinity of 18 or 19 million dollars for... between 19 and 20 million dollars for
total property, real and personal, that would be paid as opposed., to having to take the chance of a lawsuit that may fail. And, finally, in response to the last comment, that :LB 1060 (sic) could stand up to litigation, let me say that with adoption of. this amendment it could stand up better, and I think that's an improvement and I would hope the body would adopt the amendment.
SENATOR MORRISSEY: Thank you, Senator Warner. Senator Hefner.
SENATOR HEFNER: Mr. Chairman, and members of the body, I have a question for Senator Warner, if he'll yield.
SENATOR MORRISSEY: Senator Warner, would you respond?
SENATOR HEFNER: Senator Warner, the other day the body approved Amendment 3777. This would take ... this would strike the four dollar per ton on soil conditioners. Okay, and then a little further on down in that particular section, and if you want to follow me, on page 260, line 16, subparagraph (3): For the purpose of this section, gross tonnage shall not include water or other carriers added by the retail seller of the fertilizer and shall not include sales of packages of fertilizer containing ten pounds or less. Was that left in there?
SENATOR WARNER: Yes, I checked this morning, Senator Hefner, and, if you will recall the conversation we had when your first amendment was up, 1 indicated that the AM that you mentioned also included your language plus some additional language dealing with water. What the Legislature did was adopt your amendment, it adopted Senator Lindsay's amendment, and it adopted the amendment that I had offered. Your, the amendment you offered and the one that I offered, your language was included and repeated in my language. I believe it was the same and, as I understand it, this, morning the amendments dealing with the fertilizer then is all inclusive. It has the clarification of soil conditioners you suggested. It has the 3 percent...or the ... the sales tax as one of the conditions, as offered by Senator Lindsay, and then finally it has the clarification of water being added as not part of the weight that was described by Senator Schrock on the floor prior to the vote on 1063. All those items were ... are now a part of LB 719A.
SENATOR HEFNER: Okay, thank you, Senator Warner. I just wanted that in the record on this floor debate, point of clarification. And, Senator Warner, I do have another question for you. Will
you guarantee that railroads will pay four and a quarter million .dollars in personal property tax in the coming year.
SENATOR MORRISSEY: Senator Warner, would you like to answer that question?
SENATOR HEFNER: And talk plainly...
SENATOR WARNER: What's the warranty...
SENATOR HEFNER: ...so we can hear that.
SENATOR WARNER: What's the warranty provision, Senator Hefner? No, I can't guarantee that, obviously, and I assume somebody will pick that line tip and misuse it. Senator Hefner, can you guarantee me you'll be here to ... you'll be here tomorrow? No. I can't guarantee you I'll be here, but in my opinion, Senator Hefner, I think what. you're trying to get me, to say, which I I'm ,very willing to say, and that is that without this amendment the likelihood of the railroad not paying is much greater with this amendment. I believe very firmly that an amount in that vicinity, depending upon the calculations for each of the 300-plus carlines and railroad, that we can be fairly well assured that local governments will receive in the vicinity of four and a quarter million from personal property tax plus approximately 15 million that is paid in real property tax in addition, yes.
SENATOR HEFNER: Okay, thank you, Senator Warner
SENATOR MORRISSEY: One minute.
SENATOR HEFNER: I knew that you wouldn't guarantee that, but I had to ask that anyway. But this bill, LB 719A, will come up for Final Reading later on this week probably. I'm wondering if we'll have to bring it back again because the railroads have threatened us that they won't pay a certain amount and this is why I didn't vote for LB 1063 the first time around, because I don't think that we're going to be able to tax them, and I still don't think we'll be able to tax them even with this amendment on because they're protected under the 4-R Act, the federal act, and I just don't know how we're going to do that. So at this particular time I'm not going to support the Warner amendment on this bill.
April 6, 1992.
SENATOR MORRISSEY: Thank you, Senator Hefner. Senator Coordsen.
SENATOR COORDSEN: Thank you, Mr. Speaker, members of the body. I recall quite vividly as, a new member of the body coming into special session to, address the beginnings of the railroad versus State of Nebraska dispute over property taxes and, at that point in time, I listened quite attentively to the more senior members of the body and their comments relative to the rightness of what we were doing. The previous Administration's tax experts/railroad 1 road law experts, whatever, said this is the way to, do. It was wrong. Somehow. or the other this debate on the Warner amendment follows, in my mind, the same line of thinking. If you purely look at the language in the 3-R Act ... or 4-R Act relative to discriminatory taxes, you can see a possible relationship between the Warner amendment and what is currently existing in federal statute. However, the Constitutional Amendment number 1, as it's become, and the underlying supportive statutory language in, 1063 says to the people of Nebraska that what the Legislature is trying to do is create. a fair. and equitable method of valuing for tax purposes commercial and agricultural property in the State of Nebraska. I'm concerned that with this amendment that, while we may well be averting a lawsuit by the railroads, are we going to be averting lawsuits from other entities, be they centrally assessed or other classes of taxpayers who are going to be called upon to pay a sum of personal property taxes based upon the method in LB 1063 with the authorization in Constitutional Amendment 1, if that passes? I suspect that that will probably happen. Whether or not that will be successful is no more predictable than whether or not a law.. a railroad suit over the current language in 1063 would be successful. I think rather than trying to second-guess what a future court may do, either on the federal level or on the state level,, that we would be pursuing the wiser course if we use the language in 1063 provided the uniform method, the uniform mechanism of determining of value for the...for the assessment of personal property taxes on those applicable classes of property and address this concern if and when a court did in fact find that to be discriminatory against a railroad. So, for those particular reasons, I find this morning that I cannot support the Warner amendment. It may well. be that that could, in some future point in time, be the method forced upon the body of the Legislature in the State of Nebraska, but we cannot predict that. We're trying to second-guess something that we really don't know what the end
result will be. Thank you, Mr. Speaker.
SENATOR MORRISSEY: Thank you, Senator Coordsen. Senator Wickersham
SENATOR WICKERSHAM: Thank you, Mr. President. I'll try to be brief because I think I've, expressed My views on this amendment earlier and they remain the same, particularly I had to rise and say something after we failed to. adopt My amendment. The proposal before you will result in a lower valuation of railroad property as opposed to any other property subject to tax under LB 1063, simply because we have chosen, for all the right reasons, not to tax inventories in the State of Nebraska.. I don't believe that our failure to tax inventories will discriminate against the railroads and I think we can win that case in the Federal District Court. I think we should at least try. The amendment that you're going to be voting on here sometime, today will preclude that effort. We may not ever really know the answer unless somehow the kind of a deal that is represented in the amendment breaks down and somebody sues. And it could break down for a number of reasons. The railroads might decide that they don't like the way the unitary tax is supposed to be computed under the amendment. They might decide that the wrong numbers are being used by the Department of Revenue for the actual value of all commercial and industrial property in the State of Nebraska. They might decide, for some reason, that the numbers used for the net book value across the State of Nebraska are wrong. There are all kinds of things that could go wrong and result in litigation., Certainly if they don't result in, litigation they're going to result in a considerable strong-arming of the Department of Revenue and the Commissioner to resolve the issues in a way that is favorable to the railroads to once again avoid litigation, perpetually, perpetually being asked to make concessions to Avoid litigation. We do not know where that process will end. I think we may as well have the litigation, be done with it. If we're not successful in the litigation, if, for some reason, railroads are discriminated against because we do not tax inventories in the State of Nebraska, we can come back and make the changes then. If we found out the answer for certain, I think we could create the system that would result in taxation of railroad property in conformance with whatever the Federal District Court would tell us we had to do. We don't know now. I want to know the answer and I'm willing to vote against this amendment so that we can find out the answer.
