Debate Transcripts
LB 490 (1995)
General File
March 29, 1995
SENATOR HALL PRESIDING
SENATOR HALL: (Mike not activated immediately.) ... the George W. Norris Legislative Chamber. Will members of the Legislature please record their presence so that we can begin this afternoon's session.
CLERK: I have a quorum present, Mr. President.
SPEAKER WITHEM PRESIDING
SPEAKER WITHEM: A quorum is present. Any messages, reports or announcements?
CLERK: I have no messages, reports or announcements at this time, Mr. President.
SPEAKER WITHEM: I'd like to announce that I'm modifying the agenda to place LB 490 before the body at this point, Mr. Clerk.
CLERK: Mr. President, 490, a bill originally introduced by Senator Kristensen. (Read title.) The bill was introduced on January 17 of this year, Mr. President, referred to the Revenue Committee. The bill was advanced to General File. There are committee amendments pending by the Revenue Committee.
SPEAKER WITHEM: Senator Warner, on the committee amendments.
SENATOR WARNER: Mr. President, members of the Legislature, I'd move adoption of the committee amendments and I'm going to yield the balance of the time to Senator Kristensen since the amendments are an intricate part of the bill and he probably would be best to explain the bill along with the amendments at the same time.
SPEAKER WITHEM: Senator Kristensen. Senator Jones, for what purpose do you rise?
SENATOR JONES: Just wondered when my bill would come back up in the order? Could you just inform me just a little bit?
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SPEAKER WITHEM: At this point, I cannot. There is no determination made as to when 168 will be back before the body. Senator Kristensen.
SENATOR KRISTENSEN: Thank you, Mr. Speaker and members of the Legislature, and thank you, Senator Warner, for the opportunity to present the committee amendment and I think that it is much easier with this type of an issue to give you an overview and then try to tell you where the committee amendment fits into this whole procedure. And I'd like to take a few minutes to begin to lay out what issue we're dealing with and perhaps give the body some background as to what we're doing. Obviously, this amendment or this bill, LB 490, deals in the area of property tax. As you all know, property tax is based upon the value of property and that the amount of dollars that need to be used to fund the particular entity of government that relies on the property tax and the combination of that value and the dollars needed to operate the political subdivision is regulated by the levy and the levy is what really determines the amount of tax to be done. The whole basis of that process, obviously, is the value of the property and the value of the property, our constitution requires that valuation be uniform and proportionate. Uniform and proportionate really is another word for that it's got to be equal and it's got to be fair across so that people don't pay a larger percentage of their valuation. Equalization is probably the most fundamental element of doing property taxation. It's the part that determines the fairness, in other words, if I have a piece of property in one area, is it fair and equal to another similarly situated piece of property, not only in my county in my area, but with that of a different class are the same methods used to determine the value and, thus, are they equalized, not only within the county called intracounty equalization, but between county to county called intercounty equalization. LB 490 attempts, and this is not the elimination of the State Board of Equalization, so if this discussion throughout the day centers on that, that's the constitutional amendment that we've already dealt with that you will be having an opportunity to finally vote on probably later in the next week or two. This deals with the approach and the ability to equalize property within the county and those values are within classes. Those also will deal with appeals and the fundamental problem that I see and that I think that LB 490 tries to address is for the average taxpayer it is extremely difficult to appeal their valuation. it is extremely difficult to go off and determine equalization as an individual
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taxpayer because once you go to the County Board of Equalization you have to go to the district court to file to seek an appeal. What LB 490 does is it attempts to bring into focus an easier process, and I have a handout that you all have in front of you and I would suggest that you take a look at that handout.. if you want to see a schematic drawing that's the last couple of documents. You will see our current system of assessment and equalization and the appeals that are brought forward to that and then you'll see the system that we have developed and submit for your review and, hopefully, for your approval. But equalization is extremely important for a variety of reasons. One of those reasons is obviously that state aid is distributed based upon the idea and the notion that property is equalized and fair and that people are paying their fair share based on the values. Now a lot of people are going to say my property tax is higher than it was the year before, and that's really not the indicator. The indicator is, is it fairly done so that you're paying a proportionately same share as anyone else would be with similarly situated property? LB 490 seeks to do a couple of things. One is improve the speed and ease for an individual taxpayer to object and gain relief from their valuation, not only from the way that it is classified but the way that it is valued and the way that it is valued in proportion or compared to other pieces of property. Two, it provides more of a professionalism. It allows for this commission to have the appeal because, in effect, what I am doing is eliminating the district court. I'm allowing for taxpayers to go from their County Board of Equalization, like they always have, and then go to the district court, or go away from the district court, go to the Tax Equalization Review Commission to seek the redress there. If they don't like the result there, they obviously can go to the court of appeals and that provides their access to the court. We are not denying people access to the court system through this system, but we're allowing them a quicker mechanism to achieve their complaints or to achieve some remedy for what they believe to be unfairly valued property, not only in how it is valued, the dollars, but how it is compared to other individual pieces of property. The committee amendment specifically does a couple of things also that I think is important and I'll move into what the committee amendment does at this point in time. The green copy of the bill had a small claims provision. In other words, for smaller property owners they could go directly in and have a small claims system and an approach to object to their valuation. The only problem with doing that is there was no appeal from that.
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Upon review and looking at some of the cases, it is my feeling and my indication that you may be denying people access to the courts for their ability to appeal and, thus, the small claims provision, I still have some interest in that, but we do take that out of the original bill. We also go in and add some powers to the Tax Equalization Review Commission, the first of that powers is obviously to issue a writ of mandamus to compel compliance with their orders. This is probably a very necessary procedure that we take the property tax administrator and we effectively remove property tax from the Department of Revenue. We don't eliminate property tax division or anything, but we make it independent from the Department of Revenue. In fact, the Department of Revenue has began a process of doing that already in their system, but we do name an independent property tax administrator who will have the orders and they are going to be the ones that will be compelling people to carry out the orders of the Tax Equalization Commission. The other one is, the change in the committee amendment is the commission can order some reappraisals of property within a county. This commission can make prospective orders. In other words, say look, we know that you've got a problem in this county but, to prospectively take care of those problems, here's a series of orders or here's a plan and that will be less onerous upon the counties, it will be less onerous upon the other political subdivisions that may have to comply with these, but it will give them a period of time to come into compliance and to do those things. This would allow a better level of assessment and measures to somehow look at how a county has done their valuation process, how they're doing with equalization. Instead of if there is a real problem, they can go cold turkey and having a lot of upset people, they would be able to have some prospective orders and ability to carry out those plans. We also allow for the removal obviously of some taxing official if there is complete and utter disregard, 1 assume, for the orders, but those remedies have been around. They are so extreme that they really never have been used. We also allow the commission to take general notice of statistical information that they will come into contact and they will be receiving from the various county boards of equalization and those will be dealing with tendencies, those will be doing with some of the equalization things, for example, coefficients of dispersion, in other words, the range of where properties are valued to achieve an average. They will also be looking at some of the other statistical measures of valuation and equalization and we want them to be able to use what information they've gathered from around the
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state and this committee amendment will allow a little Additional power to do that.
SPEAKER WITHEM: One minute.
SENATOR KRISTENSEN: The reason that it's important for them to gather that statistical information is the other important part of LB 490 is that this commission will make a plan of equalization and submit it to the State Board of Equalization. That plan is not binding upon the State Board of Equalization, but would give the State Board of Equalization a better plan or give them some mechanics and some fundamental things to follow, to examine, and to make their orders of equalization. So again in review, LB 490 does not do away with the State Board of Equalization. It supplements it. It assists counties. it makes it streamlined for people. You'll get better results. You take away the district court so people don't have the expenditures and the time to go to court. They will be able to go to this commission on a much easier basis and they'll have three individuals who will be more professional and who will do this full time in which to examine protests and appeals of valuation. My time is nearly up but I do urge...
SPEAKER WITHEM: Your time is up.
SENATOR KRISTENSEN: ... the adoption of the committee amendments. Thank you.
SPEAKER WITHEM: Thank you, Senator Kristensen. Before we get on to discussing the committee amendments, I'd like to introduce guests of Senator Stuhr. Her brother-in-law, Roy, Roy's wife, Carol and Nathan are here from Antioch, Illinois. Would you all stand and be recognized, please. Thank you very much. For discussion on the committee amendments, Senator Kristensen.
SENATOR KRISTENSEN: Thank you, Mr. Speaker. I do want to just spend a few more seconds dealing with what I believe to be the committee amendment, the substantive parts of those. We eliminate the small claims provision because I do think that may have been violative of your right to go to court. We also give some additional powers to the commission in terms of looking at statistical information, giving them power to do prospective plans and again that may include some of those remedies for them to go through and do reappraisals. They can order the counties to do some things or other political subdivisions to achieve
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batter equalization and equalization really is equal to fairness, and the thrust of this bill is not to do away with the State Board of Equalization, but it is to supplement that, give them assistance for a better plan of equalization and ultimately add another element of integrity to the property tax system. You will also probably see in the committee statement, if you choose to look, that there was a couple of people who opposed the bill at committee. The committee amendments are basically written after ter talking with them and trying to relieve their fears or they had some additional things they wanted in here. I tried to address those with the committee amendments and I do believe that that satisfied a majority of those problems. Again, I'd be happy to answer any questions and would urge the adoption of the committee amendment.
SPEAKER WITHEM: Thank you, Senator Kristensen. For discussion on the committee amendment, Senator Avery.
SENATOR AVERY: Senator Kristensen, would you answer a question? In looking this over, and I remembered some of the discussion before, you had stated that potentially you would consider other individuals on that board? Is that any ... have you gone away from that for any reason or are you still amenable to maybe adjusting that, the makeup of that?
SENATOR KRISTENSEN: Yes, Senator Avery, and if I can just take a little bit of time to discuss with you what...
SENATOR AVERY: You can have the time.
SENATOR KRISTENSEN: ... I have done and I assume that you're referring to last year's bill that was a framework of more of a tax court commission process that I had accompanying the constitutional amendment.
SENATOR AVERY: Right.
SENATOR KRISTENSEN: This is moved away from that concept. I've removed some of the appeals and some of the other issues that they would deal with because I'm waiting to see if the constitutional amendment passes and then we may be able to use this body, but I've changed it from... I think the problem that Senator Vrtiska had, a question that you had were three attorneys basically acting as a, if you will, a court of appeals panel. This legislation has been changed. I took to heart the
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things that you had questions about last year and have changed those. There is three members, one from each congressional district. Only one of them is required to be an attorney. The other two are to have experience in mass appraisal techniques and we list out those qualifications and, as I'm talking to you, I'm going to find them so I can refer to the specific ones, but the reason I did that is that one of the members I wanted to have some ability to have a record so if you did want to appeal to the court of appeals that you would use the rules of evidence and would have a formal hearing so they could have a record to appeal on and I kind of figured that at least the Chair ought to have some sense and knowledge of administrative law and of the rules of evidence and so I removed ... two of the three are now nonattorneys. The Chairman would be but simply for the purposes of providing a record for appeal. And you can still have an informal hearing and not use the rules of evidence, but if you choose to do that, you're not going to have a record on which to go to the court of appeals, but you still get your opportunity for an independent three-person panel to take a look at your protest or your appeal. If you do want that hearing, you make the discussion or you make the notice telling them that you want to use the rules of evidence and then you're going to get a formal hearing. In that formal hearing, you'll have the rules of evidence, you'll have a record there and that's something you then appeal from as a full transcript. I'm going to look at that, those requirements, Senator, if I can, here real quickly. Section 4 of the bill, it starts on the bottom of page 3 where it outlines each commissioner shall devote her full time or his full time that they'll have knowledge of the terms for appraisals, adequate knowledge of depreciation theories, capitalization, real estate appraisals and so on, an understanding of land economics, some knowledge of the law relating to taxation, but basically I took what you and Senator Vrtiska said last year and cut two of the three out.
SENATOR AVERY: Okay. In kind of following that up further this board will stand in and become kind of a permanent entity in terms of governmental entity to ... does this process?
SENATOR KRISTENSEN: Yes, Senator Avery. What they're going to do is replace the district court for hearing protests...
PRESIDENT ROBAK: One minute.
SENATOR KRISTENSEN: ... and appeals of equalization on the
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intercounty equalization issues and individual valuations.
SENATOR AVERY: Okay. One thing, you know, and I don't know if this is appropriate but the one idea that I had toyed around and talked to some other people about is if there potentially could be two lay individuals in addition to the three men that would be on a rotate two-year term to bring in maybe other ideas, other expanded knowledge on that, you know, maybe more of the political aspect of what's happening in the state. You know, I don't know, that was just an idea that ... go ahead, I'll...
SENATOR KRISTENSEN: Thank you, Senator Avery, I do have an amendment that I'm going to introduce here this afternoon that staggers those terms among the members and so two of the three will be lay people if ... as an attorney...
PRESIDENT ROBAK: Time.
SENATOR KRISTENSEN: ... I have trouble with that calling one normal and two not, but whatever.
PRESIDENT ROBAK: Thank you, Senator Kristensen, Senator Avery. Senator Maurstad.
SENATOR MAURSTAD: Thank you, Madam President, if Senator Kristensen could yield to a question or two.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR MAURSTAD: Senator, in item three of the explanation of the committee amendments talks about the commission being allowed to order reappraisals. Who would be responsible for the costs associated with those reappraisals?
SENATOR KRISTENSEN: The reappraisals, through the committee amendment, would have the opportunity, I mean it's going to be ,the county's obligation because they're in charge of doing appraisals. If the commission determines that a mass reappraisal is necessary or you could even do a reappraisal of a particular class or you could do it of a neighborhood, I suppose, that one of the powers is the ability to assess the cost back to those groups that are responsible that should have done it in the first place, and that would be the county, not
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the political subdivision.
SENATOR MAURSTAD: And then along that line, it appears, and this is a little bit on the bill, I hope you will indulge me.
SENATOR KRISTENSEN: Sure.
SENATOR MAURSTAD: It looks like the ... we maybe have a total cost according to the fiscal note of first year of about 375,000 plus 85,000 in the Revenue Department, AG is uncertain, so we're at about 456, $500,000 fiscal note on 490. Is that about what we're looking at annually?
SENATOR KRISTENSEN: I think the 500 13 high. It, I suppose, depends a little bit in the future on how many appeals and protests that you have and they have the ability to hire a master which is basically the ability to go out and be a hearing officer to do some of those things, if there's large numbers of them. I would tell you that one of the areas that I'm flexible in is the amount of compensation for those particular commissioners. I put them at 85 percent of Supreme Court simply because that's ... I needed some place to start and that basically is a county court judge salary. If the body wants to reduce that figure, I really don't have a great objection to that, but that was a place to start, but I do think that, in terms of the cost compared to the amount of importance of doing the equalization and the amount of money we spend doing state aid, that that's a fairly minimal cost.
