Debate Transcripts
LB 1114 (1996)
General File
March 21, 1996
...vote aye, opposed vote nay.: Record.
CLERK: 31 ayes, 0 nays, Mr. President, on the advancement of LR 292.
SPEAKER WITHEM: The bill (sic) advances. Mr. Clerk, do you have any items for the record?
CLERK: Mr. President, Senator Robinson would like to print amendments to LB 1322; Senator Withem to LB 1391. That's all that I have. (Seepages 1401-02 of the Legislative Journal.)
SPEAKER WITHEM: Thank you. Move on to LB 1114. Mr. Clerk.
CLERK: Mr. President, 1114 was a bill originally introduced by Senator Warner. (Read title.) The bill was introduced on January 8 of this year. At that time, it was referred to the Revenue Committee. The bill was advanced to General File. There are committee amendments pending, Mr. President. (See the Legislative Journal.)
SPEAKER WITHEM: Senator Warner, you are recognized to open on the committee amendments.
SENATOR WARNER: Mr. President, members of the Legislature, LB 1114 might be described as the bill, the proposal that would reflect where we are trying to go. Where we are trying to go is, by setting some levy limitations on various' governmental subdivisions, that in that process we will see a review of government operations generally, hopefully looking for more cost-effective ways to do things, restructuring local governments, perhaps, a variety of things that have been suggested in our discussion on the bills so far. The limitations that are in the bill relative to the types of subdivisions, this -is by statute again as opposed to being in the constitution, so that there is opportunities to make adjustments. The bill does not take effect till fiscal year '98-99, the committee amendment does not take effect till then. And as the legislation is outlined, it would put a limitation on school districts, multitype school districts systems. K-12 systems, the maximum levy would be $1.10, and that would begin in January of 1902 (sic), it- could drop to $1. Community colleges would be at 8 cents through the year 2001 and then would drop to 4 cents. Natural Resource Districts remain
13494
at ... would be at 4.5 cents. Educational Service Units at 1.5. Municipalities would be at 45 cents with an additional 5 cents authorization that could be used for jointly financed activities, which would be both for state and local or for between counties or between cities, or a combination. SIDs would be at the same level. Counties would be, with their constitutional requirement now, which many believe is or constitutionally could not be reduced at 50 cents, but within that 50 cents, 5 cents of it would have to be utilized for cooperative efforts, and then 15 cents of it would be available to a variety of miscellaneous districts, which would have to go to the county to get their funding and the county board would have the authority, the overall authority for that. In all cases, the limitations here, if they are inadequate, the local governmental subdivision could request the registered voters to approve an increase with a two-thirds vote of the majority vote of the governing board to be given to... or by a petition signed by 5 percent of the registered voters, and then they can set a levy limit at a higher rate for a period of at least five years that would remain in their base, at the end of that time, if they chose not to continue it. In addition, there is an allowance for those districts which are those miscellaneous districts, small districts, such as townships, where in effect at an annual meeting of the residents of that governmental subdivision are required to have at least 10 percent of the people who are residents of the district, who are registered voters and residents of the district in attendance, they could then set a levy that would be higher than... than what would be authorized here by the county board to do. But, again, I would indicate that this is a goal, is in effect two years to take effect., In that time, it would be presumed through LB 299 that those cost-effective things that could be done would be implemented or be in the process of being implemented, and then the Legislature, at that point, would have to look at whether or not the savings was sufficient that no additional revenue was required, or else they would have to seek alternative sources of revenue to supplement the shortfall, in the event that that was the end result.. That's generally what the bill does and I would like to relinquish the balance of my time to the Vice Chairman, Senator Coordsen.
SPEAKER WITHEM: Senator Coordsen.
SENATOR COORDSEN: Thank you , Mr. Speaker. Thank you, Senator
13495
Warner. Senator Warner covered the details of this proposal. I think I will spend just the several minutes that are left in the opening on the philosophy of the proposal. LB 1114 is not the end of a process but the beginning of a process. You Will note that, as we spoke on several other issues, that one characteristic that seems to be overlooked by many in local government who had looked at 1114, is that it returns almost unlimited, I probably could say, unlimited authority to the citizens of Nebraska in deciding how much they tax themselves. It does create a series of levy limits on the boards of entities that have the authority to levy property taxes, and that is true. But if we are ever to come to understand, whether within localities, within school districts, communities, counties, fire departments, all of those other things that do have the opportunity under current law to levy a property tax, we must establish a system where there is a well-defined acknowledgement and support by the electorate that they do believe that the programs that they are paying for are programs that they want, and are willing to promote these programs. Many people would find this proposal fearsome, and certainly it is. The people who are familiar with the system as it currently exists, where within whatever parameters are established in constitution or law, the elected bodies have full authority to do whatever it is they want, and the only control, and it's a good control, but the only control is the voters electing the members of those bodies. I would share with you that I spent a number of years as a secretary of a large Class I school system. It was one of the largest by area and valuation school systems in our part of the country at one point in time before we ran out of children and then merged with adjoining districts. But in that system, year after year, we had to have an annual meeting, and we had a large attendance from the people who were paying the bills, and there was not a year when they didn't recognize the need for an increase in the teacher's salary. There was not a year, when the people who were paying the bills, didn't understand that there needed to be new textbooks and teaching supplies purchased. When there needed to be a new school bus, they bought a new school bus. And at that annual meeting, upon the recommendation, and they made modifications from time to time, usually...
.SENATOR WILL PRESIDING
SENATOR WILL: One minute.
13496
SENATOR COORDSEN: ... on the spending side, usually on the spending side of what the board had recommended, they voted to adopt the budget for the following year, and also certified to the county clerk the levy that was to be placed upon themselves. It's a system that many people aren't familiar with anymore, but the town hall system, folks, will work. Given the opportunity, we can cut through a lot of the mistrust that currently exists between even the smallest units of local government and the people that they are providing services for. I think 1114 will be subjected, I am sure, to many amendments because it is a new departure in a new way that's contrary to many, many decades of concentration of power. Fitted, fitting with the other proposals within the package that...
SENATOR WILL: Time.
SENATOR COORDSEN: ... came out of Revenue Committee, it will work. Thank you, Mr. Speaker.
SENATOR WILL: Thank you, Senator Coordsen. Mr. Clerk, do we have amendments to the committee amendments?
CLERK: Mr. President, I do. The first amendment to the committee amendment is by Senator Maurstad. (See AM3836 found on page 1275 of the Legislative Journal.)
SENATOR WILL: Senator Maurstad, you're I recognized to open on your amendment.
SENATOR MAURSTAD: Thank you, Mr. President. This is AM3836 to the committee amendment, which reduces the levy limit for cities and villages...the current committee amendment reduces the limits for cities and villages to 45 cents per $100 of valuation, plus 5 cents for financing agreements under the Interlocal Cooperation Act. Under existing law, the levy limit for cities of the second class and villages, those municipalities with a population of under 5,000, is $1.05. The levy limit for cities of the first class, cities with a population of between 5,000 and 100,000 is 87.5 cents. Because of this, LB 1114 will have the greatest effect on the smaller municipalities, the smaller towns and villages in our state. The amendment that I bring would reduce the levy limits for municipalities but retain the steps for different sizes of
13497
municipalities. As we currently have different steps on the levy limits for cities, my proposal would limit Omaha and Lincoln to 45 cents per $100 of valuation, plus the 5 cents. for interlocal agreements. Cities of the first class would be 60 cents per $100 of valuation, plus 5 cents for interlocal agreements. Cities of the second class and villages would be 75 cents per $100 of valuation, plus 5 cents for interlocal agreements. The amendment significantly lowers the existing levy limits of 87.5 cents and $1.05 for those first class cities, villages, and towns, but retains the distinction among the various classes of municipalities. I think that's been good public policy and I think we should retain, we should retain that. This amendment would lessen the effect on smaller communities, who are generally hurt the most by the levy reduction. They are also generally more reliant on property taxes. The change will reduce the reliance on state aid, and this is important I believe in the potential ... in light of the potential that state funds, because of federal actions, because of other burdens that will be placed upon the state, might not be as available in the future as what they are now, as limited even as they are now. Property taxes are a steady reliable source of revenue for funding basic municipal services. I think a lot of times many of the services that the communities provide at the local level are unfortunately taken for granted; good streets, water systems, electric utility systems, solid waste management, police and fire protection, parks, recreation, those things that provide a measure of quality of life to our communities, planning and zoning, housing. And others that have served in local government could add to the list and you could ... you could go on. Suffice it to say that many villages and towns, small communities, provide a wide range, as wide a range of services, as the other political subdivisions. Now I recognize that one of the reasons behind bringing the levy down on all municipalities to 45 cents is because of the local option municipal sales tax that many of the larger communities have exercised. In that extent, quite frankly, this doesn't affect the largest community in my district because their current levy is about 32 cents, albeit because of the sales tax. However, many of the smaller communities don't have that ability, don't have the sales tax base to provide the type of relief that some of the larger communities can. And so what I'm saying is that the plan that we go to needs to be workable. It needs to allow, especially those smaller communities, the ability to make the necessary adjustments to bring their levies down, to go from the
13498
current existing levy of $1.05 down to 75 cents, still a significant reduction; from 87.5 cents to 60 cents for the first class cities, still a significant reduction in property taxes. They're still going to have to make adjustments. There is going to have to be many communities around the state that will have to look at the options that we're providing them to merge, consolidate, joint delivery of services. Many counties have done that, and cities have done that already, that have joint police and fire agreements, have joint solid waste management agreements, and joint jail facilities. So it's not like there hasn't been an attempt by some and successful attempts to already try to deliver effective efficient government to their constituents by merging or consolidating or providing the. joint delivery of services. I recognize that. But I think it's .important that we don't tie one arm behind the backs of those smaller towns and villages by taking a reduction of $1.05 down to 45 cents. That's more than just onerous. That's more than just tough medicine to swallow. For many, it will be very ... or next to impossible to accomplish. Now I recognize that there is going to be a change in the equalization. Assuming that that passes, that you are talking about $5 million of General Fund in addition to the insurance tax, is that $5 million going to be available? After it gets put in place, will this source of money be the first place that the state looks when it gets into a little financial difficulty? Those are some of the uncertainties that are out there. I am certainly not, by bringing this amendment to the floor, saying that cities, towns, and villages are special or deserve preferential treatment relative to the other political subdivisions that are affected by LB 1114. What I am saying is I believe, based on my background, my experience, that this would cause a great deal of difficulty past the point that I think that the members would want to impose upon this class of political subdivisions I assume there will be a number of questions. I will try my best to respond to them. I think this is definitely a reasonable approach, and one that I hope you will look at carefully and adopt to the committee amendment. Thank you, Mr. President.
SENATOR WILL: Thank you, Senator Maurstad. You've heard the opening on the Maurstad amendment. Senator Coordsen.
SENATOR COORDSEN: Thank you, Mr. President, members of the body. Why not a dollar? Or two dollars? The point that is being missed with the Maurstad amendment is the core of 1114,
13499
and that is again I would repeat, that the lid is on the governing bodies, not upon the people. There is no magic in 87 cents, there is no magic in 45 plus S. What we've created in the Revenue Committee, with the introduction of this bill, is a new concept where there is a definable source of resources that can be done without community approval, but an unlimited, an unlimited amount that can be done with the citizens' approval. A village of 200 people, with 150 registered voters would not have to have very many people at a town hall meeting once a year to set any levy that they want above the 45 and 5. The Maurstad amendment proposes to change those amend...and I don't find fault with Senator Maurstad for bringing this amendment, but as you think about it, remember that the fight we have, the battle we're up against is it's almost a complete change in concept of how the funding for local government services, not just cities and villages, not just counties and school districts, but all local government is funded, and bringing back into that mix to a greater extent than is available at voting for the town boards, and then having recall elections, or whatever. But we're giving back to the people who live in the cities, whatever they are, the opportunity to have a greater degree of control, and I do not believe that there is a lesser opportunity for the providing for and the paying for of the essential services and the nice services, and the things we like, whether that's a park or a swimming pool or a whatever, you fill it in with what you like about your community, the people who live in that community are going to pay for it. This bill in its form it's introduced gives them the opportunity to have a voice in making that decision. It can be done by a majority vote of the elected board to put it on a ballot, can be done by an initiative petition of 5 percent of the registered voters in the town. In most of the smaller communities, that doesn't amount to very many people even needed. It's a total departure from the restrictions we put in place and one that takes some amount of thought. I-had to hassle with this a long time before I came to see the vision in it and how it would work. And as you debate the Maurstad amendment, which I don't support, but as we debate the amendment, remember what the underlying premise of 1114 is.. It's not any kind of a cap. No cap. No limit. No restriction...
SENATOR WILL: One minute.
SENATOR COORDSEN: ... (inaudible) the people that live in a
13500
town, in a county, in a school district want to tax themselves to spend, but rather it's a basic restriction on the elected boards for basic services, and beyond that, the people can do what they want. Thank you, Mr. President.
SENATOR WILL: Thank you, Senator Coordsen. Before we proceed with the next speaker, the Chair would like to recognize some guests of Senator Wickersham. In the north balcony, we have 10 eighth graders from Harrison Grade School in Harrison, Nebraska, and their teacher. If you would please rise and be recognized by the Legislature. Thank you for visiting. The next speaker is Senator Kristensen, followed by Senators Schellpeper, Bromm, Warner, Cudaback, Klein, and Maurstad.
SENATOR KRISTENSEN: Thank you, Mr. President and members of the Legislature. There is really no joy in the Revenue Committee in putting out things that are painful to do. There is not a whole lot of joy in looking at cities and counties and school districts and saying, yes, we want to support you to do a good job, but. And there's not a whole lot of joy in doing spending limitations because it is hard to do. It isn't fun to do because it requires you to go back and talk to your friends and neighbors, who are on those school boards, saying you do a good job, but it's those other communities that aren't doing a good job, or you should get the mail that I get. If you believe that property taxation is a problem in the state of Nebraska, how are you going to solve the problem? First of all, you've got to identify the problem. There appears to be two problems. One of them is the total amount of property taxes paid. In other words, everybody says my property tax is too high. The other problem comes from the areas and the ag areas that look, from out in the rural area and look into town, within the same county, within the same school district, and say, it's unfair. I pay too much of the burden to do the things that you want to do, and there aren't enough of me to vote to control it. That's an extremely difficult problem and I'll bet, before time goes on, Senator Schellpeper will stand up and tell you this doesn't do that. It doesn't address that problem entirely, and he is not wrong. But if you do believe this property tax problem is a crisis, it is not so simple to say, let's just raise sales and income taxes, replace them and go home, because it won't work, and you know it won't work. And we're going to discuss why that won't work and we'll probably see some votes to demonstrate that. Historically what happened is the property tax was the
13501
only tax in this state, and do you know when we started, do you know what the tax rate was? Two dollars, $2 a hundred. Things really haven't changed that much. If you look at the proposal that the Revenue Committee put out, we're not that much higher than $2, if you put all these levy limits together. So what happened? Property taxes were too high. So not all that much later, four or five years later, the state cranked it down to dollar and a half. And then it got bad in 1919, 1920, we finally took the county portion down to 50 cents. Historically, we put everything under that $2 lid, and then we found ways to get around it. We created cities or gave them some power so they really weren't county functions, so they didn't fit under that lid. We created ESUs, NRDs, hospital districts, we did a variety of those things. These levy limits are going to make tough decisions occur, but they are going to make the tough decisions occur with the people best equipped to make those decisions, and those are our friends and neighbors who sit on the county boards, the school boards and the city councils. You don't want this body telling them specifically what area to cut. You want to give them the ability to make the cut. We could raise every one of these levies up so that we take it to the very top, and, in effect, have a $2.50, $2.70. Senator Coordsen is right. It could be a dollar, and we could all walk home and say...
SENATOR WILL: One minute.
SENATOR KRISTENSEN: ... we did a great job. You know, vie cranked down those levy limits and, practically, you've done nothing. You've created a paper tiger. This isn't about whether those cities Aren't doing a good job. That isn't even in question. But put it into perspective, and I am going to ... we'll have a lot of time to talk about this, but keep this in mind as you look at Senator Maurstad's amendment. In some of these smaller communities, the purchase of one or two pieces of equipment can greatly change what your levy limit or what your levy is. Equalization, valuation, historically, when the rural interests came in and wanted lower property taxes, we went to 80 percent of valuation, and to look at people in towns, we said, well, we are not going to raise your valuations either. We found things like depreciation factors to keep those valuations down so their property taxes didn't go up. And so those...
13502
SENATOR WILL: Time.
SENATOR KRISTENSEN: ... still prevail in some areas, and you Ire going to find that those limitations or those things come into play much greater. I am sorry, Mr. President, did you say time?
SENATOR WILL: I said time.
SENATOR KRISTENSEN: I am sorry. Thank you.
SENATOR WILL: Thank you, Senator Kristensen. Senator Schellpeper.
SENATOR SCHELLPEPER: Thank you, Mr. Chairman and members. LB 1114 is the guts of the whole discussion on property tax. it's the whole package is in this bill, because if this bill doesn't go, everything else is probably going to fall apart, too. This bill, in my opinion, is too severe on small rural towns and small schools. It is going to drastically reduce the small towns. If you think we're having a hard time now in our small rural towns keeping them going because of the ag economy, because of everything else, if this bill passes in its current form, you won't have those small towns. They'll be gone. I think the Maurstad amendment is a step in the right direction., but I think we need to find someway to make up the difference that some of these small towns lose. LB 1114 does nothing about collecting property tax on the ability to pay. If I would sell my farm and put my money into CDs or stocks and bonds, you don't pay property taxes, yet you have the income. Now with my farm, if I don't have any income, I still pay those property taxes. We're not getting to the problem that we have in rural Nebraska about the ability to pay the property taxes. This does nothing about the ability to pay. It's going to lower the levy limits. As Senator Coordsen says, it does allow the vote to raise, and if you think these small towns are going to vote to triple their taxes, double their taxes, that won't happen. They will vote to raise them a little bit, but until they actually lose their paved streets, or their lights, or their police protection, they probably won't vote for it. I think the state of Nebraska has to come to grips with our property tax. We need to find some way to make up the difference. I had a bill in the committee that would a sales tax on food. I think that's the way we can make up some of the difference. There is also bills in there to put ... to broaden the tax on services. We don't have to raise
13503
the rates, just broaden the services tax a little bit. That will raise the dollars. I think we need to have a levy limit of some type, but then make up that difference because a small town, if you put a sales tax in Stanton, you won't raise anything. The grocery store is all we have there. I think three bars, but that won't raise any sales tax. But you need to have someway to raise this revenue. The city of Norfolk, everybody shops there. They have a very low property tax. I think they are down to about 10 cents because every surrounding community shops there. Kearney, Senator Kristensen's, they are very low. They don't have to worry because all surrounding communities shop there. They buy there. Who is going to come to a small town and buy something when we have nothing to sell? We have nobody there, we have no furniture store. We have no hardware store, no implement dealer. What are you going to buy there? Nothing.
SENATOR WILL: One minute.
SENATOR SCHELLPEPER: We're bedroom communities, and yet you expect us to be cut down to almost nothing. I think the Maurstad amendment is a good amendment, a step in the right direction, and I don't think it is too severe that maybe then they can raise their tax or go to a vote of the people. But to have it at 45 cents, when I have some towns right now that are $1.12, $1.15, the people aren't complaining about city taxes. They are complaining about school taxes. That's what's high, not city and county taxes. It is the school tax. This state needs to find some other way to fund education besides property taxes. This bill doesn't do that, but this amendment does help. Thank you.
SENATOR WILL: Thank you, Senator Schellpeper. Senator Bromm on the Maurstad amendment.
SENATOR BROMM: Senator Will, colleagues, I wanted to ask Senator Landis a question. I don't know if he's in the building or not. Is he excused?
SENATOR WILL: Senator Landis is excused, Senator Bromm.
SENATOR BROMM: Okay, I'll hold that. I wanted to speak to the bill, but while we are on this amendment, I will speak to that as well. I met this morning with about 20 or 25 school
13504
superintendents and, understandably enough, they are scared to death of the bill, and I understand that. 'I have had calls from a number of the mayors of the towns, smaller towns-in my district, who are scared to death of the bill, and I understand that. But I'm ... unless something in the debate changes my mind, I am going to try to support the bill because we simply can't have it both ways. We cannot stand here and say that property taxes are too high, we need property tax relief, and not, and not try to figure out the best process for getting to a point where we are less dependent upon property taxes. There is no easy way and there is no perfect way, but I think the... I think the Revenue Committee has done a reasonably good job of coming up with a process, and I emphasize the process, because the ... this is not an end in itself. The public will not support a move to other replacement revenue if they feel there's a reasonable chance of property tax creeping back up again. So I think this is the first step in the process. We have ... we are testing the confidence of the people as to whether or not they do have confidence in us, that we will provide the necessary safety net for the small town, the small school, or the larger town or the larger school, for that matter, if we adopt this kind of legislation. I hope that we have enough confidence in ourselves that we will do that. I do have and it is for that reason, primarily, that I'm going to support 1114. 1, at this point,, will not support the Maurstad amendment. I see it only opening the door to higher property taxes in smaller towns where we can probably afford to pay them even less than they can some other places. So I don't see ... I can't buy the rationale for that. I believe we will provide the safety net. as time goes along and after we see how the amendments come out on the ballot this fall and so forth. No adjacent state is as dependent upon property tax as Nebraska and we have to move to a position that is more consistent with what I think people are willing to accept in terms of property tax. Senator Landis, if you would yield to a question.
SENATOR WILL: Senator Landis, would you yield?
SENATOR BROMM: Do you-still think that the worse thing that: could happen in the world is for you to accidentally, temporarily and inadvertently lose your files?
SENATOR LANDIS: It's not the worse thing in the world.
13505
SENATOR BROMM: Okay.
SENATOR LANDIS: It's not the worse thing in the world. Other things could happen. Nothing comes to mind right now, but that's not the worse, yeah.
SENATOR BROMM: Well, I appreciate that. Thank...
SENATOR LANDIS: But I would like to know where in the heck is my chair? I mean you couldn't talk me out of my pants, Curt. I just want to know where my chair is now.
SENATOR BROMM: I am not even sure who you are. I don't even... I don't recognize your name.
SENATOR LANDIS: You don't recognize your victims, is that it?
SENATOR BROMM: Thank you, Senator Will.
SENATOR WILL: Thank you, Senator Bromm. Senator Landis, feel free to use my chair while I'm up here. Senator Warner, you're next.
SENATOR WARNER: Mr. President, members of the Legislature, I, too, would rise to oppose the amendment for a variety of reasons. What we are talking about on a statewide basis in terms of property tax at 45 cents. Remember, there is 50 cents allowed, but 45 cents would be approximately six... a little over $16 million, $16.5 million, and then the 5 cents that 'is authorized, and the key to this whole thing, the key to the whole thing that we keep talking about from day one is how can we get government more cost-effective? How can we reduce the cost of operation for local governments and state government and still preserve the services? And the key has always been to encourage cooperative efforts or through some form of merger and consolidation locally approved by the voters. What's envisioned as a practical matter, the question is asked, how do we provide the incentive? It's going to be numerous ways, but one of the easy ways, one of the very key. ways is the fact that the provision of a levy limit can be exceeded by a vote. The option is going to be that in one vote you are going to authorize a higher levy. The other option will be a vote to approve cooperative efforts, mergers, cooperations, which also require it vote but maybe not a levy increase. That's the incentive, and
13506
locally, it can be done. As you increase these levies, the incentive to do it goes away, at some point would totally disappear and nothing will happen. There's other aspects to the amendment, which would also concern me, by the way, all those levies exclude bonded indebtedness. And some of the levies I have heard- in different communities, many of them have Et substantial amount of levy for bond indebtedness, which would not be affected. But we rec ... but one of the concepts in here, and it's the same concept, as a matter of fact, that we have in schools that we argue about, but that is of equalization. And one of the concepts, it comes up in a later bill, but there is funds distributed to these smaller towns on an equalization basis that will fill part of the gap. What you will be told back at the window is that doesn't mean anything because. the Legislature will change it next year or the year after that. Yeah, they might. I can't argue that. The Supreme Court pointed out the other day very clearly we can't bind a future Legislature, and we all know that, in any event. But the plan is in place to do it. The legislation is in place before you to do it, and the gap that is talked about simply would not exist to the extent talked about. And the final analysis, again, is the fact that it could be voted. I have a concern if ;;e start down the route that Senator Maurstad wants to go, we are going to start a tier system now with towns, and we all know the tier system problem that some of you may feel that we ended up with on school aid, and there's justification for it, I am not going to argue that, but here's going to be another tier system.
SENATOR WILL: One minute.
SENATOR WARNER: And we were attempting to avoid that kind of a tier system, that the people who live in a small town ought to have the same opportunity for a lower property tax as the people in a big town, if that's the case, but, most importantly, they are going to have an option if this whole thing holds together, and that option is going to be for voting to expand the cooperative efforts, one of the most likely places will be public safety. And there is another provision to provide additional funding for that as well in one of the later bills, but when we look at many of these high-cost areas, we found that they had a public safety force that could have much more effectively been handled through a cooperative effort with the county and the sheriff, fewer people, fewer costs, and probably better service. It is the kind of thing that we have in
13507
Lancaster County. Many counties have it. 'it works very effectively, but those are the kind of things that we are trying to encourage with...
SENATOR WILL: Time.
SENATOR WARNER: ... (inaudible) rather than with a hammer and I urge the body to oppose Senator Maurstad's amendment.
SENATOR WILL: Thank you, Senator Warner. Senator Cudaback is recognized, followed by Senators Klein, Maurstad, Coordsen, Fisher, Robinson, Hartnett, Kristensen, and Avery.
SENATOR CUDABACK: Mr. Speaker and members, I guess the Revenue Committee is in a tough spot here. We give them heck if they don't put something out, and we give them heck if they do put something out. So I do respect them and I appreciate their stance. They gave us something here to debate and come up with a solution to and, hopefully, we can work through it so it works for everyone. I guess what worries me about the whole situation here is that we all represent different sizes, different types of communities. We all know what's happening. In the big picture, the big picture is that the small towns are getting smaller. The small towns are getting smaller. We know that. The last election, we know what happened to Senator Schrock. Senator Schrock's district was moved to Omaha, from that area. Gone. We had a conversation this noon if a poll was taken right now on a census basis, we would probably lose about two more people. Counties down here, the areas in the east would gain probably two more senators. This is happening, believe it or not. I mean it's just true, just the way it is. The smaller towns are having a tough fight. Why are they having a tough fight? Because we all have cars. These cars will all go, what, 60 mile an hour, maybe 70, 75. They can buzz into the ... hate to name names, but Wal-Marts, the K-Marts. The Wal-Marts, the K-Marts, the biggest, they are sucking us dry. They really are. Their sales tax runs their cities. Their sales tax runs their cities. Us smaller towns, we don't have a way of generating income other than property tax. I think my property tax is too high, too. I really do. I think it's too high. I give my own self heck, you might say. I talked to the mayor and say you are raising my taxes. You know, we all do this. You give your own ... but it's true, I mean, nobody likes property taxes but, in this case, I really think we are not attacking the situation
13508
head-on as I would like to. The small towns use property. The big towns use sales tax. So we are really not hurting the big town here. They won't know it. They won't know it. So, and they call me on the phone, say why are you picking on the smaller communities? What do I say? I don't know. I really don't know what to tell them. Are we picking on the smaller communities? Some say we are. if we are capping them at 45 cents, they want to have a swimming pool in town, if they want to have a street superintendent, or if they want to have a backhoe or whatever, we are talking about small, small communities here, that all they have on their mind is to survive. All they want to do is survive, my friends, that's all. And many, many of them will not survive. I hate to say read my lips, but they will not survive. They can't because they can't compete with the Wal-Marts, the K-Marts. The businesses are gone. Drive down main streets. Drive down. I have 18 towns in my district and most of them are smaller communities, boarding the windows up. I have a town up here by Eddyville, we went through one of the businesses after they boarded up here two years ago.. The kids are just knocking out the windows, knocking down the ceilings, and everything is caving in. Why? Because the folks are going-to Kearney, Overton, not necessarily Overton because they are a smaller community as well, but Lexington and shop. They have a sales tax. They are benefitting from us. I know I'm reiterating here, this has been said before, but the Revenue Committee has come up with this package and I appreciate it, and I think they expect it...
SENATOR WILL: One minute.
SENATOR CUDABACK: ... probably to be overhauled or debated, and that's what we're doing here, but I'd just like-to have somebody tell me how we give the villages a tool to survive. In about six years or four years, we will see another state senator, whether it'd be me, whether it'd be Senator Kristensen, or whether it'd be Owen Elmer, or whether it'd :De Ed Schrock again, maybe Ed will be gone again. Who knows? Hate to pick on him but, you know, he could be gone again. It's true. We will. lose someone else. Why? Because they're moving this way. Let's give our small towns another tool to survive and don't try to make it too difficult for us. If they want to have $3, 1 guess they'll have $3 sales tax or property tax so with that I guess I'll close. And I guess Schrock's gone now so maybe he's
13509
already taken the hint, I don't know.
(LAUGHTER)
SENATOR WILL: Thank you, Senator Cudaback. Senator Klein.
SENATOR KLEIN: Pretty hard to top that. Thank you, Mr. Chairman and fellow members., I have a couple of concerns, too, with the thing that is going and that's municipalities facing financing and refinancing indebtedness, and 1 think we're going to look at some severely higher interest rates. I have small towns in my district and not all of them are shrinking like Mr. Cudaback says. Some of them are growing, but we're looking at just basically anywhere from 12 to 42 percent reduction in available taxes to support these communities. And that's just too much of a cut. I don't think we're going to sit there and be able to say that we can share services when fire trucks would have to be 30 miles away. I don't believe that's going to work, Senator Warner. It certainly won't work at my house. I don't want that. I don't want to have fire protection on Monday, Wednesdays, and Fridays. I think I want it seven days a week. We're willing to pay for it. I, for that reason, will support Senator Maurstad's amendment. I do support the concept of 1114 but I just think we're awfully severe on these small towns, and they do not have the opportunity. If we're going to do, something like that, then maybe-we can go back to where Senator Cudaback said that everybody goes' to the big cities to shop. I've got one here that's got a .0915 for a levy because of the sales tax. Maybe we should redo the sales tax quota for the state and redisburse that money instead of letting the cities use it. But that's not what I'm asking for. I'm asking to support this amendment and with that I'm going to give the rest of my time to Senator Maurstad. Thank you.
SENATOR WILL: Senator Maurstad, you have about three and a half minutes.
SENATOR MAURSTAD: Thank you, Mr. President. Thank you, Senator Klein. I just want to comment on some of the points that have been raised. There certainly have been a number of very valid observations brought during 'the discussion so far and I certainly appreciate that. Senator Kristensen indicated that everyone indicates that their property taxes are too high, and I agree with them. I think that certainly it would be a universal
13510
thought that our property taxes are too high. But I would also submit that most people would indicate that their income taxes are too high and that their sales tax is too high along with their property taxes being too high. I think in general people believe that their taxes are too high. There isn't any question that because of the way the state has developed over the period of time that Senator Kristensen mentioned that we have an overreliance on property taxes to support local services and that's a problem. It's also correct that a lot of states around us, while they also are somewhat reliant on property taxes, don't also have problems. And we've all talked about the reasons why Nebraska has the system that it has based on population and resources and age of our citizens and a lot of other things like that. But as people have visited with me over the course of the last eight or nine years, the one thing that they. are mostly concerned about, as Senator Schellpeper mentioned, is how we finance our schools at the local level . And the Legislature has taken a number of very positive steps in my opinion over the course of the last few years to try to build a better finance system for schools.
SENATOR WILL: One minute.
SENATOR MAURSTAD: But I don't hear a lot of complaints as I go and visit about the levy on the ag society or the levy for the city or the county, the levy for the Historical Society, the NRDs. They focus and they're concerned about their school taxes. So while. I agree certainly with what the Revenue Committee is trying to accomplish and I echo not only what I have said on other occasions but also what's been said today that the Revenue Committee has done a great deal of work for which I'm very appreciative. All I'm trying to do with this particular amendment is to make a small modification in this particular circumstance to make it in the eyes of the beholder, and I guess that's the individual that offered the amendment, a little fairer.
SENATOR WILL: Senator Maurstad, Senator Klein's time has expired but your light is next. You may continue.
