Bill Summary, LB 719A (1992)

 

An appropriation (“A”) bill is typically considered to be a funding mechanism for the legislative bill of the same sequential number (e.g., LB 100A for LB 100).  There are very few exceptions to this rule.  In fact, the Rules of the Legislature prohibit an “A” bill from non-germane, substantive provisions.  Accordingly, the rules would first need to be suspended in order to consider non-germane amendments.

 

LB 719A (1992) was first introduced in 1991 as a funding bill to LB 719.  However, much of the contents of LB 719 were amended into LB 511 during the 1991 Session.  LB 511, as amended, made several technical and substantive changes to the school finance formula.  This left LB 719 available as a shell bill during the 1992 Session, and was, in fact, used as a vehicle to incorporate other education-related provisions.  However, none of the provisions of LB 719, as passed, required an appropriation.  This left LB 719A on Select File with absolutely no purpose, which made it destined to be automatically killed (indefinitely postponed) at the conclusion of the 1992 Session.  But there would be a purpose, as events unfolded late in the 1992 Session.

 

The 1992 Session will be particularly remembered for the long and drawn out debate concerning the personal property tax crisis.  LB 1063 (1992) and LR 219CA (1992) were passed with the intention to make headway in fixing the adjudged unconstitutional language within state statute.  In 1991, the Nebraska Supreme Court held that state law providing exemptions for certain classes of personal property (e.g., agricultural equipment, business inventory, farm inventory, livestock, and railroad rolling stock) violated Article VIII, section 1, of the Nebraska Constitution (i.e., the “Uniformity Clause”).  At the time, this clause provided that “taxes shall be levied by valuation uniformly and proportionately upon all tangible property and franchises.”

 

The problem encountered during the 1992 Session was that LB 1063 had already been passed by the Legislature on March 12, 1992 (the 42^nd day of the 60-day session).  Within a few weeks it became necessary to further amend LB 1063 during the same legislative session.  LB 719A became the chosen vehicle to handle these late session amendments.

 

In essence, LB 719A became a last minute Christmas tree bill with most of the ornaments in relation to technical and substantive changes to LB 1063.  The rules were suspended and a number of amendments were adopted to incorporate various provisions.  As passed, LB 719A spanned 160 pages with several modifications to education-related statutes, but only one change to the school finance formula itself.

 

The change to the school finance formula under LB 719A related to the existing section of law concerning the use of adjusted valuation for purposes of calculating state aid.  One of the principles behind LB 1059 (1990) was to bring about a more equitable property tax assessment system so that school districts would not be unfairly treated under the school finance formula.  It was determined that adjusted rather than assessed valuation would be used for purposes of calculating state aid.  The problem faced by the Legislature in 1990 was that a system to implement adjusted valuation required additional time to implement.  In fact, it was not until 1994 that a system was put into place to begin utilizing adjusted valuation of property.  In the meantime, use of adjusted valuation was simply a goal of the Legislature as outlined in the Nebraska Tax Equity and Educational Opportunities Support Act.

 

In 1992 the section of the formula concerning adjusted valuation merely stated that the Department of Revenue would compute and certify adjusted valuation for each school district beginning in 1994.  LB 719A clarified that the valuation of property for each district must reflect, as nearly as possible, “taxable value” as required by law and the Constitution of Nebraska.  Taxable value essentially means assessed value for real property and net book value for tangible personal property, other than motor vehicles.  Prior to LB 719A, the applicable section of the formula used the term “actual value,” which carries a different meaning than taxable value.