SENATOR MORRISSEY: Senator Schmit is our next speaker.
SENATOR SCHMIT: Mr.. President and members, there's always. something good in everything and I appreciate Section 170 of this amendment which clarifies that a person who has paid accelerated property taxes this year shall be eligible for refund of the amount paid which exceeds the amount that subsequently will be determined to actually be due for this year. When I offered that amendment of 1063 it was repudiated by the same people who are offering it now. The wisdom always comes later in life, they tell me in my case, I my life is getting pretty well down the western slope and so I better learn pretty quick. Also, it helps if you have learned to read and then remember to read and I like to go back and read what the World-Herald said on 3-18. It says the Union Pacific says it's likely to challenge the property tax plan, and then there's a whole lot of other conversation in there, and says Kim Robak, Governor Nelson's legal counsel, said Nelson's been working with the railroads and senators to see whether common ground can-be reached this session. Senator Jerome Warner of Waverly said hip is willing to listen to what the railroads want because the railroads likely would prevail if they took the matter to court. I don't know if that's accurate or not, but I have a hunch it is or else Senator Warner would have issued a disclaimer. I've said on this floor time after time the railroads would not pay taxes under 1063 because of the 4-R Act. Didn't have to challenge the constitutionality of any of what we are doing here. The 4-R Act lets them out of the gate. Now someone, Senator Withem, my good friends, Warner, say Schmit ought to be happy, he stood on the floor and said they wouldn't pay, now we've cut a deal, they have agreed to pay. When Senator Hefner said, will they pay four and a quarter million, Senator Warner says, obviously, we can't guarantee that. Obviously, we cannot. I had a little conversation with a railroad lobbyist which we attempted to settle on some kind of a figure and I can tell you very frankly that it is not the intention of the railroads to pay four and a quarter million. They don't have to pay four and a quarter million. They're going to pay whatever is an amount that is convenient that will preclude the little problem of going to court, but they know if they go to court they'll prevail. And so it would ... this is not the first time in politics or in this Legislature or in court that someone succumbed to blackmail and we have a little bit of blackmail going on in the case of the railroads, so if it's less
convenient for the railroads to pay a little bribe to the State of Nebraska, and that's all it amounts to, than it is to go to court, they'll pay the bribe. If the bribe gets to be too expensive, then they will not pay and they'll go to court if some future Tax Commissioner, I think Senator Wickersham raised some points that we ought to be listening to. Some time you should go back and, read that transcript. It's a game of numbers. It is a game, of numbers. When you can't even determine exactly what an animal is worth, what a farm tractor is worth, what a piece of business equipment is worth within a hundred percent of what someone else might agree it is, worth, how are you going to determine the value of railroad property? I can't look at an engine, diesel engine, and tell you what it's worth. Not many people can. It's an interesting concept that we find here today. This deal is supposed to buy off and avoid litigation, will not avoid litigation. What it might do, it might do just the exact opposite of what the proponents of CA 1 want it to do and that is to guarantee the defeat of that constitutional amendment.
SENATOR MORRISSEY: One minute.
SENATOR SCHMIT: I know that it's interesting, Nelson says the tax plan can stand up to Union Pacific. Is that right? Then what's he dealing ... what's he dickering for? If it can stand up to it, he ought to say, go back to the shops, ladies and gentlemen, go back to the shops. Talk to Senator Morrissey about standing LIP to the railroads. You'll find out Governors can't stand up to them. Labor can't stand up to them. They have the resources at their command, ladies and gentlemen, and in this case they have the law, the federal law behind them, a pretty powerful tool. They may buy off, ladies and gentlemen, for a few bucks. They will not pay off for a proportionate share and, if you do that, then I think you ought to take a look at an amendment I proposed some times ago which allows all of us to come in and negotiate on a proportionate share. I would hope that we continue this discussion. I don't know what's going to happen but I would suggest that regardless of what happens on this floor ...
SENATOR MORRISSEY: Time.
SENATOR SCHMIT: ...the railroads are going to pay only a minuscule amount because that's all they're going to owe.
SENATOR MORRISSEY: Thank you, Senator Schmit. Senator Moore.
SENATOR MOORE: Mr. President and members, I know Senator Warner and Senator Withem do a good job of making the argument that people like myself are the ones that are being inconsistent.. I think it's actually the other way around. I mean, I have. consistently said the prudent course tax policy wise for the State of Nebraska is to exempt all property from taxation 'cause it's just, like I, said, taxing personal property is like trying to catch smoke in a net. It can't be done. It can't be done fairly, consistently said that. I've consistently said that if you're going to buy off on this whole taxing scheme of LB 10 63 I've consistently said you ought to treat everybody the same. That's why I came very forcefully and tried to take 775 exemptions out. I've consistently said that time and time again. I've consistently said that the railroads have a winner in a lawsuit and I was consistently, not by Senator Warner or maybe not by Senator, Withem directly, consistently said forget about it, this is going to work, we don't need to worry about that. I think if anybody's being inconsistent on this floor it's the supporters of LB 1063. They said time and time again on floor debate, they said time and time again in the press and debates all around that the railroads ... the reason 1063 was going to work was you finally treated everybody the same. You finally tax all depreciable property. And the railroads were whistling Dixie when they thought they had a lawsuit case because 1063 finally fixed that. You had no herky-jerky exemptions any longer and the railroads are now going to pay, and consistently said 1063's fine, you're throwing a red herring, you're dragging a red herring across the landscape when you talk about the railroads filing suit and winning. And now, when the railroads do threaten to file suit, what happens? Inconsistently, I would add, the supporters of LB 1063 said, you're right, maybe they do have a lawsuit, maybe they are going to win, maybe we better do something about it. And so I don't think I'm the one being inconsistent. Maybe ... maybe some of the supporters of LB 1063 convinced me this thing would stand a court challenge. They said time and time again, week after week, month after month it was going to work, and I guess maybe it is a little sour grapes on my part. I was beaten into submission saying that I was whistling Dixie on the railroads lawsuit and then, all of a sudden, now it's a real threat. And I am the one being inconsistent? I don't think so. I think the supporters of this measure are the ones that are being inconsistent. They're the ones that tried to sell the state and
this body that, 1063 was going to work, and now, even before the horses get out of the gate, they're admitting that it doesn't and Senator I or War... I mean, we don't know whether there's still going to be 4-R Act problems here. My last amendment that you failed to adopt guaran...you, know, could certainly...will guarantee by a winning lawsuit by the airlines, if it's ever worth their money to do so,, an& so you still got problems. I have consistently said the property tax policy is to exempt all, property. I have consistently said the railroads and the 4-R Act needs to be dealt with and, once again, the administration has said time and time again don't worry about the, 4-R Act, .that's not our problem. There's no reason to petition Senators Exon and Senator Kerrey to repeal the 4-R Act. That's not a problem in the State of Nebraska. Go back and read some of the editorials that the Tax Commissioner said, the 4-R Act is not a problem. Well, I guess it's a problem today. I guess it's a problem right now. Maybe you ought to think about going back and trying to repeal it, but: don't, you know don't want to get cross-ways with our senatorial delegation. I understand that. I think it is a problem. It will continue to be a problem. Taxing personal property is going to continue to be a problem and I think it's a... I guess I just have a ... I have a big problem...