SENATOR MAURSTAD: Thank you, Mr. President. Just to carry on the conversation along the same general thought, just a little bit of comment on some of the points made, I agree and I think the citizens are looking for those guarantees that in fact if
13511
there is any savings here that it goes to save property taxes. So let me indicate, and I'm not trying to have it both ways, but let me indicate that I think that we need to try to provide those guarantees from as reasonable a perspective as possible. I agree with that aspect of the Revenue Committee's work in making sure that we cap levies, that we make sure that we look at the spending so that if additional revenues are provided it does provide property tax relief. However, I am very concerned and the reason why my focus has been on how to try to make these pieces of legislation, like we do in all other circumstances, better pieces of legislation by having 49 senators work on them instead of 8 or 15 senators working on them is to try to make it as good a package when we're done with it as possible. That's where the motive for my work. Senator Coordsen indicated that I've missed the point that we're putting a lid on the governing body but not a lid on the people. And I would submit that if local control has worked so well in the past, why do we even have this package before us? If local government has been so effective and in fact has not...has fulfilled their wishes of their citizens, we wouldn't be having the clamor that it's up to the Legislature to fix this problem. We wouldn't have this package of bills if that were the case. Secondly, we're talking about a very fundamental issue and that being representative type of government that we obviously believe very strongly in as elected officials of 32,000 people versus direct democracy. Are we going to make a direction more towards direct democracy at the local level? Are we going to put and expect that local governments cooperate on a direct democracy situation where they're going to have town votes on all of these circumstances? Are we going to continue to work on the way we have in the past relative to a representative type government knowing that those local officials who are close to the citizens, who live in those communities, that have to live under the ordinances that they pass, whether or not they're representative of those that elect them and are going to do the right thing for their citizens? We all know-that many of us on the floor have served in various forms of local government. You get a lot more personal contact at the local level than you do as a state senator. They're there walking the streets, going to the churches, being involved in organizations. People know that they're an elected official in that local 1 government. They provide them with input, and. I believe that they try to respond to the input that they receive relative to this particular issue so I would put forth that what we're looking at here by providing direct democracy I think we 13512 need to think about that...
SENATOR WILL: One minute.
SENATOR MAURSTAD: ....from the perspective of is there any reason for us to believe that that will provide any better outcome than what we have right now? I'm certainly not crying wolf with this amendment. I'm not trying to raise a problem where it doesn't exist. I have a great deal of faith in our towns and villages. They're very creative. They respond to the needs of their communities as diverse as they are around the state. I'm concerned because I'm trying to take a broad view of this, look at it from an overall statewide basis but still recognize that there are a lot of individual differences amongst those various communities. I believe the amendment before you is a sensible. adjustment to the committee's work. It still, reduces the levies from what they currently are...
SENATOR WILL: Time.
SENATOR MAURSTAD: ... able to levy and think that it is one that we should adopt.
SENATOR WILL: Thank you, Senator Maurstad. Senator Coordsen.
SENATOR COORDSEN: Thank you, Mr. President, members of the body. Perhaps an example of how terribly burdensome these requirements are might be appropriate in light of some of the conversation that we've had about villages and the other smaller units of government. If you wanted to look on the bottom part, Section 2 on page 4, you will find, and I will just use an arbitrary example of a village that had 700 residents and that for rural Nebraska is actually a pretty good size town; 700 residents and we're going to assume that those 700 resients are .really public spirited and there are 400 registered voters, 400 registered voters which exceeds any statistical percentage. According to this bill, if they wish to have a project that caused a levy that was greater than 45 cents, 40 of the village residents, remember, we have 5 town board members, too, in most cases that are going to be there, are going to have to come to an annual meeting that's publicized in the papers. And the majority of those present have to vote to exceed' the limit in whatever amount they want. And statistically in my hypothetical example, that would mean in this village of 700 people that 21
13513
people could set upon themselves any levy that they wnat--$1, $5, $10. I don't think that would happen, but that's how this works. And that's the concept that's hard to get across. Second class cities, villages, counties would have to have at a primary, general or special election a ballot issue that would be good for five years. But that ballot issue can set the levy limit at any amount that the electorate desires for whatever services; whatever special projects, whatever the people who are going to pay the bill want. Again, the limits in this bill are not upon the people of the state of Nebraska but the limits in this bill are upon the various boards that oversee the operations of all of the local units of government. The concept that came out of Revenue Committee is that there is a minimal guaranteed amount available for basic services for all of the units of government, all of the units of government. The real small ones, the board of commissioners or supervisors have a winnowing out authority to fit within a 15 cent total levy for miscellaneous districts. But even in those cases, any one of those miscellaneous districts by an annual public meeting can place upon themselves any additional levy for any service or project. The thing we're trying to get across with this is that there are functionally no limits. This really...this package doesn't arbitrarily guarantee any ...
SENATOR WILL: One minute.
SENATOR COORDSEN: ... property tax reduction to anyone in any unit of government anywhere in the state of Nebraska. But what the total package does do is remove all restrictions, and we've talked about that in several of the other issues that have already been before us, on cooperation, merger, consolidation, interlocal agreement and in the absence of the restructuring and reshuffling and realignment of how services are delivered the citizens have an absolute ability with the majority of those that are voting in whatever the scenario is to place upon themselves any additional levy above the caps in here that they wish to do so. And I think...
SENATOR WILL: Time.
SENATOR COORDSEN: ... that there I 's nothing in here to fear. Thank you, Mr. President.
SENATOR WILL: Thank you, Senator Coordsen. Mr. Clerk, items
13514
for the record.
SENATOR CHAMBERS: Mr. President, thank you. Senator Landis has amendments to LB 515; Senator Beutler to LB 1085; Senator Witek to LB 590 to be printed. (See pages 1403-04 of the Legislative Journal.) Senator Lynch would like me to announce a meeting of the Building Maintenance Committee at 3:30 in Room 20,22, Building and Maintenance today at 3:30 in Room 2022. That's all that I have, Mr. President.
SENATOR WILL: Thank you, Mr. Clerk.. Senator Fisher on the Maurstad amendment to the committee amendments.
SENATOR FISHER: Mr. President and members, these truly are tough times. I think it was two years ago I spoke and said that there was a tax revolution out there. I don't know whether it was a tax revolution, revolting, or just a great concern. But I can assure you there is that great concern. I think it's time we have to do something. It's also ironic that all these things that we're talking about the taxes, these are local issues, and I would venture to say that most of those, the villages and the town hall meetings and the school board meetings, only draw a handful, only a handful of concerned citizens. Yet they throw it on our back up here to make these tough decisions to set it. The only way we can, of course. is by limits. And I think it's important that we take that position and perhaps go with it. I'm very much "objectable" to mandating limits and spending of local subdivisions. I think it's their decision but it's obvious there's a problem. If that problem isn't solved or to some satisfactory. here on this floor this year, we're going to have a far greater concern out there when some of these other petitions hit the ballot. Because I can assure you if they get the required numbers, I feel very confident we will have some changes. I think it's important that we work on this. I understand there are some communities that are going to suffer. To what degree, I don't know, but it can be severe and it can be tough. But I think those local communities must address that system. This gives them that opportunity. I don't think it's anything to fear. I'm not going to support Senator Maurstad's motion at this time, but I'm going to listen to -them as we continue further down the road of trying to solve this problem. I think everybody... I think everybody is probably going to get tired of hearing this, but again I think it's our responsibility, it's now in our court and I think it's important
13515
that we take it and make a rational decision so that we can say and feel comfortable when we go back to our constituents that we tried hard, we worked, we did this for you. If we do it, job well done.. If I have any time left, I'll turn it over to my padre here, Senator Bernard-Stevens.
SENATOR WILL: Senator Bernard-Stevens you have about two and a half minutes.
SENATOR BERNARD-STEVENS: Thank you, Senator Fisher, members of the body. I want to kind of expand the topic a little bit. As long as we're going to consider talking about the villages and towns that are going to be hurt severely compared to others who will not, I don't mind that discussion. But if you're going to do the Maurstad amendment, you might as well go the whole way because I certainly am going to have some strong objections if we treat cities that way but when we get to school districts we say, yeah, there's some school districts like North Platte that will drop clear down to $1.10 and have to cut back severely or you have a school district line Inland who is at 89 cents that won't have to do a dang thing. We're going to have some real serious discussions on that level. -So what I'm saying to people is I understand people may support the amendment. In fact, maybe the amendment will pass, but don't stop on this amendment. Don't tell me you're going to support just, towns and cities but when we got to schools, well, we'll draw the line and we're not going to do that because they're the biggest part of the property tax burden. If you're going to bail out smaller areas that are going to get hurt badly by this and give them some room to grow, then that same concept has to go over to public schools. If not, this discussion is a farce. And I want just the body to understand that this is just more than cities. This will have a big ramification of where we go from here on some of the other sections. And if the body is willing to do that for public schools, that would be great. I don't have a feel of that right now, but don't think that...
SENATOR WILL: One minute.
SENATOR BERNARD-STEVENS: ... once you do this that we're done because it does set up the debate for the others. And I probably won't vote on the amendment so if it passes and the other is not done, this will be a reconsidered process real quick. So I just want to expand that debate just a little
13516
further. Thank you.
SENATOR WILL: Thank you, Senator Bernard-Stevens. Senator Robinson.
SENATOR ROBINSON: I stand to oppose the Maurstad amendment and we talk about taxes. You know, we've never been so lucky in our life to live in this country. My goodness gracious, people. Senator Klein, this is a rhetorical question. You don't have to answer it but you're talking about fire protection, you got a vote of the people. I'll guarantee you your people in Battle Creek would not vote to do away with fire protection and you can vote. Senator Schellpeper, I do have a question for you. How large is Stanton, Nebraska?
SENATOR WILL: Senator Schellpeper, will you respond?
SENATOR ROBINSON: I got one grocery store and three bars but go ahead. How large a town is Stanton?
SENATOR SCHELLPEPER: About 1,600.
SENATOR ROBINSON: Oh, 1,600. I've got a town that's 1,200 and they have a sales tax and you know in my district who has the lowest city levy of all? It's that town, 41 cents. Now you've got 400 more people and look at all the people that come up there and shop from out of town.
SENATOR SCHELLPEPER: But you're not ten miles from Norfolk, though.
SENATOR ROBINSON: No, I don't want... I just wanted to bring the point out. And, people, we can vote. Most of them can go down to the...I just about come to tears, though, when my good friend Senator Cudaback got up. Man, I took my hanky over to him, I felt so bad for him. But you know, Jim, you got to get tough, ,you know that. We got to... you got to stiffen up just a little. I really think we do. We got to stiffen up a little. There's alternatives out there. You can vote. Now what's wrong with getting people more involved in election? In fact, you got your bill on mail-in votes. That's getting people involved. I can't believe you're against this and you're for mail-in votes because that's getting people involved in the process. What's going to happen? What's the alternative? I've talked to several people
13517
say if this doesn't go, we're going to give money to Jaksha. I talked to some people out here in the lobby the other day and one said my group will probably give several thousand dollars to him if something doesn't happen. Who do you talk to? I was in the meeting with Senator Bromm this morning with 20-some superintendents. I told them how I felt. I support 1114. There are options. They can go to vote ... they don't want to go to a vote of the people. Why should you be scared of the people you represent? I don't see anything wrong with that. Someone made the comment saying, well, people don't know senators. Well, by gosh, I got too many people knowing me then; I wish they'd leave me alone. When I go uptown, people... every day I .go uptown and I go there probably two or three times a day, I have people ask me about what's going on down here. And I'm sure most of you do that have several small towns. We've got over two years to look at the problem. I told my superintendents-this morning that if none of the constitutional amendments pass, I'll be more than willing to look at 1114 and change it and I meant it. I don't think there's anyone in here that wants to close schools, but I also told those people they could be more efficient and I think that's so. And maybe from these bills they're going to start looking at some consolidation .and some ways that they might save money. But they always have an out on 1114. They can vote. They can have their fire protection. They can...
SENATOR WILL: One minute.
SENATOR ROBINSON: ... have their townships. They can have their county fair. They can have their county extension agents so there's a way out. They can vote, people. So stick in there and oppose the Maurstad amendment. Thank you.
SENATOR WILL: Thank you, Senator Robinson. Senator Hartnett.
SENATOR HARTNETT: Senator Will and members of the body, I've been in the Legislature 12 years, this is my twelfth year. This is the first time, and I think we all go back home and say we're going to help cut property tax. This is the first year that we have had a proposal before us that does that, gives us an opportunity to do it is to cut property tax. The cities, oh, the sky is falling. We've got two years like Senator Robinson said. Cities are the only one that have other means to raise money. Senator Schellpeper in Stanton can have a sales tax.
13518
They can have a wheel tax like Omaha, that's a very popular one, an occupational tax. They can have fees ... yeah, garbage tax, enterprise function. They could have their revenue support service of electricity, gas, water, sewer and so forth. We're really talking about a change. Have the cities looked at do we have to have a small police department in each one of the small' cities or can we do it some other way? Can we cooperate ate with the county, with the sheriffs? We had a bill in front of Urban Affairs Committee this year and the bill was to do away with the city police department. I never saw so many uniforms in my life like we're going to touch, going to destroy the world. we're going to take away their turf. And I think we need to do this. we're talking about a change. Making cities, making. school districts, making counties look at can we do like Senator Warner says, do this more efficient? That's what we're really looking at. Can we do a better job of providing local services? They do have the vote in the small towns, just a town hall meeting like Senator Coordsen brought out so there is the means. The cities want to be treated differently, but they have other means to raise money if they want to their means without going to a vote of the people. If I have any time, I'll have to give it to Senator Wickersham.
SENATOR WILL: Senator Wickersham, you have about 2 minutes and 45 seconds.
SENATOR WICKERSHAM: Thank you, Senator Hartnett. I've had to miss part of this debate but now that I've come back to it I'm glad to hear some people making what I think are very, very sensible comments about what we're doing. And part of my motivation for doing all of this is that I genuinely believe that people are paying too much in property taxes, whether they're paying too much in the cities, whether they're paying too much outside the cities, people are paying too much in property tax, period. And they're frustrated and they're angry and they're angry because there doesn't seem to be anything they can do about how much they're being asked to pay. Someone tried to characterize that as an issue of local control, but I think it goes a little bit beyond that because this bill, 1114, really provides very good mechanisms for local control and making local decisions to have higher property taxes if people want it. Part of what I think the property tax issue is about is kind of a five and dime cent syndrome if you will. I don't know how many of you remember the five arid dime stores. You go into them,
13519
March 21, 1996 LB 1114
everything was cheap. Everything was 10 cents. But if you loaded up your basket with enough things by the time you got to the checkout counter, that didn't mean you could pay for: it. And we have part of that process, that identical process in the property tax arena. We have cities that take 75 cents and a school that takes a dollar and then a county that takes 50 cents and then an NRD...
SENATOR WILL: One minute.
SENATOR WICKERSHAM: ... that takes a nickel and on and on and on. And by the time you get, to the pay window at the. county treasurer's office, you found out you can't pay for it but you don't have any way to put anything back on the shelf. One of the advantages of 1114 is that you know right off the bat how big your basket is and how much you can put in there. There will be no overloading at the checkout counter. There will not be a need to put anything back on the shelf. You didn't put it in your basket to start with. And I think that's one of the primary advantages of 1114. 1 disagree with Senator Maurstad's amendment. I understand what he is trying to do. I don't think it is appropriate in the context of this bill. There are other ways to address the issues that Senator Maurstad, is raising. The other difficulty we have is, of course, meeting the very, very specialized circumstances of each individual community in our state.
SENATOR WILL: Time. Thank you, Senator Wickersham. Senator Kristensen.
SENATOR KRISTENSEN: Thank you, Mr. President and members of the Legislature. When we began to have hearings on the property tax debate, obviously one of the things that came to the committee was a variety of proposals. And each one of the groups that are going to be lobbying you, if they haven't done it already and they will in the near future, all had the opportunity to come to the Revenue Committee and all did. And I would venture to say that we probably set a record this year for number of opponents for bills. I don't remember having a bill where there were more proponents than there were opponents for anything except the message was always the same. We've got to do something about property taxes. Those property taxes are too high. We hear the voice of the people. We've got to respond and yet we're opposed to this particular piece. The reason 1114 is so attractive and
13520
there's a lot of misinformation out there,, by the way, particularly I know of at least two letters have gone out on some schools that are particularly erroneous and I want to correct those, but to this particular piece, what's so attractive to this is it's three years out and during that three-year period of time you're going to have city councils and county boards and school boards examining themselves and saying, what are we going to do? This is really, really tough. And therein lies the value of giving them three years to make those tough decisions and examine it. And they may well come back, and you know they will, they're going to come back to this body and say we need some additional money. You just can't do this.. But if you don't have that discussion first and make it very, very clear that within three years they're going to have to change their method of operation or find another source of revenue, it will never occur. Why? Because they'll all be like Senator Cudaback's speech. What are we going to do? We've-got to do something. What are we going to do? We can't do this. My poor little town won't survive. It will survive.. Those towns will survive. That's the reason we put in some equalization money. That's the reason that we were looking to change the constitution. That's the reason ... but for many of those communities infrastructure is a. big deal. It's a long-term thing they need assistance with, whether it is their streets, their intersections or whatever. But those are the opportunities that this body has to do it. There is no promise, there's no guarantee that any money is going to flow. There's no guarantee that next year we're not going to complete unfund 1059. It's not likely, there's no guarantee. We need to be able to take the Maurstad amendment and say, yes, if we want to do something superficially, we can do it. We can adopt the Maurstad amendment and then what's going to happen is the counties are going to come in and say, well, you know, with just little bit of tinker if we could raise our levy limit up just little more we'd be okay. And then the schools are going to come in and say, you know, if we could just ... our little school has got to have this and look at what 1050 is doing to us. We're a nonequalization school and how are you going to look at them and say, well, we did it for the cities but, no, we're riot going to do it for you, school. We're not going to do it-for you, county. You do it here, you're going to do it for all of them. And then in effect your levy limit is now up at $2.75 and in effect you don't have anything. 'And you won't have done anything. The message that I take from all this is if we don't
13521
want to do things like 1114 and (LB) 299, and those petitions come in...
SENATOR WILL: One minute.
SENATOR KRISTENSEN: ...and one of them will, that this wasn't strong enough. And we're going to do worse things. We're going to do more difficult things. And you may not want to take the gamble, but one of those petitions may well be successful. And if they are, people will come back saying, gee, I sure... 1114 will be the model and that's going to be what they're going to drag out and say. Gee, the Revenue Committee, we should have adopted. it back in 1996, 1 wish we would have and we didn't. But at this point on General File if you're going to adopt the Maurstad Amendment, we might as well move back to things like 108 and deal with 1050 and do those because property tax in effect won't ... any relief won't occur. Thank you, Mr. President.
SENATOR WILL: Thank you, Senator Kristensen. Senator Avery's light is next followed by Senator Schellpeper, Wickersham, Warner, Bernard-Stevens, Pedersen, Jensen, Maurstad, Landis, Cudaback, Klein, Robinson, Brashear, Vrtiska, Jones, McKenzie, and Abboud.
SENATOR AVERY: Thank you, Mr. President. I stood here, sat here, listened and you can make a good argument either way. And there's ways, there's reasons that I would favor the Maurstad amendment. I may talk both ways a little bit. There are some concerns that I have, though, about situations that may not be covered. And Senator Coordsen talked about the small communities being able to come in. There's kind of an exemption, a mechanism for them to address the same problem. But my experience with a little larger community, the second class, says that maybe they're not given the leeway. I think you're looking at situations that are strapped, they have ... many of them have been out there and are very frugal. They have watched what they're spending. They have kept down, they've even worked their cash reserves to a minimum. And sometimes they need to try to raise those a little bit just -for safety's sake. One area in terms if they are reducing their cash reserves and I don't know if this has been in consideration or talked about in committee, there's a potential here that ... and the first time I thought of it, well, bonds are exempted, I
13522
thought, well, that means a vote of the people of the bonds. But I have a question. There's also bonds out there that cities can do without a vote of the people. Are those bonds exempted? If those are, you have a problem here. You have a situation where it may be street repair, you do that on a bond. You do another infrastructure project on a bond. All you're really doing is pushing that debt out for future generations to take care of. And there may be... I think there's a problem with that. Many times by a small increase in their levies or their ability to spend a little more, go up in terms of a lid, they can take care of that in a given year or two years. When you start bonding maintenance projects, which I think you have to be careful, and I see some potential for that here, in doing that, you're pushing that out to your kids or future generations or the next individuals that are serving as ... serving their community. So that's one problem and I don't know if that has fully been addressed as what is exempted. They say some of this infrastructure is outside of the lid. But in one area it is outside the lid or the spending restrictions, but on the other side it's in. That is a real problem if where we start doing maintenance programs that should be paid for on a year-to-year basis and start pushing them out through bonding. Another area that... like I had said before, small entities and villages are taken care of.
SENATOR WILL: One minute.
SENATOR AVERY: But like I said, second class cities, and I watch mine and I look, they'll have to drop about 30 cents per hundred. And I'm wondering if this is a small step. This is a reduction in what the average is. I didn't think the Maurstad amendment maybe reduced it enough. The city of Gretna could live with that 76 because I think that's where they're at now. They've tried to work and hold that down. But if you don't, I'm wondering and there are situations here that you're not giving them enough flexibility to adjust and get down. One other concern that I heard and community leader had said to me, he said this is kind of like an analogy of term limits. We say, well, you don't have faith in us ...
SENATOR WILL: Time.
SENATOR AVERY: Thank you.
13523
SENATOR WILL: Thank you, Senator Avery. Senator Schellpeper.
SENATOR SCHELLPEPER: Yes, thank you, Mr. Chairman and members. Senator Warner said that this amendment would reduce about 16 or raise it about $16 million. But you have to keep in mind that entire $16 million is going to be from small towns. None of the largest 20 towns in the state are really going to be affected. If you look, it's going to affect LaVista, they're at 47 cents, 45 cents so they have to cut 2 cents, very little. South Sioux City at 57 cents, they have to cut 12 cents. McCook is at 45.9, nine-tenths of a cent; York is 83. They have to cut. Omaha and Lincoln, it doesn't affect them, doesn't affect them at all. Lincoln is at 26.5, Omaha is at 41 cents. Now you take Eddyville, in Senator Jim Jones' district, they're at 2.04. Well, that will be a reduction.. Oh, that's in your district, Cudaback, okay. We got the wrong senator here but you can take credit for that, Senator Cudaback. Wahoo is at about 95 cents. But this amendment or this part of the bill that we're talking about for cities is really going to help small towns because none of the larger ones are going to be affected. They have their city sales tax. They got their wheel tax. They can do all those other things. I told the people before, you can't collect a sales tax in Stanton, we have nothing ... we have no services. We're a bedroom community with Norfolk. They're very low. Stanton is at 78 cents. The bonds are not in this limit so it really doesn't affect that. I really think that if this amendment, the Maurstad amendment, does not pass this is going to fuel the Farm Bureau amendment. People are going to say, well, gee-whiz, that's a lot better than what this is for these small towns, a lot better because at least then they're going to be cut a little bit with the state to pick up the difference. With this, there's nothing to say that the state will pick up any of this cost. We're saying put her to a vote. Lei: the people decide. They can raise it any way they want to. Senator Hartnett said let them raise it. They can do whatever they want to. There's no way to raise it unless you put it on every bushel of corn that goes through your streets, charge the farmer so much per bushel to haul corn across your streets, we could do that maybe in town. We don't have any police force in Stanton right now. The county sheriff takes care of it. I think a lot of towns are being run very frugal and if they have a big mill levy they raise very little dollars. Maybe they raise 15-25 thousand dollars. They're not ... the people out there are not complaining about the city sale ... or the city tax. Once again,
13524
it's the school tax that people are upset about, not the county tax. You'll notice that the counties are not affected in this bill. I think the Revenue Committee, we were very smart to get the counties off the bill. They're where they're at right now. They're not affected, but the cities and the schools are and this amendment, I think if you have any compassion in your heart at all for small rural towns, you'll support the Maurstad amendment. I'd like to give Senator Cudaback some of my time. Thank you.
SENATOR WILL: Senator Cudaback, you have a minute.
SENATOR CUDABACK: (Microphone not activated)...I guess I do feel kind of like a hypocrite here. I've always been for sales tax to relieve property tax, but, Senator Robinson, I think you missed my point. I guess my point was if the larger cities that have sales tax didn't have a sales tax what would their property tax cap be then? So I think there ought to be that difference. If they don't have a sales tax, where would they be? What we're saying is it's okay to gouge them a little bit day by day, a penny a day, but don't do it at the end of the year. That's all I'm saying. Where would they be if they didn't have a sales tax? That's where I want the villages to be because we, little villages, can't have a sales tax. In Riverdale, I mean, we're at 5 cents. The town I live in we're at 5 cents, but every village doesn't have a state senator or village idiot to try to do their work for nothing...
SENATOR WILL: Time.
SENATOR CUDABACK: ..which I do. I do their work for nothing, you might say. I charge a little dab here but not much. Every town doesn't have a village idiot, I guess.
SENATOR WILL: Thank you, Senator Cudaback. Senator Wickersham.
SENATOR WICKERSHAM: Excuse me. Thank you, Mr. President. I think when I left off last I was starting to say that I did not, believe that we could try to meet the problems of every individual community in the state of Nebraska through the terms, of 1114 or anything that even looked like 1114. 1 know I have a couple of communities in my district that have special problems. They have special problems related to law enforcement and it's going to be very difficult for them to live within the levy
13525
limitations of 1114. And maybe ultimately they'll. have...will have to acknowledge that they can't, but I think that is still where we ought to start. Think several other people have indicated we have a couple of years to review what we're intending to do here and if we have it wrong at least we could fix it some time later. I was quite intrigued by the comments that Senator Cudaback made about the small towns not being able to compete with some of the larger towns. I think we must have some sort of a new economic development argument because if you can suddenly become more competitive with high property taxes we've got a pretty easy time of things around here. I don't think that's the way it works. I don't think that's the way it works at all. And, really, the problem in the smaller communities is the same problem in all small scale operations.. It simply costs more on a per capita basis to offer. the same thing because it maybe isn't used as often. But that isn't a function of property taxes. That isn't a function of utility rates. That isn't a function of keno revenues or anything else. That's simply a function-of scale and size and we're not going to be able to cure that, Senator Cudaback. I'm sorry, but we're not going to make these communities competitive by allowing them to have 75 cents worth of property tax. That isn't going to happen. I was considerably heartened to hear Senator Hartnett, the chair of the Urban Affairs Committee, stand and talk to the body about the other sources of revenues that cities have and I agree with Senator Hartnett that those are significant sources of revenue and that they can use those to supplement the property tax and be able, hopefully, to meet the needs of their citizens. They certainly have far more flexibility in that regard than other political subdivisions do, certainly more than the schools., certainly more than the counties, and certainly more than NRDs, the other political subdivisions that you might want to pick out. So I am... I believe that the cities can live within the 45 cents that are allocated to them with the additional 5 cents that they can use for joint operations. And, like everybody else, if it is absolutely, flatly impossible and this Legislature can be shown that it is flatly and absolutely impossible two years from now, a change can be made. But that is not the place to start. The place to start is like all these other bidding auctions, is you start low And you only come up if you absolutely have to. We're nowhere-near absolutely having to come up. We are at the place where we need to start and we need to evaluate...
13526
SENATOR WILL: One minute.
SENATOR WICKERSHAM: ..what the problems are. I also understand, as Senator Kristensen does, that there is misinformation being circulated about 1114. That has become an unanswerable part of our process in a number of bills that we've addressed this year. I don't think there's anything we can do about that except rely. upon our individual integrity, the information that we have available to Us, and whatever time we can spend with our constituents explaining what the truth is when we have time to do it. The truth of it is that 1114 is the best place for us to start the process of providing property tax relief to the citizens of Nebraska without the Maurstad amendment.
SENATOR WILL: Thank you, Senator Wickersham. Senator Warner.
SENATOR JANSSEN: Senator, you're up.
SENATOR WARNER: Again, Mr. President, just briefly. it's been said and I guess many times it's been suggested counties were affected differently. That's not accurate to say. Counties have the constitutional 50 cents in the constitution, which our understanding was we couldn't go below, but there's a whole host of things they have to fund within that, some of which is not now. So counties are not treated more favorably, as the implication. But I fail to understand, when everybody says that this is going to be a disaster, what you're saying is the people who live in that community or, in the case of a village as Senator Coordsen has already pointed out, are not going to support the services. I mean, it's hard for me to believe. What they will have an option to do, though, is if there is a better way other than increasing the levy above 45 cents that they could vote on a merger or cooperative efforts. That will be an option, and maybe they won't have to increase the levy. But the safety valve is very simple. Now, in the smaller units it's exceedingly simple. They have a meeting and vote to go for a higher levy, And it's in effect for five years. Don't. have to vote every year, and they ... and it doesn't go out of your base. I just totally fail to understand.* And then finally we do attempt to put in the concept of equalization aid the money at that... of the amount of roughly 11 million, I believe, 11 or 1-2 million:-- The gap we're talking about is 16.5. Doesn't totally fill it, but it fills a substantial part of it. Why shouldn't
13527
some of these small towns be entitled to property tax relief if they can have the opportunity to get it? The Maurstad amendment guarantees they aren't; guarantees they're going to stay at 70 mills or 75 mills, or depending. on the size of the city. They'll have the option to do that, but under the concept here they also have the option to avoid it where cooperative efforts or merger, consolidations and those kinds of things can prevent it. I would urge the body to reject the Maurstad amendment.
SENATOR WILL: Thank you, Senator Warner. Senator Bernard-Stevens.
SENATOR BERNARD-STEVENS: Thank you, Senator Will, members of the body. It's difficult on any of the amendments that we'll have before us to talk simply about the amendment itself because what we do on one amendment, you still have to keep in mind the entire package of what effect, it may have and, to that degree, I guess I'm going to divert just a little to the rest of the package. As we talk about unfairness and in this case Senator Maurstad is arguing that certain cities, particularly some smaller cities, are going to be hurt more than, and the dollars from that will come more from those that are hurting rather than those that have sales tax already, that are not going to have to do much cutting, if any at all. And, first of all, let me come to the point that my... the North Platte area certainly would be one of the latter because their levy is right around 39 cents, so at the level that they're being... would be capped on the levy they're technically not going to be hurt at all, with the exception of whether or not their-sales tax and keno funds are included in their overall budget, which now they're outside. the lid,. and that is yet to be discussed. But I do want to point out that there are some inequities. If Senator Maurstad is correct on the cities, it certainly then would be correct. on schools. And I use my example of, again, I could use Hershey or Maxwell, Brady or North Platte, North Platte sticks in my mind, they're at about $1.36, this bill would cut them down to $1.10 here are other school districts in the state that are at 89 cents, and I understand it's two years in coming but when it does come that district that's 89, cents, no harm done, no problems. Lids go away. They can go to the $1.10 if they want to, which would be an increase in funding for 'em. It will lock in a lot. of inequities into stone, but then turn it one step further and go to community colleges. One of the argument that says that that's okay because if the public wants to support,
13528
via an election by even a simple majority, an increase in the levy, that can happen and that's the public control. But look at a community college. They're in a region of which not a majority by far have anything, or children, or people in the community colleges. Now try to convince anyone that's a part of a community college that on a regional vote they're going to be able to exceed the levy. It's not even a slim chance. It just isn't going to happen. So their alternative for expanding, going beyond the lid, is not possible, in my judgment. other areas will be possible. And, again, what I'm trying to point out is whatever we do is going to be full of inequities. We can try to balance all of those, and I hope that we try, or, if we take the position it's going to be too tough, too hard in the time we have to balance all those, I suspect the position will be, you know, damn the torpedoes, full speed ahead, and we'll try to work it out some time later. But I'll end on a ... I just try to say that it's more than just cities, Senator Maurstad, and I don't necessarily disagree with your amendment, but also when we get to the rest of the discussion you have to ask yourself do you really believe the Legislature will increase taxes two years from now or a year from now? I, personally, do not. Do you really believe that the spending levels and lids will go off in two years? It says...
SENATOR WILL: One minute.
SENATOR BERNARD-STEVENS: ..it will, but will they really? I, personally, think not. And those are the areas we need to get into and I promised Senator Maurstad the last 45 seconds of my time I'd give to him and I so do so.
SENATOR WILL: Senator Maurstad, you have 45 seconds.
SENATOR MAURSTAD: Thank you, Mr. President. I would... it seems to be a prevalent thought that we don't have a problem now, let's wait for three years, then make the adjustments. I would present to you that if we don't very often go back and make those adjustments, now there are exceptions, but I'm... I believe that if we make this change, if this is passed there isn't going to be a groundswell out there. I don't think that we're going to come back in and be able to change all of the arguments that have been made in support of limiting the cities-and villages to 45 cents. I don't think we're going to be able to come back in a couple of years and just ...
13529
SENATOR WILL: Time.
SENATOR MAURSTAD: ..throw that out the window..
SENATOR WILL: Thank you, Senator Maurstad. Senator Pedersen.