SENATOR MAURSTAD: Has any assessment been done relative to the ... will this change, substantially change, well, substantially ... will it change the cost for counties to a great extent?
SENATOR KRISTENSEN: Senator Maurstad, to the extent that there would be an increase in cost to the counties, if there is a county who did not do the appraisals or that there were major problems with, obviously there is going to be a cost if it has been determined that they need to be reappraised and whether that is a mass reappraisal or whether that ... you know, in some circumstances that may well be, if there's not enough samples for example, you may look at other counties or you may hire individual appraisers to come in and look at some of those factors to do an appraisal so you can get a decent job of valuation done.
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SENATOR MAURSTAD: So in your mind then and the reason that you've brought forth LB, 490 is because you see a definite problem from county to county in the equalization process, don't feel we can handle it within our current framework and so we need to create a new agency to provide that uniformity across county lines. Is that a fairly correct assessment?
SENATOR KRISTENSEN: No, I would phrase it...
PRESIDENT ROBAK: One minute.
SENATOR KRISTENSEN: I'd phrase it in a different way and I'm going to turn my light on so I can finish discussing that, but the reason I brought 490 was from the taxpayer's point of view, because they need an easier way to protest and to object to their valuation and the equalization that occurs not only from county to county, but within a county as well, and historically the State Board of Equalization doesn't have the ability and we've given it to them, we've taken it away, but they've never had the ability to go in and look at individual assessments. This board would do so. What I really do is take away and take it out of the district court. Now to the extent that I'll probably be drummed out of the legal profession, that's all right, but, quite frankly, the district courts don't place a high enough priority on doing valuation appeals and that individual taxpayers are going to expend a lot of money and if you're only paying, I shouldn't say only, for some people it's a lot of money, but if your property tax bill is...
PRESIDENT ROBAK: Time.
SENATOR KRISTENSEN: ... 1,000 to 2,000 dollars, obviously, it's going to cost a whole lot more than that to go to district court. I want to provide an easier system to do that.
PRESIDENT ROBAK: Thank you, Senator Kristensen, Senator Maurstad. Senator Jones wishes to announce that the following guest is visiting the Legislature. Eric Rogers is here from Anselmo, Nebraska. He is under the north balcony. Eric, will you please stand and be recognized. Thank you. Senator Vrtiska.
SENATOR VRTISKA: Thank you, Madam President and members of the body, I just wanted to ask a couple of questions of Senator
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Kristensen if I could, please.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR VRTISKA: Senator Kristensen, I've just been reviewing some of the points in this and Senator Maurstad asked a couple of questions that I had in mind that ... but one of the questions that I haven't really resolved in my own mind yet, and maybe you can help me and that is do you think, do you... I guess you would believe that there would be probably a great many more people who would appeal their valuations based on this kind of a system rather than having to go to district court. Is that correct?
SENATOR KRISTENSEN: I think that that would occur, that they would be more likely to take that process up. There are two types of people and one of them are that just -?ant to ... they want to voice their frustration and they're angry and they have a complaint and that's really where we have the County Board of Equalization. Those poor people set there and get complained at and yipped at a lot but they're a filter, they are a screen. The people who feel that they have seriously been wrong, either through their classification oil. their property, through their valuation, or because of equalization purposes, they're paying a higher percentage of their value than the person across the road or in the next county or in the next school district and they want to go and have a legal determination. Those are the people that really, I mean your property tax is 1,000 to 2,000 dollars, they could easily spend five to 10,000 dollars. Those are the ones that I don't... I don't want to take your time, but, yes, I think that there would be more likely to have people who would do a protest if they felt they had been wronged.
SENATOR VRTISKA: Well, let me just follow up with that and I brought this up because, sitting on the Board of Equalization of a county board for all these years, I found out that through all those years we've had a number of people who have come in that we dealt with and in some cases they weren't satisfied and they threatened to go to court, but they never did. In 24 years, we never had anybody ever... I guess we did have one individual who took us to court. The point I'm getting at is, and you made it earlier, is that oftentimes it's more expensive for them to go into court than they would ever gain and take them so long to recoup what they would lose except that maybe to prove a point
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that they were right. And I guess the point I'm getting at is the. way you set it up, the way I understand it, and I hope that you can correct me if I'm wrong, is that after they have been before the County Board of Equalization and they made a determination and they don't agree with it, then they have the ability then to instead of going to court to take it before this...
SENATOR KRISTENSEN: The TERC, the Tax Equalization and Review Commission.
SENATOR VRTISKA: Right, and they will then go through approximately the same process that the county board went through except it's your opinion, and I'm not saying whether it's mine or not, but it's your opinion that these people are more qualified, hopefully, to end up with a fair decision for that person who may have been wrong. Is that right?
SENATOR KRISTENSEN: Yes, and I think that they're full time so they have a better ability but they're also going to be able to have more information. You know, in a district court they're only limited to the evidence that is presented. The Tax Equalization and Review Commission is going to have the information from the Department of Revenue. They're going to be able to use that and they're also going to be able to look at the techniques.
SENATOR VRTISKA: Well, that's the point I wanted to get to. They can take more in for evidence in order to prove their point than they're able to take into court. Is that right?
SENATOR KRISTENSEN: Well,...
SENATOR VRTISKA: To prove their point, I mean.
SENATOR KRISTENSEN: I think that there will be more information available through the review commission. If they have a formal hearing and use the rules of evidence, they're still going to have to comply, you can't put in crazy things.
SENATOR VRTISKA: Well, I understand that and, of course,...
SENATOR KRISTENSEN: But, you know, in terms of...I think the review commission will have more statistical information and they'll have a better history that they can rely on than a
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district court who is doing divorces all the time.
SENATOR VRTISKA: Now one final thing, and we talked about this earlier.
PRESIDENT ROBAK: One minute.
SENATOR VRTISKA: Originally, you had talked about a board of attorneys or whatever and now you broaden that out to bring some people with more expertise in the field of determining values. Is that correct?
SENATOR KRISTENSEN: Yes, and appraisal techniques and, yes, right.
SENATOR VRTISKA: Well, that's the point I wanted to make sure that the body understood that we did talk about that and you were very receptive in apparently trying to put this board together in the best way possible so that they would be fair and be able to deal with issues that would in the end, hopefully, resolve the issues fair and quicker than would be done many times the way it has been in the past.
SENATOR KRISTENSEN: ',.'ell, and I'll take that as a compliment and to the extent that attorneys are fair, they're -infinitely fair and so I suppose I should take exception to that, but I know how you meant that and I think you're right.
SENATOR VRTISKA: Thank you very much.
PRESIDENT ROBAK: Thank you, Senator Vrtiska. Senator Kristensen, your light is next, followed by Senators Robinson, Maurstad and Avery.
SENATOR KRISTENSEN: Madam President, I turned my light on for Senator Maurstad and if he wanted to spend some additional time asking questions, I'd yield any time to him if he wants to use my time and not take up his turn at bat.
PRESIDENT ROBAK: Senator Maurstad.
SENATOR MAURSTAD: Well, Senator Kristensen, if you could just continue possibly what... and you maybe did this in your opening or intend to do it in your opening on the bill after the committee amendments, but continue to elaborate as to the reason
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for LB 490 and as I think just to kind of recollect where you're at, I believe you were indicating that this was to streamline the process for taxpayers, make it easier for them to file these items at less expense to them. Is that...
SENATOR KRISTENSEN: Yes, I think that's fair and to make it faster. I think that you'll find this system is much faster than getting into the district court system.
SENATOR MAURSTAD: Do you think it has the potential, the possibility to create less discourse at the county level amongst taxpayers and those that sit on a County Board of Equalization?
SENATOR KRISTENSEN: The only danger that I see in that area is that there may be a tendency for Boards of Equalization to say, well, we're not going to address the problem, we're not going to fix it, let the Tax Equalization and Review Commission be the bad person and let them change the values, we're not going to do it. You know, and I suppose to that extent that happens sometime today, but you know, I really do think that, you know, 90 percent of those Boards of Equalization are extremely diligent people who want to try to solve the problems, but sometimes they just get put in political boxes because it's their friends and neighbors and it's real hard to say I'm going to raise your value and I 'm going to lower this one and you get accused of playing favorites and that's not what they're doing, but the public perception is that way and if there is a danger to the Equalization Review Commission, it's that the county, some County Board of Equalizations may say, we're not going to make the tough decisions, let the other person do it.
SENATOR MAURSTAD: So in addition to the other issues that you brought forth, you feel as though this might be fairer in the long run also.
SENATOR KRISTENSEN: 1 really do, Senator. I think it"s fairer because you're really addressing the area of equalization. Most people look at their property tax statements and say, look, I either paid more than I did last year or less, and if I paid more, I'm mad. And you go to the district court and, quite frankly, if there are some inequities, you can't afford to get there. And so in the long run I think you'll do a better job of statewide equalization if individual people take their own tracts up and allow this commission to have a broad view of the state, instead of 93 different district courts looking at those,
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you've now got one entity who can take the whole state as a picture and I think you'll get better statewide equalization.
SENATOR MAURSTAD: Well, and I appreciate your comments because as I look at this as we'll have to face a number of times in the upcoming month and a half, I think it provides a beneficial service and so I'm trying to-weigh the beneficial service that it provides against the price tag to the state, so you've been helpful in providing some reasons why the means justify the cost associated with that. I appreciate your yielding some time.
PRESIDENT ROBAK: Thank you, Senator Maurstad, Senator Kristensen. Senator Robinson, your light is next.
SENATOR ROBINSON: Madam President, members of the body, Senator Kristensen, I want to visit with you about a few things.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR ROBINSON: When a taxpayer has a complaint, what's the process? He goes to the County Board of Equalization and they turn him down and then what does he do, just file the complaint or piece of paper with this board?
SENATOR KRISTENSEN: Did you want me to explain the way the system is today or the way I proposed it under 490?
SENATOR ROBINSON: No, under 490.
SENATOR KRISTENSEN: Under 490? Okay, and I'll... in the back of a packet, a blue packet I handed out, if you'll look at the very last page, you can follow along with... I've got a flow chart in there that talks about that. You get locally assessed first...
SENATOR ROBINSON: Last page?
SENATOR KRISTENSEN: The last ... yes, is there a flow chart on the last page?
SENATOR ROBINSON: Yeah.
SENATOR KRISTENSEN: Okay. You go over to the far left-hand corner and you'll see local assessment at the top. That's where
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your local county assessor establishes the class of property that you have and establishes a value. That then gets given to the taxpayer. You are notified if there has been an increase and your appeal rights will begin to flow from there, that if you don't like the increase or you're dissatisfied with ... let's just say they don't give you an increase, but you think that your value should be lower compared to other people, you can go to your county assessor and request changes or corrections. The assessor doesn't have to make those, but if they're clerical or if there is some obvious mistakes or so on, those can be made. Most of the appeals lie to the County Board of Equalization and there's a period of time. I've also put in there a time line for you, but I won't go into that. But you then have the opportunity to appeal to the County Board of Equalization. if you do not like what they determine, you then have the ability to file a petition. It's basically a request with the Tax Equalization and Review Commission for them to review. If you don't like what they do and provided you've asked for a formal hearing, you can then appeal it like any other case to the court of appeals, and in effect, that becomes an administrative review hearing, similar to what we do with like the Department of Insurance, Department of Banking and a few other administrative agencies, but you get your day in court then at the court of appeals level. If you don't like what the court of appeals did, you can always petition the Supreme Court.they don't have to look at it. But the court of appeals must look at your appeal.
SENATOR ROBINSON: I see where you were...let's say the ... you're at the ... with the now commission and you have a ... they're looking at your complaint and they agree with that person. Okay, then what happens? Is there... so they disagree with the county assessor. Does the county assessor have any rights there as far as that decision by the review commission?
SENATOR KRISTENSEN: The county assessor would have some standing to come into the Tax Equalization and Review Commission. The County Board of Equalization, if I remember correctly, may be a party to that proceeding inside the Equalization Review Commission as well. So they can come in and be made a party to present evidence or some probative material or information they may have.
SENATOR ROBINSON: Where does the... I was reading about the special master, where does the special master come into this? what disputes would they...
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SENATOR KRISTENSEN: Don't get master, this master confused with some you may see in the education area.
SENATOR ROBINSON: No, no. No, no.
SENATOR KRISTENSEN: But this master, a master is basically a term we've always had in assisting courts to make factual determinations. They're used in cases ...
PRESIDENT ROBAK: One minute.
SENATOR KRISTENSEN: ... for the master to go out and maybe make some factual investigations and in these cases could hear, let's say you've got a thousand protests, they could hire two or three masters to at least come in and listen to what the people have, take that evidence. The master wouldn't make the decision, would give a recommendation back for this commission to look at. You'd still get your time in front of the commission, but the masters could be used in cases where there are large masses of protests and appeals to work through the workload and would do that quickly.
SENATOR ROBINSON: With what happened in Douglas County this year, you know, all the revolt as far as taxpayers, I would think it would be about impossible for this group to take care of all those complaints.
SENATOR KRISTENSEN: Well, Senator, it depends on, you know, it goes back to my discussion with Senator Vrtiska. You have some people who just want to make a complaint and want to air that complaint. A lot of those discussions may be the same case over and over and it may only take two or three people...
PRESIDENT ROBAK: Time.
SENATOR KRISTENSEN: ... and they get to that commission, and I'll finish my story.
SENATOR ROBINSON: Yeah, I have my light on. I don't know...
PRESIDENT ROBAK: Thank you, Senators. Senator Avery, your light is next, followed by Senators Jensen, Wehrbein, Vrtiska, Robinson and Bromm.
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SENATOR AVERY: Thank you, Madam President. One thing I wanted to do is clarify the record a little bit and I guess in our conversation before I had indicated that these individuals would be men. It was brought to my attention, and I think it would be any individual and women would just as well bet qualified for that. But in terms of ... one concern that I have is that the commissioners...here we are establishing another level of government and I think it's a good process and I think it's something that possibly is needed in lieu of our tax situation and our valuations that are staggered in terms of not equal across the state and within each of the counties. But I do have concern of establishing these and I see some wording in here and maybe Senator Kristensen can further confirm that, but in terms of salaries and benefits, these individuals would be ccnstitutional officers in terms of ... that would be like, employees, Senator Kristensen, if you'd yield for a question?
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes, I'll respond. They're not constitutionally created. They would receive ... as I told Senator Maurstad that I picked out a salary level. I picked that of a county judge, trying to determine maybe some area of comparable responsibility but I'm not tied to that, but in terms of that they're going to basically be treated as such, I mean they're going to be a state employee for all practical purposes.
SENATOR AVERY: So in terms of the benefits, while they're here, I think maybe just for the record, the type of benefit, would they ... retirement, we're talking about they serve for a term. Is there, you know, if there is a benefit, maybe that... I just wanted to try to get it clarified for the record.