SENATOR MORRISSEY: One minute.
SENATOR M0ORE: when people sit here and say I'm half nuts. Maybe I still am, but the biggest criticism I always had of 1063 is now coming true. I don't fault Senator Warner for trying to plug the dam. That's what this amendment tries to do. Tries to at least keep them on. But the proponents are the ones being inconsistent. They said this will get the railroads, and now they say, once again, it only gets them if we treat them differently. You're not going to treat everybody the same anymore. Uniformity within class, you're not going to tax all depreciable property the same. You're going to treat just a few people differently. I think if anybody's been inconsistent it's the supporters of LB 1063 that are continuing to say this gives us... the constitutional amendment allows us to treat people differently and LB 1063 is not as great a law as some people thought it was going to be. It will not solve the problem. We have to try and plug the dam one more time.
SENATOR MORRISSEY: Time.
SENATOR MOORE: This, will be the first in many attempts to correct that legislation.
SENATOR MORRISSEY: Thank you, Senator Moore. Senator Withem.
SENATOR WITHEM: I would call the question.
SENATOR MORRISSEY: Senator Withem would call the question. Do I see five seconds? I do. We'll now vote on ceasing debate. All in favor vote aye, all opposed vote nay. Have you all voted? We're voting on ceasing debate. Have you all voted? Senator Withem.
SENATOR WITHEM: ... of the house and I would accept call-in votes.
SENATOR MORRISSEY:. Senator Withem has requested a call of the house. Shall the house go under call? All in favor vote aye, opposed no. Record.
CLERK: 19 ayes, 0 nays to go under call.
SENATOR MORRISSEY: The house is under call. Would all unauthorized personnel please leave the floor and all senators come to the Chamber and check in. The house is under call. We are accepting call-in votes. Abboud, Ashford, Baack, Bernard-Stevens, please report to the floor and check in. Senator Landis, please check in. Senator Lindsay, Senator Johnson, Senator Conway, Senator Robak, Senator Schellpeper, Senator -Horgan, Senator Wesely, Senator Johnson, have you checked in? Thank you.
CLERK: Senator Coordsen voting yes. Senator Rasmussen voting yes. Senator Lynch voting yes. Senator Rod Johnson voting yes.
SENATOR MORRISSEY: Record, Mr. Cleric.
CLERK: 25 ayes, 3 nays to cease debate, Mr. President.
SENATOR MORRISSEY: Debate has ceased. Now recognize Senator Warner for closing.
SENATOR WARNER: Mr. President, members of the Legislature, the issue has been discussed a great deal, but again the purpose is to authorize the methodology that the Tax Commissioner can use
in addition to their existing authority for determining valuation so that a litigation could most likely be avoided: and" hence, avoiding revenue shortfall, depending when a case may be filed led for or. . . by local 1 government. Again, I want to repeat that the estimate of four and a quarter million is based ... was done by the Department of Revenue based on figures from 1990, when. there, were a number of these numbers available, together with information that was submitted by, at least in part, I some of the carlines I and railroad companies so that the methodology could be applied. I think that it is prudent to follow that- course because greater stability is likely to be available under this provision. Certainly it's going to remove the argument of those who have consistently. said that the railroads and carlines would pay nothing under 1063. My opinion, this eliminates much of that argument and assures that at least this level, in addition to the 15 million in property...real property, is otherwise paid or, in other words, we're talking of something in excess of 19 million dollars in real and personal property tax paid as opposed to a little over 20 million in real/personal property tax paid, and I think that that stability, avoiding the shortfall or refund potential for local government makes this a .prudent amendment. I hope the body adopts it.
SENATOR MORRISSEY: You've heard the...Senator Warner's close... closing. We'll now vote on the Warner amendment. All in favor vote aye, all opposed vote, nay. Have you all voted? Have you all voted? Senator Warner.
SENATOR WARNER: Mr. President, I'd request a roll call vote.
SENATOR MORRISSEY: We've had a request for a roll call vote. We are under call. Would the senators please check in Senator Nelson, Senator Robinson, Senator Schmit , please check in. Please hold your conversations down so the Clerk can hear the responses, please.
CLERK: (Roll call vote taken. See page 1955 of the Legislative Journal.) 26 ayes, 19 nays, Mr. President.
SENATOR MORRISSEY: The amendment is adopted. Call is raised. Further amendments on the desk?
CLERK: Mr. President, the next amendment I have is by Senators Warner and Withem. I have a note, Senator, you want to withdraw 3914. Mr. President, Senator Warner would move to amend with
AM4010. (Senator Warner's AM4010 appears on pages 1956 of the Legislative Journal.)
SENATOR MORRISSEY: Senator Warner.
SENATOR WARNER: Mr. President and members of the Legislature, this is strictly a corrective amendment and I'll ... the issue I think has been discussed, but not in much detail a time or two before. Original draft of 1063, and I believe the same is true of LB 1120, had a section, an old existing section of law that was included in the legislation which would have ... did affect how insurance companies are affected between... the relationship between a premium tax and on income tax, and there were amendments adopted, for example on 1120, to address it as there was in 1063. The wording, however, in 1063 was not identical to the existing law and a question was raised as to whether or not that there may be some other effect because the wording was slightly different. What this amendment does is return the original statute of which there has been no misunderstanding as to the relationship between premium tax and between income taxes and this is to return it so that any concern that there might have been expressed that any adjustment may have some effect that was not known or appreciated, recognized, whatever adjective, this removes that concern and just simply puts back the statute in that and the other things that evolved in that section in the same fashion as they were when the Legislature convened. I move adoption of the amendment.
SENATOR MORRISSEY: Thank you, Senator Warner. Senator Elmer, do you wish to speak to this amendment? Senator Schmit.
SENATOR SCHMIT: Mr. President, I'll yield my time again to Senator Warner. I'm sorry, I don't, understand what his amendment really does and I'd like to have him continue his explanation please.
SENATOR MORRISSEY: Senator Warner.