SENATOR PEDERSEN: Mr. President, members of the Legislature, District 39 is the largest district populationwise in the state now. We're growing by 2,200 homes a year. The little towns, this was ... of Elkhorn and Bennington, they aren't so little anymore, they're growing fast, and I know Omaha's drawing very close and the district itself covers both Omaha, them little towns, part of even Senator Avery's town of Gretna, called Gretna Heights. There's no way that I could represent my district and vote for this bill without this amendment. Then we come back to the fact of what's it going to change? As these little towns, Elkhorn, where I live, recently, in the last year, annexed the SID where I live and, in so doing so, our services have gone up. We've never had better police service, better snow removal than we have now and they can't maintain that at that 45 cents. I'm, by no means, any expert in the area of tax and I've been listening closely and hearing lots of different things. In my district, and I hope if any of them are listening will get back to me on what their real feelings are about this, but I'm hearing no groundswell about the taxes but there's a real groundswell right now about don't do nothing, leave us alone. And then there's a feeling here that if we don't do something in this body that the petitions will go through and if the petitions go through there's people think they can beat them. It comes down to, again, the things we've talked all afternoon about, is services. Can we learn to live on what we've got? Or, if you live in District 39, then. people. from Omaha that are moving out to District 39 are moving out there so they can have better schools, better towns, and are interested in investing more money and it's the reason they moved and are buying new homes. So it's a difficult one. I'm not here to encourage you people how to vote, but basically it comes down to the act that I think Senator Maurstad's amendment is a -good amendment. I know for some of you it won't do anything, but for the little towns that are trying to survive and do want to survive I think they're going to need them. And if they don't want to survive then they'd be more beating down the door about saying, yes, we want these...we want more property tax relief.
13530
Thank you.
SENATOR WILL: Thank you, Senator Pedersen. Senator Jensen. Senator Jensen, you're recognized.
SENATOR JENSEN: Thank you, Senator Will, members of the body. It has been a great experience to listen to the debate today and I do commend the Revenue Committee for bringing forward LB 1114 and I certainly support the bill and hope that the rest of the senators see fit to do so. And the reason I do, is I do really wonder what happens if we fail to pass LB 1114, if we fail at this time to bite the bullet to really try to bring some control upon ourselves and the expenditures within our state? Because if we make adjustments here with the cities, the next will be the counties, and then the schools and the NRDs and the ESUs and all the rest of it. Now one thing about this is this only affects our statute. It is not a constitutional amendment like initiative petitions that are out there. And if the initiative petitions, any of them, are successful we're not going to have the opportunity to stand here today and to debate whether 30 cents is enough or 60 cents is too much or whatever that figure may be. But we have the opportunity today to determine the fate of our state. It is certainly with interest that I look at the various levies that our cities do have across the state, and I thank Senator Schellpeper for providing that. Last year, I had the opportunity to take a Farm Bureau tour, and I thank them for that, and we've toured the south central part of the state. We did get down to Fairbury and I was just so impressed with that community in that their average sale of their homes is 35,000 dollars, and these are nice homes in a very nice community where there is medical facilities. They have one of the finest parks in the state and, by the way, the improvements of that park were not built with tax dollars but were built by the community with blood, sweat and tears and then some donations from some individuals, and if any of you have the opportunity, drive down, take the kids and spend a day down there. You'll be impressed. But here the price of the homes were 35,000 dollars, average, in the community of Fairbury and in Omaha, why, we're probably about 90,000 and I think that's one of the best kept secrets, not only in Nebraska but in the state and in the nation and I think they ought to advertise that on the East Coast and West Coast and certainly maybe they'll pick up some retirees to come and enjoy the good life of Nebraska. So I, with those comments, I would just like to urge the body to pass 1114. 1 think it is
13531
a great step. Whether the figure is quite right or not I don't know, but we do have an opportunity to adjust that in the next couple years, and so I would urge the body to support the bill as presented. Thank you.
SENATOR WILL: Thank you, Senator Jensen. Senator Maurstad.
SENATOR MAURSTAD: Thank you, Mr. President. I want to make it clear, as I have before, that I'm not resisting change here. I'm trying to assist in this whole process of making sure that we come up with, ultimately, with good public policy. I don't think that this amendment would guarantee that everyone would have 75 cent levy Anymore than at current statute indicate and guarantees that they'll all have $1.15 or 85 cent levy. I still believe that, you know, our communities and towns are going to respond to their constituencies. The tiers exist now. The committee amendment would take away those tiers in the place of a... relative to the municipalities. All my amendment would do is continue those tiers and allow them to continue to exist and recognize some of the disparity that exists among our communities. I'd like to ask everybody, you know, are we ready to cut our state budget 30 percent or whatever percent it is and then take that to the vote of the people and then let them increase whatever revenues we need for five years and then take it from there? You know, I think that we need to look at this in a lot broader context in that, you know, we don't necessarily have all the answers relative to the problems of the state within the walls of the Capitol and just have to think that we're not going to be in a position to make that kind of a cut in our state budget and then take it to a vote of the people to do what we need to do. It gets back to whether or not there's going to be this groundswell that maybe we're relying on. The other thing, what' are we going to do when the feds, if they balance their budget and we have to respond to that pressure from that way? Are we going to be able to also address the pressure coming from the local government at the same time we're getting squeezed from the federal government? My point is, I don't think that replacement revenue's going to be there, so if you are counting on replacement revenue to provide the relief valve for this in a couple years, I think you better consider that that replacement revenue might not be there. Then a comment relative to misinformation about LB 1114, and that certainly occurs on a lot of bills we have, but I don't think there's been any misinformation relative to this particular
13532
amendment and hope you wouldn't stick it to this amendment because of some misinformation that maybe is occurring in other parts of the legislation. Senator Wickersham, as he usually does, provided some great analogies, some very visual pictures for us all to consider as we look at this from his point of view and I always appreciate those. I would say, relative to his shopping cart analogy, we won't have to worry about that shopping cart, we won't have to worry about that five and dime store and rolling that shopping cart up to the counter because I believe that if this amendment goes through in a lot of these smaller communities there won't be a counter to roll up to. He also indicated that we can't cure the problems that are occurring out in the rural area and I don't disagree with that at all. I don't know that we need to he part of the situation where we accelerate those problems in those rural areas. Indicated we can't cure it. I don't think the alternative is to let them die on the vine, either.
SENATOR WILL: Excuse me, Senator Maurstad. I think people may be having trouble hearing you too right now. I would remind the members to hold down their conversations somewhat, please.
SENATOR MAURSTAD: Thank you, Mr. President. That last thing I, you know, a couple...
SENATOR WILL: One minute.
SENATOR MAURSTAD: ..a couple weeks .... Excuse me?
SENAOR WILL: One minute.
SENATOR MAURSTAD: Oh. Is that not counting the time you took? (Laugh) I'm just teasing. A couple weeks ago Senator Wickersham mentioned that, when we were talking about speed limit, you know, one size doesn't fit all, and I agreed with him them and I agree with him now and that's why we're trying to pursue this from a tier basis because one size doesn't fit all. I would just say that there was a comment that property taxes won't occur if this amendment passes and I have to say I think that's just a slight exaggeration; that the door's going to swing wide open and everybody else is going to start marching through to try to do the same thing, I don't believe that. I think we have to look at this on the basis of the argument that's presented before us. My analysis is that we're sticking it to the towns
13533
and villages. I'm just trying to make that a little less onerous for them so that they might be able to continue to have a checkout counter for us to drive our carts up to. Thank you, Mr. President.
SENATOR WILL: Thank you, Senator Maurstad, and you did get your additional ten seconds. Senator Landis.
SENATOR LANDIS: Thank you, Mr. Speaker. I will be talking about the property tax package in just a moment, but with the rise of vandalism here on the floor today, and I being somebody concerned about vandalism having immortalized the phrase "stop, vandal"', I just want to establish and erect right now the "Wahoo wall". This will be a little something between me and light-fingered Senator Bromm. On his side it says, no authorized entry past this point, and notice it puts the mike on my side, and on my side it says, keep your dirty mitts off my property, this means you, Curt "Light-Fingers" Bromm. The property tax package is, in fact, a package with several moving parts and I want you to understand how I think it works. First, we do two years of spending limits with just a limited amount of growth. Then we have the drop of the hammer, which is the levy limits. In the third piece are the opportunities for savings through consolidation and the like, which both occurred the other day and then today in the constitutional amendment. How will we motivate people to consolidate? How will we motivate people to reexamine their services if they get a free pass at the beginning with the Maurstad amendment? We won't do it. Now, here's the way I contemplate the way this should work out. We create the conditions under which, if the hammer falls, we have a real problem and the real problem is a 200 million dollar shortfall at the end of this spending limit period, in which we will either have to come up with funds from a state source or there will have to be spending cutbacks on a local level. Only two choices: either they cut back 200 million bucks, or we make it up, or some -variation of the two. We do not have the groundswell that would permit us to do 200 million dollars of new state taxes. Not going not happen. Can't happen today and could only happen if there was a change in the tenor of the times. One of the tenors of the times that could change is the .kind of reality that should set in with 292 and 1114. Here's what I first think happens. I think, first, cities start thinking about sales taxes. They've got three years to pass a sales tax. That will change the mix. Second thing they can do
13534
in that three years is they can reexamine their expenditures and cut costs. Third think that they can do in three years is that they can try to consolidate their services or establish new networks. I agree with Senator Maurstad that of all of the jurisdictions one of the jurisdictions that will have the most problem are villages and second class cities. I don't think their options are that great. I think it's going to be hard for them to consolidate, it's going to be hard for them to build networks. Many of them are far apart from each other. Sales taxes won't be great. We will be left, in about three years, with another crisis and that crisis is what are we going to do just about the moment the hammer falls? However, if in those three years cities and counties and school districts have undergone a thorough goring analysis of their tax base, of their options, of their services and of their consolidation opportunities, we will -have a different... a different moment into which to contemplate broadening our state tax base in which we will come up with the replacement dollars. We couldn't come up with it today, but, after three years of the turmoil that 292 and 1114 will create, we will have not only the preparation of the cities to get ready...
SENATOR WILL: One minute.
SENATOR LANDIS: ..and the counties and the school districts, but we will have perhaps the conditions that will allow us to broaden state tax bases to make up the difference. It is not the goal of the Revenue Committee to bankrupt cities and counties and jurisdictions. It is our wish to create the climate for serious reevaluation of 19th century local government and that will only come by the fear and trepidation that arises from 292 and 1114. At the end, just before these levy limits kick in, if there is not a way out of this labyrinth, I will change the rules. I will raise the limits. I will go back to the property tax. However, the conditions may be right for a significant 200 million dollar shift away from local property taxes and either to consolidated services, spending cuts and a mix of state revenues. We couldn't do it today and the Maurstad amendment moves us further away from being able ...
SENATOR WILL: Time.
SENATOR LANDIS: ..to do it in the future because it gives
13535
King's X today to people who should have three years of preparation for that day. Thank you.
SENATOR WILL: Thank you, Senator Landis. Mr. Clerk, do we have a priority motion?
CLERK: Mr. President, Senator Chambers would move to bracket Legislative Bill 1114 until April 2nd.
SENATOR WILL: Senator Chambers to open on your bracket motion.
SENATOR CHAMBERS: Mr. President, members of the Legislature, I've been trying hard to stay out of this discussion. I've been in my office and I've listened and I come upon the floor and I listen and I can't be quiet Anymore. This is a bad bill and I think the motive is corrupt. As I just said to some of my colleagues behind me, it originates from a reprobate mind, and I'm going to tell you why. I'm listening carefully, especially to what Senator Landis said about creating this climate of fear and trepidation, in other words, create a crisis. That seems to, be the purpose of this bill. So I want to ask a question of Senator Landis, if I may. Senator Landis, I'd like to ask you a question based on the comments you just made about this bill.
SENATOR LANDIS: Yes.
SENATOR CHAMBERS: Would it be a correct paraphrase to say that the purpose of this bill is to create a crisis or a crisislike atmosphere so that it forces all of these political subdivisions, to come face to face with this issue of property taxation?
SENATOR LANDIS: I wouldn't choose the word "crisis", but it is meant to seriously induce a rethinking of our structure of local government, both by us and by local government itself.
SENATOR CHAMBERS: Okay. And I wanted Senator Landis to have the opportunity to supply his own words because I'm saying 'crisis. When I talked about those prisons and the incarceration and said you all don't care, this proves it. I said what we need is a crisis so that we will begin to look at the underlying causes of crime and why we need to build prisons and incarcerate, and you all mocked. You didn't want to do it. You thought that was the wrong approach to take. Then I listened to all of these people talking and I couldn't take it anymore. I
13536
didn't do like the guy and go stick my head out the window and say, I'm as mad as blazes and I can't take it anymore. That's not My style. I say it like that on the floor. But look at this, you're not talking just about one area where you're dealing with people that you hate, namely people who have been convicted of crimes and sentenced to be locked up. You're talking about all of the political subdivisions that can levy a tax. You want to put them in a crisis situation. You feel that unless that is done there will not be a serious reevaluation of all the issues involved in levying taxes. So now you are embracing the very thing that you repudiated the other day. I am concerned about prisoners. I am very distressed about the attitude that the legislators have when it comes to locking people up., When you take a person's freedom, that is the punishment. They are not sent to prison to be punished by the way they're treated there. Depriving them of their freedom is the punishment. And my feeling is that as long as the Legislature can so cavalierly appropriate money to build prisons it is absolutely and positively hypocritical for all those who support this legislation and say you ought to put... create a crisis situation for the political subdivisions to make them think about what they're doing. You don't think about what you're doing because you don't care. You're hardhearted, you're unfeeling and you are grossly hypocritical. You are very dishonest and I want that as a matter of record because this whole thing of talking about property tax is a sham and a hoax. The Legislature is not about to do anything other than play a game with smoke and mirrors. You talk one thing out of one side of your mouth, then you talk the opposite out of the other side of your mouth. The term "hypocrite" had to do with wearing a mask. You hide what you are, and I want to expose you for what you are and I mean every word that I'm saying. I mean every word that I'm saying because I've listened to you. You have infuriated me by the gross, unmitigated hypocrisy of what you're talking about here. You're going to make the political subdivisions think about what they're doing when they're levying taxes 'cause they do it too easily, too thoughtlessly, and don't reckon up the consequences. Then here you are throwing away three and a half million dollars just to lock people up without knowing whether it's going to do any good and knowing that it's not going to solve the problem you're supposed to be addressing, which is prison overcrowding. You all don't have the attention span to think from what happened yesterday to what's happening today, but I can think that far. I can retain it in my memory,
13537
and I watch what you do and it's very, very troubling even though I have been here going on 26 years and have seen it over and over and over. Speaking allegorically, I can understand now these pictures that they draw of the Christ you say you believe in shedding those tears because people constantly do the wrongful things that supposedly hurt and wound him . I used to wonder how, if this is God who knows everything and he knows how his creatures are going to behave, why are you going to be upset .and distressed and when they do what you know they're going to do? Then I apply it to myself. Why should I be upset and offended when the Legislature behaves in a hypocritical, dishonest manner? Dishonesty and hypocrisy are what the Legislature thrives on. It is the fare that succors them, that strengthens them, that fuels everything that they do. They speak in such high-minded terms until their little pig is being gored. But I want you to think about what you have done and .think about what you have said and I've offered a motion that will still allow enough time for the Legislature to come back and do some serious thinking about what the Legislature is going to do. You waste money for political purposes to help the Governor. You're going to throw away 350,000 dollars on some worthless, useless plans in connection with incarcerating more people. You run and you hasten to get to the point where you can spend 60, probably 70 million dollars to lock more people up without even thinking or considering alternatives to that that will be less expensive and more effective. You laughed and pooh-poohed that. Now we come to the political subdivisions and you want them to think of alternative ways to do things to get the biggest bang for the buck to be effective and make sure that those programs that they spend money for are going to address the problems they are designed to solve. Now take a moment, relax, enjoy that ice cream cone or that Popsicle that somebody sent around to all of you and think about the fact that you're going to be able to go get a free meal pretty soon. You don't have to go lunch hunting today. They bring the lunch to you. They're going to feed you and I have to make an appeal to that part of you where I can most effectively make an appeal 'cause I can't appeal to your mind so I appeal to your stomach. Your stomach is going to be filled with goodies in a couple of hours and it will put you in a mellow mood. So think about that pleasant repast that you will enjoy and, while you're in a mellow mood now because you're going to fill your belly, give one of those mellow thoughts to what I'm suggesting here, that we bracket this bill until April the 2nd. Because I'm serious,
13538
I didn't say April 1st, which would be April Fool's Day. I didn't do that, although the symbolism might be very appropriate.
SENATOR WILL: One minute.
SENATOR CHAMBERS: I don't believe a person on this floor can stand and rebut what I've said. You can't deny that you scoffed at what I said about us creating a crisis with reference to incarceration so it would force us to look at alternative programs and weigh the impact of what we're spending this money for. You laughed at that, but now that's the very principle you're adopting in going after the political subdivisions. You ought to adopt this motion. Then you can go on to some of these other bills and argue about them. But it will give us time to collect our thoughts and do something which is more consistent with what we did with reference to how we appropriate money for the programs we decide are important.
SENATOR WILL: Thank you, Senator Chambers. You've heard the opening on Senator Chambers' bracket motion. There are a number of lights that are left on from the Maurstad. amendment debate. I'm going to inquire one by one and I'm going to knock them off and ask you to put your lights back on if you wish to discuss further. Senator Cudaback on the bracket motion. Senator Brashear. Senator Vrtiska. Senator Jones on the bracket motion. Don't see Senator Jones. Senator McKenzie on the bracket motion. Don't see Senator McKenzie. Senator Kristensen on the bracket motion. Senator Hillman on the motion to bracket. Senator Withem on the motion to bracket. Senator Maurstad on the bracket motion. Senator Warner on the bracket motion. Senator Warner, do you wish to address the bracket motion?
SENATOR WARNER: Mr. President, members of the Legislature, just briefly. I would urge that the body not bracket these bills if the Legislature ... unless the Legislature is in a mood not to address the issue at all. Then, obviously, we will save a lot of time if you vote for it now. But I do sincerely believe that there will be ramifications in the form of petitions or other efforts that are inevitable if we just choose to walk away from the issue, so I would hope the body would not vote to do this.
SENATOR WILL: Thank you, Senator Warner. Senator Schellpeper
13539
on the motion to bracket.
SENATOR SCHELLPEPER: Thank you, Mr Chairman and members. I think Senator Chambers is right, we do have a crisis. If this bill would pass, we have a crisis, not in our large towns but we have a crisis in our rural towns. And anybody that believes that this body is going to come back in two years and raise taxes is in some other planet. It just won't happen. I've tried to expand the sales tax base ever since I have been here. It gets to the Revenue Committee, it dies. The Nebraska Chamber does not want to see anything changed with our property tax. They're happy where it's at. You try to expand the tax on food or the tax on services, they're opposed to it. Where else are you going to raise the revenue except sales and income tax? They're opposed to it. It won't happen. What you're going to do is kill the small towns. They don't have enough power down here to come in and say, we need 200 million dollars. That won't happen. If Omaha and Lincoln came down and said, we need 200 million, I think we could get it, but this bill doesn't affect them. So why would this body come in and put 200 million dollars in in two years? The power that be won't let it happen. It just won't. This amendment to bracket, if we can't get the Maurstad amendment then I think the bracket of this bill might be the best thing to do. I don't want to see it happen, but I think if the Maurstad amendment is adopted then I think we can move on and talk about how we ... how we're going to fund schools. But if we don't do that then the bill just as well be bracketed because nothing can happen except to devastate rural Nebraska. I think that would happen if we don't accept the Maurstad amendment. Thank you.
SENATOR WILL: Thank you, Senator Schellpeper. Senator Chambers.
SENATOR CHAMBERS: Mr. President, members of the Legislature, Senator Schellpeper, don't be so naive, and all of those of you from these little towns. Senator Maurstad, I'm surprised at you, except that I know you know you I re not going to get your amendment adopted I think you know that pretty well. You can see the writing on the wall. The juggernaut is moving. Behemoth, leviathan have all come together in what is, a menage a trois or whatever that is, or what? Menage a trois, look that up for those of you all who neither speak nor understand French, but you can bet your bottom dollar that if I
13540
say it in French it's nasty.
(LAUGHTER)
SENATOR CHAMBERS: Because I'm talking about what the big ones are doing to the little ones. Senator Maurstad, we're in the process of parcelling out pain and every little town, every little hamlet has to receive its allocation of pain. Omaha's levy is 43 or something cents so you can say 45 cents and it doesn't make any difference. Somebody pointed out how it's. not going to touch the big ones. You know what some of you who represent these little towns make me think of? A comment that Oscar Wilde made. I'm just paraphrasing. He said, I can understand why those who benefit from an exploitive, capitalistic system will praise it, fight for it and die for it, but what I cannot understand is how those who are exploited, who are oppressed, who are impoverished will fight even harder to maintain this oppressive system than those who benefit from it. I'll tell you why that happens. Because there are certain people who formulate attitudes and ideas and set the standards and they persuade those who are going to be impressed... oppressed that oppression is in their best interest. So, Senator Schellpeper, I find myself in this particular debate and it was why, one of the reasons, I was reluctant to get into it to say something that might benefit these little towns. This would be a good way to kill them off and in the past I've said there might be too many counties, too many of these various political subdivisions, but this is a dishonest way to do it. This is a way of sneaking up behind somebody and sticking them in -the back when they're not looking. But the problem is, Senator Schellpeper, you have many of those who should be the guardians and protectors allowing the stabbing in the back to occur. The motion that I'm making should have been made by somebody who has a constituency that will be devastated by enactment of this legislation. We have all been here long enough to know, as has been pointed out, how reluctant not only this body but any political body is to raise taxes. I'm probably the only one on the floor who unabashedly says whenever the issue comes up, everything costs more now than it did last year so the services that the government provides, which must be paid for, are going to cost more money. Since the way by which .governments are to raise money are taxes then we raise the taxes if we need more money, but it's done in a dishonest, sneaky way. We'll add 50 cents to people's phone bill. We'll add an
13541
additional dollar to their registration process. Add...
SENATOR WILL: One minute.
SENATOR CHAMBERS: ...50 more dollars for reinstatement of a suspended driver's license, and we stick it to the people calling it by a different name, but dress it, tax, as you will, a tax is a tax still. This bracket motion should be adopted and it gives everybody a chance to think about it and talk about it and there would still be time to run the bill on across the board. We're going to be here into April. But the reason they ,don't want to bracket, they feel like they've got their momentum now and all these bills are going to move as part of a train. if each car is connected to the one in front of it and the. one in front is connected to the one behind it, then wherever the engine of the train goes all of the cars follow.
SENATOR WILL: Time. Thank you, Senator Chambers. Senator Cudaback on the bracket motion. I'm going to ask you to put your light back on, Senator Cudaback. Senator Vrtiska on the bracket motion. Senator Hillman. Senator Maurstad. Senator Dierks. Senator Jones on the motion to bracket. Senator Chambers.
SENATOR CHAMBERS: Mr. President, members of the Legislature, I am in my element because I've jot you. You know that I've got you. You know that this is a hypocritical bill and I peeped your hole card, I pulled your coattail, and I've shown you up for what you and what you all know that you are. It's so easy to put all of this stuff off on somebody else and then not touch it yourself. See, you all's political garments will be clean 'cause you can say, we spent 3,500,000 dollars to lock up more people. And you don't have to point but the fact that it's not going to touch the problem, but that's what you did and you were able to do it, and you'll get away with it. But now you put on your righteous clothes. Now the wolf puts on his sheep suit and here he comes walking down the aisle, all innocent appearing but he's still got blood dripping down his jaws 'cause he's nothing but a bloody-jawed wolf, and you know what you are. That's Why nobody will speak, 'cause you cannot gainsay or deny what I'm saying. This that you're doing is the epitome of hypocrisy. You're putting something on the side of the plate from which the small political subdivisions must eat, but you don't wan-: to turn that plate around and eat from it yourself. And you're
13542
going to do other things when it comes to your pet programs. The Governor has already told you, and I disagree with him 100 percent, how you shouldn't be spending all this money and he's going to take this red pen and mark lines all through that bill you send over there to him. Then you're going to be too cowardly to.. stand up for what you spent all this time yapping and beating your gums about, yammering. That's all it is--yapping. And he will beat you down and you know it. You're not going to override his vetoes. You whistle when you go by the cemetery to try to overcome the fear that you have, then when all of you are whistling in unity you feel brave and you put these things in the bill. Then, when the Governor slaps you down, then you run like a covey of quails. But what I'm talking about now is a wrong that you are doing and I say it's wrong based not on my standard but based on yours. You set up the measuring rod that I am using to condemn you with. I listened to you the other day and I watched you and your votes went up on the board and told me what it is that you believe or what you profess to believe. Then we come back today and, in my naivete, I expect you to stand beside that measuring rod and engage in the kind of conduct that squares with the standard you set the other day. But, no, you didn't want to create a crisis the other day that would force the Legislature to be more responsible and prudent, but that's what you want to make the political subdivisions do. And why can you make them do it? Because you have the position of control. Whatever you write on these bills that become law will control the political subdivisions. So you flex...
SPEAKER WITHEM PRESIDING
SPEAKER WITHEM: One minute.
SENATOR CHAMBERS: ..your muscles. You puff and you blow. You bully and you feel powerful and potent, but you're like the Wizard of Oz--just a big old head up there on the screen with a lot of smoke and mirrors and noise and no substance whatsoever; like puffed wheat--a lot of air and no nutritional value. This is a good motion that I'm offering. It offers the possibility, young Senator Hilgert., of redemption. You can redeem yourselves. No matter how far you've proceeded down the wrong road, it's never tog late to turn around, and I'm saying come home, little Sheba, come back, Little Sheba.
13543
SPEAKER WITHEM: Senator Hilgert on the bracket motion.
SENATOR HILGERT: Yes, Mr. Speaker, fellow members, I just wanted to outline why I would like to encourage the body not to accept the bracket motion. Well, the reason I'm supporting 1114 is to avert a disaster. There are petitions that are being circulated. They will be in the constitution and our options at that time will be dictated by court cases and a massive shift. Every single person in my district that presently has a homestead exemption, an increase of sales taxes represents an increase in taxes on those individuals. We're talking about our disabled and our elderly which would realize a tax increase, the burden putting on those individuals. People who rent will realize a tax increase. Working people with families whose large amount of their resources are devoted towards consumable goods will realize a sales tax increase, a net increase. And if they're fortunate enough to buy their first home and they're trying to make the payments, the deductibility will be gone also. We must avert putting a shifting from property taxes and affecting those in our society that are least able to afford it. This bill deals with accountability. Yes, this deal ... this bill deals with caps on levies. These do not go into effect until 1999. Every political subdivision in this state will undergo an election between now and 1999. If the case for the small political subdivisions or the large ones or whatever we're going to be talking about, for the next few hours I'm sure, if the case is compelling enough for us to' change this legislation right here why don't you think that the case is compelling enough presented to the people of that local political subdivision to raise the levy? It will provide accountability. The people will understand. They will appreciate the good job that the cities or villages or districts or what have you does. That compelling case will fly and the levies will be adjusted by the people. We talk about local control. Everywhere I go we always talk about local control. People talk to me about local control. This is local control. The people are finally deciding what their levy's going to be. This gives them that opportunity. I agree that one size does not fit all, but this creates a base. Not every political subdivision in any category is going to be treated exactly the same. For some there'll be no impact; others there'll be large impact, but it will be up to that local political subdivision to make that case to the people that they work for and the people that they work for will be able to make a decision whether they want these services or not.
13544
I think this is a bill for accountability. I think it averts the problem of putting property taxation and the reaction to the mood in Nebraska today, it- averts putting that in the constitution which I think is wrong. It sets it in statute. We can come Lack. This forces the political subdivisions to try to address the problems through efficiencies and consolidations. I believe that this is ... perhaps this is the best choice. One of the statements I made the other night, I was talking to a group of voters, they said, you know, what are the solutions? And we talked about....
SPEAKER WITHEM: one minute.
,SENATOR HILGERT: ..this for about an hour and we came up with that there are no solutions to this problem but there's only choices. This bill allows people to make that choice. Are they willing to pay for the government? Are they willing to pay for the services? So I would encourage the body to reject the bracket motion. This is my motivation for. supporting LB 1114 and I am always encouraged when I hear that redemption is still possible. Thank you.
SPEAKER WITHEM: Thank you.. Senator Bernard-Stevens on the bracket motion.
SENATOR BERNARD-STEVENS: Thank you, Mr. Speaker, members of the body. Senator Hilgert,. I do love it when you get involved, number one, because it shows a fieriness and a concern that is refreshing and you're a articulate young man, and I can say young man because the Clerk keeps reminding me how much older I'm getting and so I suppose I need to talk in those terms. And you do bring a very optimistic flavor to the floor, which is going to be very...is very beneficial ant. you will continue to have a major impact as you get more involved, and I think it's super. Having said those nice things, I have to take issue. One of the things Senator Hilgert did talk about in all sincerity in his part was that we... if we don't do some of these things it will be done by the petition process and the constitution. I just -want to remind people, one of the arguments that people used on the conjunctive water use bill is that we don't care if Kansas sues us or not, what is the best policy? And in my position, at least, I don't care if' the Jaksha petition gets on the ballot, or if the Cattlemen, NSEA, Farm Bureau petition gets on the ballot, or someone else gets on
13545
the ballot. That's not my concern. And even if we passed all of these packages, does that mean they're still not going to be on the ballot? They still could be on the ballot. They can still pass no matter what we do, whether we support the packages or not. The petition drive should have absolutely nothing to do with anyone's decision on these packages because in the bottom line we vote on what we believe to be the best policy. That's what we do. If the public does disagree with that and they go to a petition process, that is their opportunity and right as citizens and we then submit to that, to their right and we would abide by that. But to imply that we have to do these things because if we don't a petition may, in fact, pass and that'd be the worst, that's a bogus argument because, (A) if we pass this they can still put it on the ballot and it supersedes anything we can do, and if we don't pass it obviously they may or may not be successful at the ballot. The public has had many times voting on lower lids, 2 percent lids, and they overwhelming have said, no, we don't want to do those. I'm not convinced that the public, when they look at all ramifications what will happen, will actually support any of the petition processes out there. I'm not convinced of that. Am I convinced that these are good policies? I'm not convinced totally of that yet either, but I am going to make the decision based upon policy what I, as a senator, what I, as a representative, believe to be the best policy regardless of what anybody else outside of the ... in the petition process thinks what their view is what good policy. That's not what I'm here for. The final thing I want to say is on the policy argument Senator Hilgert was correct, I think, if he was arguing, and I think he was arguing, that there are inequalities in the process we have now. We can't, as good policymakers, ignore the fact of what Senator Chambers and others have said. A lot of the little people are going to be hurt, and I'm not talking about the Auditor. I'm talking about small towns and villages and counties and school districts. A lot of the little people will be hurt and a lot of the more wealthy areas will not. And in your hearts you're going to have to look at that and say, do I want a North Platte school district to really have to cut back when somebody else is not going to have to ...
SPEAKER WITHEM: One minute.
SENATOR BERNARD-STEVENS: ..cut back at all? Is that fair? And then if you come and say, well, the school districts can have a
13546
special election, tell me-how many school districts have passed bond issues in this state. We're not passing bond issues. So if you think they're going to be able to up the lid and you walk out saying, that's okay, they have a chance to do so, you don't delude yourself, don't deceive yourself. It's not happening, and you need to vote on the policy on the entire thing, not one narrow thing at a time. So, Senator Hilgert, you took Senator Chambers' bait and got up to speak, you baited me into speaking and, Senator Chambers, I'll punch on again and when my time is I'll give you some extra time if you'd care to use it.
SPEAKER WITHEM: Thank you, Senator Bernard-Stevens. Senator Vrtiska, I believe your light came on. Are you wishing to address the bracket motion?
SENATOR VRTISKA: Thank you, Mr. Speaker, members of the body. .I obviously raise (sic) to oppose the bracket motion because I think the issue before us has been pretty well spelled out the last three hours and we need to continue to come to a conclusion as to whether this, in fact, is good policy. I happen to think that the policy we are making has ... makes some sense. I think there are some unfortunate statements that have been made that I don't necessary concur with. First of all, making a comparison between bond issues not passing and whether people would vote for an increase in taxes I think is erroneous on its face. There's a lot of difference in whether people are voting to build a building or a property than there is in providing the services that may or may not be needed by a community and I don't think there's a really direct correlation between those two types of votes that may or may not be held. Secondly, I'd have to say in all honesty one of the probably, in my opinion, this is strictly my opinion, one of the most unfair taxes that's been placed on the people in Nebraska has been the local option sales tax. Because, as you all know, it takes the money from many of us who live in the smaller towns that don't have the places to buy the goods and things that ire available in the cities, so we take our money and we spend it there and we leave part of it there, but we don't get any of it back. I think if we were really fair we would put a tax statewide and distribute the money back to all of the communities who in fact go to the larger communities to buy the goods that they can't buy at home. But I know that's not going to happen because a few years ago they decided to pass a bill that would make a local option sales tax and you could do that. I don't happen to agree with it, I
13547
never have agreed with it, but I'm in the minority obviously because it's come about and it continues to increase. But so be that. I can't individually and sure collectively, with the number of people that would oppose this, stand up and do anything about it. I remember a few years ago I came to the Legislature as a county board member and talked to the county board about the possibility. of. raising the 50-cent limit, because our county was at the limit of 50 cents and were unable to raise any more money. But you know how we solved that problem? We cut back some services. That's the only thing we could do. I think the same thing is going to happen in many to the communities. If they cannot provide all the services that they're now providing, they're going to have to make a decision which are the most... the most desirable services and they'll provide those and the rest they'll have to cut back. I know as I go through my district and I talk to people from outside of my district the word that I hear all the time is property taxes are too high. And if you own any amount of property and you pay taxes on them, like you have to do if you want to keep them, you understand that taxes are too high. Sure, sales tax are too high, income tax is too high, property tax is too high. Some of them we can do something about; others we cannot. I think somewhere in this process, and I would hope that it would happen, that as we move down this road and we do, in fact, put the tax burden under control that we can look to some other type of service... some other type of tax and sales and income that might, in fact, offset some of the losses that some of the smaller communities might be crippled by. But in the meantime we, as been explained over and over, we have several options. There's going to be some time before these takes place, before these issues come into play. In the meantime, I think a lot of hard decisions are going to have to be made by the people and I think the last thing that I want to say is there is that option, certainly it remains out there, if you cannot live within the bounds ... within the means that are provided the people are very seriously about it and think it's a concern that they have to address, they do have that option to go to the polls and make a ...
