LB 270 (1997)
March 10, 1997
PRESIDENT ROBAK: LB 622 advances. LB 270.
CLERK: LB 270, introduced by the Revenue Committee. (Read title.) The bill was introduced on January 13, referred to the Revenue Committee. The bill was advanced to General File. There are committee amendments.
PRESIDENT ROBAK: The Chair recognizes Senator Kristensen to open on the bill.
SENATOR KIRISTENSEN: Thank you, Madam President, members of the Legislature. LB 270 is the process of examining our revenue statutes in the area of property taxation, more particularly in the area of assessments, in the areas of exemptions and valuation. As you remember, we created the Property Tax Division of the Department of Revenue and split them off a
couple of years ago. During that period of time, now our Property Tax Administrator, Cathy Lang-Morrissey, has really undergone a major project, and that was to sit down and go through absolutely every statute in the 7700s, particularly in the area of equalization and assessment practices and the exemption areas. Through that process they examined the difference between what is actually going on, what the statutes have, and finding what some of the areas that needed to be updated. And I'm going to go through some of those with you this morning. As a matter of procedure, they took 18 county assessors, who were volunteers, they weren't forced to do it or anything. Those 18 volunteers reviewed the statutes, they came together, made a report and a recommendation. They then went to the fall meeting with the assessors. It was a fairly highly technical review of the statutes and the process. At their fall meeting they also then, after some period of refinement, took it to the County Officials Association, they took it to the Tax Research Council, they took it also to the county treasurers. And there will be another process with the county treasurers, they didn't get started with them until November or so on. But they'll begin to review the process, particularly in the areas of equalization assessment and exemptions. The bill does a variety of things. If you'll .... The committee statement in probably the best place to start to begin to look at those. I want to hit some of the highlights for you. I also want to talk about the committee amendment which makes some of the changes. You'll see in the committee statement that there was some opposition. The committee amendment that I'll explain in a little bit, I think, deals with all the opposition there was at the hearing. The first part deals with the funding and a cash fund that we want to make sure we, split off the Property Tax Division, that they're monies that they receive from those Cash Funds don't go into the Department of Revenue, and there has, to be some sort of dispute or some difficulty trying to get the money from the Cash Fund that goes into the Department of Revenue's funds over to the Property Tax Division. We also make some changes in definitions. And a number of these definitions are to make them consistent with appraisal techniques and appraisal terms, so there's a lot of state of art terms that are spelled out here, that rules and regulations will go ahead and flush them out a little more as we go along. We've never, for
example, defined some of the things--tax situs, assessments, undervalued, overvalued property, we defined those; omitted property, we make some definitions for those things as well, things we've not done before so you will see those definitions in there. Those definitions either have come from manuals, recognized appraisal manuals, or they've come as basically terms of art that we've used in the state, and the rules and regs, we'll go ahead and flush those out later. One of the other things that when the Property Tax Administrator testified before the committee, talked about the 80 percent ag land valuation. Want to make sure that that's affirmatively stated in there. There are a number of other places that you could open up the statute book, point to it and say, oh, here 's the value that's to be used, or it states that it shall be market value. To make it more consistent and to make sure that it's specifically there, so you don't have to dig around in three or four different sections of law, we put that 80 percent standard, which is what we've been using for a number of years. There's also a provision which would have mandatory attendance of school conducted for the county assessors, they'd be required to attend. They could get a waiver or send a representative. The key to this now is the state's going to pick up the cost of doing that. So it will be good for the assessors. This is something that I think they also would like. There's an advanced school that could be utilized. That will be at the discretion of the property tax administrator. And so we take out some of those other mandatory sections, put in the discretionary part for the advanced school. We pay for that, which again is a plus. One of the major changes that are made through here is the failure to report personal property taxation. It cleans up and clarifies some aspects of that. it also provides for a specific appeal. In the old law if you willfully, and the standard was willfully, did not report personal property tax, there was the possibility of a 50 percent penalty. The change that has been made here is that if you self-report that it becomes a 10 percent penalty. If it's one that the assessor basically catches you on, that becomes a 50 percent penalty. We also make some changes in terms of dates. We add a specific date by when the county board's got to act on exemptions. We go through and specifically talk about changes to the county board of equalization, so there's probably