SENATOR WARNER: Mr. President, members of the Legislature, Senator Schmit, what the amendment does is returns the statute as it was prior to this session as to the relationship between premium taxes on insurance companies and income taxes. No change. The drafts of LB 1063 originally and also on 1120, I believe was the other number of the bill that we dealt with, as they were drafted included some adjustment which all, in
wordage, which was also not to have any impact, but it raised questions because the wording was changed that there may be a ... may have an impact. This clearly puts it back as to how the statute did read and what it has reference to, in part at least. This section is nothing new. In part, it has, as we know, the amount of premium tax that is paid by insurance companies and in some cases those premiums, under certain county mutuals, are referred to assessments, but under those provision it becomes a calculation in the Amount of income tax that is paid. That has been the statute since, at least I believe since 1967 and since this merely returns the wording back to that... to that provisions without any adjustment, because there was those who thought those ... that adjustment might have some impact, which I don't believe it did, but by putting the words back it removes any concern that anyone might have.
SENATOR MORRISSEY: Senator Schmit.
SENATOR SCHMIT: Okay. I would have to say that I'm not totally aware yet of what this amendment does except that I understand it returns us to the status quo before 1063 and I heartily endorse anything that will return us to the status quo prior to 1063. It can't possibly be bad. It's got to be better than what we are in today, so it looks as if. I can support this amendment.
SENATOR MORRISSEY: Thank you, Senator Schmit. Before we move to our next speaker, like to announce that we have 37 students sitting in the south balcony with the Nebraska Federation of Women's Clubs sophomore pilgrimage. They represent 17 legislative districts in Nebraska and the group is led by their state president and public affairs chairman. Would you folks please rise and let us welcome you to the Legislature. Thank you for coming. The next speaker is Senator Lynch. Would anyone else like to speak to this amendment? Senator Warner to close.
SENATOR WARNER: Again, Mr. President, this Amendment, as I indicated, returns... retains the concept or relationship between premium tax and insurance...and for insurance companies and income tax the same as it is now. There was a wordage change in the bills originally introduced which presumed that there may be a change. There was no intent for a change and it eliminates any concern that there is a change by putting back the wordage
and the effect of it is, as you all ... if you are not aware no change existing law. The effect is the premium tax becomes A, credit for... on income taxes, calculated for insurance companies. This returns to that so that those premiums or assessments which are... a word that is used a long time for... for a county mutual insurance company, of which there are a handful, but they use the term in some cases assessment, as opposed to premium, but it works the same, but it is, to clarify that the existing law will he retained and that's what the amendment does, returns it and, removes any concern that anyone might have that, somehow there's inadvertently a change, which there was not but this makes sure that a lot of people I s minds that that's how it is. I'd urge the amendment be adopted.
SENATOR MORRISSEY: Thank you, Senator. You've heard the closing. We'll now vote on the Warner amendment. All in favor vote aye, All opposed vote nay. Have you all voted? Record, Mr. Clerk.
CLERK: 25 ayes, 0 nays, Mr. President, on adoption of Senator Warner's amendment.
SENATOR MORRISSEY: The amendment is adopted. Further amendments?
CLERK: Mr. President, Senators Schmit and Hefner would move to amend. AM4014, Senator. Oh, I'm sorry?
SENATOR SCHMIT: In the Journal, Mr. President?
CLERK: It is not, Senator.
SENATOR MORRISSEY: Senator Schmit. (Senator Schmit's AM4014 appears on pages 1956-57 of, the Legislative Journal.)
SENATOR SCHMIT: Mr. President and members, this amendment is an amendment which was discussed at some length. Senator Cudaback had a version of the amendment and, withdrew it. Others on the floor have discussed it at some length and this amendment addresses the issue of the tax on fertilizer and I will read the amendment to you. It's a very simple amendment. "For purposes I of this section, gross tonnage shall not include water arid other carriers added by the retailer seller of the fertilizer or any inactive or inert ingredients and shall not include sales of packages of fertilizers containing ten pounds or less." The
difference in this amendment and some of the other language is it exempts the inactive or inert ingredients. As we all know, fertilizers vary widely in the Amount of active ingredients. Anhydrous ammonia fertilizer is 82 percent nitrogen. Ammonium nitrate. is 33-1/3 percent nitrogen. There are a, wide combination of starter fertilizers which may. have as little as 20 pounds of activated ingredient or even less per 100 pounds. Obviously, a ton of fertilizer that has 20 percent active I ingredients as opposed to 80 percent will be taxed at 4 time's the tonnage rate that anhydrous ammonia would be taxed at, since it contains 82 percent nitrogen. I do not believe that it was the intent of this body to be discriminatory in their taxation policy. There have been attempts, several attempts made here to change this and I am sure the most vigorous argument against the amendment will be that it will reduce the amount of income from the agreement, and that is correct. It will do that. But I would suggest that the amount of proposed income will be dramatically reduced from that which was intended by the fact that we gave the farmers of this state. a grace period of about two weeks time during which time they could conclude their purchases of fertilizer and by giving them that grace period the vast majority of fertilizer that was I going to change hands in the State of Nebraska did so prior to April 1. The adoption of this amendment is not going to have any significant impact upon the amount of income raised from this tax as of this time because most of the fertilizer has already been purchased. What it does do, it places into statute very distinctly the intent of this Legislature that we tax fertilizers based upon active ingredients. There's another reason why we should do that and that is because, in my experience as a farmer and as a commercial applicator, it is easier to overapply fertilizers with a higher content and, therefore, it ought ... we ought to, if anything, encourage the application of some of the lower yield fertilizers. When we do it in this manner, in the manner that has already been adopted, we encourage the application of high concentration fertilizers. I would hope that if the body would adopt this amendment and then next year chooses to raise additional funds, the tonnage rate could be adjusted. The price per ton could be Adjusted to raise the amount of money which was agreed upon by those -individuals who made the agreement. I did not support the original tonnage tax. I do not support it now. I think it is wrong, it is unfair, it is discriminatory and it will lead to further abuses in time. In years to come, as additional need for revenue is present., there will be steady pressure to increase the 4 dollars per ton to 5, 6, 10,
April 6, 1992.
et cetera. But at least if we adopt this amendment, we will tax the fertilizer based upon the active ingredients in a ton, not upon the gross ingredients. I think it's a fair amendment. think it's one that ought to be adopted and I want to as I sure you again that it will not have any significant impact adversely up on the revenue that is raised this year because, most of the fertilizer that's been purchased this year has been purchased prior to April 1. I would suggest that we will have several other opportunities in: this coming year to adjust this anyway because I believe really we're going to be back in session again after the primary and at that time we may have a multitude of other problems we'll try to correct, this being one of them, but at least we ought to adopt this amendment and do so for the reasons I have given.
SENATOR MORRISSEY: Thank you, Senator Schmit. Senator Warner on the Schmit amendment.