SPEAKER WITHEM: One minute.
SENATOR VRTISKA: ..(inaudible) on whether they want to in fact raise a tax on themselves, which really goes back to the issue of local control that we've talked about many, many times in our
13548
discussions on this floor. My time is up so I thank you very much.
SPEAKER WITHEM: Thank you, Senator Vrtiska. Senator Dierks on the bracket motion. I do not see Senator Dierks. Senator Klein on the bracket motion.
SENATOR KLEIN: Thank you, Mr. Speaker and fellow members. I think that we're just getting in a hurry here. I know there's some problems. I still like Senator Maurstad's amendment, I think we need that, but I'm opposed to the bracket motion and, with that, I think I'll give the rest of my time to Senator Maurstad.
SPEAKER WITHEM: Senator Maurstad.
SENATOR MAURSTAD: Thank you, Mr. President, and I appreciate that, Senator Klein, but I don't want to speak on the bracket motion. Thank you.
SPEAKER WITHEM: Thank you, Senator Maurstad. Senator Hilgert on the bracket motion.
SENATOR HILGERT: Yes, Mr. Speaker, members, I just wanted to make myself very clear and we do not exist in a vacuum, neither does the petitions. The petitions are only existing because people are upset with the high property taxes. I've... this is what we're reacting to.' We're reacting to the public perception and the concern out there that property taxes are too high. In my own case, my property valuations has gone up 36 percent since 1992. Everyone thinks property taxes are too high. They ask the State. Legislature to do something about that. We don't spend the property taxes. The local subdivisions spend the property taxes.. LB 1114 puts the process at the feet of the local subdivisions to determine whether they can make the case to the people that they represent that the services that they offer are worth the property taxes. I'm not so sure, and here's another little dose of optimism, I'm not so sure that they can't make that case. I think they can in many instances. When you ... when you talk to individuals and you go through where their taxes go and you talk to them about what would you like to cut,' the property tax crisis ends up becoming a property tax frustration. I think that the end product of 1114 will be more involvement by our people in our state with their local
13549
subdivisions. I think they'll have a deeper appreciation of what they do, where their money goes, and that is the way to solve a frustration. And if they think that, hey, you know, we do want to cut them anyway, well, that's their choice. Again," let the people vote. I don't know if I should say. that. The last time I used that argument the bill was bracketed so maybe I should get away with let the people vote. But I, again, we don't live in a vacuum. The petitions are out there, but they're ... the only thing the petitions are is a manifestation of the frustration of the electorate about the property tax problem. That is the basic underlying issue that we're trying to address. It's not a reaction to the petitions, I, although I think that it is realistic to include that when you're making your deliberations because that is an option. People are looking to the Legislature. The lead in on one new station I saw one night is that will the Legislature finally do something about property taxes? I think the state is watching. I think 1114 is something that's real that can be done about property taxes. I think that it will result in greater accountability among the local political subdivisions and, again, this doesn't go into effect until 1999. There'll be three years to try to do everything that they can to make their operations more efficient and then go to the people and say, hey, look what we've done, you've noticed out cuts, let's raise the levies, and the people will respond and say, yes, we agree on the good stewardship that you had over the local political subdivision and we will raise that levy. I, again, I am young and I am optimistic, but I believe that that's what will happen. I think this is the best choice and, again, I would encourage the body to reject the bracket motion.
SPEAKER WITHEM: Senator Bernard-Stevens.
SENATOR BERNARD-STEVENS: Yield time to Senator Chambers.
SPEAKER WITHEM: Senator Chambers, if you care to use the time you certainly may.
SENATOR CHAMBERS: Thank you, Senator Bernard-Stevens, Mr. Speaker, and I am a caring person so I will use the time. Oh, Senator Vrtiska, Senator Floyd Vrtiska. Senator Vrtiska says that we ought to adopt this bill and do this to these political subdivisions. Why shouldn't he say? Senator Vrtiska came in here with an empty sack at the beginning of the session
13550
and had a county spend itself into trouble and got the Legislature to tell the state bail out Richardson County for Senator Vrtiska, but he doesn't want to bail out these political. And that's what I 'm talking about. We cannot look at what is happening one day and associate it with what's happening a few days later, and that's what we have to do. We have to see the panorama that is unfolding before us. Now if I could expect to get the state to bail me out of every problem that I had, it'd be easy for me to look good by saying, but drop the hammer on everybody else, put the screws to them, make them holler uncle, just so you give me what I need. Those are the kind of positions that I say create such a blatant inconsistency between what we say and what we do that it causes people to have questions about whether we're sincere, in what we're saying or whether we are operating from a purely political motive . We, as members of the Legislature, have plenary power to make laws. We can pass any law that we're not prohibited by the state constitution or the federal constitution or a federal law from passing. But we control the political subdivisions. We tell them what they can and cannot do, and we can beat them if we choose to, we can caress them if we choose to, or we can give them the candy store as we chose to do for Senator Vrtiska in Richardson County. So, naturally, they're all happy. They got sticky little fingers, candy all on their little fat cheeks, little bellies just bulging from the largess of the state. So now that they got candy bags under each arm, candy bags in their little red wagon, they look at all these little hungry, dirty-faced political subdivisions and say, but you don't get any; I got plenty of candy, but you don't get any. And that's the way kids will tend to do. As a Legislature, our standard of excellence ought not be taken from the sandbox in which little children play. We have a responsibility and we should manifest a certain maturity of judgment. There can often be an inclination to say fix 'em. They think this is good. We're going to force it on them and show them that it's not good. The child has been told don't put your hand on the stove because you'll be burned, but the child keeps looking at the stove ...
SPEAKER WITHEM: One minute.
SENATOR CHAMBERS: ...so not only do we cease warning the child, we take the child's hand and we put it on the stove and say, by God, that will learn you, and that's what the Legislature's
13551
March 21, 1996 LB 1114
doing. It has fallen to the level of the sandbox and the elementary school playground. Vindictiveness, fixing people and abdicating our responsibility. I feel a great temptation to punish these little racist towns, but that's not what I'm here for. So I hope you will vote in favor of this bracket motion. Give yourself time to think again.
SPEAKER WITHEM: Thank you, Senator. Senator Fisher.. Do I see five hands? I do. The question is, shall debate now cease? All those in favor vote aye, opposed vote nay. Record.
CLERK: 25 ayes, 1 nay to cease debate, Mr. President.
SPEAKER WITHEM: Debate is ceased. Senator Chambers,. you're recognized to close on your motion to bracket.
SENATOR CHAMBERS: Mr. Speaker and members of the Legislature, I personally believe that I am the most realistic, empiricist on this floor, but there's another part of me that is not that way and I want to see us do better than what I know we're going to do. There will be no rational changes made in this bill. Punishment is going to be allocated to everybody except the big cities. The big dogs don't have to worry about anything; the underdogs, the little dogs do. Senator Maurstad, if you were speaking on behalf of a mastiff like Omaha or a pit bull like Lincoln then you might could get somewhere, but you're down there with the little Pomeranians, the toy poodles, the... all those little bitty dogs that people have just for show purposes, so you'll get nothing. Nobody's going to be able to have a rational Amendment adopted, and by that I mean one that addresses the situation faced by these subdivisions. You all want to fix 'em all, and that's what you're going to do. But I think the laugh, ultimately, will be on you. I think this is going to backfire and I believe you will have egg on your face and nobody's going to want to take responsibility. Everybody will say, well, they were circulating petitions, they wanted -his way. "They," meaning this bill, they said we had to do it this the people that we are supposed to be representing, don't realize what will happen if you reduce property taxes, so we're going to put a lid on it. We're going to say this is all the money that can be raised, now like it or lump it. And then to sit here and think or pretend that you believe people are voluntarily going to be informed enough to vote to raise their taxes is not reasonable. I'm going to speak in the terms of
13552
diplomats now when they're violently angry, Senator Hilgert. I mean when they are so angry that if you punched a pin in them they'd do like a balloon from which the air is suddenly escaping, they'd fly from here to the top of that building and all around till all the air came out and they fell to the earth. I'm going to use a word that they would use. What this Legislature is doing is unacceptable. That's...when a diplomat says it's unacceptable that means you're in trouble. That means they have ripped you and they're not playing anymore. What is being clone by the Legislature with this bill, despite all of the discussions that have gone forth, is unacceptable, it is dishonest, it is hypocritical and it is not appropriate legislating. The Legislature is worthy of something better than what is being done by this little piece of vindictiveness, but it will probably make some people feel better, but I'm going to be able to stand up here two years from now and mock and laugh at you 'cause you're going to have passed all these bills and done nothing. There will be no mergers.. There'll be nothing. And I'm going to laugh at you and I'm going to have fun doing it. I'm going to do you on that day just like you're doing-the political subdivisions today...
SPEAKER WITHEM: One minute, please.
SENATOR CHAMBERS: ..and you shouldn't get angry with me. You don't want me to get angry at you for slapping around these little political subdivisions so don't get angry with me for enjoying the mess that you've created and then plopped down in. This motion if you vote for it, will let us rethink this whole thing and there'll be still time to make this blunder if you choose to make it. I'm going to ask for a call of the house and a roll call vote and, Mr. Speaker, I ask....make that request most respectfully.
SPEAKER WITHEM: Thank you very much. The question before the body is, shall the house go under call? All of those wishing the house to go under call should vote aye, opposed nay. Record, Mr. Clerk.
CLERK: 19 ayes, 0 nays to place the house under call.
SPEAKER WITHEM: Senator Chambers, the body has, found your request to be acceptable so the house is under call.Members, please return to the chamber. Unauthorized parties leave the
13553
floor. Members at you&- desk please check in. The house is under call. The house is under call. Members absent the chamber need to return. Members in the chamber need to record your presence. The house is under call. Senator Lynch, Senator Bromm, Senator Schimek. Senator Jones. We are looking for Senator Lynch. We have found Senator Lynch. Roll call vote has been requested. Mr. Clerk.
CLERK: (Roll call vote taken. See page 1405 of the Legislative Journal.) 5 ayes, 41 nays, Mr. President.
SPEAKER WITHEM: Bracket motion is not agreed to. The call is raised. Mr. Clerk, we are...excuse me, we will return back to the pending item which is the Maurstad amendment, I believe.
CLERK: Yes, sir, that is correct.
SPEAKER WITHEM: And speaking order on the Maurstad amendment at this time will be Senators Cudaback, Hillman, Maurstad, Dierks, Robinson, Klein, and Chambers. Senator Cudaback.
SENATOR CUDABACK: Mr. Speaker and members, I had to keep reiterating here and going on and on, on about an issue but I'd like to... I guess I'm missing something. I'm a little slow at times, but I'm not as slow as Senator Robinson is going to be when he jumps off of the high diving tower there at Kennard and no water in the pool, but...
(LAUGHTER)
SENATOR CUDABACK: ..but I may... I may get your... I might get your attention. I'd like to ask Senator Hilgert a question, please.
SPEAKER WITHEM: Senator Hilgert, will you respond?
SENATOR HILGERT: Yes.
SENATOR CUDABACK: I'd just like to ask you, Senator Hill (sic), I gues's I missed something there when your ... when you said this would be good for all of us. How would the 45-cent cap help Omaha, Lincoln, Grand Island, Kearney, Scottsbluff, Hastings? I'm just curious how.
13554
SENATOR HILGERT: Well, let me address Omaha. That's...
SENATOR CUDABACK: Um-hum.
SENATOR HILGERT: ..where I'm from.
SENATOR CUDABACK: Um-hum.
SENATOR HILGERT: (Laugh) First of all, what we're responding to is frustration about high property taxes. People that I have encountered, my neighbors, my friends, people I've met in south Omaha have expressed concern that property taxes are too high.
SENATOR CUDABACK: Um-hum.
SENATOR HILGERT: Everyone believes there is waste wherever you are, at all levels of government. What we need to do is to demonstrate that what waste is there is ferreted out. If there is no waste demonstrate that also. And relate to the political ... or the people of Omaha that this is where your money goes, there is no waste, this is what your property taxes pay for. At that point, people will be no long ... they'll ... will be no longer frustrated with the high property taxes at that point or they will say, hey, we do think that that is wasteful. Okay, you haven't made that argument. What this does is restore some creditability into the process that we have city officials that are working very, very hard, I know the city council's working hard, but yet there's a Very low reliability. People are frustrated with what's going on.
SENATOR CUDABACK: But did you know that the levy isn't at 45 cents?
SENATOR HILGERT: Pardon me? Forty-five...
SENATOR CUDABACK: My point is ...
SENATOR HILGERT: Yeah.
SENATOR CUDABACK: ...Omaha's levy is not there, so how is this going to help...
SENATOR HILGERT: Well, it would decrease ...
13555
SENATOR CUDABACK: ..bigger cities?
SENATOR HILGERT: Okay. The present levy in the city of Omaha, I don't want to ... there will be a levy reduction. I believe the.... Do you have it?
SENATOR CUDABACK: Yeah.
SENATOR HILGERT: The ... okay.
SENATOR CUDABACK: I ...
SENATOR HILGERT: It's over 60 cents, 69?
SENATOR CUDABACK: I guess my point...
SENATOR HILGERT: Sixty-one cents is the levy for Omaha.
SENATOR CUDABACK: For Omaha?
SENATOR HILGERT: Yeah.
SENATOR CUDABACK: I'd be surprised. I'll eat it if it is.
SENATOR HILGERT: Pardon me?
SENATOR CUDABACK: Is it... I'm hungry though.
SENATOR HILGERT: No, it also includes the bond levy also.
SENATOR CUDABACK: Yeah. But does this cap include the bond levy?
SENATOR HILGERT: No, it doesn't.
SENATOR CUDABACK: No, it doesn't include the body levy.
SENATOR HILGERT: Right.
SENATOR CUDABACK: So my point is, it probably isn't there for the larger ... I mean I'm not trying to... I'm...
SENATOR HILGERT: Sure.
13556
SENATOR CUDABACK: ..I'M just... I'M just asking, I think it may be... I don't want to send these... I don't want to send the people in Omaha a false message here that we're really going to cut their taxes. Me, I like the people in Omaha. Don't get...
SENATOR HILGERT: Sure.
SENATOR CUDABACK: ..me wrong. I think (inaudible) ...
SPEAKER WITHEM: One minute.
SENATOR CUDABACK: ..sending them a false.... Here, my minute's gone. Gee-whiz, time goes by when you're having fun. But I think we might be sending a false image here that we are going to lower their taxes when, in a sense, all the cities with a sales tax, they are not going to be touched by this 45-cent cap when a little, what, 5 percent of towns, Eddyville, my town Eddyville...
SENATOR HILGERT: That's why I talked...
SENATOR CUDABACK: ..you know, it will (inaudible).
SENATOR HILGERT: ..about accountability.
SENATOR CUDABACK: But accountability by cutting out a town with 50 people in it, I'm not sure Omaha's going to even know where Eddyville is. You see my point?
SENATOR HILGERT: I see your point and your situation.
SENATOR CUDABACK: But ... but ... but anyway, I am missing something here and I'd like to ask Senator... I'd like to ask Senator Warner a question, please.
SPEAKER WITHEM: Okay, you have 12 seconds of your time left.
SENATOR CUDABACK: Twelve seconds?
SPEAKER WITHEM: Senator Warner.
SENATOR CUDABACK: He's fast. Warner's fast, you know, so .... If we ... when we put this in with the ...
13557
SPEAKER WITHEM: Time.
SENATOR CUDABACK: ..our share of the sales tax, will this ....
SPEAKER WITHEM: Senator Cudaback, your time is up. Senator Warner may be fast, but you weren't, so Senator Hillman.
SENATOR HILLMAN: Yes, Mr. Speaker, members, probably I better preface this with, Senator Maurstad, that I will oppose your amendment, but there's an issue here that I would like to bring to the body's attention which I don't think we've discussed yet, and that's the area of economic development; that if you look at the economic development that's been done around the state I think you will find that your cities and counties are your innovators. They're the ones that have done job creation, probably more than anything that the state has done . They have invested tax dollars, hired economic developers for demographics, went out and recruited a lot of people, but more than that the selling point that for the most part that you have in the state of Nebraska is quality of life, and the quality of life comes from basics. It's parks, it's sidewalks, it's roads, it's access to education, and it's health' care, and many of those come from local property tax. I think with the bill we need to be aware that for every action there is a reaction and I don't think that we recognize all of those at this time and, though we may have a period of time here to see how things work out I think it behooves this body to be very attentive in to what happens with the consolidations, and I'm one of those that promotes consolidation, but I also look at being a regional trade center that we depend upon the smaller communities around US. We're on I ly as healthy as those communities that surround us and one of the things that has been feared in this state has been a shift in the population; that the small rural towns are disappearing and they're going to the larger ones, and I think probably this could be a trend that could be escalated with some of the things that we're doing. Economic development creates people, creates jobs, it creates sales and it creates income tax, and so keeping in mind when we're doing the kinds of things that we're doing today, and again I'm going to oppose Senator Maurstad's amendment, that you may find that your counties and your cities and your schools play a. role that maybe we're overlooking in this process and I think it would be important for us to really follow that very carefully. And, with that, I would give the rest of my time to Senator Cudaback, since you
13558
didn't get finished.
SPEAKER WITHEM: Senator Cudaback, two and a half minutes.
SENATOR CUDABACK: Thank. you for the time, Senator Hillman. I'd like to ask my ... finish my question of Senator Warner, please.
SPEAKER WITHEM: Senator Warner, will you respond?
SENATOR WARNER: Yes.
SENATOR CUDABACK: Senator Warner, when we put this share money in there, like let's say a small town would be short dollars, then we're going to receive state aid back. Is that true, we'd be receiving state aid back if this goes through, in two years?
SENATOR WARNER: There is a provision in. 1177, Senator, that provides a mechanism of equalization aid that would enable a town to generate as much funds at the average mill levy of the state as a whole does. They would get aid to make up the difference between that and what they have, yes. That doesn't answer...
SENATOR CUDABACK: I had a call on this ...
SENATOR WARNER: ..fill the whole gap, no.
SENATOR CUDABACK: ..and this call asked me...
SENATOR WARNER: Pardon?
SENATOR CUDABACK: ..could we implement this bill at the same time that went through to make sure that went at the same time? I guess my... that's my question.
SENATOR WARNER: Eleven seven ... they are all connected, Senator.
SENATOR CUDABACK: It would go into same ...
SENATOR WARNER: When 1177 comes up, the effective date for that coincides with the effective date of 1114.
SENATOR CUDABACK: So if that bill doesn'tpass, if that wouldn't pass then this would not be into effect either, the
13559
45-cent cap?
SENATOR WARNER: No, the...
SPEAKER WITHEM: One minute.
SENATOR WARNER: We can tie, there's a way to tie all the bills together, if that's what you're asking me, Senator, but ... but 1114, for the equalization aid concept, would take effect in the same fiscal year that 1114 takes effect.
SENATOR CUDABACK: Would we be sure that would...? Course, we're not sure of anything, but...
SENATOR WARNER: That's right.
SENATOR CUDABACK: ..but that... if that took a... if we, didn't (inaudible) ....
SENATOR WARNER: If the ... as the legislation would have to be repealed, if it was both passed this session it would have to be repealed...
SENATOR CUDABACK: Okay.
SENATOR WARNER: ..prior to ... to... in either '97 or '98.
SENATOR CUDABACK: Okay.
SENATOR WARNER: I, I mean I wouldn't anticipate that happening, but, as you well know, we can't stop a future Legislature from doing that.
SENATOR CUDABACK: How much to you envision the percentage that we would be getting back of a loss? Do you have any idea?
SENATOR WARNER: Not a percentage. What we know, that statewide there's about 16.4 million...
SPEAKER WITHEM: Time.
SENATOR WARNER: .-.dollars involved and we have around, well, 11 ... between 11 and 12 million, I believe, in the Equalization Fund.
13560
SENATOR CUDABACK: Thank you. I appreciate your knowledge of this, Senator Warner.
SPEAKER WITHEM: Would like to recognize guests of Senator Matzke. Sitting under the south balcony, we have Bob and Anne Binhammer from Omaha. Could you be recognized, please? Senator Maurstad, our records up here indicate that you have opened and spoken twice on this. You'll be able to close, but your number of speaking times have expired, so, Senator Robinson, you are recognized.
SENA TOR ROBINSON: It's hard to hold my anger back. Gosh. I call the question.
SPEAKER WITHEM: Do I see five hands? I do. The question before the body is, shall debate now cease on the Maurstad amendment? All of those in favor of closing debate vote aye; those wishing to not cease debate vote nay. Record.
ASSISTANT CLERK: 27 ayes, 3 nays to cease debate, Mr. President.
SPEAKER WITHEM: Debate has ceased. Senator Maurstad, you're recognized to close.
SENATOR MAURSTAD: Thank you, Mr. Speaker. We always recognize that there are some differences between Omaha and the rest of the. state at times and, you know, most of the people in most of my communities know what their levy is. It's important...it's certainly important to them. And on top of that, Omaha's going to lose in this end deal if we do the equalization thing, so not only is Omaha not going to benefit from this particular situation or be affected by my amendment, but they'll lose relative to the equalization aspect of it. But, to get on to the bill or my *amendment, the whole purpose of this is to continue the tier system that we currently have for the communities in Nebraska based upon ... based upon their size. We're going to reduce the levy for our cities and second class villages to 75 cents, which is a 59 percent reduction from what their current lid is. We're going to reduce cities of the first class to 60 cents, which is a 47 percent reduction in what their current lid is, and we're going to keep Lincoln and Omaha at 45 cents, and I would submit to you that I don't think anybody's
13561
been affected to the extent that we're looking at affecting the cities and villages. Want to comment on the petition efforts. You know, my opinion is, and it might be... it might be in the minority position, but my position is that what we do in this session will have little effect on the petition efforts. They're going to go on regardless of what we do because I think that, regardless of how many of these bills we pass and/or. in what shape, I think you're still going to have a significant part of our population that will think that it is not enough. And so I think the petition efforts are going to be there. They're going to be before the voters, so I hope we look at this from the perspective of trying to make these bills as workable as Possible. I passed out a letter from the bond council. obviously, in my closing I don't have time to go through that so I would ask you to look at their concerns relative to the abilities of small towns and municipalities being able to borrow money and the additional expense associated if this change occurs. We ... comment was made that we shouldn't tell the local municipalities how to spend ... how to cut their money. I would submit to you for many years we've been telling them how to spend their money. Maybe we've come to that point where we should tell them how to cut from their budgets in addition to that and that way they would have even less control over their own destiny than what they have now. As I indicated before, I'm not trying to say that the people addressed by this amendment are special. I'm not trying to provide them preferential treatment; trying to treat them fairly. Senator Bernard-Stevens talked about the disparity in school districts must be fixed, must be addressed in this issue and I agree with him. However, I think that where we fix that and where we are attempting to make some strides in that is through LB 1050 and we should certainly continue that way. But, regardless of that, you know, not only do kids need education, they also need the services that are provided to them by their villages and by their ... by the cities that they live in. There's that old saying about the village and being able to take care of the children that are in that village. And so I would say that kids need streets and parks and safe water and a sewer system and all the services that are provided to them just as much from the cities as we should provide for them in their education.
SPEAKER WITHEM: One minute.
SENATOR MAURSTAD: The ... I'm not opposed to the vote of the
13562
people, but I want to make the distinction again relative to the representative government and direct ... direct government. This bill doesn't address the right to vote of a community. They can still do that. I believe they need that, but they need it even with this marginal increase that I'm proposing in this amendment. There's, you know, a lot of good points made. I think it's been a extremely worthwhile discussion. I hope that you will look at this from the situation of whether or not we want to take the ... cut the legs off of the smaller communities in our state and provide it so onerous that they're not...they're not going to be able to continue. So I ask for your support of the amendment. I think it would be a good step in providing the LB 1114 a more workable document. Thank you, Mr. President.
SPEAKER WITHEM: Thank you, Senator Maurstad. The question before the body now is, shall the Maurstad amendment to the committee amendments be adopted? All of those in favor vote aye, opposed vote nay. Have you all voted? Record vote has been requested. Have you all voted? Record, Mr. Clerk.
CLERK: (Record vote read. See pages 1405-06 of the Legislative Journal.) 12 ayes, 27 nays, Mr. President, on the amendment.
SPEAKER WITHEM: The amendment is not agreed to. Mr. Clerk, next item.
CLERK: Mr. President, may I read just a few items (inaudible).
SPEAKER WITHEM: You bet.
CLERK: Senator Pirsch, amendments to 604 to be printed. Enrollment and Review reports 645A, 847A, 1218A as correctly engrossed. Two study resolutions: Senator Hartnett offers 360, 361 by Senator Witek. Both will be referred to the Exec Board. (See pages 1406-11 of the Legislative Journal.)
Senator Warner has the next amendment to the committee amendments, Mr. President. (AM3854)
SPEAKER WITHEM: Senator Warner.
SENATOR WARNER: Mr. President, members of the Legislature, this amendment, page 1323 of the Journal, is basically a clarifying
13563
amendment, but it does three things. First, the question was raised, the amendment as ... the committee amendment, as drafted, indicated the levy limits took place, commencing January 1 of 1999, and there was concern whether or not that meant that it ... that they did not take effect until after the calendar or after the fiscal year had started. Obviously, at least drafting thought this was ... was proper, but in order to make no question about it at all, this clarifies that the levy limits would commence with the fiscal year beginning July 1 of 1998. it makes no change other than the original (inaudible) was January 1, '99. It's the same fiscal year, but it makes it clear. Secondly, the next amendment harmonizes some provisions where there is a voter or town hall ... town meeting type override provisions. This applies to those entities that are within the 15 cents that has ... that goes to the county board to have their budget approved and the levy set. The alternative for these small entities, and they range fairly wide in their levy that they currently have, but it makes it clear that any of these small entities who would go to the county board to have their budget approved, if they chose to have a town meeting which the... the residents of that district met and set their levy, this would be an annual event, set their levy by a vote like the old Class I schools did, it would make it clear that that vote that they would ... would cast would ... would not...that any money that the county included would be ... would be apart from what they voted to go above or if the county provided them nothing then it would totally be from that source. They would be limited by. whatever statutory authority that they have currently. They couldn't go above that, but it's the... again, the opportunity for these small entities. And then, finally, there was a section in that same area in which we had limited townships to 7 cents maximum levy. Their current authorization is 28. This would permit them still to go to 28, but they still have to go through the town ... what we call the town or voter meeting to establish whatever levy they may want. May range from very small levies to a higher, but in any event it would be done locally and they would vote to do ... do it. In fact, I think probably some of them already are required to do that to some extent. But this is a clarifying amendment and I would move its adoption.
SPEAKER WITHEM: Thank you, Senator Warner. On the Warner amendment, Senator Maurstad, followed by Senator Robinson.
13564
SENATOR MAURSTAD: Mr. President, if I could ask Senator Warner a question.
SENATOR WARNER: Sure.
SPEAKER WITHEM: Senator Warner?
SENATOR WARNER: Yes.
SENATOR MAURSTAD: And, Senator Warner, I ... you maybe indicated this at the last and I just didn't quite pick it up, but the second change that you mentioned relative to those subdivisions that lose their levying authority, if... is what you're indicating if the county gives them, let's say, 2 cents and they think they need more than 2 cents they can have an election of their ... who they represent?
SENATOR WARNER: Yes.
SENATOR MAURSTAD: Okay, so like the ag society, in essence, that would be those that belong to the ag society, or would it be the entire county that would vote on something like that?
SENATOR WARNER: That case, entire county.
SENATOR MAURSTAD: Entire county? Okay.
SENATOR WARNER: it's the registered... it's the registered voters in the area.
SENATOR MAURSTAD: Okay.
SENATOR WARNER: I know that agriculture societies are a separate group, but it's a county levy.
SENATOR MAURSTAD: Okay. And the same thing for the, in essence, for the historical society? They would...
SENATOR WARNER: Yes.
SENATOR MAURSTAD: ..be reflective of....
SENATOR WARNER: Yes.
13565
SENATOR MAURSTAD: Okay. Thank you, Senator. I think that that in itself presents somewhat of a ... somewhat of a problem, but I'm not completely certain of what ... of what an impact it would have. But I think that what was characterized earlier relative to getting ten people together and deciding to increase your levy, especially for some of these smaller entities that right now don't really levy that much, is ... will be a little bit more difficult than what I think has been characterized... characterized so far. And I think, relative to the whole county levy of 50 cents being.... Maybe I ... maybe I need to ask Senator Warner one more question, if (inaudible).
SPEAKER WITHEM: Senator Warner.
SENATOR MAURSTAD: Senator Warner, maybe I misunderstood what you said when we were deliberating the earlier amendment, but am I correct in my analysis that the county may but is not required to use any of that 15 cents for all of these other little political subdivisions. Is that... ?
SENATOR WARNER: Yes.
SENATOR MAURSTAD: Okay, so... and if they don't, they can levy up to 45 cents with the other 5 cents for interlocal agreements. Is that... ?
SENATOR WARNER: Yes.
SENATOR MAURSTAD: Okay. So, theoretically, and I doubt that this would occur very often, but theoretically all of those other political subdivisions that now have to go to the county, the county could, in essence, say we're not going to fund any of you for any amount and then the county could use the full 45 cents.
SENATOR WARNER: Yes.
SENATOR MAURSTAD: Okay. Thank you. I wanted to make sure that...
SENATOR WARNER: But, by the way, that's not significantly different now other than county board has to provide up ... whatever the mandatory amount. In the case of county agriculture societies, it varies by size of county. Lancaster
13566
County I know the statutory authorization is around 25,000 and I think their request is well over 100,000, which the county does, as a ... they have the flexibility to do it or not do it. Same would hold true of some of the other subdivisions.
SENATOR MAURSTAD: Yeah, I think, if I understand what you indicated, that you're pointing out that there might be some circumstances where some of these smaller subdivisions could receive more funds under this scenario than they are now. They can make a good case before the county board.
SENATOR WARNER: Well, the county... if they didn't make a good...
SPEAKER WITHEM: One minute.
SENATOR WARNER: ..case before the county board, they would have an option to go to... it's the other way... it's a way other way around. But the other more practical problem is that some of these entities, you know, the range, let's use fire districts, that generally they run from 2 to 4 cents, but there's occasionally a few that are at the maximum of 12 and that would use up almost all of the 15 cents. In those cases I suspect they would have to go to a town hall meeting...town meeting.
SENATOR MAURSTAD: Thank you, Senator, and I think what we've indicated here is that there really is some uncertainty here and there very well could be situations where they would be eliminated completely, not provided any taxing authority unless they went to this special vote of the people, which I think is going to be a little more difficult than what's maybe been portrayed so far, but there is, of course, also that upside for them also.
SPEAKER WITHEM: Time. Senator Robinson.
SENATOR ROBINSON: Mr. Speaker, members of the body, Senator Warner, I have a... I was out and I missed a couple things, a couple things on the record. On the 5-cent interlocal agreement that the counties have, could they get together with a fire district for that 5 cents, or say that would be one group they could get together? Could they get together with the ag society and the county extension agent or county extension group and have a interlocal agreement with those groups?
13567
SENATOR WARNER: I don't believe agriculture society would fit, but where they're doing mutual...mutual programs, cooperative programs....
SENATOR ROBINSON: Like the fire district, could that be one?
SENATOR WARNER: I tend to think more in terms of municipalities and...
SENATOR ROBINSON: Um-hum.
SENATOR WARNER: ..villages. I'm not aware, you know, for most of those cases, until we get the constitutional amendment passed, to do something jointly they both have to have...
SENATOR ROBINSON: Yeah.
SENATOR WARNER: ..the statutory authority...
SENATOR ROBINSON: Okay.
SENATOR WARNER: -individually to do it collectively...
SENATOR ROBINSON: Okay.
SENATOR WARNER: ...and I do not know off...
SENATOR ROBINSON: Yeah, okay.