a dozen changes, affirmative duties to equalize values within the county, something that's always been there by court decree, basically. It's been inferred, of course, by the constitution, but we put that affirmative duty in statute. We require that the protest be written and filed. There's some appropriate time frames that are added in there. We also clarify that the county boards are to keep records of those actions on the protest and then file them with the property tax administrator. We also have the equalization to the current year's assessment, so they can't go back and forth. We set out some time lines and procedures for those appeals to the Tax Equalization Review Commission. And we also make some repeals of some old, archaic language that are in there. For example, some of the language, particularly in the area of aq land, we talk about earning capacity. Well, that's a 1980s, when we were under that particular statute. Now that's inconsistent with what we currently have done in the nineties, which is an income approach as opposed to an earning capacity. We also take out the acreage size restrictions and look at it on a case-by-caoe basis. So if people are actually using the agricultural land for production, they'll gain that agricultural valuation standard. We also remove the annual review of cemetery property for an exemption. Before they'd always have to come in and show that they're still a cemetery. That now becomes basically a perpetual exemption, except- people have the ability to come in and say it's no longer being used and they can challenge the exemption from that point of view. I think a number of these changes were done. Just because we've looked at them for a number of years, we've not had a chance to go back. The committee statement does have a variety of those changes, a lot of them, I think, you will find to be clarifying in cleanup, but there are also some updating ones. Madam President, I'd be happy... I think that's a good introduction, rather self-serving, I suppose, but it's an introduction of what the bill does. The committee amendments then deal with the opposition at hearing. And at this point in time, I'd like to yield back my time and deal with that amendment.
PRESIDENT ROBAK: Thank you, Senator Kristensen. Before you begin on the committee amendments, while the Legislature is in session and capable of transacting business, I propose to sign
and do hereby sign LB 11, (LB) 58, (LB) 68, (LB) 80, (LB) 321, (LB) 140, (LB) 161, (LB) 210, (LB) 230, (LB) 258, (LB) 285, (LB) 315, (LB) 412, (LB) 426, (LB) 4790 (LB) 666, (LB) 37, (LB) 183, (LB) 184, (LB) 325, (LB) 568, (LB) 722, (LB) 47, (LB) 631, (LB) 397, (LB) 130, (LB) 199, and (LB) 453. Senator Kristensen, to open on the committee amendment. (AM0485 appears on page 805 of the Legislative Journal.)
SENATOR KRISTENSEN: Thank you, Madam President, members of the Legislature. If you'll look in your laptop, on your laptop, you will find there was some opposition to the bill. The committee amendment does the following things-we do rename the Cash Fund, that's not a big problem. We've taken out and maintained in current law the exemption for rental inventory property tax. The other one is keeping in current law the affidavit procedure for renewing a tax exemption. That had caused a considerable amount of opposition at the hearing. The Revenue Committee felt that instead of making that big change or doing anything to it, we would just remove that from the bill no it keeps the current law, which is the affidavit procedure for renewing the property tax exemption. We go on and there was another discussion of penalty under that. The failure to timely file an exemption application was, at least under the old law it was 10 percent. Now we... 10 percent of the tax. What we do now is the lesser of 10 percent of $100 each month. That basically puts a cap on what any of those penalties are going to be. I assume some of you have that problem or had people who wanted to change that or thought that was a harsh penalty, so the committee has changed that. We also require the county board to act on the exemptions by August 15. The current law had no particular date to do that. We also have a provision which sets out the procedures for assessment and taxation of central assessed property. Those things are currently in the law, and there's a procedure that we do by rules and regs, but there's really no statutory authority to do so. And so the committee felt that it was a good time, when we're doing this review, to put those in. There's also the Property Tax Division's Cash Fund that I talked about earlier. We, in effect, get money from three sources. The state collects a one percent assessment fee on the centrally assessed, similar to what the county would collect when it does property tax assessments. This one percent of fee, as well as the sale of