SENATOR WARNER: Mr. President, members of the Legislature, again, there are two provisions in the proposed amendment, the one dealing with water content is already in the proposed legislation. That portion was contained in the amendment the other day so the only issue I believe, this, is the one that deals with the active ingredients and, as Senator Schmit pointed out, someone would suggest that leaving the fee at 4 dollars. against active ingredients will, in fact, cause a shortage of revenue from what was anticipated by those who came up with this idea to the General Fund and I'm sure that is a fact. I believe, as I recall, and I...Senator Cudaback, when he offered a motion, he had increased the fee on the active ingredients, it seems to me 6 dollars but I'm not absolutely certain, but it seems to me, which at least was an effort to, in part, avoid the reduction in revenue, but it's probably accurate to state that, because of the dates of implementation and the ordering of fertilizer, the revenue may be somewhat less than what had been estimated. To do this, it would be even significantly more of a shortfall, which its resulting General Fund problems, as far as the state is concerned, less likely to meet minimum reserve and obviously add to the problems that were discussed earlier this morning on the first bill that we had on Final Reading, the gap between revenue and receipts that's going to... or between revenue and expenditures that is likely to occur next session. So, while I don't disagree with the logic of tying a fee, in some extent to ingredients, I'm not aware of any information which will enable us to make a determination of what that fee
ought to be other than the way it was in the bill, which is tonnage., and the importance of at least, and I wasn't involved in the discussion, but I believe it's important to uphold the understanding that the Legislature had when amendments were ,adopted that brought on this tax which was the hold-harmless of the General Fund and I am in support of that principle and, therefore, would have to vote against Senator Schmit's amendment.
SENATOR MORRISSEY: Thank you, Senator Warner. Senator Elmer.
SENATOR ELMER: Thank you, Mr. Chair. Listening to the debate the last Friday and today on 719 continues to bring home the fact that all of us are uncomfortable with what's being done. We're uncomfortable because we realize, that you can't tax personal property fairly unless you tax none of it or you tax all of it. We all know we can't tax all of personal property. Therefore, the course we need to follow is to try to reach some sort of a stopgap until we can convene next year and, do the proper thing, get the proper kind of taxes into place to fund removing personal property from the tax rolls. We will never legally be out of this mess until that's done, in my opinion. We made some attempts this year and we'll make further attempts. I hope some ... some time in the future one of the ... this body will realize what we should have done this year and remove personal property from the tax rolls. As far as 719, it's like putting chocolate on a cow chip. Makes the chocolate no good and it doesn't help the cow chip. Thank you.
SENATOR MORRISSEY: Thank you, Senator Elmer. Senator Schellpeper.
SENATOR SCHELLPEPER: Thank you, Mr. Chairman and members. I'd like to ask Senator Schmit a question, if he's around.
SENATOR MORRISSEY: Senator Schmit.
SENATOR SCHELLPEPER: I don't see Senator Schmit at this time. I can go on. I really have a problem at the present time trying to open up the fertilizer situation again. I think the farmers out in Nebraska are very confused. They finally decided that they would live with the 4 dollar tax and that's where it's at. They didn't like it. They still don't like it and then they aren't going to like it, but I think by having to change the formula is not going to make that any more popular in rural
Nebraska. I think what Senator Schmit is attempting to do here is going to put more of a fiscal impact on the state and it's going to be a lot of extra confusion. Now, I don't think he had any fee increase as Senator Cudaback had stated in his. I think Senator Cudaback had talked about a 6 dollar a ton on anhydrous, but I didn't hear Senator Schmit make that comment that he was going to increase the fee on anhydrous by 2 dollars to make it from 4 to 6, but when he, comes back in maybe he could answer that for somebody. But, anyway, I really have a big problem at the present time opening up this whole problem again. I would just as soon leave it where it is and let the farmers decide what they want to do with the CA as it is. Thank you.
SENATOR MORRISSEY: Senator Withem is the next speaker.
SENATOR WITHEM: Yeah, Mr. Chairman, members of the body, I would rise in opposition to the Schmit amendment from probably a more broadly-based sort of concern as opposed to whether... how, in fact, fertilizers should be taxed. I don't really care what the methodology is of taxing fertilizer as long as the fiscal impact remains the same as it was when we passed LB 1063 and I would remind the body that there was an agreement that had been reached between a group of rural senators and a group of urban senators dealing with the issue of farm machinery and whether or not we tax farm machinery and the agreement was we will...we'll tax farm machinery sales tax but you can get a rebate. You can get a hundred percent rebate provided, that the funds that are raised to cover the General Fund deficit are raised with a combination of general impact taxes and taxes that are specifically oriented' to the ag sector, and that was acceptable by a number... a number of senators and they are the ones that hit upon the fertilizer tax as the agriculture ... the agriculture senators' contribution to paying the General Fund deficit created by the refund on farm machinery. And I forget what all the dollar amounts were, but we agreed on how much the fertilizer tax would raise and the fertilizer tax was then imposed. If the manner in which it was drafted was improper, if there are better ways of administering it, I'm willing to listen to I those, provided that the fiscal impact remains the same. And if Senator Schmit would have a way of adjusting the rate but decreasing the base so those dollars would be raised would be the same I probably wouldn't care a great deal. It's probably something that I would feel ... feel comfortable doing. But to come, back in a couple of weeks after that agreement was made where we did capitulate and to some extent on dealing with the
farm arm machinery sales tax issue and-then have it changed so that the dollars will not be raised so that... that the General Fund money would be covered, it's something I can't support: As I a matter of fact, if this amendment is adopted, I would probably, follow with an amendment I that would remove that provision where farm machinery would receive a favorable sales tax benefit.. So I would urge you, rather than have to go through all of I that process, I would suggest that we just vote down the Schmit amendment. If there are ways I of restructuring the fertilizer tax so that it raises as, much money in future years as we had projected when we used it as an, offset to the farm machinery tax, I'd be willing to accept that, but this amendment doesn't do that so I cannot support it.
SENATOR MORRISSEY: Thank you, Senator Withem. Senator Schrock is the next speaker.
SENATOR SCHROCK: Mr. Chairman, members of the Legislature, I would like to just reaffirm what Senator Withem has just said, Do I think the 4 dollar per ton tax is fair? No, I don't think it's fair. Do I like a fertilizer tax? No, I don't like the fertilizer tax, but we need to finance state government and I felt like we had to do something and. this was a better solution than an energy tax and a partial rebate on sales tax on machinery. Do I think we should do something about it, the sales tax on fertilizer? Yes. Do I think now is the proper time? No. I think we should take our time. I think we should study it this summer or this fall, have some interim studies, come in with a bill, have a proper hearing and then address the problem. If it is going to be the intention of this body, to raise 7-1/2 million dollars from a fertilizer tax, I think we should do it right the next time around and not do it piecemeal like we said we're going to do here. The 4 dollar per ton tax is not punitive. It's not going to put anybody out of business. We can live with it for a year or a year and a half. And I don't think we want to do something now where we don't, know where we're headed and we haven't had public input on it, so I think now is the wrong time to address this issue.