SENATOR WARNER: ..the top of my head if counties ...
SENATOR ROBINSON: Okay.
SENATOR WARNER: ..have the authorization...
SENATOR ROBINSON: Sure.
SENATOR WARNER: ..for a fire district. If they do, then the answer would be, yes.
SENATOR ROBINSON: Okay.
SENATOR WARNER: But if they don't...
13568
SENATOR ROBINSON: Okay.
SENATOR WARNER: ..then...
SENATOR ROBINSON: Okay, the...
SENATOR WARNER: ..that would not be a specific type of example.
SENATOR ROBINSON: Okay. Thank you. My next question would be if a... let's take a...you mentioned townships. Could they ... say the township does not want any money from the county but they will ... they're just going to have a vote outside. Do they ... do ... do they have to tell the county board that, or what would be the procedure in that, Senator Warner?
SENATOR WARNER: There is an amendment being prepared on ... it will happen on Select File that will establish a prebudget setting meeting between with the county board...
SENATOR ROBINSON: Okay.
SENATOR WARNER: ..and these various governmental subdivisions in which they'll have preliminary type of discussions ...
SENATOR ROBINSON: Okay.
SENATOR WARNER: ..of what each of them...
SENATOR ROBINSON: Good. Yeah.
SENATOR WARNER: anticipate so that people will know, a pretty good idea at least...
SENATOR ROBINSON: Yeah.
SENATOR WARNER: ..if those budgets Will fit in and if they know they aren't then they need to stop and look. at...
SENATOR ROBINSON: Just go ahead and have the election.
SENATOR WARNER: ..at the alternatives.
SENATOR ROBINSON: Yeah. Then the...that would be ... that would
13569
be for the townships and also the fire districts.
SENATOR WARNER: Yes.
SENATOR ROBINSON: Now I have a ... there's a hospital district. It's not a county hospital but it's a hospital district. Could they come in like in the presession and just... ? Course, they'd have to have a vote of the people too to do that.
SENATOR WARNER: (inaudible), yes. Okay. I'm going to refer to Senator Kristensen...
SENATOR ROBINSON: Okay.
SENATOR WARNER: ...'cause he worked with this.
SENATOR ROBINSON: Sure.
SPEAKER WITHEM: Senator Kristensen.
SENATOR KRISTENSEN: Thank you, Mr. President. Senator Robinson, there's a difference between...let's make sure we got the right terms. There's a hospital district...
SENATOR ROBINSON: And, yeah, this is a hospital district.
SENATOR KRISTENSEN: Okay.
SENATOR ROBINSON: Not a county hospital.
SENATOR KRISTENSEN: Okay, the county hospital would be back under their levy, under the county because it's a county function.
SENATOR ROBINSON: Okay.
SENATOR KRISTENSEN: Okay, and they're going to be restricted. That's what we did with (LB) 1085.
SENATOR ROBINSON: Okay.
SENATOR KRISTENSEN: The hospital district then will be one of these other levies ...
13570
SENATOR ROBINSON: Okay.
SENATOR KRISTENSEN: ..that will have to fit within that.
SENATOR ROBINSON: So they could come in, in the preplanning group that Senator Warner's talking about, could they do ... could they....
SENATOR KRISTENSEN: Right, if that's the same.
SENATOR ROBINSON: Yeah, and then they could...
SENATOR KRISTENSEN: I think all of your conversation (inaudible).
SENATOR ROBINSON: ..then their district could vote on. that. I mean they could vote whatever...
SENATOR KRISTENSEN: Yes.
SENATOR ROBINSON: ..their people felt that they needed. Is that a...
SENATOR KRISTENSEN: Correct.
SENATOR ROBINSON: ..correct statement?
SENATOR KRISTENSEN: Right. That's the reason they called it...
SPEAKER WITHEM: One minute.
SENATOR KRISTENSEN: ..that's the reason they call, and you talk about a hospital district because it can go across county boundary lines ...
SENATOR ROBINSON: Right. Yeah, well,...
SENATOR KRISTENSEN: ..and that's the reason they talk about area.
SENATOR ROBINSON: ..this one doesn't, but they can.
SENATOR KRISTENSEN: Exactly.
13571
SENATOR ROBINSON: Yeah, thank you very much.
SPEAKER WITHEM: Thank you, Senator Robinson. Senator Warner? Senator Kristensen.
SENATOR KRISTENSEN: Thank you, Mr. President, members of the Legislature. I want to respond a little bit to Senator Maurstad, because he raises some interesting points here that's important to bring up about the philosophy of 1114 and how it fits in with some of these levies and combining them and collapsing them. We need to be very careful about, particularly at the county level, who's going to have control of the property tax system, and it goes back that the county board is really the one who has the major contact with the system because they are the ones who send out the tax statement, they're the ones that hear the protest, they're the ones that do the valuations and, quite frankly, when you come to complain about your property tax people go to their county board and, particularly, they go to it at protest time saying, well, look, my taxes are way too high and my valuation is too high. The county board will patiently look at them and say, yes, but realize that we've got this miscellaneous district, for example, the hospital that can levy 7 cents. The statute says there's nothing I can do about it; I've got to put 7 cents into the tax area. The same thing occurs with the extension service, the ag... fair board system. We've got all these little miscellaneous levies out there ' that, gee, we'd sure like to have some control over but I don't have .any control over them. What we've done with 1114 is have a system where the county board is really going to act as the administrator, if you will, of most of the property tax levies and so, on one hand, if I was a county board member I'd say, hooray, I'm finally going to get some control over this, on the other hand they're going to have to make some very difficult choices because now they can't say, look, I don't have any control over the hospital levy, I have to be responsible for that. And what will occur at these meetings is that the county hospital group, the administrator, the trustees, whoever, are going to come in, all these smaller units, including like townships for example, are all going to come in and the decision making process is going to be centralized to the county board. I think that's probably good policy. That's the reason when Senator Warner was talking about a vote of the area to exceed that many times through 1114 you're going to find we've shifted from shall levy to may levy or we've changed some of those
13572
things to make the policy and collapse the policy back to the county- board. With ... by doing that you're still going to have in places in the statute where the county board may assess a levy that will. raise 20,000 dollars, for example, on, oh, it could be the ag society or whatever, but we want to make sure and we tried to protect that the county board will have the ultimate say with that 15-cent levy. And if they can use their nickel, that would be with things that aren't primarily under their function. So the items that we didn't collapse to the county under 1085 would probably be the areas where we could use the nickel for the interlocal agreements, 'cause you couldn't have an interlocal agreement with yourself. You'd have to have it with probably the fire district, you could have it with a municipality. Most likely, that will be law enforcement, garbage waste disposal pick up and so on, and those are the primary areas that we designed that to do. The other thing that is important with 1114 that I keep wanting to stress is that it's going to give you a three-year option to look at some of these things to do. They're not going to be something that this summer you're going to be able to have a grand plan to do. It's going to take you a period of time and planning. You also are going to have, and the present amendment that we have that clarifies when some of these things take effect is important so we get all the dates lined up, but...
SPEAKER WITHEM: One minute.
SENATOR KRISTENSEN: ..at least for the next probably six months you're going to have a lot of boards, and whether they're the NRD boards, the community colleges or whatever, searching for ways in how do we address this. And I think the community colleges, in particular, were the ones who came in and said, look, you know, we've got a policy choice here; do we become part of the state system or do we rely on the property tax system? And a majority of us would probably like to stay where we're at with property tax, but, well, maybe going to the state isn't so bad. What 1114 is going to do is cause that community college system to sit down and have a very serious discussion among themselves and then, given the spending limitations that are going to tome in the next bill, that's going to-force them to take some hard looks at philosophically what do they want to do, but it's their choice. They're going to get a chance to, at least over a period of two years probably,...
13573
SPEAKER WITHEM: Time.
SENATOR KRISTENSEN: ..talk about that and make the decision "themself".
SPEAKER WITHEM: Senator Maurstad.
SENATOR MAURSTAD: Thank you, Mr. President. If Senator Kristensen would respond to a question.
SPEAKER WITHEM: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR MAURSTAD: You mentioned that we have a three-year option here and I'm trying to look at, in the context of the amendment, it appears that the way that the amendment would change it we'd have two budget years. The first one would be '96-97.
SENATOR KRISTENSEN: Well, that's...
SENATOR MAURSTAD: Is that right?
SENATOR KRISTENSEN: You're talking about budget years, yes.
SENATOR MAURSTAD: Yeah. Okay. And the reason why we're making the change, because the way it was before would, in fact, given three budget years.
SENATOR KRISTENSEN: No. No.
SENATOR MAURSTAD: Would not have?
SENATOR KRISTENSEN: No.
SENATOR MAURSTAD: Okay.
SENATOR KRISTENSEN: No.
SENATOR MAURSTAD: Well, and maybe someone can take a moment and explain that to me when we're done here and then I'll have a better understanding of it, so I need to clear that up in my mind.
13574
SENATOR KRISTENSEN: Okay, I or somebody will come down and I can... I'll draw you the map on how that works.
SENATOR MAURSTAD: Great.
SENATOR KRISTENSEN: Thank you.
SENATOR MAURSTAD: Also, I want to indicate to you that I agree with at least the first three and a half minutes of what you were saying and I don't. .. and that's not... I don't disagree with the last minute and a half, I just didn't hear it. Relative to the control and relative. to, you know, the county board certainly is who they go to, that, of course, is another one of those double-edged situations because, in my former service, we were lowering the city levy for a variety of reasons and it's not important why, but we were lowering the city levy and I was very careful to indicate, when we would discuss this on radio shows or out and about giving talks and interchange, that we were looking at lowering the city property tax levy; that your city property taxes would be lowered. And then people would get their property tax statement and the total of the property taxes that were paid was higher than the year before and then they called me and said, hey, I thought you said we were going to have lower property taxes? I said, no, I said you were going to have lower city property taxes. So, I mean, there's a lot of who gets what in all of this, but I want- to emphasize that I don't disagree with what you and the committee have done relative to this particular area. I just want to make sure that those people that are truly interested in the ag societies, fire districts, historical sites, all of them, I hope that they... that it's brought out that this dramatically changes the authority that they have and the process that they're going to have to go through BO that they're aware of what will occur before the fact and hopefully not after the fact. Senator Kristensen, if you could respond to one last... one last question, you mentioned the townships and they would come in and indicate to the county board. I'm trying to get in my mind the process that will occur here because right now the townships in my county all have different levies ...
SENATOR KRISTENSEN: Right.
SENATOR MAURSTAD: ..and will this 15 cents be...how will that
13575
be broken down to know when or if the counties exceeding that, if they've got one entity like the township that might be higher or lower than the other?
SENATOR KRISTENSEN: The townships, because of what we did in 1085, the townships are going to come under the county's 30 cent, because it's a purely... it's going to become a county function, so that's...
SENATOR MAURSTAD: Okay.
SENATOR KRISTENSEN: ..where they fit into that.
SENATOR MAURSTAD: So we're not eliminating them. We're Just taking away all of their authority, basically.
SENATOR KRISTENSEN: We're taking away their independent authority...
SENATOR MAURSTAD: To levy.
SENATOR KRISTENSEN: ..to levy.
SENATOR MAURSTAD: Okay.
SENATOR KRISTENSEN: I think that's the best way to describe it.
SENATOR MAURSTAD: And so ... but I guess what I'm trying to get at and you can clarify for me, does that mean that all of the townships in that particular county will have the same township levy?
SPEAKER WITHEM: One minute.
SENATOR KRISTENSEN: No, not necessarily,...
SENATOR MAURSTAD: No. Okay.
SENATOR KRISTENSEN: ... because the county board will have the ability still...their. ... those townships will meet, come up with a budget and decide how much they need, or how much they want. They'll (inaudible) and the board has the power.... It isn't a common levy for townships, it's an overall levy cap for-the functions, and they can dole it out however they see fit.
13576
SENATOR MAURSTAD: And the other thing that you can explain to me then when we're able to get together is how that will work, because I'm having a hard time envisioning how the county will know when or if they've exceeded their authority for this 15 cents when you might... if you have, I don't know, 24 townships, when you might have 24 different levies associated with that particular township, you'll also have other overlapping boundaries.
SENATOR KRISTENSEN: And part of the reason that you'll know is that, and in here You'll Bee an earlier meeting time and that's where you're going to have that....
SPEAKER WITHEM: Time. Senator Warner, you're recognized to
close on the amendment.
SENATOR WARNER: Mr. President, members of the Legislature, I just ask that the amendment be adopted. I think the discussion that has been held has been discussed in more detail. But, again, it's not a substantive change in the overall picture, it was meant to clarify and define some terms so that questions that have come up as to the drafting and that essentially is what it does. I'd ask that the amendment be adopted.
SPEAKER WITHEM: You've heard the closing. Question is, shall the Warner amendment be adopted... the Warner amendment to the committee amendments be adopted? All in favor vote aye, opposed vote nay. Members, we are voting on the Warner amendment to the committee amendment. Again, it's not my position to tell you how to vote or to force you to vote, but those of you interested in voting on this measure should be advised that we are voting at this time. Record.
CLERK: 26 ayes, 0 nays, Mr. President, on adoption of Senator Warner's amendment to the committee amendments.
SPEAKER WITHEM: The Warner amendment to the committee amendments is adopted. Mr. Clerk, next item.
CLERK: Senator. Schellpeper would move to amend the committee amendments.
SPEAKER WITHEM: Senator Schellpeper. (Schellpeper amendment,
13577
AM3965, can be found on page 1377 of the Legislative Journal.)
SENATOR SCHELLPEPER: Thank you, Mr. Speaker and members. This amendment was brought to me by the counties. Counties, cities, and other governmental subdivisions use lease/purchase contracts for the acquisition of all types of equipment and capital improvements to real estate. Their ability to perform these contracts depends upon their ability to levy property taxes. This amendment will treat pre-existing lease/purchase contracts the same as bonded indebtedness, for example, if a county has acquired road maintenance equipment with a lease/purchase contract approved prior to July 1, 1998, the levy required to perform the county's obligation under that contract would be excluded from the levy limits. If these contracts are not exempted from the levy limits it could create some serious legal questions with respect to the impairment of the contracts when the levy limits come into effect in 1998. So all this amendment does is just states that on page 2, line 21, you insert "pre-existing lease/purchase contracts approved prior to July 1, 1998". It's very simple, that just treats these contracts the same as a levy limit. I think if you've ever been on a county board you know how that operates, how they operate. They just wanted to be treated like bonding. Be glad to answer any questions, Mr. Chairman.
SENATOR BERNARD-STEVENS PRESIDING
SENATOR BERNARD-STEVENS: Thank you, Senator Schellpeper. Senator Warner.
SENATOR WARNER: Mr. President, members of the Legislature, as I understand the amendment it is, in effect, what Senator Schellpeper's description, the same as my... as I understand it. These are pre-existing contracts that would be treated. As a matter of fact, I'm not sure you could jeopardize a contract in any event but ... I'm sure you couldn't. But it's the same as if it was a bond purchased over a longer period... over a period of time as well, and would be consistent with the way the bill is. I think it would be appropriate to adopt..
SENATOR BERNARD-STEVENS: Thank you, Senator Warner. Senator Schellpeper, there are no further lights.
SENATOR SCHELLPEPER: I would close, thank you.
13578
SENATOR BERNARD-STEVENS: You've heard the closing. The question is, shall the Schellpeper amendment be adopted? All those in favor vote aye, opposed vote nay. We are voting on the Schellpeper amendment. Have senators all voted? Senators not in the body, if you care to vote on the Schellpeper amendment, we'd appreciate you casting your -vote here shortly before we have to record. Senator Schellpeper, what are your intentions?
SENATOR SCHELLPEPER: Mr. Chairman, I hate to have a call of the house because I know where they're all at, they're over eating . If they could just get about... only need three more people, four more people to come over and vote, it they would.
SENATOR BERNARD-STEVENS: Senator Schellpeper, would you like to have a call of the house or just accept call-in votes?
SENATOR SCHELLPEPER: Well, here, I got one coming. (Laugh.) Not enough, though. Bud vote twice, I don't suppose.
SENATOR BERNARD-STEVENS: Senator Schellpeper, we need to....
SENATOR SCHELLPEPER: Yes, I will ask for a call of the house and take call-in votes.
SENATOR BERNARD-STEVENS: Thank you. The question is, shall the house go under call? All those in favor vote aye, opposed vote nay. Record, Mr. Clerk.
CLERK: 13 ayes, 0 nays to place the house under call.
SENATOR BERNARD-STEVENS: The house is under call. All unexcused senators please report to the floor. Senator Schellpeper is taking call-in votes. All unauthorized staff please leave the floor at this time. We are accepting call-in votes.
CLERK: Senator Schrock voting yes. Senator Brown voting yes. Senator Schimek voting yes. Senator Wehrbein voting yes.
SENATOR BERNARD-STEVENS: Record, Mr. Clerk.
CLERK: 26 ayes, 0 nays, Mr. President, on the amendment.
13579
SENATOR BERNARD-STEVENS: The amendment is adopted. Raise the call at this point. And, Mr. Clerk, next amendment.
CLERK: Mr. President, the next amendment to the committee amendments is by Senator Beutler, AM3998. (Amendment can be found on page 1412 of the Legislative Journal.)
SENATOR BERNARD-STEVENS: Senator Beutler, you're recognized to open on your amendment.
SENATOR BEUTLER: Senator Bernard-Stevens, members of the Legislature, the amendment has been passed out to you. Before I discuss the amendment itself, let me say by way of preface that I'm very grateful for all the work that the Revenue Committee has done on this entire question. I think it's marvelous that they've been able to come up with such a detailed plan in such a short period of time, considering all the subtleties and complications and implications of this entire project. And I would like to say also, by way of preface, that I am supportive of the effort. And the amendments that I propose either today or on Select File are generally designed, hopefully, to help the cause and also with respect to this particular amendment to put me in a position where I feel comfortable supporting the whole effort. It seems to me that we have done a lot in this particular bill and in the other relates bills in the package to at least attempt to protect cities and attempt to protect counties, and there are various alternative taxes and mechanisms by which those two entities can move to protect themselves under this particular proposition. But the school districts ... but the school districts are left out there extremely exposed. Under Section 2... subsection (2) of Section I the school district levy is going to drop to $1.10 in a year, by January, 2002, and down to $1 after that. The average school levy in Nebraska is $1.41, that means by the time it drops to $1 we're looking at something 25, 30, 35 percent, most school districts, somewhere in that range, a drop in their revenues. The amount ... the total amount of money that's affected is going to be at least $200 million, maybe somewhere closer to 250 ... 200 to $250 million, I'm not sure we know exactly. In any event, it's a huge amount of money. What my amendment says is that prior to these levies coming into effect the Legislature shall have raised, either by income tax rate increases or by expanding the tax base, it will 1 raise and use at least $150 million, $150 million of resulting revenue will be added to the Tax Equity and Educational
13580
Opportunities Fund, the 1059 fund. The objective is this, and this is structured in the bill so that if this does not occur by the time that the school levy goes into effect then the school levy cap will sunset. If, on the other hand, we have raised this amount of money and put it into the State Aid Fund, then the caps will continue to be in effect. It's not my objective to suggest that all of the money that the schools would need for replacement should be replaced now with some sort of new revenue; $150 million is not all of the money, by any means, that will be required, at the most optimistic it's three-quarters, at the least optimistic it's perhaps 60 percent. In any event there is going to be a substantial figure that's going to have to be made up" with either some kind of restructuring or continued reduction in school expenditures, on the level of 10 to 15 percent at every school district, even with this kind of "influsion" of funds. The intent of the amendment and all I'm trying to get us to commit to, and I think if we're willing... if we're really willing to do this, we ought to be able to commit to it, that is a commitment to raise part of that money for sure if this cap is going into effect. I'm not sure I can vote for this bill if I have to be a riverboat gambler and say we are now capping the school levies in such a way that it will cause a 25 to 30 percent reduction in their revenues, and I'm willing to bet on the fact that we can either beat the chamber of commerce or beat somebody else in this political game in order to restore some of that funding to the children. When we talk about cities, I don't think in terms of individuals so much, and when we talk about counties, I don't think in terms of individuals so much, not individual faces and persons. They're big people, they can fight, they can struggle, they can move to protect themselves. But when I think about schools I think about the kids. And it's one mistake to do damage to certain kinds of institutions, they can recover better. But to do any sort of long-term damage to the children is the biggest mistake we could possibly make. And I know that we're all playing here this game and we're thinking, well, maybe there will be a petition drive and-maybe there won't-be, and we don't want a petition drive, and we certainly don't because those propositions would be much worse for the children of the state, in my opinion, than anything we're doing today. Nonetheless, I have to believe that the people of the state will understand a logical and reasoned and effective and serious act on our part that is designed to make this transition in an intelligent way. And petition drives notwithstanding, I don't
13581
want to be in the position where I have been the one to have damaged the school system. I don't want to take that chance. I'll take $50 million worth of chance, I'll take $90 million worth of chance, I'll bet on that kind of restructuring, I'll bet on that alternative tax revenues, but I will not bet on 200 or $250 million of makeup revenues coming from someplace or bet on us revoking that cap in the event that they do not occur. And I don't think that any Of Us in here should do that. I mean if we are prepared to develop the thought as far as we apparently are, why are we not prepared to develop the thought one step further? Because I believe that when you get to the bottom line that almost all of us in here know we have to raise a good part of those revenues that represent the 30 percent reduction in school revenues. I mean we know we got to do that. And there could be no clearer message to the people of the state that this needs to be done than to say so right here as part of the overall proposition. People of the state are not fools, they know there has to be some kind of revenue to make up for this. They don't want to hurt the school system. And there shouldn't be any...
SENATOR BERNARD-STEVENS: One minute.
SENATOR BEUTLER: ... doubt in anybody's mind, a 30 percent reduction would be a big hurt. And so they're going to be supportive of reasonable efforts. They're going to understand reasonable efforts. And we should infuse this process with a little realism of our own. And I think in doing that we will gain credibility with the people. And we do that by saying out right, if this is what you want, and this is what you want apparently, then in order to protect the Most important of all institutions, the schools or the children, this is what needs to be done. And that's all this amendment does is to say we are not in any sense going to abandon the schools, that if somebody is going to abandon the schools it will be Ed Jaksha or somebody else with one of their petition drives.
SENATOR BERNARD-STEVENS: Time.
SENATOR BEUTLER: Thank you.
SENATOR BERNARD-STEVENS: Thank you, Senator Beutler. Senator Warner, on the Beutler amendment.
13582
SENATOR WARNER: Mr. President, members of the Legislature, I'd rise to oppose the proposed amendment at this time. The concept that we have talked about from the beginning and this is a process, and the process is one where we establish some goal in terms of levies. The assumption is that before you start to raise additional revenue that first there will be assurances that are perceived or real, whichever it is, or a combination of the two, that those things that can be done to reduce costs have occurred. Now you're never heard.... There are those who argue that there will be no need for any additional revenue when this is put into effect, you have never heard me make that argument. In fact you've heard me make the reverse argument. In all likelihood there would be something, but I also believe that once you start down the route of suggesting fixed dollar amounts or however you might do it that it's going to be made up. That then brings to an end the incentives to really begin to look for ways to become more cost-effective or to get rid, of the perception that it can be done to be more cost-effective. And finally the obvious thing is that we can put this in, but it's not going to be binding. This would be a condition, as I understand it, of enactment. We just had a court case here a couple weeks ago said we can't do -chat. And I believe this will probably hold up the same way. And I can appreciate the desire of Senator Beutler and perhaps everyone to say, well we're going to cover part of this loss. At this point I don't know what level that is appropriate, until this process is gone through, what efficiencies, if any, can be accomplished or cost-effectiveness through consolidation, mergers, a whole series of things that could happen. But I think to suggest at this beginning that this is just another proposal to shift from one tax to another, which you may-in part end up in part, but to start off at the beginning, if that's what it is, we'll, as a partial matter, defeat anything being done at all.
SENATOR BERNARD-STEVENS: Thank you, Senator Warner. Senator Hillman, followed by Senators Klein and Beutler.
SENATOR HILLMAN: Yes, Mr. Speaker, members. I'm not going to support the Beutler amendment. But I am going to take the opportunity to talk a little about education, though maybe not K through 12. Kind of like to shift to the debate just a little bit, to look at the differences that there are in the political subdivisions that we're addressing. And one of the ones that I would like to visit with about and Senator Warner would like to
13583
ask you little bit about your thoughts and that is how we address community colleges. I've heard that there's some escape routes, there's some ways that you can reduce your levy by voters, in that the voters can choose to increase the levy. And in a regional concept, which you're looking at 16 or 25 counties, I think realistically you would agree that there is no way you're going to get that many counties to increase the levy. If you're looking at consolidation for another way to address reduced costs, I will give an example of Western ... who has done some restructuring, who has moved a campus, who has arranged its entire ed on two-plus-two programs, who has entered into distance learning, and has done those kind of things, but they can't really offer any kind of consolidation where perhaps you could consolidate with another community college. And I think there's some difficulties. in any kind of consolidation or looking at any restructuring when we look at higher ed. So I have some real concerns when it comes to community colleges and how they can address the issue of the levy and would like to know what the thoughts was of the Revenue Committee and what you think the alternatives are for community colleges.
SENATOR WARNER:. Senator Hillman, there's been a variety of discussions on community colleges and they range from, some of the things that have been talked about in the past, I would agree that in the case of community colleges, the way they're structured, while there would be authority for a higher levy by vote would be there, I would not think that's probably a likely thing to occur. What there .... Obviously, whether or not the old argument, whether state government ought to take over all of secondary education costs for community colleges as well as other is there, or there would be a smaller... a greater percentage that would be state supported, that argument is there. There is one other concept that Senator Wickersham has looked at that we've discussed. I think it would be a matter of an interim study proposition. And I should defer to Senator Wickersham to briefly describe what the concept is. A recent court case, I think, opened up another alternative, it would be a major, way to address the lack or uniformity between the various community college districts and their ability to fund at 8 cents. I think the concept that Senator Wickersham has preliminarily looked at in fact would fund them at 8 cents, perhaps even less. But whatever time I have left I'll extend it to Senator Wickersham, if he'd like to briefly touch on that.
13584
SENATOR BERNARD-STEVENS: Before I do that, Senator Hillman, this is your time, is that correct?
SENATOR HILLMAN: Yes.
SENATOR BERNARD-STEVENS: Do you want Senator Warner to yield Senator Wickersham your time?
SENATOR HILLMAN: How much time do we have left?
SENATOR BERNARD-STEVENS: You have about one minute left.
SENATOR HILLMAN: All right, Senator Wickersham, in his benevolent way would not be able to tell me in a minute, and so I would turn on my light, or I'd appreciate Senator Wickersham doing that, and some explanation. The other thing I would like with it is if they have any kind of a timeline whereby they think they could be addressing this? There are two of the six community colleges that don't have any apparent problems with an 8 percent, but the rest of them do. And I know that's general when we're talking about counties and cities also. But to know the revenue's thinking, the Revenue Committee's thinking in how they would initiate and perhaps how soon, and if they have any definite plans to address that. Thank you.
SENATOR BERNARD-STEVENS: Thank you, Senator Hillman. Senator Klein, followed by Senators Beutler and Wickersham.
SENATOR KLEIN: Thank you, Mr. Chairman and members. I want to compliment Senator Beutler on his 180 degree swing from this morning. I actually like his idea this time. I'm going to support that. We live in a very fast-changing world. You know we just ... we need to do something to make sure education can stay up. I think at the present time there are 40,000 articles, .scientific articles published every week, that's just the ones that are published, those are not the ones that are submitted. The World Future Society said that knowledge doubles every 15 months now, and by the next millennium it will be every 11 months. I don't think we can afford to take a bite out of education. I think we need to fund it. I like his idea. Like I said, the world is changing rapidly. Since the U.N. was formed, 130 of the 190 countries that-are in the U.N. have changed, they are not the same ones. So I think that. if we slow down on our education, because of a bill like this, we're going
13585
to end up with people that aren't going to be able to keep up, and we're giving our advantage to the rest of the world Instead I will relinquish the rest of my time to Senator Beutler.
SENATOR BERNARD-STEVENS: Senator Beutler, you have approximately four minutes.
SENATOR BEUTLER: Senator, thank you very much.
SENATOR BERNARD-STEVENS: And, Senator Beutler, yours is the next light, so I'll just let you go on, if that's what you prefer.
SENATOR BEUTLER: Thank you. I'm not sure I can or should take all of that time. But I appreciate the senators comments with respect to the importance of education, whether you're in the business community, or almost any aspect of our society, as they talk of competitiveness in the world, as they speak of why people are losing jobs and not able to find other jobs, it all comes back around to education and the need for more sophisticated people, more better educated people. If there was ever a time in our history as we go into a global free market where we're competing with societies all around the world, if there was ever a time in our history when we have to be careful that education is getting better and that it does not get worse, it's at this particular point in time in our history, because we can lose jobs and industries to other societies who better prepare their people for the high tech world, for a world that continues to become more high tech and more high tech all along. So the word of caution, but beyond that let me say again that this amendment wouldn't do away with the need for restructuring. This amendment doesn't suggest the replacement of all the revenues, it suggests the replacement of 150 million of what's going to be 200 to $250 million of shortfall. So the pressure will be there, there will be plenty of pressure, even if we relieve the situation to this extent. If we don't relieve the situation to this extent, there won't be voluntary mergers, we will have to have mandatory restructuring of the schools and the school systems because it's going to have to happen quickly, and they won't move to do it that quickly, they won't be able to comprehend the situation that quickly, and the deterioration will be very quick unless we have some safety net of basic revenues there to help them make this transition. Let me
13586
suggest what's in some of the other bills and ask you to think about what's being done for cities and counties, and nothing is being done to protect the schools, nothing that I can think of. And I reach out a little bit here and step a little far because, like you, I'm not on the Revenue Committee, I'm not sure I know all the details of all these bills. But it appears to me that with regard to cities we're going to have a municipal equalization bill. So at least with respect to the cities that are going to be the worst hit, we are already providing, in this package, for at least a part of their salvation. Cities can have sales taxes. Cities can have keno operations.. Cities can have several other mechanisms, none of which are available to the schools. One of the big...interestingly enough one of the big political subdivisions in this. bill that's allowed are sanitary and improvement districts. Now sanitary and improvement districts are used in the particular local of our state to absorb development costs and help cities develop and grow. But the only city that uses that to any large degree is Omaha. If you're in a small town and you're developing, if you don't have these big, major additions of 200 and 300 homes and building a, golf course and a whole unit and having this political subdivision, called an SID, fund it, if you can't use that, something on that scale, then your little town, or little, medium-sized town and your development costs are a part of your municipal Costs. So therein lies another advantage, but I bring it up in the context of this discussion simply to indicate that. here's another way out for some of the cities. Lincoln doesn't use SIDs. Well, they could start using SIDs, they would have fewer municipal costs in a certain area, and they'd use SIDs and their tax levy to develop, like Omaha does. All of these things are there for the city, provisions are in this package to help protect them. With respect to counties, first of all, as has been pointed out, they can squeeze all these little, miscellaneous districts *to the extent that it's politically feasible or to the extent that they think it's necessary. They have the controlling hand on that 50 cent levy, which is ... there will be pressure there, there's no doubt about that. But there's flexibility there. If we provide for a county sales tax, I believe, of 1.5 percent, there's a mechanism there that we're giving them right now to help save themselves. And, of course, their-overall levy wasn't lowered, even though it has to be shared with this miscellaneous ... with these miscellaneous districts. They also can start keno operations. In short, either through this package or through existing mechanisms,
13587
there are ways for cities and counties to think through this, to fight out of this, to pick up alternatives probably to save themselves with some good restructuring, you know, overall I don't have a lot of concern about those units, I have concerns about individual units but not about their being taken care of as a whole, because the Revenue Committee has been able to get into it far enough that they've really thought those through. But you know they stopped with the schools. What's in this package that helped save the schools? Name me one thing, name me one thing. There's nothing! And the reason there's nothing is because that's the big bite. And somehow we're going to make the decision that we won't talk about the big bite, we'll put the schools at risk. And I'm saying let's put them only half at risk, or two-thirds at risk. Let's put that safety net there, there's no sense in putting the schools at risk of a 30 percent budget reduction that's not otherwise made up in some way. Another part of this bill, this is going back, I should have mentioned this when I was talking about counties, but we're going to take over the county poverty program, right? Big reduction to a lot of the counties, big reduction. And we're paying state funds now, we're going to pay state funds to pick that up, So already we're making provisions for the counties with significant bucks. But what bucks are we putting into the schools right now to help them through this transition? We're not putting anything in. So I will leave it at that and ask the Revenue Committee again to explain why certain provisions have been made for the other political subdivisions,, but with respect to the children, who I think are the most important of all, we're going to play this riverboat gambler game and see, and .just see in a couple years if maybe we make up the revenues. I,. for one,...
SENATOR BERNARD-STEVENS: One minute.