SENATOR KRISTENSEN: Senator Avery, the legislation doesn't identify a particular benefit package or retirement system at all. What it does is set their salary and say they're going to get necessary expenses and then I refer to a section of statute that is the usual necessary expenses, you know, the travel reimbursement, but that is not specified in here as to which retirement system they'd be under and those sorts of things.
SENATOR AVERY: Well, I do get concerned in terms of the retirement process. We put individuals in retirement and when you have a defined benefit plan which is one that I think many states and business try to go away from and it's more on a
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contribution and when you have individuals that are given a term of office and those staggered is, you know, maybe another question too is, is there a limit to the amount of time that they can serve; you know, two terms, and then you rotate that or one term? I realize and, you know, I think it may be something we can address and if we find that out, we can get that set for the record in terms of... so we understand and the intent is there what direction that we want these individuals to be. I'll turn my any other time over if you want to address...
SENATOR KRISTENSEN: Yes, I'd like to try to answer your questions if I could. I was looking at the fiscal note. I see they plugged in a 25 percent benefit which is the standard city employee...
PRESIDENT ROBAK: One minute.
SENATOR KRISTENSEN: ... benefit system as to making them a part of the judge's, you can't do that without a statute, obviously, put them under that retirement, and I wouldn't suggest doing that at this point in time. The other part of that in terms of staggered terms, I'm going to have that amendment coming up here pretty quick to do that. I did not put a term limit provision in here for them. That violates my sense of good government, so I didn't choose to put that in there, but they are on six-year terms and what I tried to do with that is to take the politics out of this as best I could. And, obviously, if you're going to stagger those terms and give them six-year periods of time, they'll probably, at least given Nebraska's history, go from one governor to the other and try to provide some continuity. If it's like any other taxing body or anybody that deals with taxes, the more you deal with it, the more they hate you and, quite frankly, this is not a popularity group. This group is probably...
PRESIDENT ROBAK: Time.
SENATOR KRISTENSEN: ... going to come under Some fire ire and will not be long for the world.
SENATOR AVERY: Thank you.
PRESIDENT ROBAK: Thank you, Senator Avery. Senator Jensen.
SENATOR JENSEN: Yes, thank you, Madam President, and members of
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the body. Senator Kristensen, would you yield to a couple questions, please?
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR JENSEN: It is my understanding that if some individuals of a community, if they were not happy with the equalization that was set before them, that they could then come before this commission and if the commission deemed that, yen, they were justifiable and that their equalization was not correct, the commission could then reorder an appraisal of that property. Is that correct?
SENATOR KRISTENSEN: I just, and I hate to do this to you, I just want to make sure we keep all the terms correct with what we're dealing with. Are you talking about a group of people that would go to the State Board of Equalization complaining about intercounty or are you talking about a group of individuals who were concerned about their intracounty equalization? Because it makes a difference on how I answer. If they're concerned about the valuation of their individual tract and how it compares with that class of people within their county, within that range, then you're right, they'll be looking here. Otherwise, if they're. looking, say well if I compare myself to county D out here in the hinterlands, that's a state board issue.
SENATOR JENSEN: No, no, I'm talking about as you first described, intercounty, intracounty.
SENATOR KRISTENSEN: Intra ... okay, okay. Yes, if they have a problem with their valuation and because they think they're being unfairly treated, they have the opportunity to come to this commission and seek some redress.
SENATOR JENSEN: And then the commission could order a reappraisal of that particular area, is that correct?
SENATOR KRISTENSEN: Well that's one option. Obviously, they could also take and the people would come in and say, look, my values ought to be lower because compare me to this. They could receive that remedy. That might be the more likely remedy unless you have major problems and then you may have a
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reordering done.
SENATOR JENSEN: Could the commission then order a reappraisal of that entire community?
SENATOR KRISTENSEN: Yes.
SENATOR JENSEN: The entire county?
SENATOR KRISTENSEN: Yes.
SENATOR JENSEN: Just like what was ... well, of course, I'm from Douglas County and we just got the 10 percent hit but they could order a complete reappraisal of the entire county.
SENATOR KRISTENSEN: Yes. Let's make sure that we again get our terms, because your questioning is very important. We're not talking about percentages of increase or decrease...
SENATOR JENSEN: I understand.
SENATOR KRISTENSEN: ... as a group. That's what the state board does and that's the problem. You know, you've got people that you could be at 80 percent and order a 15 percent increase and you could have people setting at a hundred and when they get that block grant increase or block increase, they could be at 115 percent, where really the problem is, if a reappraisal was done and done in a comparison, they could go through and do individual classes or so on and do the reappraisal and achieve equalization in that manner through doing better appraisal work, and yes, that is a possibility.
SENATOR JENSEN: Okay. Then the second question is, do we have an idea of how many... and I remember what Vrtiska was saying, Senator Vrtiska was saying, how many cases there have been that have gone to district courts throughout the entire State of Nebraska that people have taken to district court because they were unhappy with an evaluation that was set before them by the county?
SENATOR KRISTENSEN: Oh, Senator, I don't have that number. I can tell you though from just practical experience, when the cases of personal property hit a few years ago, that about every county had a mass filing of district court cases and they did it to protect their appeal rights. Those cases languished for
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years in some counties. Other counties were aggressive and wanted to get them (interruption).
PRESIDENT ROBAK: One minute.
SENATOR KRISTENSEN: Other district judges said, oh, let somebody else do that, I don't want to do it. And I don't have a number of those cases and I don't know that the Supreme Court has that either because they keep statistical logs, but I think it varies depending on what the issue is out there. But year in, year out, I don't think great numbers because of the cost. It just isn't worth it to go do it.
SENATOR JENSEN: Okay, thank you. I'll follow the rest of the debate.
PRESIDENT ROBAK: Thank you, Senator Jensen. Senator Vrtiska.
SENATOR VRTISKA: Thank you, Madam President and members of the body, I'd like to continue my discussion with Senator Kristensen if I could.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR VRTISKA: Senator, first of all, LB 452 that was passed would change the date of...
SENATOR KRISTENSEN: Right, the calendar.
SENATOR VRTISKA: Right.
SENATOR KRISTENSEN: Uh-huh.
SENATOR VRTISKA: How is that going to dovetail with this?
SENATOR KRISTENSEN: Okay. Or. the packet of stuff that I. .. that blue group of documents on your desk, you will see my staff prepared a good calendar here showing the current calendar on the left, then you'll see a middle column with the passage of LB 452 which has occurred and then the calendar with the commission on the right so you can compare the current with what the new system will be, with what, if LB 490 passes, what that calendar may look like.
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SENATOR VRTISKA: Okay. I didn't have a chance to look at that, obviously, and so I appreciate that. The second question that I have that I think needs to be at least discussed and that is, after they've gone to the county board and made in appeal and then they go the Tax Equalization and Review Committee and they're not satisfied, what's the next step?
SENATOR KRISTENSEN: You have... if you have requested a formal hearing using the rules of evidence so there is some record made and by record meaning that the exhibits are kept and marked and identified and that there's a verbatim transcript kept, they have the right then to go to the court of appeals and the court of appeals has no choice, they must hear that appeal.
SENATOR VRTISKA: Okay. I was just... I thought that was the answer but I wanted to make sure that was in the record. Maybe you had it in there earlier and I wasn't here but I...
SENATOR KRISTENSEN: But that's...
SENATOR VRTISKA: ... I wanted to make sure that that was...
SENATOR KRISTENSEN: And that's important because we want to make sure we don't shut off the right to go to the court.
SENATOR VRTISKA: Right, and that was my point is that somebody may not be satisfied, obviously, when it has gone through even both steps ... these both processes. I guess one other question I have that I'm very curious about and I talked to you a little bit about this before and I don't know whether you can give me a very good answer or not, but when we have a situation like happened in Douglas County and I think there were like 10,000 appeals. I'm just curious how if that comes before, if the majority of those and we discussed it earlier, probably a lot more people are going to take their appeals up if they feel, they don't have to go to court. I guess I'm curious how a... and that's just one county.
SENATOR KRISTENSEN: Right.
SENATOR VRTISKA: I'm just curious how they're going to be able to handle this or, you know, what your feeling is about this type of situation.
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SENATOR KRISTENSEN: Well, I have two observations about that. One is, obviously, all those appeals are still going to go through the County Board of Equalization...
SENATOR VRTISKA: Right.
SENATOR KRISTENSEN: ... so the four people on the County Board of Equalization is going to listen to that 10,000 group and they're going to filter out some of those. The next level, a lot of those may be some of the same complaints, in other words, that we haven't had a reappraisal or that you did do, you reappraised us, but you didn't do another neighborhood that is in our same class. They may be a lot of the same issues and that's where the masters hearing some of that initial information or looking at the petitions they may be able to take and hear one or two cases that are similar in nature to a lot of them and they may be able to do it in that manner. But they're still going to have, they've still got the right to hear everybody out and that, obviously, is not an easy thing to do but if you've got that many people protesting, obviously, something is wrong.
SENATOR VRTISKA: Well, I agree with that, but the other thing that I, I guess the other question I have that is along the same line and that is if, in fact, the... I always try to think of the name, the Tax Equalization and Review Commission, is that right?
SENATOR KRISTENSEN: Right. I call it the TERC, it's a lot easier.
SENATOR VRTISKA: If, in fact, they...
PRESIDENT ROBAK: One minute.
SENATOR VRTISKA: ... order a reappraisal or tell a county or a community or an area or whatever that it has to do with reappraisal, is it going to be the obligation of the county then to defend themselves in that process to say we don't think that you're right or* what is going to be the process for them in order to...
SENATOR KRISTENSEN: Yes, they also have the right to appeal.
SENATOR VRTISKA: That's the point I'm getting at.
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SENATOR KRISTENSEN: Sure.
SENATOR VRTISKA: They can appeal and say we don't think that you're right and they then can have the right 'to come and be heard as well as an individual.
SENATOR KRISTENSEN: Yes, they have standing in the commission and then they have the right to appeal if they don't like that.
SENATOR VRTISKA: And the last question, I hope I can get this in and you can answer, and that is, somewhere in here did you identify, and I haven't had time to look, did you identify what the qualifications of these individuals who are going to serve have to be? Or do they have to have certain qualifications?
SENATOR KRISTENSEN: Yes. And I would refer you to Section 4 that starts on the bottom of page 3 about the type of people, the qualifications that we're going to do, and then you will also...I have an amendment coming which I'd like to put in there that talks about...
PRESIDENT ROBAK: Time.
SENATOR KRISTENSEN: ... additional training. I'll ... we'll visit with that...
SENATOR VRTISKA: Okay.
PRESIDENT ROBAK: Thank you, Senator Vrtiska. Senator Robinson.
SENATOR ROBINSON: Madam President, members of the body, I couldn't help but think about that one comment you made, Senator Kristensen, about all the boards of equalization being very diligent and you know that... and, of course, that makes... so what you are saying is Senator Cudaback and Senator Vrtiska and Senator Engel were very diligent people when they were on their county boards and that really makes me feel good because knowing that they were very diligent in their endeavors down there. I do have a few more questions though, Senator Kristensen.
SENATOR KRISTENSEN: There's exceptions to every rule.
SENATOR ROBINSON: Okay, good, I like that comment. If you look at Vrtiska out there, that's all right, that's all right. One question that I didn't (let around to asking, who do you think
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has more power ... who would have more power, comparing the two situations, the present board that we have or the new board?
SENATOR KRISTENSEN: Well, the present ... what I'm really replacing is the district court and to the extent ... the district court has such extreme broad powers for contempt for certain equity orders and so on. In terms of maybe raw power, a district court has, but just because you have the power doesnt necessarily mean they dispense it wisely and to that extent I think that this probably has a better targeted power to do the job.
SENATOR ROBINSON: But if I ask you the question which group or would the public be better served under which situation, you would say this one, I'm sure.
SENATOR KRISTENSEN: Yes, I really would. I just have no second thoughts at all that this would do a better job than 93 district courts would do.
SENATOR ROBINSON: You may have touched on this and if you have, maybe a quick answer. Can your commission, the commission that you're bringing forth here, can they refuse appeals? I don't know if you'd mentioned ... that's been asked or not.
SENATOR KRISTENSEN: They cannot refuse someone to come to them. There is an absolute right to go the Equalization and Review Commission.
SENATOR ROBINSON: So they're guaranteed a hearing then. Is that correct?
SENATOR KRISTENSEN: They're guaranteed to at least have their stuff presented to them. Now they may have a master take in some of their information, but they are guaranteed a decision by the... (inaudible).
SENATOR ROBINSON: Either a master or...
SENATOR KRISTENSEN: The master is more or less just an agent.
SENATOR ROBINSON: Yeah. Now the commissioners, would they meet as a group or could they meet individually or is that up to the commission?
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SENATOR KRISTENSEN: We have in the statute the ability for one or all of them to hear it, but the decision has got to be made by the group.
SENATOR ROBINSON: Group, okay. Thank you very much.
PRESIDENT ROBAK: Thank you, Senator. Senator Bromm.
SENATOR BROMM: Thank you, Madam President. Senator Kristensen, could I again bother you with some more questions, perhaps, and...
SENATOR KRISTENSEN: Oh, it's not a bother.
SENATOR BROMM: Okay.
SENATOR KRISTENSEN: Unless it's Senator Robinson, I suppose.
SENATOR BROMM: Okay. If I'm retrodding ground that you've already covered, I apologize but this is, I think, a pretty important bill and I want to be sure that I understand certain parts of it anyway. I'm concerned or I guess I'm questioning the relationship between the commission and the State Board of Equalization....
SENATOR KRISTENSEN: Okay.
SENATOR BROMM: ... and also let's talk about the property tax administrator. Now the property tax administrator deals with centrally assessed property, and is that a position that is in the Department of Revenue or where does the property tax administrator come from? Is that an existing or a new position?
SENATOR KRISTENSEN: Right now in the Department of Revenue there is a property... I don't remember the exact title but in effect it's a property tax administrator because they have a person in charge of doing property tax sorts of things. Under the current system, it goes to the Department of Revenue for those rulings and they determine the central value of let's say the railroad property, whatever, and they do that valuation. Those appeals go directly, they don't go to the district court, those go directly to the State Board of Equalization.
SENATOR BROMM: Now does that stay the same?
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SENATOR KRISTENSEN: Yes, we don't deal, we don't change the centrally assessed properties appeal rights.
SENATOR BROMM: Okay, so the property tax administrator's decision does not come to the commission, that goes directly to the State Board of Equalization.
SENATOR KRISTENSEN: Yes, it does.
SENATOR BROMM: Okay. On page 6 of the bill, line 14, where it speaks of the powers and duties of the commission to hear and determine appeals, it says hear and determine appeals of valuation set by the property tax administrator. Now that's part of what has me confused. Does ... if the appeals of the property tax administrator go directly to the State Board of Equalization...