SENATOR MORRISSEY: Thank you, Senator Schrock. Before we go to our next speaker, I'd like to announce that Senator Withem has some guests in the north balcony, 69 fourth graders from Golden Hill Elementary in Omaha with their teachers. Would you folks please rise and be welcomed to the Legislature. Thank you for coming. Senator Cudaback is our next speaker.
SENATOR CUDABACK: Mr. Speaker, members of the body, I did have an amendment last Friday to change the current tax from 4 dollars to 6 dollars. This, would be in answer to Senator Withem's question, would that have balanced out, and that would have balanced out and that was the Agreement and I wholeheartedly agree with him on that issue. If we were going to change the structure, then it had to work out internally so it would offset whatever we do. Senator Schmit's idea is, a great one, along with many of the rest of the senators who wish to make it more uniform. The intent was not to discriminate or make it unfair at the time. We did it, as I said, in haste. We rather rushed through it but, unfortunately, that's the way it is. The wheels are in motion. The wheels are in motion and rather than go back and change it and cause more confusion, and unfortunately we can't do that to our people again. They're going to wonder what we were doing, where we're at, do we know what we're doing. Let's leave it at 4 dollars. Senator Schrock has a study coming up this summer. We will restructure it then come up with a solution to correct the problem that we know exists, so I guess I would, unfortunately, be against the amendment of Senator Schmit's. Thank you.
SPEAKER BAACK PRESIDING
SPEAKER BAACK: Thank you, Senator Cudaback. Senator Schmit, you're next.
SENATOR SCHMIT: I always kind of like to contrast what goes on this floor. We're looking at a two hundred and fifty or seventy-five page amendment that Senator Warner brought to us to uncobble the cobbled up messes which they have in 1063 and Senator Withem is righteously indignant with Senator Warner and the rest of them, said we can't do this. Senator Schrock and Senator Cudaback, with their experience, come along and say, well, of course, we did this in a hurry. I wasn't in on the deal, Senator Schrock, that was cut underneath the balcony, but I went to country school and I learned the difference between 21 percent and 82 percent and I can still calculate it and I don't need a study for that. I can do it here on the floor (snaps fingers) like that. I sat on the sale barn sideline many times and calculated how much money it cost me to buy a hundred head of cattle at twenty-one and a quarter if they weighed 769 a pound. That's what you learn in the business of farming and agriculture. That's what we ought to learn on this floor. What
you're doing here is You're accepting, you're accepting the premise of an unfair tax and you're saying, well, we don't have time. Senator Warner's got time to throw this thing at you and buy it lock, stock, barrel and belly because they know they've .got a mess of trash. They've got a mess of trash and they're trying to get themselves out of, a jam. And ... but Senator Cudaback, he's been here how long? I've got more time standing in the chow line than Senator Cudaback's got on this floor and he suggests that we can't do it right now. Well, I don't mean to be disrespectful, ladies and gentlemen, but once you establish a precedent on this floor it becomes established, it becomes established. And Senator Schrock, my good friend, will not be here next year. I probably won't be either, and do you think anybody's going to bring it up then? I suggest not. I suggest not, not by a darn sight. The time to correct it is what Senator Warner is trying to do with 719A. That's what he's trying to do. He knows that it's a problem so he's trying to correct the problems before it gets in the mill. Senator Withem knows it needs to be corrected so they're doing it, but you people, who are representing agricultural people, say, well, there will be a revenue shortfall. If I were the one who proposed the tax I'd a done what Senator Cudaback did. Id a raised the rate to 6 ... to 6 dollars a ton. I did not propose the tax. I did not support the tax. I do not condone the tax. Very frankly, Senator Withem, I preferred the other system. I preferred the other system where we paid the taxes on the sales tax on farm machinery and we did not pay the personal tax. We will one day return to the system where no personal property is taxed because all of the efforts we have made here today are an exercise in futility, and the railroads will teach us. They'll lead us by the nose. The pipelines will do it. The power lines will do it. Telecommunications will do it and we're going to get whip-sawed back and forth and back and forth. It's kind of interesting, you got a bill which is liked by the Omaha Chamber of Commerce, by Governor Nelson and the 3-R Committee, and it's disliked by 51 percent of the people, not withstanding the massive barrage of propaganda for the bill. It's a 51 to 38 1 think, or 36? poll. After all that hoopla, now maybe they can put together enough money to force-feed that and to scare the people, but I went to Ernie Kucera's 50th anniversary of his band yesterday at Starlight and there were five or six hundred people there. They were 90 percent Democrats, probably. They were the salt of the earth, the best people there. I didn't have a single person come up to me and say, Loran, we disagree with what you are doing. I didn't ask the Governor what kind of
response he got, but overhearing some of the conversation I would suggest that maybe. he didn't get as quite a positive response from those people as I did. I would suggest you're setting this thing up to fail and fail it will and we'll be back here. It may be, ladies and gentlemen, that all the tax will be returned to personal property, but I'll tell you this, I would prefer either all on or all off than all of the various types of proposals which have been advanced.
SPEAKER BAACK PRESIDING
SPEAKER BAACK: One minute.
SENATOR SCHMIT: I'm going to let you vote on this, ladies and gentlemen, because I think it's good. I think the record needs to be there. There may be only one green vote, but I want a record vote on it and I want everyone to know that people sit here and said, well, we'll do it next year. If you don't have the ... if you do not have the votes to correct it now, if you can't take the time to correct it now when we're correcting the very serious problems of 1063, what makes you think you're going to correct it next year, when Senator Schrock is no longer here, Senator Lowell Johnson won't be here, Senator Lamb won't be here, Senator Hefner won't be here? Those are the people who Are on our side. We don't know what's coming, in. Ladies and gentlemen, you're making a mistake if you pass this up now. There may not be the votes, but at least those of you who represent rural areas ought to try to cast a vote for equity I and not one for expediency. Thank you very much.
SPEAKER BAACK: Thank you, Senator Schmit. Senator Beutler.
SENATOR BEUTLER: Question.
SPEAKER BAACK: Question's been called. Do I see five hands? I do. We will now vote on ceasing debate. All those in favor vote aye. opposed vote no. We are voting on ceasing debate. Have you all voted? Record, Mr. Clerk.
CLERK: 25 ayes, 0 nays to cease debate, Mr. President.
SPEAKER BAACK: Debate has ceased. Senator Schmit to close.