SENATOR BEUTLER: ... don't want to wait and see, I want to do something now so I feel comfortable that the situation, if not handled totally to my liking, at least will be handled in such a way that is minimally acceptable, I think, to you and I and to the people of the state. Thank you.
SENATOR BERNARD-STEVENS: Thank you, Senator Beutler. Senator Wickersham, you are recognized at this time.
SENATOR WICKERSHAM: Thank you, Mr. President. I will ... I have
13588
gone down and spoken to Senator Hillman about the common levy concept for community colleges. And I will admit, Senator Hillman, we spent more than a minute talking about it. But if you ... but if you have questions about the concept, after our conversation or after what I have to say here, I'll come down and talk to you again so we don't have to use up your time. I.... But to have a ... one comment that is at least relevant to Senator Beutler's amendment, Senator Beutler, I'll just simply say that I oppose your amendment and then go on and talk about other things. The concept that I was discussing with Senator Hillman and, as Senator Warner suggested, I'm working on is indeed a common levy for community colleges, and it would result in a statewide levy for the community colleges that would fit very close to the 8 cents that is in 1114 and I believe can be made workable. I'd really planned to discuss that concept through an amendment I was going to offer on Select File, but since the topic has been brought up, Senator Hillman, maybe it's just as timely to talk about it now. I'm not aware that anybody else has filed any amendments concerning the community college levy, so maybe we wouldn't have had any other opportunity. But the concept, as it would be applied to the community colleges, certainly does work, and in some ways is I think a much better ... has much better application in that arena than it does in the K-12 system. And I think you're all aware that in the K-12 system I don't think it's good policy and doesn't work very well. gut at least as it would be applied to the community colleges, I think it could be made to work quite well because it is my belief that truly the community colleges are a part of the higher education system in the state of Nebraska. And while I don't believe they ought to be funded by property taxes. at all, the fact of the matter is that they are. And if they're going to be funded in part by property taxes, and if they are going to be a part of higher education, as I believe they are, then it seems to me to be appropriate to have a levy that extends across the entire state and supports them. The distinction in the common levy, of course, is that each region served, each region for a community college would still be entitled to set their own budget., to meet their own programmatic needs, and still be able to then finally aggregate those needs but have a statewide levy to do it. The effect across the state is quite dramatic, from Western Community College that has a relatively high levy, to Metro, for example, that has a substantially lower levy. But it does provide for uniform support ... would provide for uniform support of the community colleges and at a levy that fits fairly
13589
nicely into the constraints of 1114 as you have it before you this evening. So, Senator Hillman, if you have additional questions about the common levy concept for community colleges, I'll be happy to come visit with you again. But that's it in very broad brush. Thank you.
SENATOR BERNARD-STEVENS: Thank' you, Senator Wickersham. Senator Wehrbein, followed by Senators Coordsen, Maurstad, and Kristensen.
SENATOR WEHRBEIN: Yes, Mr. Speaker, members, I'll be fairly brief. At first blush I was inclined to support Senator Beutler, upon reflection I realized that we can't. I think we have to recognize ... we can't at this point. I think we have to recognize the need for something to happen. It may well be one year from right now, be interesting to mark our calendars, of what we will be debating, because I would guess that we'll perhaps be debating how are we I going to replace maybe $400 million of property tax relief that may go out as a result of the constitutional amendments, one or many, that may pass. But I think at this time we, even though I recognize the need for education, I've certainly had many comments, even threats in the last two or three weeks about this subject that you can't do this, and we can't do that, the sky is falling, we can't respond, you've got to do this. Perhaps we have ... we simply have to react a little more to the realization that there's change, change is coming. Even if we do nothing there's going to be changes occurring in education as well as there is in the business world, state government, whatever, we have to react to that. And I simply think at this point it's probably necessary to keep on the path that we're pursuing with 1114, simply to get one ... all of our attitudes, wherever, including not only here, but across the state, that we've got to do somewhat of a better job. I don't.. . an entrepreneurial spirit, if you will, and I know *.-hat that s going to be considered an unkind word by many, but we've got to look at this that we're going to do the same job that we're doing now for our kids, but we're going to do it for less. Much easier said than done, I recognize that. But moving ahead with Senator Beutler's bill ... amendment right at this point it's going to take the pressure off. And I don't think any of us, wherever we are, are going to react unless we have pressure. And I think some things can be done if we all start looking at things in a different light. And if this is what it's going to take, then I'm willing to take that risk, at
13590
least for a year, and have people start thinking about what can we really do. I thought about asking Senator Bohlke about some things that may be done in education as innovations that could be looked at. I won't put her on the spot at this point. But I think we have to raise everyone's interest in this issue to the point that not only school people, but taxpayers across the state are going to have to focus more. I think the Revenue Committee, in its studies statewide, have done a lot to raise the level across the state of taxpayers awareness of what really are the issues, what really is important and what is not important. But I don't believe the dialogue is done yet. Andso I believe at this point moving ahead with 1114, as the proposed amendments, is a risk that we're going to have to take. one of the risks we take in here, I think the good Legislature should be five or ten years ahead of a given state or even a country is going, and that's one of the risks we're taking. None Of Us really knows where we're headed, but we do know that change is occurring rapidly and we're going to adapt to that change. And actually doing nothing is ... either is probably falling behind and cannot continue at the status quo. And I think this amendment, if passed, would take that pressure off to the degree that certainly there's money. I won't argue that if pinned down probably two years from now we could well be doing this exact thing. Might even be more money, Senator Beutler. But I don't believe we ought to put it in at this point.
SENATOR BERNARD-STEVENS: One minute.
SENATOR WEHRBEIN: Let's see how innovative all the subdivisions as well as ourselves can be. A hundred and fifty million, as I see it, is a cent and a half sales and income... in sales tax, it's half the amount that would be raised by a food tax. There is other service taxes. I've not yet seen an indication that the body or the state taxpayers are ready to raise sales tax. And then I bring in the other issues that we have of fighting crime, increasing costs of Medicaid, which I will not let that rest because that's going to be an increasing responsibility of the state. So I oppose your amendment, Senator Beutler, that's the bottom line for me at this point.
SENATOR BERNARD-STEVENS: Thank you, Senator Wehrbein. Senator Coordsen.
SENATOR COORDSEN: Senator Beutler, there's no question here,
13591
but it's interesting the way we from time to time, on rare occasions, have been on opposing sides of an issue. And I would share with you, Senator Beutler, that were I able to waive a magic wand and didn't need 25 votes and signature of a Governor, I would dispense with what we're doing and replace it with a program that would cost 5 or $600 million and would insure the payment of the classroom costs, the educational costs of K-12 education in the state of Nebraska. I would probably fund it all or in part with a one percent or so tax -on all of our income before we get credits and that sort of thing and you would have property tax relief on every square inch, every house, everything in Nebraska. But I don't have that magic bullet within my power grasp, and we're in a situation where we have to lay a foundation for the future, I believe. Our current situation, not only through the property tax support, but through our formulas and how they are computed relative to state aid to education, create scenarios, Senator Beutler, across Nebraska where there are children in K-12 systems who are significantly disadvantaged for reasons not of their own cause, primarily because of the place in the state their parents live. And I think you raised some valid concerns and certainly interest me because I, along with the other 48 members, do not want in any way to damage the education system anymore than it's already been damaged by our current system. When you look at areas where there's fundamentally low income, and we talk about equalization, but for some strange reason that doesn't work the way we envision is in many cases, that we don't have a very good system today, with a heavy reliance on, property tax for the support of K-12 systems. We look ... we use artificial measures cost per pupil, for an example, is a measure. Many times in some of the systems certainly those in the sparsely populated areas that cost per pupil may represent minimal, minimal programs, minimal opportunities, where a cost per pupil in a more advantaged area could have many more times the programs and two-thirds of the cost per pupil. So there are so many areas that we need to look. I have passed through, hopefully, the children in the classroom, but I have grandchildren and they're getting a good education, and I don't think anyone wants to do that. And if we could get any assurance that we had a signature from the northeast corner of the Capitol ...
SENATOR BERNARD-STEVENS: One minute.
SENATOR COORDSEN: ... on shifting some of the support to other
13592
sources of revenue available to us to levy, I'd support it. otherwise I have to oppose it at this point in time because I'm afraid in the political climate that we're in that any indication in this year that we're going to shift any funding would result in a veto. And I don't know what the strength of the body would be in overriding that veto. So the net result would be we would have no effort, in the final analysis, in trying to do a good effort. Thank you, Mr. President.
SENATOR BERNARD-STEVENS: Thank you, Senator Coordsen. Senator Maurstad, followed by Senators Kristensen, Fisher, and Bohlke.
SENATOR MAURSTAD: Thank you, Mr. President. I agree with a great deal of what my neighbor to the west indicated relative to the disparity that exists and the attempts to try to address that over the course of the years and hope that eventually we'll be able to work on something that is able to rectify that problem. But I would indicate to the senator that if we have a concern relative to this year and veto of a shift, increase in taxes or whatever, part of my premise is that that indication will always be there. Whenever we're going to, or regardless of when we decide to provide additional revenue it's going to have to be 30 votes or more, it's going to have to be over whoever the Governor is. I don't think that will be unique just to this ... our current Governor. And you always have, of course, the other premise that half of us are always going to be rolling back in front of the voters. So I see that replacement revenue coming very begrudgingly. Senator Beutler, if I could ask you a question relative to your amendment. I understand-what you're trying to do. Could I ask Senator Beutler a question?
SENATOR BERNARD-STEVENS: You sure may. Senator Beutler, if you'll yield.
SENATOR BEUTLER: Senator.
.SENATOR MAURSTAD: Senator, I think I understand what you're trying to accomplish here. But what I need for you. to explain to me is why this would be good for the schools and not good for the others.
SENATOR BEUTLER: Senator, I'm not sure that it would be good for the schools and not for the others. I think it would be good for them all. I'm not sure that at this point in time,
13593
without some assistance from the Revenue Committee, that I'm able to analyze exactly how much need there is in the area of each political subdivision. It seems to me, from the mechanisms that have been put in place in the package, that the question of replacement revenues has been handled very unevenly, that there is some provision for, in the case of counties not replacement revenues necessarily, but a huge deduction in their expenses from the point of view of getting rid of their poverty programs, making available to them a county option tax. In the case of cities there are some alternatives. They're helping the cities with the equalization plan. I'm not sure to what extent that replaces some of their revenues. I think what I'm trying to do for the schools is probably also applicable perhaps to a lesser extent to both the counties and the municipalities also, and that we ought to look closer at that question. But again I have not heard anyone, on the Revenue Committee or otherwise, answer the question of what assistance is there here to the schools in any measure for those replacement revenues as there is for the counties and the municipalities.
SENATOR MAURSTAD: You know, in a broader context, not getting into the number or the amount of relief, would you agree that if a safety net is appropriate for the schools, that a safety net would be appropriate for the others that this ... that 1114 will affect?
SENATOR BEUTLER: I think so.
SENATOR MAURSTAD: Yeah, thank you. A little bit later... Senator Vrtiska also has an amendment filed that deals with this in another way that would provide a more broad-based range of assistance in that section ... he would modify Section 70 ... or 55 by indicating if the Legislature has enacted legislation which is in effect ...
SENATOR BERNARD-STEVENS: One minute.
SENATOR MAURSTAD: ... July 1, 1998, to provide state aid or other funding mechanisms to political subdivisions to enable such political subdivisions to raise revenue at a level equal to at least 90 percent of the revenue realized in fiscal year 1997-98. So he's addressing it from a little broader perspective than what Senator Beutler is in providing a safety net of at least 90 percent to all the political subdivisions. I
13594
hope people have taken a look at that, that might be another way to address this. But I want to thank Senator Beutler for his comments.
SENATOR BERNARD-STEVENS: Thank you, Senator Maurstad. Senator Kristensen.
SENATOR KRISTENSEN: Thank you, Mr. President, members of the Legislature. Senator Beutler, I want to give you my opinion from the Revenue Committee, and it's obviously just my opinion and not a consensus of the group. There's no doubt that the schools are the most important factor of property tax, for a couple of reasons. One is they certainly are the largest users, but they also have the Most emotional appeal. It's our kindergarteners, it's our seniors, it's our future, all of those things that you and I know to be true. The ones that are the most vulnerable in here, that could be left out, are the counties and the cities because they do mostly administrative things. They carry out the function of our county records, they carry out our law enforcement, they do motor vehicles, they do those sorts of things. From my opinion the reason that the committee did is that you want to take care of those counties and cities in your terms, not mine, but address those problems is, one, that it's easier; but, two, those are also the most likely ones to be left out. There's no doubt that... and it isn't a gamble, that there will be tremendous pressure because of the importance of the schools. When this all occurs you do the restructuring first, then you look for the replacement revenues, if necessary. Schools will come first in line because they're going to be the most important. They won't be the ones left at the gate. Who would be left at the gate will be the cities and the counties. And from my point of view that's the reason that we did this up front. Second point is that when we go to the Education Committee it's real hard to sit in the Revenue Committee and do education type, because of our committee- structure, begin 'to do 1059 types of things in a vacuum, because schools, the reason 1059 sits over in the Education Committee and not in the Revenue Committee is -that there is actual impact upon instructions and there's a lot of other factors that, quite frankly, it's very difficult to do when you're looking at property tax relief. The third factor for me is the Maurstad amendment, speeches by many, many people, the schools are the problem, the schools are the problem, the schools are the problem, they spend more. And that cry, if
13595
you're going to do something, means that the biggest emphasis has to be placed on the schools to examine themselves. That's not pleasant, that's not easy to do, and nobody wants to say what the real words are, but here are the real words. And I get a letter, a legislative alert sent out by my superintendent that there's some major inaccuracies in here. But the basic thing is, look, we're going to have to cut teachers aides, we're going to have to cut four teachers, we're going to have to cut an administrator. And I get a letter back, not from somebody saying how terrible that was, they said, couldn't you do a little bit more. There will be emphasis to do those sorts of things. And, quite frankly, that's the reason I don't think it's the riverboat gambler approach, because I know that this body, whether it's this group of faces that are sitting here, but the next group will pay attention to the schools, and they'll go to extreme lengths to make sure that those educational opportunities are met and help it do it. But first you got to have the schools examine themselves and begin to find ways and come back to us with the problems of meeting with those lids. It is the larger problem. We're not going to solve the property tax problem forever with LB 1114, this is the beginning of doing that. It's part of a three to five-year process, and it took us a lot longer to get in there. The other thing that I want to visit briefly, and I wouldn't support that because, quite frank... your amendment, because, quite frankly, you'll bring on a variety of people who now are going to be, we can't raise sales. and income taxes, and we'll generate that bee hive of 'activity and defeat the ultimate purpose, which is begin the process of some property tax relief.
SENATOR BERNARD-STEVENS: One minute.
SENATOR KRISTENSEN: But there are a number of things that have come out that are inaccurate, and I don't know if it's generated as an organization from some of the schools, or whether it is a few isolated people. But some of the things that you're going to be getting, for example, says that the levies can only be exceeded by a two-thirds vote of the registered voters. That's not accurate. It's two-thirds of the governing board, and then it's a majority of the vote ... of those people who are voting at that point in time, big difference. You also have people say, well our levy, particularly the school levy, for example, is $1.37, we're going to lose all these dollars. They don't bother to tell people that 12 cents of that levy turns out to be bonded
13596
indebtedness and wouldn't be counted anyway. And that's no reflection on Senator Beutler's amendment, because of time and it's difficult to get into speak in this, there are a couple... some of those inaccuracies, as you get information to look at...
SENATOR BERNARD-STEVENS: Senator Kristensen, because of time, your time has expired at this point. Senator Bohlke.
SENATOR BOHLKE: Yes, Mr. President and members, I have not spoken yet on the issue because, as others have indicated, they've struggled with this issue and how we should approach it and at what stage we should approach doing something, it's been very difficult. I wanted to hear some of the debate and some of the reasoning of the Revenue Committee. Certainly we have people on the Revenue Committee who also sit on the Education Committee. I've talked with Senator Beutler and Senator Bernard-Stevens and other members of the Education Committee about the impact of this and at what point do we frame the argument for the people that we need to do something in reaction to what the possible outcome may be. I say that I have decided LB 1114 is a great reality check. As we go back home and Visit with people and certainly the example, other people have given examples, but in the newspaper you've heard the example of the high levy in Hastings and Hastings Public Schools, that's $1.57 without bonded indebtedness, that's $1.57 and we're talking $1.10. So I've had the conversations certainly with the personnel at my... at Hastings schools. 'But at the same time I believe that in that time frame, in that ... before we come back here, I believe ultimately that the people across the state will believe that if we do anything at all, we must protect the quality of education in Nebraska. I think they're proud of the schools in Nebraska. And I think that even though approximately only 20 percent of the people have students enrolled in the schools, that there still is a great... a large number of the population who are very concerned about what happens to Nebraska's schools, not only grandparents, aunts and uncles, but certainly businesses, because when they come to Nebraska and they look at the quality of the schools, the availability of the workforce are two of the things that they look at. And so at this point I've decided that I think that we should let LB 1114 be there, let the people have the reality check, let them say this is what the outcome could be, and then I think that they will come back to us and certain future Legislatures ... Senator
13597
Beutler, I'm not sure we can bind a future legislative body. But I would think that certainly all 49 senators would not be willing to have what ... the ramifications this could have on schools. And so I appreciate what Senator Beutler is articulating in his concern and wanting to provide that safeguard at this stage of the debate. But if we do, I have a feeling that we will lose a larger argument with the general public. And so at this point I think that 1114, as it is, does provide that reality check and does say to those people, it's time for you to decide, here are the cuts that would be there, and then it still gives us the opportunity to come back, as state senators, and say, we've had the discussions but as state senators we believe that these are the steps that we need to do, to make sure that quality education continues in the state of Nebraska. And I believe that the majority of the state senators, whoever they may be, will be committed to doing that. Thank you.
SENATOR BERNARD-STEVENS: Thank you, Senator Bohlke. Senator Maurstad.
SENATOR MAURSTAD: Thank you, Mr. President. I certainly agree with the statements that have been made relative to schools being important to kids. But I have to take ... probably getting to the point of agitating some, but I have to take the opportunity to say that cities and counties and county fairs and community colleges and NRDs, to name just a few, are also important to kids. And it's also important to their future what we're doing right now. And I guess what I continue to visualize in my mind is that Clint Eastwood movie where he's standing outside the village, a little town, country town, after they brought him in to help clean the things up. And you see the party shot with the whole town painted red. I don't know whether any of you have seen that particular movie and/or in other movies, with the tumble weeds blowing down the streets as the old, decrepit buildings fall while the camera passes by, because I believe that what we have is a situation where if all of the reaction occurs that has been anticipated by these severe cuts, and if there isn't the diligence to provide additional state resources, I think there are going to be a lot of parents sitting down with their children and grandchildren as they chart their future and try to make a decision on whether or not it'srational for them to stay in Nebraska, because Nebraska offers them hope and opportunity and the good life that a lot of us
13598
have enjoyed. So that's where my concern comes from. I hope that we're not cutting our nose off in spite of our face. I understand the rationale that ... you know if the villages and the cities, county fairs, whoever, you know if they can't get the votes of a small percentage of their population to do this, then I guess they deserve what they've asked for. I just don't quite have enough confidence at this point in time that people are going to realize what's in their best interests or not in their best interests. And I understand that now I'll be accused of not letting the people have their will, but that's what concerns me. I think that what Senator Beutler is proposing here and what Senator Vrtiska is proposing in is amendment are certainly good discussions on whether or not we're going to. provide a .safety' net, or whether we're going to continue to go on the premise that the Legislature will do the right thing when it all breaks loose down at the local level. I also think our credibility is on the line because I believe that if we impose, in fact, this type of constraint on the local level, we better be getting ready, the next time we work through the budget, in providing a similar reduction in the state's budget, because I will state again that people are not only upset just about their property taxes, they're also, if you ask them, think their income taxes and sales taxes are too high also. So we can think about that as we start working on the state budget for '97-96, '98-99 also. Thank you, Mr. President.
SENATOR BERNARD-STEVENS: Thank you, Senator Maurstad. Senator Beutler, followed by Senator Schimek and Senator Pedersen.
SENATOR BEUTLER: Senator Bernard-Stevens, members of the Legislature, I just wanted to reflect upon some of the comments that were made and some of the ironies of this particular debate. It's indicated that if we put some kind of funding or some kind of indication of possible funding in here that it would be vetoed by the Governor. I don't think that would be the case. I suppose it's possible, everything is possible. But why would the current Governor make the next Governor a one-term Governor? I mean if we don't put the money in now, if that decision is not made now, and if everybody is telling me, well that decision will be made in two years, nobody will abandon the schools, we'll put this money in two years from now, well there's going to be some Governor sitting there, two years from now, and he or she is going to realize that this is major, big time decision, and how can we be sure we won't get a veto then,
13599
anymore than we can be sure we wouldn't get a veto now? I mean I think it would be as likely then as now. And maybe likely in both cases, in which case we probably should prepare for this well in, advance. Senator Kristensen spoke of the bee hive of activity that would develop if you started talking about sales or income tax, or shifts, or replacements of revenue. Well, to me that just stirs me up in the sense that that's exactly what I'm worried about. That bee hive of activity, why is that going to be any less in two years when we have to do this to save the schools? Is that argument going to go away? Is the chamber of commerce and those who follow that philosophy, are they going to go away? I don't think so. Expanding the sales tax on services, is that going to be any easier argument in two years? A sales tax food, some believe in that, some vehemently oppose that, is that going to be any easier in two years? All those disputes that we get into when we perceive an edge to the urban, or an edge to the rural area in terms of the reallocation of taxes and who pays the taxes., is that going to be any less in two years, in the next two years? The decisions are there, the decisions may or may not be any easier, but there's a great possibility they may not be made, they may not be made. And if they're not made, then what are we saying to the public? That we're not going to fund the schools? Well, the public is proud of their schools, we've heard on the floor here today, they don't want to do that. So then the people must be expecting that we're going to do something about it, something rational, And I think we ought to be forthcoming with the public, because I think they know that something has to be done. Once they are aware of the dimensions of the cut, 25, 30 percent of school revenues, they will be aware of the scale of the problem, and they will be supportive of the need to put in an underlying safety net. Senator Kristensen argues that the cities and the counties are more vulnerable, I'm not sure I buy that at all. I'm not sure there's a more emotional argument than the argument for police, or the argument for fire fighters. I think those are every bit as strong and as emotional as the appeal of the schools ...
SENATOR BERNARD-STEVENS: One minute.
SENATOR BEUTLER: ... and does not afford us a rationalization for treating the ... for treating, the counties and the municipalities much, much better under this package than we do the school districts. If the people are proud of their schools,
13600
as has been stated on the floor, if they're supportive of the good schools that we have,- why are we afraid of this? Why wouldn't the people support alternative revenues that at least replace 60 percent of what's being cut? In what way is that radical or irrational? Surely all of you would agree, philosophically, as you sit there that 60 percent of a 30 percent cut in budget ought to be replaced. We've watched all of our school districts, we've listened to all of our school districts, I don't think... I've never heard of anybody cone in talking to me, or quietly talking to me on the side of the Legislature, saying, gee.. my. school district could cut 30 percent of their budget, they're so inefficient.
SENATOR BERNARD-STEVENS: Time, Senator.
SENATOR BEUTLER: Thank you.
SENATOR BERNARD-STEVENS: Senator Schimek.
SENATOR SCHIMEK: Yes, thank you, Mr. President, members of the body. I have, like several others on the floor, not spoken on this issue today because I'm really torn about this issue and because I've been trying to learn as much as I can about all of the provisions and how people perceive they will affect our different governmental subdivisions. One of the reasons I'm worried is because some figures handed out earlier today said that levies will go down about 24 percent in my locality. And I know that 65 percent of our school budgets, for instance, go to teacher salaries. And there does not... there is not a lot of flexibility in the budget, certainly not for huge decreases. Now we don't know what's going to happen with school aid and how that's going to affect our levies, but it may not happen for a while, if there are increases . We don't really know what income -tax receipts are going to be four or five years from now, those could be down and those could affect the amount of monies available, etcetera. So I was discussing with Senator Kristensen about how an individual school district, if it had the public discussion and the people of that community wanted to take a vote on whether they wanted to be under this particular levy limitation, what the scenario would be for doing that, and if it would be possible. And I guess I'd like to ask him now to explain these levy limits go into effect beginning July 1, 1998, for the '98-99 fiscal year. Would it be possible for my school district or any other school district in this state to take a
13601
vote on whether it wanted to come under those levy limits or not, Senator Kristensen?
SENATOR KRISTENSEN: Yes, you're going to have the opportunity to do that. You either do it in a special election, primary or general election. Now you and I had had some discussion about the Warner amendment that got attached that changed that date. That's fiscal years and that's going to become after July 1st of 198. You can do it as long as you vote prior to September 30th of the year in which the levy will be impacted. That would be September of '98.
SENATOR SCHIMEK: But how ... how could you ... how could you plan your budget if you don't vote until after your budget....
SENATOR KRISTENSEN: Well you bring ... you have your hearings in the spring, then when your ... your primary election would occur in May, for example, so you wouldn't have to have a special election to exceed those levy limits. Then when you set the levy, which is set on September 30th, with the new calendar, that's when you set the levy, that's when the...
SENATOR SCHIMEK: Right.
SENATOR KRISTENSEN: ... limitations, and then that's when the tax year will carry you through.
SENATOR SCHIMEK: Okay, so you have to have that done by September of '98, but that could be done at that primary election, in May, or even at ...
SENATOR KRISTENSEN: Or prior to that.
SENATOR SCHIMEK: ... some special election., if you decided to call one...
SENATOR KRISTENSEN: right.
SENATOR SCHIMEK: ... for that purpose.
SENATOR KRISTENSEN: And remember, you can go up to five years. So depending on, you know, if you do it next year, you're in effect wasting a couple years because they aren't in effect yet. But I would expect some activity in the primary election of '98.
13602
SENATOR SCHIMEK: So that ... that...
SENATOR BERNARD-STEVENS: One minute.
SENATOR SCHIMEK: ... that would give the people in my school district about a year from the time the Governor signs the bill, probably, or a little less to decide whether they wanted to have a special election.
SENATOR KRISTENSEN: It... it might even be closer to two years because... I can't remember how quickly you have to get that.
SENATOR SCHIMEK: Oh, I'm sorry, it would be two years.
SENATOR KRISTENSEN: You're probably closer to 18 months because...
SENATOR SCHIMEK: Yeah.
SENATOR KRISTENSEN: ...You've got to have a period of time, is it four months prior to the election, if I remember the election law correctly.
SENATOR SCHIMEK: Right, right.
SENATOR KRISTENSEN: So then you're backing yourself up into February of '98, and this is March of '96, so it... it's somewhat less than 2 years, but it's close... it's a period of time, yeah.
SENATOR SCHIMEK: That makes me feel a lot better. Thank you.
SENATOR BERNARD-STEVENS: Thank you, Senator Schimek. Senator Pedersen. That will not be necessary, yours is the last light, Senator. Senator Beutler, you're recognized to close.
SENATOR BEUTLER: Senator Bernard-Stevens, members of the Legislature, I think the point of the amendment has been clearly stated. I think it's clear in everybody's mind what is happening, basically I'm asking for a safety net, I'm asking for a safety net with regard to one particular political subdivision, the schools, for the reasons that have been stated, that they are the least protected and the most affected by this particular package of bills, that they are the institution that
13603
IS of growing importance to us, the institution always named as the first and foremost concern with respect to economic development and our ability to compete in the world. And as you and I squabble with each other, in the next couple of years, and sort through our different philosophies and collide in 100 different ways, many, many times resulting in inertia or no action at all, I don't want that result to occur in this next two-year period when we will have laid open the schools to a very destructive potential force. And so I'm suggesting this $150 million safety net, which is only a portion of the 200 to $250 million that will be lost by the schools, that will not take away the incentive for restructuring, that will, in effect, place the schools, in my opinion at least, on somewhat of an even keel with how the counties and cities are being treated in this overall tax package, property tax package. I don't perceive that on this particular round of debate, and maybe not to the end of this debate that we are thinking of the totality, of this package and how all the interrelated parts work. I think if we do think about that, that there is a particular vulnerability here that stands out, and that it is a kind of dishonesty about the package that is obvious to those who look at it closely, and that we will have far more credibility with the public and risk far less danger with a valuable institution if we do not take a chance on the scale that is being requested or being suggested to us by the Revenue Committee, but rather that we take a modest step to protect the institution, but at the same time deliver a very clear message notwithstanding that efficiencies in that institution are expected and must occur before any remaining funding, making Up the remaining 50 to $100 million, would be in any way forthcoming. It's a half-way measure, it's a compromise, but one I think that makes sense. Thank you.
SENATOR BERNARD-STEVENS: You've heard the closing on the Beutler amendment. The question is, shall the amendment be adopted? All those in favor vote aye, opposed vote nay. Have you all voted? Senator Beutler.
SENATOR BEUTLER: I'd like to have a roll all ... a call of the house and a roll call vote.
SENATOR BERNARD-STEVENS: The request is for call of the house. All those in favor vote aye, opposed vote nay. Record, Mr. Clerk.
13604
CLERK: 23 ayes, 0 nays to place the house under call.
SENATOR BERNARD-STEVENS: The house is under call. Would all senators not excused please report to the floor. Would all unauthorized staff please leave the floor at this point. The house is under call. The house is under call. Would all senators please report to the floor. And again, all unauthorized staff please leave the floor at this time. The house is under call. Senator Lynch, Senator Pirsch, and Senator Chambers. Senator Schellpeper, Senator Engel, and Senator Wickersham. The house is under call. We're still looking for Senators Chambers...excuse me, not Senator Chambers, Senator Schellpeper, Senator Wickersham. The house is under call. Senator Wickersham, if you are close, if you could report, we're waiting for you, Senator Wickersham. Senator Wickersham, the house is under call. Senator Wickersham has arrived. Senator Beutler has. asked for a roll call vote. Mr. Clerk, would you call the roll.
CLERK: (Roll call vote taken. See pages 1412-13 of the Legislative Journal.) 11 ayes, 28 nays, Mr. President, on the amendment.
SENATOR BERNARD-STEVENS: The amendment is not adopted. Mr. Clerk.
CLERK: Mr. President, may I read some items?
SENATOR BERNARD-STEVENS: You certainly may.
CLERK: Mr. President, Senator Maurstad has amendments to be printed to LB 299. 1 have study resolutions, LR 362, LR 363, and those will be referred to the Board. Senator Withem, amendments to 299 to be printed.
SPEAKER WITHEM PRESIDING
SPEAKER WITHEM: The call is raised.
CLERK: Mr. President, the next amendment I have is by Senator Beutler, AM3929.
SPEAKER WITHEM: It is withdrawn.
13605
CLERK: Senator Beutler, AM3878. (See pages 1423-24 of the Legislative Journal.)
SPEAKER WITHEM: Senator Beutler.
SENATOR BEUTLER: Senator Withem, members of the Legislature, I hope this is appropriate attachment to this, to this particular bill. This is part of the work we did with the Revenue Committee on the 206 committee work, looking at the different institutions within our committee jurisdiction. One of the things we ran into were weather control districts. The amendment's being passed out to you, but essentially all it does is as of January 1, 1997, it eliminates weather control districts. These types of districts were... the possibility of creating them was put into statute some time, I think, early in the 1980s, there has never been one created. And so far as we know, nobody's seriously thinking about it. They do have an ad valorem tax ability, and so we're simply getting rid of weather control districts to eliminate one more taxing authority. Probably the best way to go at this particular kind of thing is through an NRD anyway rather than creating some kind of separate district because that's what we just tried to get away from in the 1970s when we consolidated all these districts into NRDs. But in any event, that's the purpose of the amendment, trying to be helpful, not harassing the bill. I e a couple more amendments that are along those lines, but I hope we can move quickly with them one way or another. Thank you.
SPEAKER WITHEM: Thank you, Senator Beutler. Senator Warner.
SENATOR WARNER: Mr. President, members of the Legislature, I was just going to briefly concur the adoption of the amendment on the basis that it was also consistent with the LR 206 and in addition, I don't know of any worthy purpose they serve. I can vaguely recall, Senator Beutler, when one of these kind of things were talked about and we were going to see clouds. Was this, wasn't part of that, was it? It seems to me that was going to be ... well, if it doesn't rain pretty quick, I might change my mind, but for the moment, I would be in support of the amendment.
SPEAKER WITHEM: Thank you, Senator Warner. Senator Coordsen.
13606
SENATOR COORDSEN: Thank you, Mr. Speaker, members of the body. Senator Beutler, I just don't know how I could possibly support this amendment. I was just down in Oklahoma the weekend and down there their forward thinking Governor had just taken $100,000 from his Disaster Relief Fund And in cooperation with Oklahoma State University they were going to embark on a cloud seeding project to try to create rain in Oklahoma. Now, with this amendment, that...this will put Nebraska behind Oklahoma in spite of what our football team's been able to do. And it seems to be somehow un-Nebraskan and un-Big Red to do away with cloud seeding opportunity to Nebraska when verily as we speak they're preparing the planes to fly in Oklahoma. So I'm going to have to reserve judgement on this, Senator Beutler, till we take the vote.