SENATOR KRISTENSEN: There is one exception to that on the railroad company's taxable property, so I might have misspoke, but there is that one appeal difference and that is set forth on the bottom of page 5, that's in the commission powers, if you look under Section 8. The commission does hear the appeal of those particular decisions. So in terms of the railroad, that's the one exception, I'm sorry I misspoke, there was the other (inaudible) assessed items.
SENATOR BROMM: Okay, but then if you follow down to the ninth power on the next page, you have a little bit broader power to hear an appeal of valuation set by the property tax administrator and that does not appear to be restricted just to railroad company taxable property.
SENATOR KRISTENSEN: That could be a very legitimate point. That may be an overbroad...
SENATOR BROMM: It may be a drafting...
SENATOR KRISTENSEN: It may not be as clear. Obviously, I don't think you can have power in excess of what you have the ability to. hear. That may be a very legitimate point, yes, that needs some clarification.
SENATOR BROMM: Okay. Then intercounty, intercounty equalization between counties like between Dodge County and Saunders County, if there is a difference or an adjustment...
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PRESIDENT ROBAK: One minute.
SENATOR BROMM: ... does that ever get to the commission or does that just get to the State Board of Equalization?
SENATOR KRISTENSEN: The intercounty stuff, they'll do a plan.
SENATOR BROMM: The commission will do a plan?
SENATOR KRISTENSEN: Will do a plan, but it's not binding on what that will be because I don't think you can take away the powers from the State board of Equalization absent a constitutional amendment.
SENATOR BROMM: So that would stay with the State Board of Equalization?
SENATOR KRISTENSEN: Yes.
SENATOR BROMM: Okay, okay. Now, on an appeal to the commission, if someone feels they are aggrieved with respect to the valuation of their property or some other relevant matter that the commission can handle, is there a time limit that they have to take that decision to the commission? Let's say we have a ... and it's probably in here and I apologize if I missed it, let's say the county board denies the appeal or the request...
PRESIDENT ROBAK: Time.
SENATOR BROMM: ... from the taxpayer ... we'll continue it. Thank you, Madam President.
PRESIDENT ROBAK: Thank you, Senator Bromm. Senator Janssen.
SENATOR JANSSEN: Madam Chairman, members, I'd like to ask Senator Kristensen a few questions if he would answer.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR JANSSEN: Is there or should there be some type of regulation at the county level whereby they have a set of guidelines that they have to follow? The reason for that is so
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that the county boards, County Board of Equalization cannot easily dump problems off onto the Tax Equalization and Review Commission. This is what I'm afraid of, that there will be so many things that the county will just say, rather than the way it is now where they have to go to district court, that they would just say, well, we'll just dump this off.
SENATOR KRISTENSEN: I struggled with that as well and the answer that I came up with goes like this. That if they do wholesale dumping off of problems and the Equalization and Review Commission takes those problems and what Senator Jensen was saying that there's a big problem, the commission will go back and say you fix it and you're paying the bill to do so. And, in effect, if they do, if there's problems that they can fix on their own, it's a lot cheaper for them to do it themselves under their own methods and under their own procedures than it is to have the Equalization and Review Commission order instead of maybe if it could be fixed by doing one class of revaluation, where if they ignore that, this commission may say you do the whole county and it gets a lot more expensive. That's...I guess that's protection, that and I think, you know, the good nature of county officials, quite frankly.
SENATOR JANSSEN: Or would this be a role that the special master would play in reviewing these?
SENATOR KRISTENSEN: Well, the special master I think would take into ... could tell the commission, look, here appears to be a pattern of what a county is doing or the commission. I think you'll see those patterns show up real quick because you'll see the records of what happens at the Board of Equalization. But, you know, the Board of Equalizations traditionally have handled lots and lots of problems and what they asked for is better tools, you know, to help us do better work. They've not traditionally said we don't want to do the work, they've always asked for more help to do it. So maybe I've got a little history and tradition on my side that they'll do...
SENATOR JANSSEN: Now this board, this new board that we are going to establish, now they would do this work year round, I certainly hope they would with the amount of money they're getting, why...
SENATOR KRISTENSEN: Yes, that's correct and we prohibit them
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from having any other job and we prohibit them from conflicts, in other words, being hired and doing appraisals on the side and, I mean, this is what they're going to do.
SENATOR JANSSEN: Well, I feel as though that, you know, if they work with this every day of the year and this is their primary job that they are going to be in a better position to understand the problems that are sent to them by the County Boards of Equalization, and I think they would probably be more consistent in their judgments on this, you know, at the county level, and I realize the County Boards of Equalization do the best job they can, but sometimes I think they get over their heads a little bit.
SENATOR KRISTENSEN: Well, you also have some person... I mean, they're locally elected people.
SENATOR JANSSEN: Well, yeah, certainly.
SENATOR KRISTENSEN: And we put them in impossible positions once in a while. They really...it's like the assessor. The poor assessor has got to look his neighbor in the eye and say I'm raising your value. You know, personally that is not an easy thing to do. Politically, that's not easy to do.
SENATOR JANSSEN: No.
SENATOR KRISTENSEN: And we have a lot of turnover.
SENATOR JANSSEN: The assessor has to worry about getting reelected too.
SENATOR KRISTENSEN: Yes. And that's ...
SENTOR JANSSEN: That opens up another can of worms though that could be taken care of.
SENATOR KRISTENSEN: But ultimately, if we're going to address these things, those are the types of issues that have to be looked at...
PRESIDENT ROBAK: One minute.
SENATOR KRISTENSEN: ... and you have a high turnover on assessors. I mean, we're really hard on assessors in this
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county or in this state and I'm amazed that we've got some of the people doing the work we do. I mean, there's some extremely hardworking people out there.
SENATOR JANSSEN: Okay, well, thank you, Senator Kristensen, I'll give the rest of my time to Senator Bromm. I know you had a dialogue going there with him.
PRESIDENT ROBAK: Senator Bromm.
SENATOR BROMM: Okay, thank you, Senator Janssen. The question I was getting to was, are there any time parameters on when you can take a decision to the ... or question to the commission to appeal an adverse lower decision or, you know, what is the time limit involved?
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Okay, thank you. Senator Bromm, the time period for the individual to file that is going to be between June 15 and July 15, so they've got a 30-day window in there to object to their valuation. And now that's a little different than what we have had under the old calendar, so there's going to have to be a learning process out there because, with the passage of LB 452, we make a fairly good difference in when we do those objections, but it's basically a 30-day window of June 15 through July 15.
SENATOR BROMM: Okay, now there's also such things as under Section 8 of the powers of the commission to hear claims for refunds of property taxes alleged to be illegal, unconstitutional or clerical error or misunderstanding or mistake. Does that time parameter apply to that or would that be something you could take to the commission...
SENATOR KRISTENSEN: No, those are...
SENATOR BROMM: ... whenever the problem, you became aware of the problem?
SENATOR KRISTENSEN: Right.
PRESIDENT ROBAK: Time.
SENATOR KRISTENSEN: That's got a different time frame because
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of the method in which they are done because those aren't necessarily valuation issues.
PRESIDENT ROBAK: Thank you, senators. Senator Schellpeper.
SENATOR SCHELLPEPER: Thank you, Madam Chairman and members, I also have a few questions for Senator Kristensen.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes, Senator Schellpeper.
SENATOR SCHELLPEPER: What... in the committee amendments, it states that the commission will enforce all the orders and then bill the county for the cost. What kind of cost do you see being billed to the county?
SENATOR KRISTENSEN: I could see those costs ranging from, if you needed reappraisals, that the cost of reappraisal could be there. The other costs that you might have may be those costs involved in improving their techniques countywide. Let's just say that the commission says, well, look, this individual taxpayer has a small change but it's symptomatic in your county of larger problems. In other words, you don't use mass appraisal techniques, you know. Some of those costs, they could say, look, you need to come up to the twentieth century here and use come mass appraisal techniques and they refuse to do that, they basically then could come in and implement those techniques and that may be as much as hiring somebody to come in and do it once to, you know,...
SENATOR SCHELLPEPER: So there's no, really no limit on the amount of dollars. This could be major dollars for a county.
SENATOR KRISTENSEN: Yes. I mean, I'll make no bones about that, depending on the scope of the problem, obviously, the problem that you have is if you order the nuclear bomb to solve the problem of a couple snipers, then, in effect, you're going to kill a county off with that sort of approach and the protection there is, obviously, the county's ability to appeal and say, look, this is an inappropriate order.
SENATOR SCHELLPEPER: So the fiscal note had nothing to do with county. That's strictly...
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SENATOR LANDIS: No, although you'll see in the fiscal note, they make some reference to the counties, if I remember correctly.
SENATOR SCHELLPEPER: Well, I see three commissioners at 376,000 and the administrator had another 85,000 about...
SENATOR KRISTENSEN: And I'm fairly...
SENATOR SCHELLPEPER: Really didn't say anything here for anything else.
SENATOR KRISTENSEN: For the counties, no, because there is no... it's a remedy sort of thing, Senator Schellpeper, that if everything is okay, there's not a problem; district courts you'll have the ability and the Supreme Court, you and I have seen that happen where they go back and one of the old remedies were that you got zero value. They've kind of backed off of that, but...
SENATOR SCHELLPEPER: In light of the comment in this morning's paper by the Governor, are you worried about the $500,000 A bill with this bill?
SENATOR KRISTENSEN: I don't want to offend you, but I didn't read the paper and this time of year that sometimes can be detrimental to your outlook. This is policy and it's like everything else, Senator. As I've talked to three or four other senators on the floor, am I willing to look at lowering those salaries? Absolutely. I tried to pick out a salary that was commensurate with what I thought their job obligations were and it looked to me like they're doing the duty of something similar to a county judge.
SENATOR SCHELLPEPER: Now these are 9.11 three lawyers though.
SENATOR KRISTENSEN: No. No, that was last year's legislation when we were dealing with the court. We've struck that out. Only one is the Chairman because if you request a formal hearing that you're going to appeal on, you can use the rules of evidence.
SENATOR SCHELLPEPER: Well, I didn't think you could hire three lawyers for ... about 200,000.
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SENATOR KRISTENSEN: Well, you've got a couple here for 12,000 right here.. Don't go any farther. I know what you're thinking.
SENATOR SCHELLPEPER: I mean good lawyers. (Laughter.)
SENATOR KRISTENSEN: know what you're thinking, you know, you see we sent all day and we did real well. I think you probably are done.
SENATOR SCHELLPEPER: No, I'm not quite yet. Actually, this bill I've always had a little bit of a problem with when we heard it in the committee. I didn't support it out because I'm not sure it's something that we need to do. I'm really not opposed to it but I'm just not...
PRESIDENT ROBAK: One minute.
SENATOR SCHELLPEPER: ... also sure that it's something that has to be done. I think it's another step for the counties, especially if they don't have a problem, then maybe it isn't a problem for them anyway. Maybe it will help the other counties, but I just saw it as something that probably doesn't need to be done this year and I think the fiscal note and possibly some other expenses that would be put onto counties would be another burden and so I'm not all that supportive but I'm really not all that opposed, but I just think it's something that maybe its time might not quite be here at this time. Thank you.
PRESIDENT ROBAK: Thank you, Senator Schellpeper. Senator Robak would like to announce that the following guests are visiting the Legislature. There are 30 eighth graders and their teacher here from Humphrey St. Francis in Humphrey, Nebraska. Will you all stand and be recognized, please. Welcome. Senator Fisher, your light is next, followed by Senators Vrtiska, Pirsch, Robinson, Bromm and Janssen.
SENATOR FISHER: Madam President and members, I must say, Senator Kristensen, this is very timely, your bill. I received my reappraisal this morning in the wail and it is 115 percent of market value the way I calculate it. I would like to ask a couple questions of Senator Kristensen, the first one being, are there any other states that utilize this type of...
SENATOR KRISTENSEN: Yes, there are, Senator Fisher. We have a variety, in fact, most states utilize some sort of an
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administrative independent body that hears appeals and, in fact, and that goes a little bit to our constitutional amendment. There are very few states that use that old system of doing those appraisals, because it has become so complex and technical, they needed the expertise so the vast amount of states do some administrative like that. The small claims provision I have in here in the green copy that we're proposing to take out, obviously, is real intriguing to me. That is utilized by several states as well.
SENATOR FISHER: Thank you. Was there any particular reason for the selection of three members? Was it a cost effective number perhaps?
SENATOR KRISTENSEN: I'm partial to three for the following reasons, not that they're good reasons, but they're just the reasons that I took three. When I originally looked at doing this, I was interested in a tax court. We used three members of the court of appeals as a panel. That's the lowest number of people you can use so you don't have one person's judgment. In other words, it takes two out of the three and you could use five and use, you know, three out of five, but that seemed to be too many people and that, obviously, elevated the cost. I didn't want to put this on one person's judgment because I didn't like the idea of one person having the say and if I got the wrong person in there, it didn't work very well. So three was the lowest number I could get to and not have one person's judgment.
SENATOR FISHER: Well, thank you. I happen to, you know, work with the philosophy, if it's not broken, don't fix it but the more I'm around the political arena, sometimes I think if it's not broken, you need to break it, but anyway, I think I'm going to support the amendments and I think I'm going ahead and listen with intent the remaining portion of the bill. Thank you.
PRESIDENT ROBAK: Thank you, Senator Fisher. Senator Vrtiska.
SENATOR VRTISKA: Thank you, Madam President. Back to Senator Kristensen again if I might.
SENATOR KRISTENSEN: Yes.
PRESIDENT ROBAK: Senator Kristensen.
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SENATOR VRTISKA: I was just curious about the form. would they use the same form that they appeal to the county board? Would that same form then go on to the Board of Appeals?
SENATOR KRISTENSEN: Well, Senator Vrtiska, it would be similar but it won't be the same one because you would have to allege there are certain things in the petition we're going to ask them to set out, and I'll look for those here real briefly...
SENATOR VRTISKA: Well, the reason I ...
SENATOR KRISTENSEN: It's a little different form because it's going to ask them to overturn the action of the County Board of Equalization.
SENATOR VRTISKA: Okay, well, all right. The reason I asked that question is because, you know, on the appeal form that is used at the county level there ... you have to state a reason why you're appealing. Many times the reason is my taxes are too damn high, you know that as well as I do.
SENATOR KRISTENSEN: And that's usually a pretty good reason.
SENATOR VRTISKA: And that's a pretty good reason. You know, you don't have to accept that as a reason...
SENATOR KRISTENSEN: No, I understand that.
SENATOR VRTISKA: ...because it's not a legitimate reason. You need to state the, you know, in comparison with other people's land or whatever or house or whatever is a legitimate reason and I was just curious about if you are discussing then that they have to again file another paper with the Board of Appeals?
SENATOR KRISTENSEN: Yes, they're going to have to set out in a petition which is just basically a paper asking what they want to be done and stating what they believe to be the violation is.