SENATOR SCHMIT: After the vote on 1063 and 219CA, some of my rural colleagues came to me and said, well, Loran, we know how
you feel about this, we know you feel deeply about it because you were involved in the removal of the tax, from personal property, but after all, a year or two from now, we can come .back if it doesn't work and we'll take it all off again. And I said, if you can't get ten votes, fellas, to scope the constitutional amendment from being proposed, you tell me how you get 25 'votes to take the tax off personal property, when 70 percent of the personal property is exempt and the majority of the property which. is taxed is going to be rural and. small town businesses? Well, that's exactly where you're at now. You are buying a proposal. You are assisting Senator Warner and Withem in correcting the mistakes they have in 1063. Very laudable. Very laudable, except you should not be quite that naive if you think you're going to get the same kind of cooperation in return.. Senator Withem said in a promise, I don't consider that a threat, that's a promise, he said if this becomes adopted I will introduce an amendment to remove the sales tax exemptions from farm machinery, and he's got, the votes to make it stick. He's got them. He knows that. This is not... no bar... no gamble for Senator Withem. The problem is, ladies and gentlemen, there are few times on this floor that you can stand up and exercise your right to speak on behalf of principle. When Senator. Warner talks of the matter of equity and other issues in his amendment, then you ought to talk the same way here. How can you stand on this floor and accept a fertilizer tax, which is four times as bad on one type of fertilizer as it is on another, and then say we can live with it? We can live with anything, ladies and gentlemen, till we go broke. That's exactly right. You are accepting a tax on an industry which cannot pass it on. We're selling corn today for less than I sold it for 44 years ago. And you say, well, we'll live with it. I can tell you a lot of those things you can live with, ladies and gentlemen, until you can't do it anymore. We are embarking upon a tax program which is negative for Nebraska, not just for agriculture it's negative for Nebraska. It's a program which is not popular. It's a program which is endorsed and supported by a very small minority because it's geared to favor a very small minority and the publicity that attends it leads people to believe that there is no alternative. There is an alternative. I believe the people will accept it. The people will say "no" to the constitutional amendment and then the tax will all go back on, though not totally. It won't go back on the 775 exemptions. That gulf stream too will still fly unimpeded, unburdened with the personal property tax, but the old Bonanza will be taxed again and all the rest of those little airplanes. So what I'm
saying at this time is this, if you vote "yes." on this amendment, you're casting a vote for equity and fairness. If, you vote "no", you are reaffirming the unfairness that has been embodied in this bill from the first time that it was introduced on the floor. I ask you to vote for the amendment. Thank you.
SPEAKER BAACK: Thank you, Senator Schmit. You've heard the closing on the amendment offered by Senator Schmit. We will now vote on that amendment. All those in favor vote aye, opposed vote no. A record vote has been requested by Senator Schmit. Senator Schmit.
SENATOR SCHMIT: Roll call vote, please. A roll call vote, please.
SPEAKER BAACK: Do you want a call of the house? Did you ask for a call of the house.
SENATOR SCHMIT: Call of the house and a roll call vote, yes.
SPEAKER BAACK: Okay. We do have a request for a call of the house. All those in favor vote aye, opposed vote no. Record, Mr. Clerk.
CLERK: 15 ayes, 0 nays to go under call, Mr. President.
SPEAKER BAACK: The house is under call. All members please return to the Chamber and record your presence. The house is tinder call. Members, please report to the Chamber and record your presence. The house is under call. Senator Ashford, would you record your presence, please. Senators Lynch, Pirsch, Bernard-Stevens, Rogers. Senator Cudaback, would you record your presence, please. Senator Wesely. Members, please report to the Chamber. We are tinder call. We need Senators Bernard-Stevens, Pirsch and Rogers. We're looking for Senators Pirsch and Bernard-Stevens. We're now looking for Senator Pirsch. Senator Schmit, Senator Schmit, Senator Pirsch is on her way up. May we proceed? A roll call vote has been requested. Mr. Clerk, call the roll.
CLERK: (Roll call vote taken. See pages 1957-58 of the Legislative Journal.) 11 ayes, 18 nays, Mr. President.
SPEAKER BAACK: The amendment fails. Do you have items for the record, Mr. Clerk?
CLERK: Mr. President, I do. Amendments to be printed to 962 by Senator Robinson; Senator Kristensen, amendments to 319. (See pages 1958-61 of the Legislative Journal.) Bills read on Final, Reading have been presented to the Governor. (See bills Presented to. the Governor regarding LB 1022, LB 12681 and, LB 1292 found on: page 1958, of the Legislative Journal. Request to withdraw raw LB 1184A by Senator Rasmussen, that, will be laid over. (See page 1958 of the Legislative Journal.) Mr. President, Senator Lamb would ask unanimous consent to unbracket LB 339. (see page 1961 of the Legislative Journal.
SPEAKER BAACK: No objection, so ordered.
CLERK: That's all that I had, Mr. President.
SPEAKER BAACK: Senator Byars, would like to recess is till one-thirty?
SENATOR BYARS: Yes, Mr. Chair, I would move that we recess till one-thirty.
SPEAKER BAACK: You've heard the motion to recess. All those in favor say aye, opposed no. We are recessed.
SPEAKER BAACK PRESIDING
SPEAKER BAACK: Welcome to the George W Norris Legislative Chamber, Roll call.
CLERK: I have a quorum present, Mr. President.
SPEAKER BAACK: Items for the record.
CLERK: Mr. President, I have received a communication from the Virginia House of Delegates regarding resolution passed there. That will be on file in my office. That's all that I have, Mr. President.
SPEAKER BAACK: We will now proceed with LB 719A.
CLERK: Mr. President, the next amendment I have to the bill is by Senators Nelson and Wickersham. The amendment is found on page 1940 of the Journal.
SPEAKER BAACK: Senator Nelson.
SENATOR NELSON: Mr. Speaker, this is not a major amendment. I guess it's one of those that I think would be fair for the body to do. In essence, when estimated income tax is paid, there are two provisions that you must either pay 90 percent of tax due or the tax that was due in the previous year. Say for example, you may need to pay $1,000 this year but only paid 300 last year. ear. You are either at the 90 percent level or the 100 percent of what was paid in past years. The Nebraska Department of Revenue has taken the position that the taxpayer subject to the depreciation surcharge must also pay in the 90 percent of the surcharge in addition to the prior year's amount to avoid penalties. The basis reasoning on the fact that the depreciation surcharge is an excise tax and not an income tax and as a result, and I readily admit that they sent out notices September 15 estimated tax due dates that you must increase your estimated tax. This will not affect a lot of farmers because of the fact that of the increase, the surcharge, but because the surcharge is being called an excise tax instead of an income tax, the small businesses particularly the farmers probably wouldn't have that much and there is a $300 tax level too on tax that you do owe, but some of the small businesses are being hit by this penalty. It's not a lot. What my amendment would say, and Senator Wickersham's amendment, is that, and I have run this past the Department of Revenue. We have gone over this and this is the only way to- correct it and on page 3, Section 4, it says for purposes...could I have a hammer, please.
SPEAKER BAACK: (Gavel.)
SENATOR NELSON: I'm sure they'll all vote green on this, but they might not understand, for the purposes of administering the surcharge imposed pursuant to this section, statutory provisions relating to the income tax shall apply including provisions relating to interest penalties and estimated payments. Our addition is, except that the department shall not assess any penalty for Underpayment of estimated income tax on an individual taxpayer estates or trusts, and there are very few
estates or trusts, based upon the surcharge imposed by this section.. And that is simply all it does. There are not a lot of dollars involved over to the... because of the insufficient estimated tax paid. A lot of corporations are on a fiscal year a little bit different, but to me it just rubs salt into the, wound again, to call this an excise tax and then penalize that farmer or small business that doesn't have an accountant to do their tax work and then is hit by this additional penalty. It's not a lot. It's just the idea of it and for that I ask for the passage of the amendment, or I'll answer any questions.