SPEAKER WITHEM: Thank you, Senator Coordsen. Senator Elmer.
SENATOR ELMER: Thank you, Senator Withem, members. I have in the western part of my district several individuals that are actively trying to put together one of these districts. I don't know that they'll be successful. I don't know that they will be able to get people so succumb to a little more property tax when they're already exiting the state to buy land in Colorado because of the property tax we already have. But in the weather modification programs themselves, they have been successful in North and South Dakota, in lowering the incidents of hail. And where they're doing them there have significantly lower hail insurance costs and statistically, higher rainfall. So they are working. But I do think that Senator Beutler is correct in that we should weave them into the tapestry of our NRDs as they are probably now being characterized. And one of the multitudes of functions that the NRDs have, they're really starting to look like quite an array of individuals that have multitalents in those NRDs. But this is probably a proper amendment at this point. Thank you, Mr. Speaker.
SPEAKER WITHEM: Thank you, Senator Elmer. Senator Wehrbein.
SENATOR WEHRBEIN: Yes, Mr. President and members. Senator Beutler, I, too, am going to take a serious note on this. It's your thought that this would be a proper function of an 14RD without more enabling legislation, if they're so desired. By my idea is that these might be somewhat productive as some are. I'm not sure of the validity of their actions, but, in terms of
13607
the weather control, but much along the line of Senator Elmer. Even for the record, if nothing else, would you consider an effort on the part of an NRD an illegal activity under present statute?
SENATOR BEUTLER: Senator, I would. I don't know that there'd be any problem with them doing it. But we'll certainly take another look at it if you're concerned about it.
SENATOR WEHRBEIN: I really don't know where the summer's leading, I don't really need to speak publicly how pessimistic I am about the weather. But there may be the times this summer this might be... and taking this out of the statute, I think, is proper at this point, but I would want to be assured that therewould still be some availability of a group to get together on maybe an informal association to do something. I am serious about that approach and I ...
SENATOR BEUTLER: Okay.
SENATOR WEHRBEIN: Thank you.
SPEAKER WITHEM: Senator Beutler, there are no further lights on, would you like to close?
SENATOR BEUTLER: Once again, Senator Withem, this gets rid of weather control districts as separate tax levying organizations.. We put the date in of January 1, 1997. This was an accommodation to Senator Elmer and just in case the people wjp were talking about it out there really wanted to do it before then or if there was any other group that really wanted to try this way, before then. But I do think the NRDs could do it and we'll double check on that just to be sure we're representing things totally accurately. In any event, it seems to me that it should be done by the NRDs and it should be within that tax levy so we can not cause ourselves additional problems but rather bring all of these things under the levies that are identified in 1114. Thank you.
SPEAKER WITHEM: You've heard the closing. The question before the body now is the adoption of the Wehrbein (sic) amendment. All those in favor vote aye, opposed vote nay. Record.
CLERK: 26 ayes, 0 nays, Mr. President, on the adoption of
13608
Senator Beutler's amendment.
SPEAKER WITHEM: The amendment is adopted. Mr. Clerk, next amendment.
CLERK: Senator Chambers would move to amend.
SPEAKER WITHEM: Senator Chambers.
SENATOR CHAMBERS: Mr. Speaker and members of the Legislature, a copy of this amendment should be on your desks now. And what it is going to do, in a nutshell, is place a one percent tax on intangibles in excess of $10,000. And the intangibles would really be discussed in terms of unearned income. And that is defined as the income from interest, dividends, or sales of ,intangible assets which are not specifically exempt from income taxation under the IRS Code and certain provisions of the Nebraska Revenue Act. So if a person happens to be of modest means and it trying to lay some money aside, if those investments, of whatever kind, produce unearned income of $10,000 or less there would be no tax on that. Any unearned income above $10,000 would carry a one percent tax. And that one percent tax would bring in between 35 and 40 million dollars. The one percent tax is not unreasonable. This is a form of income... of income which has not currently, which is not currently reached in Nebraska, and the fact that the amount would be in excess of $10,000 makes it clear that it is not hitting people who would be harmed by this one percent tax. This is reasonable, it is rational , and it would provide some additional revenue to the state instead of spending it. So I hope you will look at this amendment. You will consider its scope, especially thinking about the $10,000 exemption, and that you will support it. If people can overcome their first initial feeling of trepidation and give it some thought in terms of how the budget for the state is being dealt with, the types of expenditures that have been authorized by the appropriations bill. The fact that in my mind $3.5 million is being wasted on these Quonset huts, this would make some money available. And maybe you wouldn't have to fear so much that red pencil that the Governor has threatened the Legislature with. But this is a serious amendment. I think it's worthy of discussion and consideration. And I think that it ought to be adopted. The 35 to 40 million dollar figure is based on an estimate that was made in 1992, 1 believe. So by this time, when you consider the
13609
increase valuation of these investments, increased value, it's not up-reasonable to conclude that what would have brought $32 million in in '92 would probably result in maybe 35 to 40 million dollars now. it's a one percent tax. If you have any questions, I will answer them. And I hope you will support this amendment.
SPEAKER WITHEM: Senator Schellpeper.
SENATOR SCHELLPEPER: Yes, thank you, Mr. Speaker and members. Senator Chambers, I'm kind of tempted to support this. If we can't put a tax on the services or a tax on the food, this is a way that we can get the wealthy people, if we have 35 individuals that don't pay any tax on a million dollars or more as was stated a while back in the newspaper, we could get some revenue here, if you think it'll be 35 to 40 million dollars. This would be on their income tax form, that's how you'd get it? Senator Chambers, would you answer that please?
SPEAKER WITHEM: Senator Chambers, could you respond?
SENATOR CHAMBERS: Yes.
SENATOR SCHELLPEPER: You don't know how many individuals, any idea, you just think it'd be 35 to 40 million?
SENATOR CHAMBERS: Well, you got about eight of them in here.
SENATOR SCHELLPEPER: Well, I had a couple of them already tell me, oh, that would hit my pocketbook. I have one of them sitting right ahead of me here, so... But I think you're right. But this is something that, I think, if we're going to look at the entire tax picture in Nebraska, we have to look at this. I don't think we can just look at it expanding the sales tax and on services or food, but this also needs to be looked at. So, thank you, Senator Chambers.
SPEAKER WITHEM: Senator Warner.
SENATOR WARNER: Mr. President, members of the Legislature, I'd rise to oppose the amendment at this point. This is a concept, as I recall, and I think Senator Chambers made reference to '91", 1 think, 1992, 1 believe, these were, was one of the concepts that was being looked at among a whole series of different
13610
things when we were dealing with personal property tax. But I would suggest' that in the event that one is looking for other revenue, some time in the future, why, this might be, one of the alternatives one would look at, although I doubt that it would be adopted. But it'd be inappropriate to do this at this time in keeping with the concept that the first efforts are going to be made in trying to find ways of being most cost effective and not ways of raising more revenue.
SPEAKER WITHEM: Senator Hilgert.
SENATOR HILGERT: Mr. Speaker and members, Senator Chambers, if you'd yield to a question.
SPEAKER WITHEM: Senator Chambers, will you respond?
SENATOR HILGERT: I just got this in, I didn't have a lot of time to study it, but a quick question. On the unearned income, income derived from interest, dividends, or sales of intangible assets not specifically exempt, etcetera, etcetera. Where would pension funds fall into that, and IRAs or ... ? I know an IRA would be exempt, is that correct?
SENATOR CHAMBERS: I would ask Senator Warner that question.
SENATOR HILGERT: Okay. Senator Warner.
SPEAKER WITHEM: Senator Hilgert has a question, Senator Warner, about the tax codes.
SENATOR HILGERT: Again, I'm not an expert on the tax codes. I was just wondering, unearned income means the income derived from interest, dividends, or sales of intangible assets, etcetera, etcetera. Where would pension funds, IRAs, etcetera, fit into that, Senator Warner?
SENATOR WARNER: As I recall, this ... they would be covered, I believe.
,SENATOR HILGERT: So they would be exempt?
SENATOR WARNER: No, covered.
SENATOR HILGERT: They would not be exempt?
13611
SENATOR WARNER: No, would not.
SENATOR HILGERT: Okay.
SENATOR WARNER: Well, in excess of $10,000.
SENATOR HILGERT: Right.
SENATOR WARNER: First $10,000 would be exempt.
SENATOR HILGERT: Okay. And, Senator, let's see, Senator Vrtiska, could I ask you a question?
SPEAKER WITHEM: Senator Vrtiska, would you care to respond?
SENATOR VRTISKA: Yes.
SENATOR HILGERT: Are CRP payments unearned income or is that income?
SENATOR VRTISKA: It's income.
SENATOR HILGERT: It's income? So that would not be covered by the tax. Okay. Senator, I would... Senator Chambers, if this would... of course you can't amend an amendment to an amendment, and I realize that, but if this would go and get on Select somehow, could we work out that perhaps we could look at retirees pension funds as ...
SENATOR CHAMBERS: Yes.
SENATOR HILGERT: ... an exemption?
SENATOR CHAMBERS: I want to be as reasonable as possible in this because to be quite frank, there are categories of persons that I am not aiming at with this amendment. It's something that may require some refinement, and I would certainly be willing to work with you on that end of it.
SENATOR HILGERT: Thank you, Senator Chambers. Thank you, Mr. Speaker.
SPEAKER WITHEM: Thank you. Senator Bernard-Stevens, you are
13612
recognized to speak.
SENATOR BERNARD-STEVENS: You're welcome, Mr. Speaker.
SPEAKER WITHEM: I was not thanking you. I was thanking Senator Hilgert.
SENATOR BERNARD-STEVENS: (Laughs) Senator Chambers, I think you and I both know where this amendment is going to go, and I know you may have been encouraged by Senator Schellpeper who said he was tempted. Senator Schellpeper said he was tempted to support it. But I know Senator Schellpeper, he tries to fight temptation whenever he can. So I don't know if you can count on that support there or not. And I suspect that, Senator Chambers, you know, as I know, what's going to happen to -this particular amendment. But I'm going to rise and support the amendment for different reasons, and also, I must confess, because I know it's not going to pass. But I think I still would support it. However, yeah, Senator Wehrbein said they were going to follow and way behind, I suspect. Senators, the reason that I'm going to argue, at least in favor of the bill, is something that Senator Warner said earlier in response to some dialogue with Senator Beutler and Senator Hillman. What... if you were paying attention, what actually was said on the community colleges, and now that my memory is coming back better, it was Senator Hillman that brought the subject up. If you're looking at community colleges, and I'm thinking particularly of Mid Plains, which, certainly, I have a vested interest in as well as all of the community colleges, and Western, if you look at their levy, they are so high because the valuation is so poor in that area that for them to drop to an eight and then to a four, they will cease to exist, literally. That is not a, oh, my, the sky is falling, that is fact. They well cease to exist under that form. And what Senator Wehrbein indi ... Senator Warner indicated was that eventually what will have to be a policy issue, and then Senator Wickersham was brought in, as the community colleges, since they cannot survive in that environment will need to bring, be brought over, probably, to the state and the state would pick that up, which is a concept that Senator Wickersham and others have had. And I'm sure that concept will be a reality if we do 1114 and LB 299, or whatever the other one is. Please understand where I'm coming from, if we just say, that's what we're going to have to do, or that's probably, at this point looks like the best 13613 option, where will we find $54 million? Senator Wehrbein, I'm not going to ask you to answer it, but where do we find $54 million plus to keep that going? How are we going to continue to fund a tax increase for a local entities to try to replace or help them with their loss of services? And, oh, by the way, I've heard no one talk about when the budget in the federal Congress is balanced, which it won't be certainly till after the election. But when that does happen, and we lose $300 million, how are we going to do that? And you can talk till the cows come home about what we'll have to do. And until you face the actual economic reality, we can't do it. without increasing taxes. And I'll bet my bottom dollar that this body will not have the courage at that point in time to raise the revenue because you're going to have a Governor, whether it's Governor Nelson or the next governor, Governor Robak in that particular case, and this chamber-of commerces, and people who are going to say, no tax shifts. In fact the emphasis is going to be the opposite, the emphasis is going to be, now that we have done this at the local subdivisions, we need to do that at the state level. We need to cut our spending down to 2 percent and have a growth policy and this type of thing. I'll bet you odds we will never get to the increasing of revenue, and yet we talk here as if the community colleges, no problem, they'll probably be up to part of the, be a part of the state. I'm sorry, there is a problem. At least Senator Chambers offers us a choice that says....
SPEAKER WITHEM: one minute.
SENATOR BERNARD-STEVENS: ... look, we can get 30 or 40 million dollars, and at least we can begin planning for that time, when it's going to happen. And this amendment will fail. I know it will fail. But if you're really in your heart believes when the push comes to shove you'll be voting for tax increases and the public will urge you to do so, I don't think so. And I think there'll be a lot of pain out there. Senator Warner, I think in his heart believes that that pain will cause us, give us some type of leverage to do the tax enactments. I put to you that maybe the 75 percent of people who don't have any kids any more in this school won't care and they'll be delighted that their property tax went' down and they won't want their other taxes going up. Bottom line. You have to make that call. "his amendment will fail, but I'll support it because if you are truly believing what you are saying about community colleges and
13614
other, you really have no choice to this now or do it later. I'm sure you'd rather put it off...
SPEAKER WITHEM: Time.
SENATOR BERNARD-STEVENS: ... until later. But later will be the same as today.
SPEAKER WITHEM: Senator Jensen.
SENATOR JENSEN: Yes, thank you, Mr. Speaker and members of the body. You know, here I thought we were talking about in 1114, 1 thought we were talking about cutting spending. I didn't think that we were talking about increasing taxes.. I sure hope that you are aware of what a bill like this does. First of all, think of the people that are subject to this kind of a bill. Many retirees within this state, and if you want to see a mass exodus of those people, pass a bill like this. Watch them go to Arkansas, Arizona, Missouri, South Dakota, all the other states that don't, do not tax their senior citizens the way this bill was. If you pass this bill and I guarantee, you'll hear from the AARP and every retirement group out there. We have addressed homestead exemption in this state, and here this is a slap in the face of anything that we might have done with those homestead exemption people in the qualifying of those. Also you better think a little bit about this state and its municipal bonds that it puts up for sale because many of these same people are the same people that go and buy those bonds. So before you take a step in this direction, please think of who the people are that are subject to that, and yes, I am one of those. I'll admit that. But still, I will never retire. But we have a lot of people out there that that's the only income that they really have got, and now we're going to be taxing them for it. And so with that I would just please ask that you consider this. And if we want to look into something like this, let's introduce a bill, let's have a public hearing on it, but now is not the time to take an amendment and hook it on to a bill that is supposed to control spending and look for other taxes to impose upon our citizens. Thank you.
SPEAKER WITHEM: Thank you, Senator Jensen. Senator Chambers.
SENATOR CHAMBERS: Mr. Speaker and members of the Legislature, I would like to ask for. Money Bags a question or two if I may.
13615
SPEAKER WITHEM: Senator.
SENATOR JENSEN: Glad to.
SENATOR CHAMBERS: I didn't even call a name. (Laughter.) Well, as old folks used to say, the first hen that cackled laid the egg. You got it right though, Senator Jensen. Come on.
SPEAKER WITHEM: Senator Jensen, do you care to respond?
SENATOR JENSEN: Oh, boy, you step into one.
SENATOR CHAMBERS: Senator Jensen, see, if all wealthy people were as good humored as Senator Jensen, we would be a much better world. But, Senator Jensen, how much, how much of an investment would a person have to have, if you can kind of average it out, to produce an, in excess of $10,000 a year in this unearned income? What do you think the... ?
SENATOR JENSEN: Well, I don't know. I've never been fortunate enough to have that Berkshire-Hathaway stock that some people have that returns a much higher percentage. But, you know, certainly 6, 7 percent, somewhere in there, is what your return should be. And so you can figure out what that would be.
SENATOR CHAMBERS: Well,...
SENATOR JENSEN: And, mind, you pay taxes on that anyway.
SENATOR CHAMBERS: If ... in law, if you have a trust, the substance or the thing of the trust is some times called the corpus, so what value would the corpus have which would produce $10,000 in unearned income?
SENATOR JENSEN: I could figure that out.
SENATOR CHAMBERS: oh, okay, I mean you couldn't just give a rough estimate? Just rough.
SENATOR JENSEN: I'd prefer not to.
SENATOR CHAMBERS: Okay, thank you. And I'm not looking in his money bags. We could be talking about Warren Buffet. I'll tell
13616
you what, I bet if we pass this, Warren Buffet wouldn't come down here and say, I'm leaving Nebraska and I'll never come back again. He would probably applaud us. He'd say, it's time that this segment of the public paid their fair share. One percent is not excessive. There was a time when we did tax food. Right now we tax the clothing, we tax ..the fuel, we tax many. necessities of people who can barely make it from one end of the week to the other, let alone the first of the month to the end of the month. And there does not seem to be much in the way of qualms felt about taxing these people. So now that we move up the scale higher on the food chain, we get an appeal based on the notion that people would find life in Arkansas so much better. than that in Nebraska that they, for the sake of saving one percent tax they'd have to pay on their unearned income, they would choose Arkansas. That's not saying much about the quality of life in Nebraska. Or South Dakota, where I think they're loaded up with gambling operations, aren't they, Senator? Oh, is that North Dakota, Senator Schellpeper? Okay. So they'd run up there right next to the devil's door and lose all the money that they got. Run there to try to save one percent in tax and lose everything that they got. But Senator Jensen knows that what he said does not apply to him. He would not leave Nebraska as he's leaving the Chamber now, he would stay here because there are too many things that tie him to this state and that's the way it would be with others. So this amendment...
SPEAKER WITHEM: One minute.
SENATOR CHAMBERS: ... is reasonable. It will raise some revenue. But as Senator Jensen said, this is not the time. And I don't mean as far as the date, March 21, 1 mean 7:58 p.m. on March 21, after people have been well fed and watered. The Arabs have a proverb which says, when the stomach is full the head is empty. And I must have something to which to make an appeal. And I understand that when people have eaten well, especially after a busy day, there comes a tendency to kind of get a little tired because if Senator Dierks were to be speaking now, I think he could say that when you eat all that food and the...
SPEAKER WITHEM: Time. Senator Fisher.
SENATOR FISHER: Mr. President, members, I know it's getting
13617
late but it's not that late. This is a little ridiculous, this one. You know I urge you to dispatch this quicker, sooner the better. I remember back when they did have some intangible tax. It was very negative on our state. It caused people to move money, considerable different places. But this is ridiculous. We're getting taxed enough. I don't think we're talking about taxes, taxing more. And the people that are eligible for this, I think they have no problem with it. If we need some more tax dollars, let's do it the right way. But this is definitely not the right way and I urge you to vote no. Thank you.
SPEAKER WITHEM: Senator Witek.
SENATOR WITEK: Question.
SPEAKER WITHEM: Do I see five hands? I do. The question is, shall debate now cease? All of those in favor of ceasing debate vote aye, all opposed vote nay. The question before the body is, shall debate cease? Have you all voted? Have you all voted? Record.
CLERK: 25 ayes, 2 nays to cease debate.
SPEAKER WITHEM: Debate is ceased. Senator Chambers, you're recognized to close.
SENATOR CHAMBERS: Mr. Speaker, members of the Legislature, I feel chastened this evening. After listening to, the fervent appeal of Senator Jensen, who pleaded guilty to the nickname of Money Bags. After listening to the cry, the heart wrenching cry of Mr. Big Bucks back there, I feel very guilty of what I am suggesting, about what I'm suggesting. That we should dare consider taxing this type of income, so that these very rich people will have to pay their fair share. I think it is a dastardly thing that I'm suggesting. But this bill will come tip again on Select File, and it'll come up at a time when it's not so late in the evening and there might be more people here. There will be an opportunity to look at the issue. So what I intend to do at this point is to withdraw this amendment and I would like to refile it for Select File, Mr. Clerk, if I can do it in that manner, so it will follow the bill. That's what I will do. Thank you.
SPEAKER WITHEM: Question before the body is, shall the Chambers 13618 amendment be adopted? (Laughter.) I'm sorry, it's withdrawn. I'm sorry. Mr. Clerk, next item.
CLERK: Mr. President, Senator Beutler, AM4002, Senator.
SPEAKER WITHEM: Senator Beutler.
SENATOR BEUTLER: AM4002, Mr. Clerk?
CLERK: AM4002, yes, sir.
SENATOR BEUTLER: I'd pass over that temporarily.
CLERK: Se nator, I now have your handwritten amendment. I understand that you would like to withdraw and substitute for that with AM4014.
SENATOR BEUTLER: If it's necessary to substitute, it's the same amendment, Mr. Clerk.
CLERK: I'm afraid it is, Senator, only because of the sequence of events up here.
SENATOR BEUTLER: That's fine.
SPEAKER WITHEM: So we are requesting a unanimous consent for substitution? Is there any objection? It is ordered.
CLERK: AM4014, Senator. (See page 1425 of the Legislative Journal.)
SENATOR BEUTLER: Senator Withem, members of the Le gislature, this particular, amendment I think has been passed out to you now. It's simply a response to bond council's letter asking for a clarification in one portion of the bill to make more clear that the levy limitation, as it pertains to some of the miscellaneous districts, identified in one portion of the bill, that that limitation does not apply to property tax levies for bonded indebtedness that has been approved according to law and secured by a levy on property. This is the same language that is applicable in other portions of the bill to other political subdivisions, and completes...if it was not complete before, it certainly completes now the total exemption of the levy with respect to bonded indebtedness as it may apply to any political
13619
subdivisions. Just a clarification. Thank you.
SPEAKER WITHEM: Senator Warner, for discussion on the Beutler amendment.
SENATOR WARNER: Mr. President, members of the Legislature, I rise to support the amendment. I suspect we don't know, but I have a, we have a suspicion that we have the same provision or comparable intended provision that's in LB 1085. 1 assume they only looked at 1114, didn't look at 1085. But this amendment is consistent with that provision and I see no problems with adding it here as well because it will merely reflect what's in 1085.
SPEAKER WITHEM: Senator Warner, thank you. Senator Beutler, there are no further lights on, would you care to close?
SENATOR BEUTLER: Senator Withem, no closing. I think people understand the amendment.
SPEAKER WITHEM: The question before the body is the adoption of AM4014 offered by Senator Beutler. All in favor vote aye, opposed vote nay. Record.
CLERK: 30 ayes, 0 nays, Mr. President, on the adoption of Senator Beutler's amendment.
SPEAKER WITHEM: The Beutler amendment is adopted. Mr. Clerk, anything further?
CLERK: Senator Beutler, AM4005. (See pages 1425-27 of the Legislative Journal.)
SPEAKER WITHEM: Senator Beutler, to open on AM4005.
SENATOR BEUTLER: Mr. Clerk, members of the Legislature, this is another clarification. I think the intent of 1114 is to limit the total Natural Resource District levy to 4 1/2 percent, as I understand the proposition. And this amendment does nothing more than correlate the existing Natural Resource District levy statutes so that the total statute ... so that the total levy that can be made by an NRD is 4 1/2 percent. And this basically, the Natural Resource District levy is broken up into several statutes because you can levy a basic general tax of 4 1/2 percent plus some additional tax for control areas,
13620
special protection areas, and management areas. but as I understand the intent of 1114, it's to be 4 1/2 percent for all of those things total, and that's what this amendment does is simply correlate those provisions.
SPEAKER WITHEM: Senator Warner, on the Beutler amendment.
SENATOR WARNER: Mr. President, members of the Legislature, Senator Beutler, maybe you said this and I didn't quite catch it. I rise to support the amendment, I believe, but you are striking the current language that permitted a vote to, on a referendum basis, to go above the current four and a half and what this amendment does would make the process where that was to be done the same as is provided for other governmental subdivisions in Section 3, sub (1), as I understand this. So it would be... it's just merely making the process here the same as any other governmental subdivision is.
SENATOR BEUTLER: That's correct, Senator. It actually limits the current NRD prerogatives with regard to exceeding the levy by elections in the sense that under current law they could, I think it was indefinite in terms of how long the levy could be exceeded. Now it will change back to your bill and they'll be like any other political ...
SENATOR WARNER: Yeah, I'd be consistent with everything.
SENATOR BEUTLER: ... subdivision and election would be part of...
SENATOR WARNER: I rise to support the amendment.
SPEAKER WITHEM: Senator Warner. Excuse me, Senator Coordsen.
SENATOR COORDSEN: Thank you, Mr. Speaker and members of the body. A question of Senator Beutler, if he'd respond please.
SPEAKER WITHEM: Senator Beutler, would you respond?
SENATOR COORDSEN: Senator Beutler, in the other provisions of 1114, there is a, certainly the levy caps on the various units of government that are mentioned and then the, then the sub ones in Section 3. But I guess I have to ask if you want to do this for sure without study because without this amendment, wouldn't
13621
it be possible for the people within a Natural Resources District to, at a primary, general, or special election to increase their levy beyond 4 1/2 cents? And does that power still exist with your amendment?
SENATOR BEUTLER: Senator, with the amendment, that power clearly does not exist. The problem, as I saw it, was that you had two different provisions with, if you adopt 1114 you have two different provisions that apply to NRD election...
SENATOR COORDSEN: Okay.
SENATOR BEUTLER: ... proceedings, and so you, you have to at least, I think most people would say you ought to chose one or the other and be clear about it.
SENATOR COORDSEN: Alright.
SENATOR BEUTLER: So,...
SENATOR COORDSEN: Okay.
SENATOR BEUTLER: ... I'm not, I'm not even saying I agree with that entirely, I'm just trying to put it in order so that at least we're all following the same ...
SENATOR COORDSEN: Well, yeah, that ...
SENATOR BEUTLER: ... drummer for the moment.
SENATOR COORDSEN: Thank you, Senator Beutler. And if it doesn't turn out quite as we envision it in the amendment, why we still have Select File to make further adjustments. So with that I support the amendment.
SPEAKER WITHEM: Thank you, Senator Coordsen. Senator Beutler, there are no further lights on, would you care to close? Closing's waived.- The question is the adoption of the Beutler amendment. All in favor vote aye, opposed vote nay. Record, Mr. Clerk.
CLERK: 25 ayes, 0 nays, Mr. President, on the adoption of Senator Beutler's amendment.
13622
SPEAKER WITHEM: The Beutler amendment is. adopted. Anything further on the bill?
CLERK: Senator Janssen and Bromm would move to amend, Mr. President, with AM4013.
SPEAKER WITHEM: Senator Janssen or Bromm. Senator Janssen is here. Go right ahead, Senator.
SENATOR JANSSEN: Thank you, Mr. Speaker, members of the body. I bring this amendment from some conversation we had this morning with some school administrators,. worried about the effect of judgements, I'll take the first part of the amendment. And this would be judgements that would be levied against a school district in the scenario of say, a school bus accident or something like that where the school was held liable for the injury or death of anyone on that school bus. I know that something like this happened in the Oakland school districts several years ago, and they are still paying on that, on that judgement that was issued by the courts. The second portion would be to pay for any lump sum payments which are required to be paid to certified employees under their early retirement pension benefit plan. I think this would help in twofold. it would get someone who is nearing retirement and it would require a lump sum payment out of that school district to give that retiring individual, or that retiring teacher a chance to get out of the system. As we all know, the older teachers are the more expensive teachers on your payroll, and it would allow the fact that this older teacher, if there was a reductions-in-force, not to come in and bump someone on the lower end of the pay scale. So this would help the school in that area also. The third portion would be to eliminate any special sinking funds established for projects commenced or contracted and entered into prior to July 19 of this year for construction, expansion, or alterations of school district buildings. I know Senator Schellpeper had a bill just a little bit ago, it did basically the same thing for counties, only that date was in 1999. This would be anything that was established right at the present time or right up to July 19 of 1996. So I don't believe there would be a case where they would come in and try to establish a sinking fund in that big, of a hurry of any significant importance any way, prior to that date that we have in the amendment. Thank you for your consideration and I'd %try to answer any questions if I could.
13623
SPEAKER WITHEM: Senator Bromm.
SENATOR BROMM: Thank you, Mr. Speaker. Senator Janssen, I think, explained the intent of the amendment very well. There are some things that I think school districts are quite apprehensive about, primarily obligations that they cannot control, obligations that they may have committed to prior to the effective date of this act. And then thirdly, items that they'd like to do to become more efficient perhaps, which falls into the category of providing encouragement or incentive for a long-term teacher to retire, which is normally replaced by a teacher at a substantially lower salary level as well.. So to echo a little bit what Senator Janssen has said, you may have all read or remember a few years ago about the Oakland-Craig school district, which had a bus accident and which had a horrible judgement rendered against them, which resulted in the entire school board resigning and a receiver taking over the administration of the school until they could get the lawsuit worked out because of the possible personal liability of the board members and that kind of thing. And they had an awful time working out the payment of the judgement. And it took a number of years. And that actually could happen. In that case it was compounded by the failure of an insurance company that had some insurance coverage for the school bus. So this is an effort to try to provide for that unusual situation where there is a judgement obtained against the school district. Then, I think along with encouraging schools to restructure, if you will, to economize comes the second provision which would allow them to pay a certificate employee early retirement pension and have that be outside of the levy limit. The third item is as Senator Janssen mentioned, if they have already established a sinking fund for a project that has been commenced or a contract that has been entered into prior to July 19 of '96, which would be the effective date of this bill, for construction, expansion, or alteration of school district buildings, this would allow them to continue to levy that sinking fund to meet that commitment. I could ... I certainly could argue both sides of that, but I think as a practical matter I don't think schools are going to abuse that and I think if they have the commitment, just like a bond situation, which -is outside of the limitation already, bonded indebtedness, I think if they have utilized this sinking fund, made a commitment for a project or entered into a contract, which some of them are lease/purchase contracts on
13624
some of these buildings or improvements or modular classrooms, that we should give some consideration to allow them to fulfil those commitments or those contracts without being affected by the limitation. That's about it. I'm sure there will be some questions and discussion. And I, I don't know if copies have been passed out yet, they're coming around and that should help everyone understand what we're doing here. With that, thank you, Mr. President.
SENATOR WILL PRESIDING
SENATOR WILL: Thank you, Senator Bromm. Senator Warner.
SENATOR WARNER: Mr. President, members of the Legislature, I'd yield my time to Senator Kristensen.
SENATOR WILL: Senator Kristensen.
SENATOR KRISTENSEN: Thank you, Mr. President and Members of the Legislature. I appreciate Senator Janssen, Senator Bromm, if I had a chance to look at the amendment and ... thank you, Senator. Yes, okay, it's a little different than the one I had prior, so I'm going to go off of what I've got. I did have the opportunity to speak with them earlier. There's really three parts to this amendment, as I understand it. The first of it is in the area of judgements, particularly in the Oakland-Craig situation, the state responded and that's, to put this in some perspective, that's when we put in the political subdivision tort claim caps so that we could try to prevent schools from some of those excess judgements to do that. When we have, for example, an adverse ruling against a city or a county, and there has to be some refund of taxes, for example, we give people periods of time to do that. And I'm not so sure that that wouldn't be an appropriate policy to begin to examine, and I'm not sure that I want to do it right here, right now in making that something that's in excess of the lid, or not the lid, excuse me, the levy limit cap. And the reason for doing that is that if you have a judgement that is out there, in one year you're going to spike the payment. In other words, it's going to be a large, it could be a large payment at that point in time. If you're, if you're up against the levy cap and you have some, some difficulties and then this comes above it and you want to have other elections, generally those elections become referendums on whether the court's ruling was a good one or not,
13625
there'll be some reaction against that. It might be a better policy to allow that subdivision a period of time to pay that judgement off over a period of five to ten years, or whatever we do that. The one that I guess perhaps bothers me the most, and I think this has been different from the one, Senator Janssen, we had earlier, was the sinking funds. We had a real discussion about sinking funds in the Revenue Committee. And the issue went like this, there are a number of school districts who instead of wanting to pass a bond issue, and it also relates to sinking funds for other subdivisions, but I assume that this just deals with schools, that they will put those away and as a mechanism of saving up some money so they don't have to do bond issues, because bond issues are difficult to go through, they're not always popular to do, and so it's a way of keeping the levy up while soaking some of that money back and keeping it for projects. If we're going to do levy limits, the committee felt that we needed to get down to the point of what is the absolute amount you need to operate a district with, or to operate a subdivision with. And so we chose to put these sinking funds within the levy limit. And so that people, what generally would frustrate people and they'd come up to the school board and say, well, you know, we want to, we want to cut our taxes. And they say, well, we can't, we're putting it here, here, and here. And they said, but we're going to build this building over here. We're going to build a bus barn and we're going to buy this or buy that. And they go, well, where's that in the budget. And they said, well, it's not, it's setting in the sinking funds. And that there was some general frustration, as we heard in the committee and we heard testimony that there was" a general frustration over the use of sinking funds. Now I don't know, one of the things that make me nervous is putting a date in here of July 19 of 1996, is between now and the time that that date comes that you'll have a lot of people starting to put things into sinking funds. And that'll be a way of starting to put it away.