SENATOR VRTISKA: Okay, then I've got to ask this question because it's been asked of me and so, you know, I'll just pass it on to you and I guess for what it's worth and that is that some assessors have indicated to me that this is a step that they've been talking about for a long time and that's centralized assessment. Do you think this is something that there's a fear that maybe we can move closer to centralize the
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central assessment by the state or do you think this is just a fear that is always in there?
SENATOR KRISTENSEN: Well, I answer that question this way. I do have a bill that goes for central assessment and I've never chose to introduce it...
SENATOR VRTISKA: And bring all the assessors into Lincoln, I assume.
SENATOR KRISTENSEN: Well, it's always nice to see them, but the trouble with moving to central assessment, obviously, is there's many other things that have to occur to do that and, to a certain extent, you know, I get assessors who talk to me privately saying, boy, we wish there was some way we could -to central assessment to take the heat off of me. I can classify property, but you start talking about coefficient of dispersion, you start talking about price differentials, you start talking about those things and that's really hard for me to deal with with my staff and deal with ray people. And central assessment is going to take a step, in my mind, that you're going to have... if you're going to do it, there's got to be other purposes to do it. I think the state should be reluctant to do central assessment for a little while till we get some handle on what we want to do With property tax because if we're going to make major shifts in property tax, central assessment could be a real waste of time to do at the state level because we're going to be more interested in other areas and say, look, that's completely a county tax, let them deal with it. We won't be so interested in equalization, but until we get over the hump of what we're going to do with property tax, I think central assessment is not in the cards to do and this deals with appeals. This is not...
SENATOR VRTISKA: I understand. I understand that. I just...
SENATOR KRISTENSEN: (Inaudible). It gets expensive.
SENATOR VRTISKA: I only brought the question to you because it was posed to me when the discussion from assessor was that this is just another one of those ploys to get centralized ... central assessment and, you know, I just wanted you to know, and I'm sure you've heard it as well as I have. I just want to finish up by saying somewhat what Senator Bromm or whoever it was...
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PRESIDENT ROBAK: One minute.
SENATOR VRTISKA: ... said that, you know, I think I can support this bill. I do have a little problem with the cost, but as I sat here and looked around the room and saw all the lawyers working for 12,000, maybe you could get three of them and raise their salary to 20,000 and it would only cost you $60,000. Thank you.
SENATOR KRISTENSEN: Do I get some time on that? I was going to apologize for abusing you earlier, Senator Vrtiska, but I guess my time has run out. Thank you.
PRESIDENT ROBAK: Thank you, Senator Vrtiska. Senator Pirsch.
SENATOR PIRSCH: Thank you, Madam President, members of the body, I, too, also would like to put Senator Kristensen in the answer chair, question and answer period.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR PIRSCH: Senator Kristensen, in regard to the committee amendments, we are specifically allowing or it's adding specifically allowing the commission to consider statistical measures of assessment levels and centrality in resolving contested cases. Could you explain to me what is involved in that?
SENATOR KRISTENSEN: I certainly will give it a good try. The commission can take into account a couple of different things and what the statistical information is is that when you look at valuations in a county, let's just use counties because it's easier for me to talk about, and you've got a class, let's say residential property. And the average valuation may well be 90 percent, but is that 90 percent because you've got a whole number of lowly valued residences that are down in the sixties which drag that average down there? They look at that statistically and one of those are called dispersions and that's a statistical. How much dispersion from the average is there? How far is the fringe? And if your dispersion is real wide, that means you've got problems with your assessment because you've got a big range.
SENATOR PIRSCH: And that might be a case, someone, where they would go in and do the whole county then?
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SENATOR KRISTENSEN: They certainly could do that or maybe that subclass is just a neighborhood that's got the whole thing off too.
SENATOR PIRSCH: Okay. And what about centrality*;`
SENATOR KRISTENSEN: Well, centrality is a term of art that they use in the Department of Revenue with property tax valuation. As I understand, centrality is the center of that average valuation and how far you go with that. It's similar to coefficient of dispersion, but I've got to tell you, if you want a legal definition, I'm ill-equipped to do that. I mean... if somebody explains it to me I could follow it. To sit here and tell you with precision, I can't do that.
SENATOR PIRSCH: In other words, this is going to require some digging into records, into comparisons, et cetera, and this would be those three people's daily job.
SENATOR KRISTENSEN: That's correct. I mean, that's part of ... they're going to be able...
SENATOR PIRSCH: They're going to be used to doing this.
SENATOR KRISTENSEN: Yes. I mean, that's ...
SENATOR PIRSCH: Or hopefully.
SENATOR KRISTENSEN: I hope so, yes.
SENATOR PIRSCH: Because they will be appointed by the Governor and paid almost $75,000, so we would hope they would be able to do this.
SENATOR KRISTENSEN: They'd better be able to do that, yes.
SENATOR PIRSCH: Now, you also talk a lot in the bill about special master and would the special master be hired to do some of this digging, some of this comparison?
SENATOR KRISTENSEN: Yes, they could be. My guess is that the masters are more used to go out and do routine hearings and gathering of information and doing... instead of policy making, they're more of the fact gathering, so if that includes digging
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around, probably so.
SENATOR PIRSCH: Well, I know. that you have only 10 days allotted in the fiscal note for a special master. Ten days seems like a very small...
SENATOR KRISTENSEN: Short period of time, doesn't it?
SENATOR PIRSCH: Yes, it does.
SENATOR KRISTENSEN: I didn't do the fiscal note and I can't tell you how they arrived at that figure other than that's probably some of the things that came over...
PRESIDENT ROBAK: One minute.
SENATOR KRISTENSEN: ... from the Department of Revenue or from their best guess. I honestly don't know how they get that figured up. In terms of salary, you may not need those special masters either in any one given year unless you have like Senator Vrtiska talking about the 10,000 protesters either.
SENATOR PIRSCH: You may need more at the up front though in the beginning...
SENATOR KRISTENSEN: You certainly could, and you may have...
SENATOR PIRSCH: ... then as this develops.
SENATOR KRISTENSEN: Yes. Realize that the Department of Revenue also has a wealth of information that they're going to be able to...
SENATOR PIRSCH: Sure.
SENATOR KRISTENSEN: ... bring across too.
SENATOR PIRSCH: Okay, well thank you, Senator Kristensen. I, too, like others who have asked questions, are not really sure how I could support this. I keep thinking of the Board of Parole and their full-time...
PRESIDENT ROBAK: Time.
SENATOR PIRSCH: ... six-year terms where they are supposed to be
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proficient in their job and sadly lack.
PRESIDENT ROBAK: Thank you, Senator Pirsch. Senator Robinson.
SENATOR ROBINSON: Madam President, members of the body, Senator Kristensen, Senator Vrtiska said he had one more question. I said if 1 have time at the end, you'll get it, you won't get it at the beginning. The question I have, Senator Bromm, I think it was Senator Bromm said that one of the three would be lawyers? Is that correct?
SENATOR KRISTENSEN: That's correct, Senator Robinson, yes.
SENATOR ROBINSON: They all three could be, couldn't they?
SENATOR KRISTENSEN: Yes, we don't disqualify them because of their profession.
SENATOR ROBINSON: I thought that was...the change is very diligent though. You know, I thought it was very diligent in that change, but is there ... what kind of a background ... okay, I'm the Governor and what kind of a person do I look for that could be... are they CPAs or are there any qualifications whatsoever listed in the bill? And I should know that but I don't.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes, there are, Senator Robinson, and I would.
SENATOR ROBINSON: Just verbalize a couple of them.
SENATOR KRISTENSEN: Okay, they've got to have knowledge of the depreciation theories of cost estimating, capitalization. Basically we're talking about valuation. If you'd ask me what things would be helpful to them, would be some education in the financing of property, the valuation...
SENATOR ROBINSON: Where would you look for people? Who would you look at?
SENATOR KRISTENSEN: Oh, I think you'd have to look- at people who have, maybe even people who have been in county government who have been on the top end of doing mass appraisal techniques.
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I think you may well look for people who have been in the appraisal business (interruption).
SENATOR ROBINSON: Okay, that's enough. Okay now, how many people appeal to the district court here, would you guess?
SENATOR KRISTENSEN: Well, we really don't have a good number of those because they don't keep statistics on individual Cases that I'm aware of. I can tell you, I suppose, that in some years there's not that many in most counties, but in the years that we had the personal property tax discussions and everybody thought they were going to get lower valuations, you had in the smaller counties tens...
SENATOR ROBINSON: Okay, couldn't we say that, getting down to the dollars, that really the public could save money with this process? Is that a fair statement?
SENATOR KRISTENSEN: Oh, well, it's cheaper for the public...
SENATOR ROBINSON: Yeah.
SENATOR KRISTENSEN: ... to do that.
SENATOR ROBINSON: Now my colleagues that surround me might not like that, but ... that are in, you know, that type of business where they take people to court, but...
SENATOR KRISTENSEN: If I could interject just a second. The reason you may not like this is that if you want to cut off people's opportunities to appeal, you're going to put hurdles in front of them, make it harder to appeal. And if you like that, then I'd keep the district court system, I really would.
SENATOR ROBINSON: Yeah. We had a bill, can't remember, it was the last couple of years, where here we, Senator Kristensen, where we had a number of counties and they were going to, this board was going to help equalize. Did that pass?
SENATOR KRISTENSEN: Yes, it- did. That was Senator Wickersham's regional boards and...
SENATOR ROBINSON: How has that gone? I just
SENATOR KRISTENSEN: Well, they're just now getting started to
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operate.
SENATOR ROBINSON: Okay.
SENATOR KRISTENSEN: And I think quite frankly, the initial indications are very well.
SENATOR ROBINSON: Okay. Do you think this will be a political football with the Governor in? That finishes mine now. Senator Fisher's comment, I want you to know I've strummed a couple of strings on my violin for him, when he talked about his increased valuations. Come up to our county, Senator Fisher, they are all that way. Senator, I yield to the senator from Table Rock.
PRESIDENT ROBAK: Senator. Senator Vrtiska.
SENATOR VRTISKA: Thank you, Madam President, and I just have one question to Senator Kristensen that I meant...
PRESIDENT ROBAK: Senator Kristensen.
SENATOR VRTISKA: ... to get around to ask you, and that is, in this process where they appeal to the county, and then they don't get relief or they do get relief but it is not what they want, and then they appear before this, is it going to be then necessary for the county to defend their position that they've taken? Is it going to be... and now it would be...
PRESIDENT ROBAK: One minute.
SENATOR VRTISKA: ... in the court.
SENATOR KRISTENSEN: Well, I think they would be wise to make an appearance and, you know, they could sit back and just say, look, we are not going to enter into this. If the TERC wants to give them relief, they can. Quite frankly, I think the county would be wise to send their county attorney or deputy county attorney to represent them at this ... at this... (interruption) ...
SENATOR VRTISKA: And all these hearings ...
SENATOR KRISTENSEN: ... board.
SENATOR VRTISKA: ... will be held in Lincoln, so somebody from
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Scotts Bluff County would have to come in and the board would have to come in and make their case.
SENATOR KRISTENSEN: Well, we have the commission with its headquarters here, simply because...but the ability to have hearings outside of Lincoln is there. You know, that is what we did with the court of appeals, that they do travel out to do that, and it makes a whole lot more sense to travel, particularly if you have one commissioner that would go out and hear a number of them, it is a much better use of time and they have the opportunity to do that under the bill.
SENATOR VRTISKA: Because the county ... because they do have standing, the county is going to have to (mike off).
PRESIDENT ROBAK: Time.
SENATOR KRISTENSEN: Yes.
PRESIDENT ROBAK: Thank you, Senator. Senator Bromm. senator Janssen.
SENATOR JANSSEN: Madam President, members, some more questions, again, for Senator Kristensen, if he will answer them.
SENATOR KRISTENSEN: Sure.
SENATOR JANSSEN: Are you getting tired of answering questions?
SENATOR KRISTENSEN: No, not at all.
SENATOR JANSSEN: Okay.
SENATOR KRISTENSEN: They've all been good questions but a couple.
SENATOR JANSSEN: Do you think that we will get the problem of equalization between counties addressed in this? To me, that is where there is an awful lot of problem, where you have NRDs and school districts, and so on, that are overlapping in the counties, and with the assessment in different ... being different, you know, not having the ... not having the rate at, say, 90 percent in both of those counties, there is such a discrepancy there, also for schools too.
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SENATOR KRISTENSEN: Yes, that is correct. You know, there are... 44 percent of all of our school districts, we have got roughly about what, 700 school districts, I don't see Senator Bohlke here, but roughly 700, 600 or so school districts, just about half of them overlap county lines. That is where intercounty equalization is so important. To adequately address intercounty equalization really is the State Board of Equalization's duties. Now that is the reason we got the constitutional amendment up. This is sort of a twopronged fight or war here. To the extent, though, that I can, and that's the reason I want this commission, because they are going to hear all these appeals, and they are going to see in this pocket maybe there is problems here. They are going to present to the State Board of Equalization a proposed plan. Now the State Board of Equalization can flip their nose and their thumb and wiggle and say, nice try, we are not going to look at it, but I will tell you, this Commission is, when it gets up and going, is going to be able to put some history and some information because they are going to have all those things to give that preliminary plan of equalization to the state board. And they may well say, now, look, you know, you don't need to go and make a wholesale change of valuation for a class. What you really need to do is surgically go in and make them redo this point or that point. And so, to the extent I can't do anything with the State Board of Equalization unless the Constitution changes, this does provide for an informal plan that is submitted before the State Board of Equalization meets and I think the State Board of Equalization is going to have to answer why don't ... why isn't this a good plan. To that extent, that is where you put the pressure on the State Board of Equalization.
SENATOR JANSSEN: Now Senator Robinson also ... did he ask you if you knew how many cases a district court handled?
SENATOR KRISTENSEN: Yes, and I don't have a number on that.
SENATOR JANSSEN: Well. you know, if this was going to lessen the load on the district courts, maybe we can look back at additional district court judges also and help ease the pain of the revenue for this? Do you suppose that would be possible?
SENATOR KRISTENSEN: Oh, you know, those numbers in questions we talked about earlier in your speech are starting to rise. Obviously, you factor... it is all fairly relative, you know, and I will tell you that I think you will find most district courts
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are reluctant to handle equalization cases because they don't see them all the time, and they are complicated. You are dealing with small amounts of money, generally, and, you know, the big players, the ones that really have lots of money, they are in the State Board of Equalization and the Department. of Revenue on centrally assessed things, and the counties, the district courts and the counties just don't see a lot of these that go to trial, so they are not as equipped to handle that case because these are fairly complicated.
SENATOR JANSSEN: That is what I am talking about, these people are going to be working with this year around.
SENATOR KRISTENSEN: Yes.
SENATOR JANSSEN: They are going to see it every day and every day, and I think that they are ... they would possibly be able to get a better...