SPEAKER BAACK: Thank you, Senator Nelson. Senator Wickersham.
SENATOR WICKERSHAM: Thank you, Mr. Speaker just briefly, this is an amendment that Senator Nelson and I have been discussing for quite some time and then finally brought it when we thought we saw the opportunity on 719A. I think Senator Nelson has done a good job of explaining the rationale for the amendment. We've simply had the Department of Revenue assessing an underestimated of tax penalty in situations which I would not have anticipated based on the language we passed last year in 829 so we're simply directing the Department of Revenue to in effect change their interpretation of that, those provisions at least as they apply to individuals, estates and trusts, and to effectively waive any underestimated tax penalties due to the depreciation surcharge,. I think it's a good amendment. I think a number of people were caught unawares whether or not they should have been aware and it does not really amount to that much money in terms of fiscal impact and I think it's fair to the taxpayers.
SPEAKER BAACK: Thank you, Senator Wickersham. Senator Warner.
SENATOR WARNER: Mr. President, I just rise to support the amendment as explained by Senator Nelson and Wickersham, applies to, as I understand it, LB 829 and it's appropriate so I'd support it.
SPEAKER BAACK: Thank you, Senator Warner. Senator Withem.
SENATOR WITHEM: Yes, just a question of Senator Wickersham, his last statement as he was explaining this he said there would not be a shortfall of funds. As I understand this, this would probably, there'd be no way we would have, when we did last year's budget and made a fiscal analysis of how much money the depreciation surcharge would have brought in, there would have
been no way we could have estimated any revenue coming in from penalties by people. So it wouldn't be even if it were a sizable sum of money it probably wouldn't be money that we were counting on getting that would cause a shortfall.
SENATOR WICKERSHAM: No.
SENATOR WITHEM: It would be windfall money that might have come in through a lot of people not doing this that we otherwise would not have gotten, so is that a fair explanation?
SENATOR WICKERSHAM: That's correct, and the reason I mentioned fiscal impact at all is because of the potential for a cash flow problem if you extended this across the board and the... of course, the underestimated tax penalty is an incentive to pay the tax on time. We're not including corporations in this amendment very deliberately so that the incentive for them to continue to make the estimated payments is there. If we'd have included corporations in this amendment, the cash flow problems were potentially substantial.
SENATOR WITHEM: Okay, thank you, Senator Wickersham. I will be voting for the amendment.
SPEAKER BAACK: Thank you, Senator Withem. Any other discussion on the amendment offered by Senator Nelson? Seeing none, Senator Nelson, do you wish to close?
SENATOR NELSON: I think it's been amply explained and I might just address the cash flow problem. Eventually it would have caught up again but it was too big an item and I didn't want to bust the budget and the individuals; It's a small amount it's just the idea of it is all. I just ask for the passage of the amendment.
SPEAKER BAACK: You've heard the closing on the amendment offered by Senator Nelson. We'll now vote on that amendment. All those in favor vote aye, opposed vote no. We are voting on the amendment by Senator Nelson. Have you all voted? Have you all voted? Record, Mr. Clerk.
ASSISTANT CLERK: 26 ayes, 0 nays on the adoption of Senator Nelson's amendment.
SPEAKER BAACK: The amendment is adopted. Next amendment,
ASSISTANT CLERK: Mr. President, the next amendment I have is from Senator Wesely. Senator Wesely is excused until he arrives. Next amendment I have is from Senator Warner. Senator, this is AM4044. (Warner amendment appears on pages 1962-63 of the Legislative Journal.)
SPEAKER BAACK: Senator Warner.
SENATOR WARNER: Mr. President and members of the Legislature this is an amendment that was brought to me this morning from E & R. It affects the Hall Amendment that was adopted Friday as well as the Crosby amendment. As it was described to me it was a little more of an adjustment than would be an E & R. It is no substantive change and the Hall amendment the wording of, the old wording, existing statute wording is the following classes of personal property shall be exempt and it spells out the items in the new reading would just simply say the following property shall be exempt and the Crosby amendment there is a couple of sections apparently that was omitted which again only applied to the, as you recall Senator Crosby's amendment only applied to 1992 surcharge and I'd move their adoption, they're, as explained to me at least, they're technical amendments from E & R that they felt was something slightly more than just a pure E & R amendment. Makes no substantive change in the effect or the purpose or the intent of the amendment as offered by Senator Hall and Senator Crosby and I move its adoption.
SPEAKER BAACK: Thank you, Senator Warner. Discussion on the amendment offered by Senator Warner. Seeing none, Senator Warner, do you wish to close? He waives closing. We will now vote on the amendment by Senator Warner. All those in favor vote aye, opposed vote no. Record, Mr. Clerk.
ASSISTANT CLERK: 26 ayes, 0 nays on the adoption of Senator Warner's amendment.
SPEAKER BAACK: The amendment is adopted. Before we proceed any further I would like to introduce some guests today under the South balcony. They are guests of Senator Schrock. We have Mr. and Mrs. George Kellogg, Mr. and Mrs. Carol Peterson, and Mrs. Edwin Imm. Would you folks please stand and be welcomed by the Legislature. Thank you for being with us. We are now on tile bill itself and for advancement. Senator Warner.
SENATOR WARNER: Mr. President, members of the Legislature, the bill has been certainly discussed in substantial detail. At this point I'd just simply move its advancement so we can move on to other items on the agenda unless there is some issue that someone wants further discussion on.
SPEAKER BAACK: You've heard the motion to advance LB 719A. All, those in favor say aye. Opposed no. A machine vote has been requested. We are, voting on the advancement of LB 719A. Have you all voted? Senator Warner.
SENATOR WARNER: I'd request a call of the house and a roll call vote to expedite matters.
SPEAKER BAACK: We have a request for the house to go under call. All those in favor vote aye, opposed vote no. Record, Mr. Clerk.
CLERK: 19 ayes, 0 nays to go under call, Mr. President.
SPEAKER BAACK: The house is under call. All members please report to the Chamber and record your presence. The house is under call. Members, the house is under call. Please check in, please. The house is under call. Senator Conway, would you check in, please. Senator Chizek, would you check in, please. We are looking for Senators Moore and Chambers. Senator Warner, did you say we could go ahead and proceed? We are voting on the advancement of LB 719A. A roll call vote has been requested. Please keep your conversations down so the Clerk may hear your response. Mr. Clerk, call the roll.
CLERK: (Roll call vote taken. See page 1963 of the Legislative Journal.) 27 ayes, 10 nays, Mr. President.
SPEAKER BAACK: LB 719A advances. The call is raised. We will now proceed to General File and LB 1240.