SENATOR WILL: One minute.
SENATOR KRISTENSEN: We just had a brief discussion and we're going to check that out. There is some restriction on the amount of sinking fund that you can put it, but I'll guarantee you that everybody will do this, anybody that's on 'the ball will start to use those sinking funds between now and July 19. And I don't think that's a good policy to do. The lump sum payments
13626
for the certified employees or for the teachers, I assume is an effort to make payments and, in effect, buy out early retirements for older teachers and then hire back young ones. The impact I'd be interested what Senator Bohlke would think of that as a policy and how that fits in the Education Committee. I don't know if that is sufficiently defined for me and how I can put that into the levy limitations. In other words, by saying lump sum payments, I don't know if that's how that's described or down, but I can tell you that from a policy point of view...
SENATOR WILL: Senator Kristensen, the time is up, but your light is next so you may continue.
SENATOR KRISTENSEN: Thank you.. I'm not sure how those lump sum payments are going to work as to whether they actually, and I'm trying to think as I talk on how that lump sum works for those employees, but I think that what occurs is that if you are going to buy them out, in effect, they can buy retirement or we can pay off their contracts. Or is that, Senator Janssen, could I engage in discussion so I, I think that through. I'm trying to remember when we did that in the school board.
SENATOR WILL: Senator Janssen, will you respond?
SENATOR KRISTENSEN: I can have an instructor who is, in effect, I'm taking early retirement. I contribute more into their, their plan and, in effect, buy their contract out. And then they can also buy additional years of service. I'll match that and then that's how that occurs.
SENATOR JANSSEN: I believe that's true.
SENATOR KRISTENSEN: Okay. I guess if I was the instructors I'd be ... it starts a class warfare to a certain degree within the teachers' profession because you're going to sacrifice some of the older ones so you can get the ones that you don't pay as much for. And I suppose it depends on how old I may be, too. I know it's voluntary.. I know it's not mandatory. But I assume you also make that so enticing that you will cause them some real internal problems between the staff. And I guess I'm real hesitant to do it in this, particularly because of the sinking fund issue. I think there's a better way to do the limitations on the schools, and I'm not sure I'm ready for an internal
13627
dispute on who we're going to take out. And I'd yield the rest of my time if you want to help me with that point.
SENATOR JANSSEN: Well, thank you. Thank you, Senator Kristensen. It seems like every, well not every day, but periodically I will, I will have someone write to me and say, you know, why can't, why can't I buy, buy out this contract, you know. I'm tired, I'm worn out, I'd like to get out. This is an avenue for them to get out. And I know that a lot of good school districts, good school districts, have a lot of older teachers. They are good teachers, but maybe, maybe this is why some of the school districts are having such big budgets is because they're top heavy on this type of teacher. Senator Robinson would like to have a little of this time if I can sublet the rest of Senator Kristensen's time here to Senator Robinson.
SENATOR WILL: Thank you, Senator Janssen. The subletting is up to Senator Kristensen. Senator Kristensen, would you yield to Senator Robinson? Senator Kristensen would like his time back.
SENATOR KRISTENSEN: There's a real reason for doing this. it limits the ... no. Senator Janssen, I, would you be willing to do this with me because there's some points in here that are pretty good, and particularly the judgement issue is one I'd like to work on. And I hate to do this to you, but would, would you be willing to pull this amendment if we could sit and look at that judgement issue between now and Select File?
SENATOR WILL: Senator Janssen.
SENATOR JANSSEN: Yes.
SENATOR KRISTENSEN: Because there is some good points to that and I...the lump sum payments in terms of policy may be a good one or a bad one, but if you'd do that I, I'd be very willing to see if we couldn't get that amendment towards the top on Select File for consideration. If we can just have a few minutes to look at it because it kind of came up on me reasonably quick.
SENATOR JANSSEN: Senator Kristensen, being the admirable Danish decent that you are, yes, I would love to do that.
SENATOR KRISTENSEN: Thank you. I'd appreciate that. And you
13628
know what else that does for us? That means that Senator Robinson doesn't get to speak and that we can go on from here.
SENATOR WILL: Thank you, Senator Kristensen. Senator Janssen, I take it the amendment is withdrawn. The amendment is withdrawn. Mr. Clerk, next item.
CLERK: Mr. President, the next amendment I have is by Senator Bernard-Stevens, AM3995. (See pages 1427-30 of the Legislative Journal.)
SENATOR WILL: Senator Bernard-Stevens, to open on your amendment.
SENATOR BERNARD-STEVENS: Thank you, Senator Will. I'll need one second. It's gone, I'm done. This amendment is actually, believe it or not, is what Senator Bernard-Stevens would actually call, and here I am talking of myself in the third person, it's what I would actually call noncontroversial, if that... such a beast exists. What this amendment does, and I apologize, I was in a discussion with Senator Jones and I'm trying to find a copy of the amendment. What this amendment does is it goes to the... it re-enacts the airport authority clause, it just makes a, one change. And I've talked to Senator Warner, I don't know if he's supportive or not, certainly he'll let us know. But the amendment simply allows that an airport authority, under the current bill, would be under the county. And there would be, I think, ways that they could get under the city. I just want to clarify it so that airport authorities would actually have the option to petition, if the airport authority board agreed to, they could petition either the city or the county to ask that they be included. And in some airport authorities they would feel comfortable under the county, because that's where they're at. In the case of the North Platte, for example, airport authority, they actually were created by the city. The city owns the title of the land. It makes more sense for them to be under the city. This amendment would not automatically put them there but would give them the option to petition the city council to ask if they would accept them under their budget and under the lids and what have you. And, of course, if the city council refused, then it would obviously be the county's responsibility. So that's the nature of the amendment. And that's all the opening I need.
13629
SENATOR WILL: Thank you, Senator Bernard-Stevens. There are some lights left from the last amendment. I don't know if they wish to address the Bernard-Stevens amendment. Senator Janssen. Senator Janssen, do you wish. to address the Bernard-Stevens amendment? Senator Robinson. I don't see Senator Robinson. Senator Warner.
SENATOR WARNER: Mr. President, members of the Legislature, I would rise to support the amendment as it was described by Senator Bernard-Stevens. It retains everything in but it does give this option. I know airports have a variety of ways that they're organized. I see where this presents no problem in most... anything it does permit would be voluntary on the part of the municipality, so it doesn't, is not compulsory. And I would urge the body to adopt the amendment.
SENATOR WILL: Thank you, Senator Warner. Anyone else wishing to discuss the Bernard-Stevens amendment? I don't Bee anything further. Senator Bernard-Stevens, do you wish to close?
SENATOR BERNARD-STEVENS: Only to the point that if you're, if you're looking at the amendment, it's the same portion that's in the bill right now, but the added sections would be on subsection (17), and it just simply says, "An authority may adopt a resolution requesting that the governing body of a city include"..."request that the governing body of a city include the tax levy in the city budget". It gives them the opportunity to try and it gives them a chance of flexibility. It's up to the local entities and government officials to decide how they want to handle it. I would urge its adoption.
SENATOR WILL: Thank you. You've heard the close on the Senator Bernard-Stevens' amendment to the committee amendments on LB 1114. The question is the adoption of the Bernard-Stevens amendment. All those in favor vote aye, opposed no. We are voting on the Bernard-Stevens amendment to the committee amendments. Has everyone voted? Senator Bernard-Stevens, have you voted? Mr. Clerk, please record.
CLERK: 26 ayes, 0 nays, Mr. President, on the adoption of Senator Bernard-Stevens' amendment.
SENATOR WILL: With Senator Bernard-Stevens' assistance, the amendment is adopted.
13630
CLERK: Senator Bernard-Stevens would move to amend, FA570, Senator.
SENATOR WILL: Senator Bernard-Stevens.
SENATOR BERNARD-STEVENS: This one is not ... this one is controversial. And, quite honestly, I don't, I'm not even sure that I'm going to bring it to a vote, but I filed it because I want to have at least a discussion briefly. And if, of course, a discussion, if the body's not up to it, we'll just refile it until we are up to having the discussion. This amendment, if we voted on it and if it were adopted, would simply in the area that talks about the community colleges, in the area that their levies are reduced from eight down to four, I just add another sentence, for the most part. And the sentence says that as of July 1, year 2002, which is when the, we're starting at the 4 percent, that the community colleges will simply become a product of state government. And so what this basically says is that, that we then would finance the community colleges simply because they are not going to be able to function in that manner. And I want to take a little bit of time to talk about, a gain, the scenario. If you look at, and Senator Hillman had a great chart, but I-do not have a copy of that, but if you look at the community colleges and their levy. And you just mentally look at what will happen to them when they go from eight down to four. Now, granted, some of the community colleges are better off. There are two that are ... that have really been "hurted", "hurted", hurting by the process we have because the land values are simply too low. And that's Western and Mid Plains. I'm not sure in what position the community college, the Southeast Community College is, I just don't know. But if you look just at those two, there is no way on God's green earth that they will survive. And the discussion that we had earlier with Senator Hillman, basically Senator Warner and others implied that one of the possibilities certainly would be that at such point they would have ... one of the options would be we move them under the state. Obviously it's too soon to make that statement now, and I understand that. But I do want to raise the issue. If that is in, what is in the back of people's minds, ask yourself the question then, in the year 2002 or 2001, where will you find the 54 million plus dollars it'll be needed at that point? Where do you find it? Where is it going to come from? This will be at the same time period that we'll be looking,
13631
we'll be still facing the effects of federal budget cuts, if they happen. I suspect they will. It'll be at the same time that, a little bit after the fact that may be increased taxes to reimburse some of the subdivisions on some of the losses. it may be right after that time. Certainly we'll have the 2000 computer thing fixed one way or another. And maybe we're just going to be in the year 1902 rather than 2002. But at that point you need to find where the dollars are going to come from. And I do this basically for the discussion purposes that when you do this to community colleges, not to mention the fact that when we talk about where we can find the dollars to fund them we didn't even care ... well, that's not true, twenty-four people cared enough to say that we will give them half of the vetoed money. I mean this body wasn't able to give them $108,000, where in the world are you going to come up with 54 million. And so I would like to bring to discussion, because I would like to have those supporting the bill the way it is, I would like to have you tell me where you plan on getting the money, what tax you're willing to increase, and what you're going to be willing to do. And I heard Senator Fisher clear as a bell and I heard Senator Jensen on the Chambers amendment on the tax on the intangibles. Senator Jensen said no way, no way, no way, and I understand that. And quite honestly, I somewhat concur with Senator Jensen that when you tax intangibles, intangibles have a tendency then to move to another bank and to another state and you can still grab a hold of them. And I understand that and it's a very valid point. But Senator Fisher said, this is not the right tax. So I asked him, I said, what is the right tax, out of curiosity. And his response was, and he can correct me if I misquoting him, but his response was, across the board is the best way to do it when we need the dollars. In other words, we'll raise corporate taxes a little bit, sales tax, you know, in equal amount, income tax, and so on. And then you have to ask yourselves, okay, if that were really the proposal, would Senator Fisher actually support that? He's arguing that that would be the fairest one in his view, but would he support it. Would you support it? Will you support the sales tax, which is more regressive. That senior citizens way want because they don't want the income tax to go up. or would you support the income tax of when people are saying, no, we're taxed too high any way, we need to keep the tax base lower so we keep our businesses here and we keep the economic development going. Where are you going to find the dollars? Because if you do this, you will face that decision. And I would like to see if
13632
anyone even cares at this point, at this hour, whether or not that's even an issue worth to talk, talking about. So I've offered the amendment for that purpose at this time.
SENATOR WILL: Thank you, Senator Bernard-Stevens. You've heard the opening on the Bernard-Stevens amendment. Senator Warner.
SENATOR WARNER: Mr. President, members of the Legislature, I'd rise to oppose the amendment as it says, it'll be totally state funded. (inaudible) your community colleges, that we've been dealt with, we all know for a number of times, but when we go back to LR 93, that was introduced the end of last session, which was at that time was a constitutional amendment. And at that time the amount for community colleges was at 7 cents in that particular proposal. In fact, it drops to four in the out years here, but eight now. The policy issue in part, and while Senator Bernard-Stevens' amendment says it's all going to be state support, and that's one of the options. But the 1114 as it is currently drafted doesn't limit itself to that at all. We had a discussion earlier, as far as how the eight mills might be handled. But there also has been a discussion, at least I've been involved, 1 assume others, when talking about the community colleges, and that is that they still wanted to preserve some level of local support, some level of local property tax support that could be utilized. And that concept is still here, even at the 4 cents. There is still a level that would be available. And I believe it would be inappropriate to make the leap,. at this point, that there's going to be, totally state funded because there are other issues besides just the tax issue and the revenue replacement issue. But there is that-other policy issue which should some portion remain with, with the local district, which gives them some flexibility to meet some of their local demands that may or may not be something that would be funded out of state revenue. So I would be opposed to the amendment because I think it forecloses, if this is to be the assumption, forecloses a number of options that I think are going to be looked at over the next two years. And it, in my opinion, at least, is premature to assume that necessarily the state's going to take over the total cost. I don't believe that is necessary, the conclusion at all, and as a matter of fact, if the proposal that was discussed earlier became an alternative it even lessen the likelihood of the state taking over the total cost. So I would urge the body to vote against. This makes a presumption which I don't believe is inherent in the bill, but
13633
it raises another policy issue. And whether or not some support for community colleges should be coming from local sources, and I think you could make that case as well and should not be decided on an amendment at this point.
SENATOR WILL: Thank you, Senator Warner. Senator Kristensen on the Bernard-Stevens amendment.
SENATOR KRISTENSEN: Thank you, Senator Will. And I would urge the members of the body if this comes to a vote, I would urge most of you to be not voting because no matter which way you would vote on this, you're going to send the wrong message. And here's how it occurs, when we were in committee, the levy limits started off, I believe, Senator Warner, if I remember right, it was nine, then it was going to go to six. The amendments then went down to take them to seven, to six. We had another consideration and went back to eight because of the average levy and in some consideration of Western. And we decided that we'll make it, we'll take them back to eight for the first and then ratchet, basically, down to four. And the policy choice here is, do you tell the community colleges, we're going to take you over on a state basis, or are they going to make that decision for themselves and say, look, it makes more sense for us to have, perhaps, a mix of property tax and of General Funds. Or maybe it forces us and their representative, regardless of what you may think of him, was very candid with the Revenue Committee in saying, that's a tough decision we may have to make. We may have to sit down with our board and make some discussions that we don't want to look at, and that is, do we want to be state funded? Do we want to be with the, under the Coordinating Commission? Do we want to enter into that? Because there's some security in that, and particularly for those in Western, that's a real tough choice. And so the reason that it is eight and four, or now I guess this would take it down to, basically at the end of that period of time they become state, you today, some six years ahead of time are going to make a policy choice the state's going to take over the community colleges. In six years, who knows what those community colleges may look like. And so if you vote yes to do this, you're making a decision for six years down the line, and that sends the message to the community colleges, don't look at making any changes, all you got to do is ride the storm out to 2002. If you vote no you're going to send the message that the state doesn't want you. And then what they're going to do is buckle down and try to ride out
13634
the property tax fight and they'll try to struggle and do those things. No matter which way you Vote you're going to send the wrong message. So, Senator Bernard-Stevens, the policy choice we had here is it's easier for the community colleges to realize over a period of six years, that the state has a serious question whether we should continue them on property tax or whether there should be some mix. But it's going to allow them their own self-determination. It's going to force them to make their own tough decisions within their bodies and not have us do it. And so I'm going to urge, if it does go to a vote, I'm going to urge people just to be not voting because I don't want them to send the wrong message either way they vote. And that, I hope. gives you some inside, at least from my point of view, of what we discussed in Revenue Committee why we went eight to four and didn't make the ultimate choice of state takeover. Because that certainly was one of our discussions. And we think the community colleges are very aware of the policy choice that faces aces them the next six years and they can't put that of f . And quite frankly, if they do put it off, the choice will get made for them. At that, at the end of that time they won't have much of a system left. I would... I'm not in favor of the amendment. I would be not voting on it, I would hope others would be not voting as well. Thank you, Mr. President.
SENATOR WILL: Thank you, Senator Kristensen. Senator Wickersham, on the Bernard-Stevens amendment.
SENATOR WICKERSHAM: Thank you, Mr. President. Well, whether I'm not voting or simply' voting no, I guess isn't as difficult a decision for me, although I think Senator Kristensen, perhaps, has laid out relative considerations for the rest of you. I think normally, many of you would expect me to vote yes on Senator Bernard-Stevens' amendment. I've been a sponsor of legislation to remove the community colleges from the property tax base, period, to change their administrative structure, and to assure that they're paid for entirely out of state dollars. But I think as Senator Kristensen noted, that isn't a decision that we should make tonight. That is a decision that needs to be more carefully considered and provided for than what we're able to do now, even though I'll acknowledge to, for Senator Bernard-Stevens' benefit, that it isn't something that's going to happen overnight anyway, as I understand it, under his amendment. But I don't, I don't think that's a decision whether we should make at 8:47 tonight, although I've seen stranger
13635
things happen in my short term in the Legislature. But I'm not going to ask you to do that, even though that's something I personally favor. I think we ought to leave the provisions as they concern the community colleges in 1114 as they are. You've heard, I think, a little bit of the discussion about what might be done with community colleges and their funding structure. I believe there will be a continuing discussion. Whether that discussion results in a common levy that allows them to continue to have access to the property tax base or eventually results in complete state funding, I think is too early to predict. I do favor complete state funding, but I don't want to do it tonight. And I would urge you to vote to oppose in whichever way you choose, Senator Bernard-Stevens' amendment.
SENATOR WILL: Thank you, Senator Wickersham. Senator Hillman, on the Bernard-Stevens amendment.
SENATOR HILLMAN: Yes, Mr. Speaker, thank you. members of the body, just a little bit. I had some of this discussion earlier, but some of you, perhaps, weren't here and I just wanted to touch base a little bit more to point out that community colleges do not have the flexibility nor the opportunities that some of the other political subdivisions have. And the debate that's gone on about voters being able to exceed the levy limit, which in the case of community colleges, being a regional area, it's just not reasonable to assume that would happen at all when you've got seventeen or twenty-six counties that would have to do that. Consolidation, those kinds of things can't happen with community colleges. Many of them are restructuring, gone to distance learning, two-on-two programs, have done some very innovative things to be able to make, I think, some very fine education accessible to many young people and that nontraditional student, by the way, clean across the state. As Senator Wickersham mentioned, he sponsored and I cosponsored some legislation earlier, and that was to look at, as he said, state funding the community colleges. And as a result of that, Senator Wickersham and I, we're...had some very lively discussions with groups of community colleges across the state and the one in our district. But I think it's, the community colleges are a peculiar political subdivision in this particular bill. And I think it is important that we look at what it is that we're going to do and how we are going to affect their future. And having said that, Senator Bernard-Stevens, I would yield the rest of my time to you if you would like to finish.
13636
SENATOR BERNARD-STEVENS: Thank you, Senator Hillman. I would, and I want to again clarify that I, for the body's sake, I am not bringing this amendment to a vote because I concur, it's not the right time. My purpose is, as Senator Kristensen pointed out, and I hope I'm not saying it incorrectly and I'm sure he'll correct me if I do. Senator Kristensen is absolutely correct when he talks about the Revenue Committee making a jump. For example, if you go from wherever they're at to 8 percent, they have two years to look at that and they will have to totally redo, I suspect, their distribution formula, and they will try to make that work. And they probably can make that work, though at, obviously, as everyone else going to have a lot of pain involved in that. This will be at the same time when we are doing business incentives, like the Union Pacific bill, and others on the Micron bill, where we're actually asking community colleges to do more training, we're going to have them cut back. So the Revenue Committee basically said, look, we'll give them two years prior to it being enacted, and that goes to eight. And there's another, you know, period of time, a year, I think, where and then it goes to four. And I may be wrong, maybe it's two years. But it then goes to four. And it's kind of a gradual step to where we're eventually going to be. I concur that the gradual step makes more sense. Where Senator Warner and I, I think, are disagreeing, but I think deep down we're not disagreeing, one of us is willing to admit it and the other one is not necessarily willing to admit that now and may no actually believe it now, but where I'm trying to get the people to understand is when you get to that four, yes, the community colleges will have to reassess their budgets, yes, they're going to have to find a different formula. But when you get to four, it's done. We're done. And there may be other alternatives out there, but the bottom line is,. they're going to have to be able to get 40 to 54 million dollars or whatever is above the 4 percent where they needed to be, or they become under us and we give them what they need to function, which is around $54 million ...
SENATOR WILL: One minute.
SENATOR BERNARD-STEVENS: ... today, it'll be higher later. And I want the body to understand that. And it's one thing to say, yeah, it's something that we need to put off. And I agree with that, it'll be a decision later. But don't leave here today
13637
when this bill: passes and think that's no problem, we'll solve that when we get there because this is the only way you'll solve it is through dollars, period. Dollars. Now if you don't believe in the community college system, you're on the right track because they will. be gone. If you believe in the community college system and we're going to be asking them to do more for what they do in the regions, you have to deep down begin thinking now what you are going to be willing or not willing to do. And if there are people out there such as, well, I won't mention names, but people have already said things like on the floor, if you listen carefully to what they say, I thought this was a reduction in spending bill, I didn't think this was a tax increase bill for more spending. Listen to the whispers of the Plains. People are looking at this as their taxes are going to lower.
SENATOR WILL: Senator Bernard-Stevens, Senator Hillman's time is up, but your light is next. You may continue.
SENATOR BERNARD-STEVENS: Thank you. Thank you. They are looking at this as their taxes will lower. They are not necessarily sending the same message that they want the taxes to shift. They are not saying that. Go to your people, if you have, and ask them, are you... if we do the property taxes, are you willing to have other taxes, sales and income, shift? And your answers are absolutely mixed. There is no consensus. Some people will say, yeah, I'd be willing to do that. If his income is up, the only way fair to do it, if you make the money, you pay. And, of course, those that have the incomes, and when you are trying to attract businesses, what you have, say, no, that's not the best way to do economic development, and we've got to get that in the state of Nebraska. So then you ask them, well, what about sales tax? And the elderly then say, oooh, not sales tax. I'd rather you do the income tax because I don't have as much income anymore, lets don't do sales tax. (A), a group is going to say it's regressive, and, (B), they are going to say if you can afford to buy it, you can afford to pay it, and those that are doing more buying because they are not having the income anymore because they are retired are going to say, no, don't do sales tax. We know we are not going to do tax on intangibles. The food tax we could go to. That's great. This is the tax that the-people repealed. That's the one the people said we don't want to do. We are going to probably say, because we don't think you meant it this time, this time we think you'll
13538
let us do it. Maybe they will, I, but those groups that opposed the food tax because it's a staple that people need to survive will still be there. And I could go on and on on the taxes. What are you personally going to do that you feel your public will support you? And I believe, in my heart, when you do that, you don't have a clue. I don't have a clue because there aren't any clues out there with the exception of , they don't know either. So if you are going to start on the road where you need the dollars, and you are not willing, necessarily to do any of those; not to just say, I will be willing to think about it, but in your heart know, yes, I will vote, elections or not, to increase taxes. Even if I'm up for election, I will vote to increase taxes because at some point half of us all the time are up. I mean if it's not this group that's not up, or that's up, it will be the next group next time. If you are not willing to do it during an election year, we can't hold the line here in the body. So that's why I'm bringing- this for a discussion because I firmly believe that when you do this to the community colleges, and to other entities, It is easier to show on the community colleges, I don't believe we're really serious about funding it. I think we are willing to put it off because we will find a way later, but ask yourself, do you really... are you really dedicated to find that way when it comes to actually increasing money. And this will be a time when the federal government, if they balance the budget, it's been guestimated, the state will lose somewhere around $300 million. How much of that are we going to try to make up? How much of that are we just going to say, sorry, we're not going to do any of those things anymore? How much of that are we going to try to increase taxes to make up for some of that? How much are we going to cut the university system, or whatever, in order to fund some of that stuff? All of those are going be around during this time period, and the one thing we are telling the people is the thing that we have not admitted ourselves. We are telling the people they have to cut services if they are going to cut property taxes. We have to admit ourselves, if we are going to pick up those things, or we are going to handle the federal government side on reductions, we have to cut services. We cannot increase the taxes to the point we can cover all these things, and where are you going to be when the bell tolls on community colleges? Because if you do community colleges, You are not going to be able to do something else, and we all -know when it comes to push and shove, whoever has the biggest hammer and the loudest squeak is going to get the dollars, and the
13639
community colleges don't have the big base out there.
SENATOR WILL: One minute.
SENATOR BERNARD-STEVENS: They just have former Senator Baack, and that's scary enough. So with that, members of the body, I will conclude my remarks. Thank you.
SENATOR WILL: Thank you, Senator. Bernard-Stevens. Senator Robak.
SENATOR ROBAK: Mr. Speaker, could I move I that we adjourn until tomorrow morning at March 22nd, at nine 0 clock in the morning.
SENATOR WILL: Mr. Clerk, do you have items for the record.
CLERK: Mr. President, I do. Senator Wesely has amendments to LB 681; Senator Robak to LB 1290; Senator Bromm to LB 299. That's all that I have. (See pages 1430-34 of the Legislative Journal.)
SENATOR WILL: Thank you, Mr. Clerk. The motion before us is to adjourn. A machine vote has been requested. All in favor of adjourning vote aye, opposed no. Mr. Clerk, please record.
CLERK: 9 ayes, 19 nays to adjourn, Mr. President.
SENATOR WILL: The motion to adjourn fails. We move to the next speaker on the Bernard-Stevens amendment. Senator Witek. The question has been called, do I see five hands? I do. The question is, shall debate cease? All those in favor vote aye, opposed no. Mr. Clerk, please record.
CLERK: 27 ayes, 0 nays, Mr. President, to cease debate.
SENATOR WILL: Debate has ceased. Senator Bernard-Stevens, to close on your amendment.
SENATOR BERNARD-STEVENS: Thank you, Senator Will, members of the body. Just a ... I kind of ... Senator Wehrbein said, gee, you can't close. You said everything you could on that one time, and he's absolutely correct. But I do want to talk about one other area. There's so many facets to what we're going to do and it makes it so complicated it almost paralyzes, certainly it
13640
does me, as far as what is the best thing to do. There's so many good things that we're trying to do with this bill and the next bill, and there's so many things that I'm scared, literally scared to death of, and it's going to come down, I suspect, that we can't solve all of the problems. It's going to be based on faith, what do you believe will happen, and we go at that point. I understand that. But just remember what our community colleges are, and I do have to laugh because one of the things, when I'm not in the body after the next two years, I am certainly going to try to get back into teaching. Well, I suspect what we do here on these next two bills, they are going to be RIFFING so many in North Platte, that I am going to maybe vote myself out of that job, so that leaves the community colleges. So maybe that's why I'm supporting them so much right now, so I am trying to kiss up so maybe, I can get something. But I don't believe that's the motivation behind it. But since some people have been saying that, I'd might as well bring it up on the floor. So if it does help, I would appreciate that if anyone is listening. But we do need to remember who the community colleges serve, what their role and mission is, and many times it's people who have lost their farm, not th... it's a single parent family, that they are trying to get an education, and they can't go off to Lincoln, they can't go off... they have to ... to Omaha, they have to stay in their area, and it may take them, sometimes in North Platte, Mid Plains, it has taken people eight years to get a degree, and I have some discussions I need to have with President Johnston of Kearney because we are having a lot of difficulties with them at this point on working with community colleges. Once they got in the university system, attitudes started to change, which I guess I am not- surprised. But we need to remember who we are talking about, what people we're talking about, and when you're a single parent family or single person, period, and you don't have the skills and you're trying to get it, you don't have a lot of money to spend. That's what the nature of the community colleges. It is relatively low tuition, and they can go two years to get working on a skill and might even be able to get a degree through telecomm... the telecommunications and the agreements with Chadron or Kearney or the University of Nebraska, wherever. But the bottom line is, when they are stressed on money, the way they have to go is they'll have to increase tuitions. They will have to increase costs, and if it's you and I, that may not be a problem, but for many people they serve it will be a problem, and we need to keep all of these things in mind. The bottom
13641
line is whatever we end up doing on community colleges at the end., and I suspect it will be eight to four, where are you going to find the dollars, and do you really have the commitment to do it when you are going to have all of the other pressures too? Where will they come into play? And with that, Senator Will, I withdraw the amendment.
SENATOR WILL: Thank you, Senator Bernard-Stevens. The amendment is withdrawn. Mr. Clerk, next item on the committee amendments.
CLERK: Senator Beutler would move to amend.
SENATOR WILL: Senator Beutler.
SENATOR BEUTLER: Which AM is this, Mr. Clerk?
CLERK: I am sorry, Senator.
SENATOR BEUTLER: Which is the AM that we're ...
CLERK: 4002.
SENATOR BEUTLER: I think everybody is tired tonight. I think I will withdraw that amendment.
SENATOR WILL: The amendment is withdrawn. Further items,
Mr. Clerk.
CLERK: I have nothing further to the committee amendments, Mr. President.
SENATOR WILL: We are back to debate on the committee amendments. Senator Robinson, do you wish to address the committee amendments. Senator Robinson waives off. Senator Warner.
SENATOR WARNER: Mr. President, members of the Legislature, I'd ask to pass.
SENATOR WILL: Senator Warner waives. Further discussion on the committee amendments? Seeing none, Senator Warner, do you wish to close? Senator Warner waives. The question before the body is the adoption of the committee amendments to LB 1114. All
13642
those in favor vote aye, opposed no. Mr. Clerk, please record.
CLERK: 30 ayes, 1 nay, Mr. President, on adoption of the committee amendments.
SENATOR WILL: Committee amendments are adopted. We move to the bill. Senator Warner, would you like to open on LB1114? Senator Warner waives opening. Mr. Clerk, any amendments on LB 1114?
CLERK: Senator Will has an amendment with I have a note he wants to withdraw, Mr. President.
SENATOR WILL: Senator Will would withdraw that amendment.
CLERK: Mr. President, Senator Vrtiska has an amendment, AM3952.
SENATOR VRTISKA: Wish to withdraw.
SENATOR WILL: Senator Vrtiska withdraws that amendment. It is withdrawn. Further amendments?
CLERK: Senator Vrtiska, second amendment, Senator, AM3955. (See page 1366 of the Legislative Journal.)
SENATOR WILL: Senator Vrtiska.
SENATOR VRTISKA: I would like to take that amendment up, but I am going to withdraw it as soon as I'm finished and I won't take very long. Everybody is getting tired and so am I, so I'd Just like to run through this and tell you what this amendment would do, and I will discuss it. What this amendment would do is require the Revenue Committee to study the issue of replacing the revenue for the subdivisions impacted by this bill and report back to the Legislature next session with recommendations. The bill will also require the Legislature, by July 1, 1998, to adopt some form of replacement revenue structure which would provide local governments with at least 90 percent of the revenue that they have available to them in the fiscal year, 1997-98, in order for the levy caps in the bill to become operative. First of all, property taxes need to be lowered, and I intend to support the package we are working on right now, even though I agree with others that we might want to consider some modifications in various places. The people who
13643
have come to me wanting property tax relief also want reduction in spending and I think that is something that all of you would certainly agree with, but I've not had anyone come to me from my district who want to strap local governments beyond the point where they would not be able to provide essential services at the local level that they expect and, obviously, want. That's why I drafted this amendment. Obviously, the levy caps on this bill will reduce property taxes. My amendment was designed to give everyone a chance to come back next session or the following session, once we see how things play out, and then pass legislation which would provide replacement and still guarantee some reduction in available revenue up to 10 percent of the local level. Meanwhile, property taxes are still lowered to the fullest extent that the caps, that the levy caps would do. It seemed to me to be just one idea of creating a win-win situation for both the taxpayer and also the taxing subdivisions. I filed the amendment so it could be printed, and the idea would get ... and would get out so we could ... would be discussed. I have been listening very closely to the debate, and I will continue to listen, but I intend to take a good hard look and see where we are when we reach Select File, and possibly offer something, something on this order. I am not exactly it will be just exactly like this, but something in this ... in this order, so that people will have a chance to not only reduce taxes, but in somehow replace some of those funds that some of these organizations and some of these entities would lose, and we've been listening to that all evening, and somehow we've got to come to a decision on how we are going to do this. I appreciate your' listening to my little short discussion, and with that explanation, I will withdraw the amendment at this time.
SENATOR WILL: Thank you, Senator Vrtiska. The amendment is
withdrawn. Mr. Clerk, do you have items for the record?
CLERK: Senator Beutler would like to print amendments to LB 1155, Mr. President. (See pages 1435-37 of the Legislative Journal.) Mr. President, I have a priority motion. Speaker Withem would move to adjourn until nine o'clock tomorrow morning.
SENATOR WILL: Senator Withem, do you wish to address the motion?
13644