PRESIDENT ROBAK: One minute.
SENATOR JANSSEN: ... better handle on the situation and come up with some better ideas, and better solutions to the problems. Do you agree with that, that, that a district court could?
SENATOR KRISTENSEN: Oh, absolutely. Absolutely, I think that's probably better put than the way I put it. Yeah, I think that is right.
SENATOR JANSSEN: All right, thank you.
PRESIDENT ROBAK: Thank you, Senator. Seeing no further discussion of the committee amendments, Senator Kristensen, do you wish to close?
SENATOR KRISTENSEN: Yes, I do, Madam President, and members of the Legislature, real briefly, we are on the committee amendments, and I will yield a little bit of my time to Senator Warner if he wants it. The committee amendments do, briefly, three things. They eliminate the small claims procedure that we have in the original green copy of the bill. They allow for the empowerment of the commission to do some prospective changes in orders, and they allow for a means of assessing those costs, if there is problems, back to the county to do that, and it also allows the commission to consider various types of evidence,
3500
things like statistical information. And, Senator Pirsch, I am going to make sure I get for you some of that centrality issues. one, it is good for me to learn it even better, and, two, I will get that to you. But I think the committee amendments are consistent with the intent of LB 490, and I would certainly...I will encourage any questions when we get to the bill, but I would urge the adoption of the committee amendments. Thank you.
PRESIDENT ROBAK: Senator, had you given your time to Senator Warner? No further time. The question before the body is the adoption of the committee amendments to LB 490. All those in favor vote aye. All those opposed vote nay. Have you all voted? Have you all voted? Please record. Senator Warner.
SENATOR WARNER: Madam President, I'd ask for... I guess I have to ask for a call of the house.
PRESIDENT ROBAK: There has been a request for a call of the house. All those in favor vote aye, all those opposed vote nay. Please record.
CLERK: 18 ayes, 0 nays to go under call.
PRESIDENT ROBAK: The house is under call. Would senators please return to their seats. Will all unauthorized personnel please leave the floor, the house is under call. Senator.
SENATOR WARNER: Accept call-in votes.
PRESIDENT ROBAK: We are accepting call-in votes. The question before you is the adoption of the committee amendments to LB 490. We are accepting call-in votes.
CLERK: Senator Withem voting yes. Senator Brown voting yes.
PRESIDENT ROBAK: Please record.
CLERK: 25 ayes, 0 nays to adopt the committee amendments, Madam President.
PRESIDENT ROBAK: The committee amendments are adopted. Is there any further discussion on LB 490? 1 raise the call. Senator Kristensen, do you want to open on LB 490?
SENATOR KRISTENSEN: Madam President, members of the
3501
Legislature, real briefly, to open, obviously the committee amendments addressed, I think, 95 percent of the bill and certainly I will spend as much time as we want to spend answering questions, and there really have been some good questions, even though I took a couple of exceptions to a few of our senior members. But I do think that equalization is so important. People have tended to lose track that it doesn't matter about the level of valuation and your levy if it is not fairly and equally done across the state. And this is an attempt to make it easier for taxpayers to do that. And the fundamental reason I have for doing it is this. If you take individual taxpayers, they are the best judge of what their property is worth and whether they are fairly being de dealt with. If you build the system of equalization and valuation from the ground up, you will have a better sense of valuation across the state, instead of having someone at the top down looking merely at averages, like the State Board of Equalization. The system will have more integrity. It will be much better. Madam President, I really think that we've discussed the bill a lot. I would rather move to more questions and I assume that we do have an amendment that I'd like to address, if I could, to put the bill in a little better shape.
PRESIDENT ROBAK: Mr. Clerk.
CLERK: Senator Kristensen would move to amend with AM1294. (See pages 1403-04 of the Legislative Journal.)
PRESIDENT ROBAK: The Chair recognizes Senator Kristensen to open on his amendment.
SENATOR KRISTENSEN: Thank you, Madam President. Members of the Legislature, I promise that I will be as short as I can because I do know that there are other issues you want to get to yet today. What this does is stagger the terms of the commissioners. There are three of them. One will serve for two years, one will serve for four, and another for a six-year, and then they will rotate, expiring every two years. I think that adds a better mix. We also, I want to make sure that the members of the TERC, and this is particularly because of Senator Vrtiska's questions and Senator Robinson's questions about what are these people and what sort of understandings are they going to do. This amendment, basically, says we are going to have them also understand mass appraisals, and complex industrial property, because they are going to be doing some more
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complicated things. I also want to make sure that they have some continuing education requirements, and will continue to do that. That's part of this amendment, and, finally, the last one is that the commission can. suspend or remove an assessment official from office for failure to comply with any of those. It is really what we discussed earlier. That is similar to the remedy that is now possessed with the State Board of Equalization and the Department of Revenue, although it has never been exercised, it is certainly one that they have the opportunity to use, and these people will be in the beat situation to do that. obviously, the major part of this, this amendment, is that removal power; it's the knowledge of complex industrial properties; and the ability to have some continuing education; on the staggered basis of the terms as well. I don't believe that this amendment should cause you great heartache anywhere, given the questions we've had before. With that, I'd urge the adoption of this particular amendment.
PRESIDENT ROBAK: Thank you, Senator Kristensen. Senator Hall, to speak to the Kristensen amendment.
SENATOR HALL: Thank you. Madam President and members, Senator Kristensen, would you respond to a question?
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR HALL: I apologize, I just got a copy of the amendment.
SENATOR KRISTENSEN: No, you are fine.
SENATOR HALL: Was it passed out?
SENATOR KRISTENSEN: Yes, it was, Senator. I made a mistake yesterday in filing it and I didn't get it printed, so it got put out today.
SENATOR HALL: I am sorry. I couldn't... I still can't find it but explain to me again, if you would, I understand the... I have no problem with the term of the members and how they expire, and that change. What do we do, on page 4, line 7, where we include complex industrial properties, and mass appraisal techniques? Can you walk me through that and tell me what that does?
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SENATOR KRISTENSEN: Yes, I certainly will try to do that. One of the requirements of the commissioners serving on the commission, we have them outlined in the bill, and that, if I remember right, is that in Section 4 of the bill?
SENATOR HALL: It would be on page 4, it would be Section 2, actually, or, no, Section 4.
SENATOR KRISTENSEN: Section 4, you start at the bottom of the page...
SENATOR HALL: Subsection (3), right.
SENATOR KRISTENSEN: Yeah, we put in there, and this is sort of the laundry list of things that we want them to have some familiarity with, and one of the items at the committee level that we talked about was, look, we want them to know something about economics, appraisals.
SENATOR HALL: So this just goes to their qualifications for purposes of...
SENATOR KRISTENSEN: Right, this goes to the qualifications.
SENATOR HALL: Okay.
SENATOR KRISTENSEN: We want them to have some of those... in effect, this is a touch-me amendment that says, look, remember, you have got to do these things, so you ought to be qualified to do it.
SENATOR HALL: Okay, so it is going to limit the pool of who is going to be eligible?
SENATOR KRISTENSEN: Well,...
SENATOR HALL: And clearly they are going to have expertise in this area, that's the desire?
SENATOR KRISTENSEN: Yes, that's the desire, right.
SENATOR HALL: Okay.
SENATOR KRISTENSEN: It would pro... it would eliminate me. Of course....
3504
SENATOR HALL: Right.
SENATOR KRISTENSEN: ... under those requirements, we'd probably be eliminated.
SENATOR HALL: Right. But that is not the point, and I am not interested in the job, but my question is the second portion down there, 17 through 23. Now we are putting in a new subsection (f) in this same section, and that deals with continuing ed, basically?
SENATOR KRISTENSEN: Yes.
SENATOR HALL: Okay. We spell out utility and railroad appraisal, and then we reinstate or restate, I guess, rather, the complex industrial properties. Do we talk about utility and railroad appraisal up above someplace?
SENATOR KRISTENSEN: We do that, and we've had some discussion about that. If you will look, Senator Hall, over on page...
SENATOR HALL: Basically, here we are talking about centrally assessed type property.
SENATOR KRISTENSEN: We are, and Senator Bromm asked a question of me, and, quite frankly, I thought his question was pretty good. I am going to reexamine that centrally assessed area because I am not sure, it conflicts with what my flow chart I had in there, that was certainly my intent. I would seriously consider taking that centrally assessed part out but I wanted to look at it before we got it done.
SENATOR HALL: Okay, and I apologize. I was off the floor while ... when you were discussing the bulk of the committee amendments because I do have a question. I know they were adopted. I passed on it because I have a question that I will address. I don't have any problem with this amendment, I think, but the... I am just looking at it, the...
SENATOR KRISTENSEN: Well, Senator Hall, what I am going to do is between now and Select File is I am... I think there are people that had some considerations of salary, I think there were some that had considerations of doing the railroad evaluation, or the railroad protest, and Senator Pirsch had some
3505
questions about what some of those statistical things could do. I am going to reexamine those between now and Select too, so if you have some things,...
PRESIDENT ROBAK: One minute.
SENATOR KRISTENSEN: ... I guess I plan to put a Select File amendment in here based on the discussion we have had today to clean that up.
SENATOR HALL: Well, and I just want to clarify something, and I will do that when my light goes on again, but on the balance of this amendment, the very last item, it amends the Standing Committee amendments and it says, it now says that the commission would have the ability to suspend or remove an assessment official from office?
SENATOR KRISTENSEN: Right, for failure to comply with any order.
SENATOR HALL: So they would have the ability to remove an elected official from office?
SENATOR KRISTENSEN: Yes, that is similar to what the Department of Revenue has right now. That's where I got the language from.
SENATOR HALL: Well, in what way? I mean, what are the criteria; merely for failure to comply with any order of the commission? I mean...
SENATOR KRISTENSEN: That...
SENATOR HALL: ... are we not talking about... I mean, that we are talking about negating the public's vote and we're...
PRESIDENT ROBAK: Time. Thank you, Senator Hall. Senator Vrtiska.
SENATOR VRTISKA: Thank you, Madam President. I just have a short question that I think ... Senator Kristensen, could I bother you again?
PRESIDENT ROBAK: Senator Kristensen.
SENATOR VRTISKA: My question...
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SENATOR KRISTENSEN: Yes.
SENATOR VRTISKA: ...has to deal with the special masters, and I ,noted in the fiscal note, you have $400 a day for ten days. I was just curious how you arrived at the 10 days and...
SENATOR KRISTENSEN: I ... was it Senator Pirsch, I think, that raised the same issue, and I didn't prepare the fiscal note, and I don't know how they came up with those numbers.
SENATOR VRTISKA: Well, you just reach in there and get them.
SENATOR KRISTENSEN: (Laughter). Well, there are other things I do do that on, and they didn't come to me and say, what do you think. I assume they got that from the Revenue. There may be years that that's way too low, and there may be years that you don't use it. I don't want to hold you out that that's all they are going to do because I don't think that is true. But I, again, the fiscal note is an estimate of what they are going to do, (interruption).
SENATOR VRTISKA: Okay, then I won't detain you. It was just a question I had and I wondered how you arrived at that, and the other, the only other question I have is you made a comment of your own, so I am not making this up, but you indicated that maybe you could see a little different change in the...at the start, you know, everybody that gets a job, they expect a raise, are you amenable at all to those salaries that you set out, or is that where you are going to take the bill in with?
SENATOR KRISTENSEN: No, Senator, I set that, just as I said before, just to... I tried to pick some comparable job I thought was out there. I thought of county judge, that's how you determine the county judge salary. That's not set in stone and, obviously, as the priorities of this Legislature go along, and as we get towards the end, I'd be willing to look at changes then.
SENATOR VRTISKA: I don't want to take up any of your time, I just wanted to bring that, because you had brought it up, and I just was curious about it, and so I won't carry the thing any further, but maybe we can talk about it later. Thank you very much.
3507
PRESIDENT ROBAK: Thank you, Senator. Senator Hall.
SENATOR HALL: Madam President, a point of order. I'd like to ask that the amendment be divided. I'd like to take the last section out. The rest of it, I don't have any objection to the first three. I'd just like to see Section 4 dealt with separately, if it's... I believe it's clearly divisible and I would ask that the Clerk make that determination if he would agree, if the Chair would agree then.
PRESIDENT ROBAK: Senator Hall, are you referring to paragraph 4 on page 2 of the amendment?
SENATOR HALL: Yes.
PRESIDENT ROBAK: Yes?
SENATOR HALL: Yes.
PRESIDENT ROBAK: It is so ordered. Senator Hall, you have nothing further? Senator Hall, nothing further?
SENATOR HALL: No, Madam. President, I rise in support. I think there is just a question that some of the members have with regard to whether or not the amendment has been before us, and I got mine from the Clerk, and it might have been passed out earlier, but even in this mess that I have here, traditionally, I can't find it, and I don't have any objection to the first three portions. I'd just like more clarification on the last one, and I rise in support of the first half of this amendment as it has been divided. I don't think there is any problem at all with the amendment as it has been divided, at least the first three paragraphs, and would urge the body to support those as well. But I do have some questions about paragraph 4. That's why I asked for it to be divided.
PRESIDENT ROBAK: Senator Kristensen, do you wish to deal with the first sections first or the Section 4 first?
SENATOR KRISTENSEN: I would like to deal with the first sections, first, and then ... where is my light at in the order of speaking?
PRESIDENT ROBAK: Senator Kristensen, you are last right now, which is third up. Senator Bromm, Senator Hall, and Senator
3508
Kristensen.
SENATOR KRISTENSEN: Okay.
PRESIDENT ROBAK: In that order. Senator Bromm. We will now deal with the first three sections of the Kristensen amendment to LB 490. Senator Bromm.
SENATOR BROMM: I waive off on the amendment.
PRESIDENT ROBAK: Senator Hall. Senator Kristensen.
SENATOR KRISTENSEN: Thank you, Madam President, members. I apologize to the body, it was my impression, we had those photocopied this morning and I thought that I had them, that they had been passed out. They haven't, and so I am going to take a little extra time because I want you to have a chance. I thought they had been printed and, evidently, had not, and the page delivered them right there and they were sitting there. So you have the opportunity to talk to me about not having them passed out. It should be on your desks. If they are not here right now, they will be shortly. The first part of the amendment is the additional training, and is the staggering of terms. I don't think that ought to be a problem, I think staggering of terms is a good concept. And the other is that you should have some knowledge of complex industrial properties, and mass appraisals. The other part of this is that they are supposed to have continuing education in those areas so they keep up with training, and I think that's important as well. And I'd urge adoption of the first part of the amendment.
PRESIDENT ROBAK: Senator Hall.
SENATOR HALL: I rise in support of this portion of the amendment as well.
PRESIDENT ROBAK: Senator Pirsch.
SENATOR PIRSCH: Senator Kristensen, in their continuing education, they are talking about utility and railroad appraisal. This is for the commissioners, and is that part of their role? I thought in your flow chart that they were not involved with centrally assessed property, the property tax administrator wad. Would you respond?