publications, for example, the LAN Manual, some of the other property tax manuals. When we don't ... well, we give them to certain political subdivisions, but we sell them to the general public. That money comes in and then there's a special method of keeping property tax assessments, basically a data base called CAPS, that's done for some of those smaller counties. Those monies all go into the Cash Fund. The Cash Fund is then going to be... it's more accountable. You can see how much money goes in there and you'll want to be able to use that for the cost of the assessor's school. So instead of just pouring General Fund money in, you don't know where it's going, you'll be able to see how much money we generate from that. And that's going to go in and help develop the programs and the models to improve the assessment practices for the county officials. The last two changes in the committee amendment, this morning we passed LB 397, that was a deadline for some of the filings in the greenbelt. Since we changed that in 397, we just strike that completely out. There's no changes made to the greenbelt in this bill. And then finally, the last one was the creating of the Tax Equalization Review Commission, their Cash Fund. We didn't have any fund to receive their filing fees. We put in filing fees, but we didn't have the appropriate fund designated to receive the filing fees, so that was a housekeeping item. And we make the designation, and that's where the filing fees are going to go is not into the Property Tax Administrators Fund, but would go to the Tax Equalization Review Commission. Those are the filing fees for the appeals. With that., Mr. President, that is the committee amendment. I would urge the adoption of the committee amendment. I think a number of members of the committee ommittee felt very comfortable. making these cleanup changes, and I'd be happy to try to answer any questions.
SPEAKER WITHEM PRESIDING
SPEAKER WITHEM: We are now debating the adoption of the committee amendments. Senator Lynch.
SENATOR LYNCH: Mr. President, members, could I ask Senator Kristensen a question?
SPEAKER WITHEM: Senator Kristensen, will you respond?
SENATOR KRISTENSEN: Sure.
SENATOR LYNCH: But while I was waiting to ask you the question, Senator Hartnett, I think cleared up the issue. I was curious about why the Nebraska Catholic Conference, and independent college folks opposed it. And I understand that you, in this amendment, have taken out from this bill the language that was a concern for them. In that right?
SENATOR KRISTENSEN: That's right. There was going to be a change in how they made their... the process of filing a form to continue their tax exempt statute.
SENATOR LYNCH: Okay.
SENATOR KRISTENSEN: And basically what the bill had done was made it a little more difficult, more expansive. And they said, what's wrong with the current process? We like the affidavit we do right now. After the public hearing, this is one of those things the committee agreed with them. And just struck...
SENATOR LYNCH: Okay.
SENATOR KRISTENSEN: ... that change and leaves the current law. And I think they should be satisfied with that.
SENATOR LYNCH: Okay, thank you.
SPEAKER WITHEM: Thank you, Senator Lynch. Any additional debate? Seeing none, Senator Kristensen, do you have closing?
SENATOR KRISTENSEN: Mr. President, I'd waive closing on the committee amendments.
SPEAKER WITHEM: Thank you. Question is the adoption of the committee amendments. All of those in favor vote aye, opposed vote nay. Record, Mr. Clerk.
CLERK: 28 ayes, 0 nays, Mr. President, on adoption of committee
SPEAKER WITHEM: Committee amendments are adopted. Anything further on the bill?
CLERK: Nothing further on the bill.
SPEAKER WITHEM: There are no lights on. Senator Kristensen, do you have closing?
SENATOR KRISTENSEN: Mr. President, I do have a closing, very briefly. And I want to extend to the body that there are a number of changes here, although I don't know if there's any super policy changes. But I would encourage you or staff, if you wanted to review this piece of legislation between now and Select File, we have a white copy of the bill as it sets with the adopted committee amendments that are now there, as well as a pretty good section-by-section that's been done. And we'll be happy to answer any questions between now and Select File.
SPEAKER WITHEM: Thank you for the closing, Senator Kristensen. The question now before the body is, shall LB 270 be advanced to E Sc R Initial? All of those in favor vote aye, opposed vote nay. Record, Mr. Clerk.
CLERK: 26 ayes, 0 nays, Mr. President, on the advancement of LB 270.
SPEAKER WITHEM: (LB) 270 is advanced. Mr. Clerk, do you have any items for the record?