3509
SENATOR KRISTENSEN: You are correct, Senator Pirsch. There is a... in the bill as drafted, there is one subsection that Senator Bromm pointed out, and that is the reason I like debate is that, obviously, he picked out a section that has got a slight inconsistency in there, there is, in the bill there is a small portion of railroad appeal that would come to the equalization commission. I am uncomfortable, as I begin to discuss that, I am uncomfortable with doing that. However, that is something I am going to look at between now and Select File, to clean that up, and that was what Senator Bromm and I had been discussing earlier. To the extent if you want to... I guess what I would like to do is if we take that part out, when we do the amendment to take it out, then take out that part of this amendment as well. Instead of doing two amendments, I could do it with one.
SENATOR PIRSCH: So you can make the decision at that time, but when they do the formal equalization plan, will they take the centrally assessed property into consideration at that time?
SENATOR KRISTENSEN: No.
SENATOR PIRSCH: That's strictly on residential property or...
SENATOR KRISTENSEN: Well, it will be on...
SENATOR PIRSCH: ... the county property.
SENATOR KRISTENSEN: Well, it will be on individually assessed property.
SENATOR PIRSCH: Yeah.
SENATOR KRISTENSEN: The centrally assessed property really doesn't, in terms of equalization, is still with...as long as we have a State Board of Equalization, that's where that decision is going to be made, and I don't think that the TERC, they are going to have enough problems dealing with all the other individual assessments.
SENATOR PIRSCH: So that never was a part of your plan, to tell the State Board of Equalization to include centrally assessed property, then?
SENATOR KRISTENSEN: Not all the centrally assessed property, that is correct?
3510
SENATOR PIRSCH: Oh, but some.
SENATOR KRISTENSEN: Well, if you are asking what my intent was, my intent was not to do that. There is this subsection that is in there that may be left over from my tax court. bill that I had, and as we talk about maybe that is where the drafting ... where I missed that subsection.
SENATOR PIRSCH: Okay.
SENATOR KRISTENSEN: So, I can tell you my basic intent is that the tax equalization commission should deal with those individual assessments as their area of expertise. And as long as we have a State Board of Equalization, they ought to deal with the centrally assessed property.
SENATOR PIRSCH: Okay, thank you.
PRESIDENT ROBAK: Thank you, Senator Pirsch. Senator Hall, do you wish to speak to the first three sections? Senator Bromm, do you wish to speak to the first three sections? Senator Jensen, to the first three sections of the Kristensen amendment.
SENATOR JENSEN: Thank you, Madam President, members of the ... who are we here ... body, to just, a couple of questions, Senator Kristensen.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR JENSEN: The terms are for six years. They can be reappointed, is that correct?
SENATOR KRISTENSEN: Yes, they can.
SENATOR JENSEN: And then I just had a question on the property tax administrator, he is also appointed by the Governor, is that correct?
SENATOR KRISTENSEN: Yes, she would be, right.
SENATOR JENSEN: Oh, okay.
3511
SENATOR KRISTENSEN: Or he, I am sorry, she.
SENATOR JENSEN: She or he, right. Thank you.
SENATOR KRISTENSEN: It will be a she, I hope.
SENATOR JENSEN: But that really replaces the present tax commissioner, is that correct?
SENATOR KRISTENSEN: No.
SENATOR JENSEN: This is a new position?
SENATOR KRISTENSEN: No. In the Department of Revenue, the head of the Department of Revenue is the tax commissioner.
SENATOR JENSEN: Right.
SENATOR KRISTENSEN: Under the tax commissioner currently, there is the Property Tax Division of which there is a head of that Property Tax Division. What 490 does is take the Property Tax Division and move it out of the Department of Revenue and make it an independent group. In effect, that is what the Department of Revenue is doing anyway now, but this would make them independent of that, so their information wouldn't be under the direct control of the tax commissioner, but would be under the control... so whoever the division head of the Property Tax Division now, in effect, would assume the duties of the property tax administrator, which would be appointed by the Governor. Is it a new appointment? Yes. Is it a new position? No.
SENATOR JENSEN: Okay. And then my last question is, can these people also then be fired for cause? Is that correct?
SENATOR KRISTENSEN: Yes, like any other...
SENATOR JENSEN: All right, thank you. Thank you, Madam President.
PRESIDENT ROBAK: Thank you, Senator Jensen. Any further discussion of the first three sections of the Kristensen amendment? Seeing none, Senator Kristensen, do you wish to close?
SENATOR KRISTENSEN: No, I would waive closing. I think we've
3512
adequately discussed, and I don't think there is any problem with these first three points. If people have a question about what is in it, please come talk to me and I will be glad to address those.
PRESIDENT ROBAK: Thank you, Senator Kristensen. The issue before you is the adoption of the first three sections of the Kristensen amendment to LB 490. All those in favor vote aye, all those opposed vote nay. Please record.
CLERK: 25 ayes, 0 nays, Madam President, on the motion to adopt the first portion of the Senator Kristensen's amendment.
PRESIDENT ROBAK: The first three sections of the Kristensen amendment are adopted. We turn now to a discussion of the fourth section of the Kristensen amendment. Senator Hall.
SENATOR HALL: Thank you, Madam President and members. Senator Kristensen, if we could, would you take my time right now and just kind of explain this section, if you would, please.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes. I certainly will try to do so, Senator Hall. As you know, the tax commission, or the TERC, will have the ability, as we have got it designed at this point, to allow for orderers to do certain things to correct inequities of equalization or evaluation, depending on what individual taxpayers brought it to them. They also, if they see a pattern, have the ability to correct the pattern within a county, to go back and do some remedial things, but they also have the ability to do prospective things. And instead of saying, cold turkey, look, this year you've got to do everything, and since you don't have everything done, we are going to lower everybody's values. Instead of that drastic measure, the bill is drafted so that there can be some prospective remedies; in other words, you get a year, or two, or three to improve generally your coefficient of dispersion, for example, or the price differential. The issue arose is what happens if a county tax official says I am not going to do this, I am not going to do this? The county has the remedy to go to the court of appeals to object to the ruling or appeal the ruling of the TERC, but the individual assessment official is the one who has the ultimate authority of going back and actually fixing the things on the tax rolls. The remedy that we looked at we borrowed from the remedy that the State
3513
Board of Equalization has, but the tax commissioner has the ability to lift the certificate of the local assessor if they fail to comply with their orders. Now if I were going to redraw this, I would probably use Section 77-425 and put in some notice, due process sorts of things because I suppose you can't lift that certificate without some due process anyway and you probably have to have some cause. So if you'd ask me., would 1 be willing to redraw it to put in some due process? Yes, I absolutely would. And is that a fair point to raise? Yeah, it is, and if the body chooses, gee, I can't withdraw at this point. We are going to have to vote it down. I'd probably tell the body go ahead and vote this section down and let me redraw it. if... if... I guess I'd listen for some discussion but judging from the mood of the body, they might want to move on today and I'd be willing, with some discussion with you, to do that. I would yield back my time to see if you had other questions.
SENATOR HALL: Thank you. Thank you, Madam President and members. Thank you, Senator Kristensen. I appreciate that. That would be my, I guess if I had a choice in the effort right now on this portion because I ... I mean I can understand the ability possibly to look at suspension. I don't think that actually we could even... I am not sure that we could allow for this entity to remove someone who had been elected at the local level without at a minimum having some appeal process, some due process that is made available, because my next question was going to be, as you well knew, it was going to be where is the appeal process for this individual assessment official. And in some cases, it may be the elected official; in other cases, it may be just a county employee who is acting in their capacity as an assessment official. So I would like to see us ...
PRESIDENT ROBAK: One minute.
SENATOR HALL: ... strike this portion or vote it down at this point for purposes of coming back on Select File with some kind of a format where possible, and I would like to see it limited to suspension. I don't really want to see a removal. I am thinking of the case, for example, Senator Kristensen, where you have an individual who is an employee, who is, basically, following orders. They are the individual who is not complying with the order of the commission, and yet the commission would have the ability to remove that individual who happens to be following their boss's orders. I think we ought to vote this
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down at this time, rework it, and bring back some workable solution between now and Select File. Thank you.
PRESIDENT ROBAK: Thank you, Senator Hall. Senator Bromm.
SENATOR BROMM: Thank you, Madam President. I, at this point, would concur with Senator Hall. I think maybe it would be best to not adopt this section of AM1294. I ... Senator Kristensen, we did approve the Standing Committee amendments, did we not? Could I ... would you yield to a question in that respect?
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes, we did, Senator. We approved those.
SENATOR BROMM: Okay, and would you yield to another question or two?
SENATOR KRISTENSEN: Absolutely, sure.
SENATOR BROMM: In those standing committee amendments, we give the commission the power to issue writs of mandamus compelling compliance with its orders. Is that correct?
SENATOR KRISTENSEN: Yes.
SENATOR BROMM: Okay. Now without further review and just at first blush, I would say that, you know, the commission does have the authority, if this is what we're doing, and I may want to discuss that a little bit more later, but to issue what are called writs of mandamus, which actually requires...compels somebody to do something, and if they have the power, apparently, you know, that would be equal to the power of a court, which a person would have to comply with. And I think that merits further discussion, but, be that as it may, I think this section of AM1294 ought to not be adopted until we have a fuller discussion about whether we want to do that. Lots of times the county official, even though they are elected, and I am thinking of the official rather than an underling, like Senator Hall was talking about, is also being persuaded strongly by the county board that they ... that that approves their budget, and they can be in a real bind on this sort of thing. The tax commission might say you will have a reappraisal and you will have it done by September 1, and the county board might say, hey, we are not going to approve the funds for that. County
3515
official, how are they going to do it, you know, and are they subject to removal? I think that there. is a lot more thought and discussion as this point. So I guess I would urge not to adopt this section of the amendment. Thank you,. Madam President.
PRESIDENT ROBAK: Thank you, Senator Bromm. Senator Elmer.
SENATOR ELMER: Thank you, Madam President. Just a quick little discussion with Senator Kristensen, if I may.
SENATOR KRISTENSEN: Yes.
SENATOR ELMER: Senator Kristensen, I understand this commission that is being set up to be somewhat similar to a panel of judges on tax matters. Is that correct?
SENATOR KRISTENSEN: Well, last year's version was a tax court, in effect. This year's version is more an appeal, an administrative appeal process for valuation and equalization purposes. They don't have all the ... they don't have all the powers of a court, obviously.
SENATOR ELMER: But they would have, as far as this portion of the amendment we are currently discussing...
SENATOR KRISTENSEN: Oh, right, yes.
SENATOR ELMER: ... or the writ of mandamus and those types of things.
SENATOR KRISTENSEN: So, yes.
SENATOR ELMER: Taking that into consideration, if you had a county official out there that just bowed his neck and says, you go to the devil, I am not going to do what you ask me to do, I can see that there needs to be some sort of a hammer, such as this portion of the amendment is. If it was not there and we did not have this hammer, how could the commission, how could the commission enforce its order if they did not have this ability in some way?
SENATOR KRISTENSEN: The committee amendments did give a writ of mandamus, which is the ability to compel to do things. What this is is more the recalcitrant person who thumbs their nose
3516
and says, ah, I am not going to do it and come get me. Because there, if you're going to have to take legal procedures, it's going to take awhile. The ability to suspend somebody if something bad is going on is there. The tax commissioner has always had this power.
SENATOR ELMER: Yeah, I understand that but...
SENATOR KRISTENSEN: Yeah.
SENATOR ELMER: ... ultimately, if we don't have something like this, even if they send out this mandamus, and the official says, heck, you can't do anything to me, is that the case, can they, if they issue the mandamus?
SENATOR KRISTENSEN: Yes, they can still, because the mandamus, yes, they will still be in business and operating.
SENATOR ELMER: Okay.
SENATOR KRISTENSEN: Yeah. Senator Elmer, with your discussion, of course, I've got my light on and I don't know where I am at. and I don't want to take your time, but I think I could draw it better than the way I have it.
SENATOR ELMER: Okay. Thank you very much, Madam President.
PRESIDENT ROBAK: Thank you, Senator Elmer. Senator Kristensen, your light is next.
SENATOR KRISTENSEN: Madam President, thank you. Are there other lights on?
PRESIDENT ROBAK: There is one further light, Senator. Senator Lynch.
SENATOR KRISTENSEN: Okay, and, Senator Lynch, I will be glad to answer your questions too. I would hope that the body would... for those of you who are paying attention procedurally, obviously, with the way our rules are, I can't withdraw this portion because the amendment has been divided, and so I am asking you to vote this section down. I will be voting against my second portion of the amendment, and I will do that so we can get on with this amendment. I will make attempts to redraw that so there are some more procedural safeguards, and I will try to
3517
follow closer what the tax commissioner has. But so we are plain, I am going to vote no on my section of the remaining amendment and I would hope you would do the same thing. Senator Lynch, you can have my time, plus if you have other questions, I'd be glad to-do it.
PRESIDENT ROBAK: Senator Lynch, you have four minutes.
SENATOR LYNCH: Madam Chairman and members, I hope I won't need four minutes, and if Senator Kristensen could just listen and maybe* clarify my concerns, that would be fine. I don't know if the current and proposed tax calendar in the blue packet that we got is part of your fourth... is part of the fourth part of the amendment. I don't think it is, is it?
SENATOR KRISTENSEN: No, it is not.
SENATOR LYNCH: It is part of one of the earlier amendments, I assume.
SENATOR KRISTENSEN: It, yes, it is part of the... actually, it is a combination of the committee amendment and the green copy of the bill.
SENATOR LYNCH: Okay, since it really doesn't apply to the amendment now, I would like to ask a question, and I apologize for being late, but...
SENATOR KRISTENSEN: Oh, that is fine, sure.
SENATOR LYNCH: ... but in that part it mentioned something about the commission could adjust valuations within a class or subclass. Now we've mentioned a number of times, and since I was Chairman of a Board of Equalization for about 20 years or so, inequities can exist within a county, especially like in Douglas County, within a class. Just take residential, if, in fact, one part of town is at 55 percent of value and another one is at 106, 110, and people would complain as a class that the valuations are inequitable for tax purposes, could the commission adjust those values within that class in that subdivision or in that part of town as compared to the other?
SENATOR KRISTENSEN: They could do a couple of things. They could ... as the individual taxpayer comes through, they could change their valuation to address it, or they could tell the
3518
county you go back and revalue that section of town to solve that problem.
SENATOR LYNCH: In other words, they couldn't adjust the value for tax purposes unless a complaint was filed, do I understand that, for anyone?
SENATOR KRISTENSEN: Well, they would have the ability to adjust the individual complainants, and if there is a problem, they can then go back and provide a remedial program or an order and say, county, you've got a problem here, here, and here, this is where you need to fix it.
SENATOR LYNCH: Yeah, because sometimes the arguments are used, as assessors; most I think do a great job and try to do a good job.
SENATOR KRISTENSEN: Absolutely.
SENATOR LYNCH: Sometimes they claim they don't have enough staff to do it right, but then sometimes it appears even if they have staff, it still isn't done right, and I can see where, if this is the case, maybe a commission could avoid the need of A complete and total countywide reappraisal. Is that the intention of this?
SENATOR KRISTENSEN: Well, that's ... you know, they've get that range of options. That is the reason I also want the county to have the ability to appeal, too, is that if the board comes in and says you have got to redo the whole county, and they are saying, well, you know the real problem is just this area, that you ought to be able to ... the county ought to be able to say, look, you don't need to use the atom bomb ...
PRESIDENT ROBAK: One minute.
SENATOR KRISTENSEN: ... for a sniper, and ...
SENATOR LYNCH: I was going to say the last time we ... well, I remember in 1968 when we did the reappraisal, we had 15,000 complaints that we had to manage, the five of us on the county board at the time, within 45 days, and now there is only 30, and, in fact, it cost us about $12 million. I can imagine what a countywide reappraisal in Douglas County would cost now, and I didn't know for sure if you intended with this bill to help
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overcome some of those kinds of problems with this commission, or keep them from getting any worse because that is the most serious problem we have in a county like Douglas.
SENATOR KRISTENSEN: Yes, Senator, and to provide the taxpayer with an easier system, instead of going to the district court to fight that battle, that they could do it in this commission, so it is easier for the taxpayer to get some redress instead of being forced -6 spend lots of money going through the court system.
PRESIDENT ROBAK: Thank you, Senator Lynch. Is there any further discussion on Section 4 of the Kristensen amendment? Seeing none, Senator Kristensen, do you wish to close?
SENATOR KRISTENSEN: Yes, Madam President, I do. I would hope the body would vote against this section. Please vote red. I plan to do so, and will rewrite the amendment. Because of our rules, I cannot withdraw this. You need to vote no. Thank you.
PRESIDENT ROBAK: Thank you, Senator Kristensen. The question before you is the adoption of Section 4 of the Kristensen amendment to LB 490. All those in favor vote aye, all those opposed vote nay. Please record.
CLERK: 0 ayes, 25 nays, Madam President, on the adoption of the second portion of the amendment.
PRESIDENT ROBAK: Section 4 of the Kristensen amendment fails. We return to a discussion of LB, 470, Senator Hall, 490, excuse me.
SENATOR HALL: Thank you, Madam President, members. Senator Kristensen, could I ask you another question? It deals with the new Section 18 that was adopted as a portion of the committee amendments.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR HALL: And I apologize again, I was not here in time to deal with these prior to their adoption. We talk about, and this goes to part of what Senator Lynch was asking you with regard to the amendment that we just voted down, but I think he
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was more interested in the bill, but it says that the commission may order a reappraisal of property within a county, and area within a county, or classes or subclasses within a county. What are we ... we are talking about allowing the commission, in effect, as you well know in Douglas County, for example, we've had some problems with regard to appraisal as it relates to our valuation, as it relates to residential property. The commission would only have this ability where there is a contested case?
SENATOR KRISTENSEN: There would have to be a contested case, yes, in front of the commission.
SENATOR HALL: So one case, one piece of property could trigger an entire reappraisal for all residential property?
SENATOR KRISTENSEN: Well, that's the mechanism that you get there'. Obviously, you have other parts of the bill that allow the commission to take into account the conditions that are around there. For example, I think it would be impractical if you had one case that would trigger a countywide because, obviously, it wouldn't. That'd be the sniper in the war, sort of thing. But if you've got... if you've got 10,000, such as Senator Vrtiska was alluding to, obviously, you have got some major problems. This provides for or range. The reason I put in there, or an area within the county...
SENATOR HALL: That was my next question, what does an area within a county mean?
SENATOR KRISTENSEN: That could be a neighborhood because, you know, and I don't profess to know a whole lot about Omaha, other than there is a whole bunch of wonderful people there, but a neighborhood, because of growth, may be out of whack because it is new, and because appraisals hadn't been done, that you could go in... I didn't want the only remedy to be countywide appraisal because that is just too expensive and nobody would ever do that. But maybe you have got a neighborhood or a growth area that needs reappraisal, or maybe you have an older neighborhood that nobody has ever reappraised, but all the new properties had been reappraised, it could work both ways.
SENATOR HALL: What example would justify an entire class of property being... in a county being reappraised?
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March 29, 3.995
SENATOR KRISTENSEN: If you had... let's take, let's take Kearney County, for example.
SENATOR HALL: Okay.
SENATOR KRISTENSEN: There are... there is limited commercial property in that county. Most of it is either going to be ag land or going to be residential, and because of few sales, because of inattention, or because they really didn't care, they never did anything, reappraisals, to commercial property. And if you start to look at sales assessment ratios, you have got one or two sales, and all of a sudden you see that commercial property is valued at 125 percent of market when everybody else is down at 80, you could order that reappraisal of that class of property, and in the smaller counties that tends to be true. Commercial property receives less attention because there's just less sales.
SENATOR HALL: I can understand that in the case of commercial property in an example like Kearney County. Can you think of an example where residential in a county like Douglas,....
PRESIDENT ROBAK: One minute.
SENATOR HALL: ... where there would be justification for ... with everything else that's in the bill regarding prospective orders and things along those lines, where an entire class, such as the residential class in Douglas or in Lancaster or in Sarpy, which would be a tremendous expense, as Senator Lynch attested to, and as we well know, what would trigger that type of a reappraisal? Because, I mean, I can understand the specific and the smaller commercial or an industrial class, or the centrally assessed class, but when we are talking about the entire class of residential property in a very heavily residential county, we would allow for this commission to, I guess, ask for or demand, require a total reappraisal which would have a tremendous cost to that county. And I guess I am just looking for the reason in that specific case.
PRESIDENT ROBAK: Time. Senator Hall, your light is next.
SENATOR HALL: If ... thank you, Madam President and members. Senator Kristensen, if I can just finish up here...
SENATOR KRISTENSEN: Sure.
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SENATOR HALL: ... and I'll give you the time to respond, because I can understand smaller classes, the example that you gave. In the case of a residential county, such as Douglas, what would justify that type of reappraisal being required by the commission?
SENATOR KRISTENSEN: And I'm thinking off the top of my head, but the best example I can give to you is let's just say that you've got a class of residential property that has a huge coefficient of dispersion. In other words, there is a wide range of those things, that would indicate to me not that one or two pieces of property are wrong classified or that an individual piece is out of whack; that would indicate to me that the whole system there has some problems, that whole range. So if I have got a wide range of coefficient of dispersion, that would be an indica... I am not saying this is an automatic trigger because legally it is not, but that would be one of those areas where something is wrong there because there is such a wide range of things.
SENATOR HALL: But wouldn't... shouldn't there be, in that case, some kind of trigger built into this, some kind of trigger mechanism, so that it is not possibly for other reasons that the reappraisal was required, because I am thinking that when a cost is going to be borne for that reappraisal by the county and by the residents of that county, the property taxpayers there, in the case of that example with regard to the tremendous cost that would be associated with a class of property similar to the residential class in Douglas County, should there not be some kind of trigger, maybe its, you know, the wide coefficient of dispersion with regard to, you know, the residential property within the class that we're dealing with, but as I read the bill, and I think as you stated, there is no trigger for this other than the contested case. Is that not correct?
SENATOR KRISTENSEN: Yes, that is correct.
SENATOR HALL: Is there... I mean, are you willing to look at that for purposes of Select File amendment because that is the... I don't have a problem with a specific piece of property, an area within a county, such as a neighborhood, a subdivision, a subclass of property, possibly, but when we are talking about counties that have a ... or that are predominately of one class or another and the cost is going to be borne by that county, I
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would think that there would need to be some kind of a trigger other than a contested case to allow the commission the ability to ask for an entire reappraisal of that class? Are you open to looking at that between now and Select File?
SENATOR KRISTENSEN: Yes, and given ... given to you, here's my philosophy of the whole thing is that you want a range of remedies. If the commission is going to have the obligation to try to improve equalization, they need that range of responsibility to remedy the inequities, and, obviously, class reappraisal may be one of those. I guess I look at it similar to, and it is not a good analogy but it is the easiest one for people to understand, it's the range of a criminal penalty, from nothing at all to something that is very severe, and that you give that discretion in there. To the extent of adding some guidance for that discretion, I don't have a problem with that, and probably would be willing to look at that. I am a little... I am just stumped because I am not sure I know the exact trigger point, you know, for let's say a coefficient of dispersion number. I am just ill-equipped to do that and it probably wouldn't make good sense in statute anyway, but...
PRESIDENT ROBAK: One minute.
SENATOR KRISTENSEN: ... to the extent that you need some guidance or could give some, yeah, guidance as to what that remedy would be, and, in effect, what you are talking about is proportionality of a remedy, sure, that is legitimate and that is a reasonable request.
SENATOR HALL: And the reason I asked that is because I don't disagree with the intent, that I think the range of remedies is appropriate, but they ... the penalty also should fit the crime, and I guess, you know,...
SENATOR KRISTENSEN: Right.
SENATOR HALL: . . we Ire talking about a contested case here and that's a very broad penalty. You know, it's the death penalty, if you will, for purposes of the property taxpayers within that county for jaywalking, depending on what the contested case is, and I would just think that there needs to be some standard by which the county or the commission has to look at before they go to that entire class being reappraised, and I will work with you on it, and I will try to see if there isn't some...
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PRESIDENT ROBAK: Time. Senator Hall, your light is next.
SENATOR HALL: Thank you, Madam President and members. Senator Kristensen, again, I will try to see if there isn't some trigger mechanism that would make sense, that would work *or purposes 'of that which would be the entire class, because that is the portion of this section, this new Section 18, that I guess troubles me the most because I can see in many counties where the cost could be extremely high. And based on everything else that we are trying to do, not only in this proposal, but in other pieces of legislation, and laws that are on the books today, hopefully, we will never be in that kind of a situation with regard to our appraisal practices, but it has been a long, arduous journey to get the counties up to speed and have as uniform an appraisal process as they currently do, but there is still a long way to go. With that, I would, you know, agree to, I guess, disagree at this point with Senator Kristensen on this section, but am more than willing to work with him between now and Select File to see if there isn't something that could be built into the legislation to ensure that, before an entire class of property within a county is set to be reappraised, there has got to be some kind of threshold, trigger mechanism, whatever, built into the statutes, and I would pledge to work with him on that issue. Thank you, Madam President. Thank you, Senator Kristensen.
PRESIDENT ROBAK: Thank you, Senator Hall. Is there any further discussion on the advancement of LB 490? Seeing none, Senator Kristensen, to close.
SENATOR KRISTENSEN: Thank you, Madam President, members of the Legislature. I am fairly impressed with the body today because property taxes and equalization, obviously, are not the most exciting topics. They can border on the dry because they get complex, but I will tell you when you go back to talk to your constituents at the end of the session, and they say, well, what did you do for us this year, or some of them will phrase it, what lid you do to us this year, well, one of the things that this body is going to attempt to look at this year is property taxation. And everybody is only going to look at the bottom line, but good taxation requires that the system be fundamentally fair, and I suggest to you that equalization is the cornerstone of making sure its fair. It is not fair for somebody in the neighborhood to have their property valued at
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90 percent or 95 percent and the other part of town to be at 50 percent, and then the State Board of Equalization come in and raise everybody by 10 percent. Now that 10 percent raise may get somebody at the bottom and make them pay a little more but it is unfair to the individual that was at the top end, and you need for a system of fairness to work that you can come up, as an individual taxpayer, be able to have an easy way, a quicker way, and I believe a better way of airing their disputes. That is what the Tax Equalization and Review Commission does. People who say that debate doesn't make a difference, today is a good example of where it does. There is at least three different areas that, because of debate today, because of people reading it, has helped me find some areas that I want to change, and to that extent, it has been very instructive for me. I know that the body has some patience to deal with this. I would hope that we'd advance LB 490 onto Select File. I am going to take seriously Senator Bromm, Senator Pirsch, Senator Vrtiska, Senator Hall, even Senator Robinson, some, even Senator Robinson, and I think Senator Lynch has got some philosophic question there that is important that has got to at least be addressed about when are you going to do that, and some proportionality of the remedy for doing that. I don't think anybody has an objection that we need to work and achieve better equalization. If you are going to distribute over 300 million dollars a year in state aid to schools, and that it's supposed to be equitably and fairly done, the entire state needs to have equalization, and another word for that is "fairness." If you don't have that fairness, the system will begin to be undermined even further. People will not trust that sort of a system, and it will even deteriorate worse. So with that, I would urge the adoption and the advancement to E & R Initial of LB 490, and I, again, thank you for your patience and wonderful questions.
PRESIDENT ROBAK: Thank you, Senator Kristensen. The question before you is the advancement of LB 490. All those in favor vote aye, all those opposed vote nay. Have you all voted? Senator Kristensen.
SENATOR KRISTENSEN: Madam President, I would ask for a call of the house, please.
PRESIDENT ROBAK: There has been a request for a call of the house. All those in favor vote aye, all those opposed vote nay. Please record.
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ASSISTANT CLERK: 17 ayes, 0 nays to go under call.
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Madam President, I would allow for the use of call-in votes providing they understand this is for the advancement of LB 490.
PRESIDENT ROBAK: Thank you, Senator. The house is under call. Will senators please return to their seats. Will all unauthorized personnel please leave the floor, the house is under call. Senators, please check in. We are accepting call-in votes. The question before you is the advancement of LB 490.
ASSISTANT CLERK: Senator Wickersham voting yes. Senator Elmer voting yes. Senator Stuhr voting yes.
PRESIDENT ROBAK: Please record.
ASSISTANT CLERK: 26 ayes, 1 nay on the motion to advance the bill, Madam President.
PRESIDENT ROBAK: LB 490 advances. The Chair recognizes Senator Withem.
SPEAKER WITHEM: Yes, Madam President, members of the body, just to indicate tomorrow is consent calendar day and we will be working through the lunch hour. The survey that we've taken appears to be coming back fairly strongly that that is, at least for long weekends, it is almost unanimous preference that we work through the noonhour. So we will be doing that. There are a lot of bills on that consent calendar. I would urge you to take a look at those. If there are those that you think the controversy sufficiently warrants their not being on the agenda, please, if you would, try to get those three-senator notes to my office early in the morning, so we won't have to take time on the floor on those bills. Another comment I guess I would make, I just visited with Senator Jones, and I realize, I was in error and just want to make sure everybody realizes that. I had recalled visiting with Senator Jones about other things about the bill this morning and I thought I had indicated to him that, because LB 168 had taken a lot of time on the floor, that we could probably use the time on other bills, and attempt to discuss things off the floor on 168. 1 had not specifically had
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