LB 271, General File, May 2, 1997

Floor Transcripts

LB 271 (1997)

General File

May 2, 1997

SPEAKER WITHEM: Mr. Clerk, next matter, or additional matters for the record, if you still have.

CLERK: No, Mr. President, I'm prepared, thank you. Mr. President, (LB) 271, a bill introduced by Senator Coordsen. (Read title.) The bill was introduced on January 13 of this year, at that time was referred to the Revenue Committee. The bill was advanced to General File. There are committee amendments pending by the Revenue Committee, Mr. President.

SPEAKER WITHEM: There has been a request by Senator Chambers to invoke the rule, I forget the number, dealing with Rule 6, Section 3, 1 believe it is, to ask that the bill be read by section-by-section. Mr. Clerk.

CLERK: (Read LB 271 section-by-section.)

SENATOR WESELY PRESIDING

SENATOR WESELY: Thank you, Mr. Clerk. We're ready now to open on LB 271. The Chair would recognize Senator Kristensen. There he is. Senator Kristensen, we'd ask you to open on LB 271.

SENATOR KRISTENSEN: Thank you, Mr. President, members of the Legislature. LB 271 deals with the taxation of motor vehicles. And as we begin this debate, I think it would be helpful to review how motor vehicles are taxed right now, and then the policies of why we need to change. The committee amendment, Senator Coordsen is going to introduced those, and they have the substance the meat of what is in there. Senator Vrtiska, I

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think your microphone is open. Thank you. Actually, he was doing a better job of opening than I was. I'll gather myself. Right now motor vehicles are currently taxed on a value based property tax, that's the basis for the system. The valuation of these vehicles are established for the property tax administrator. The various subdivisions then go out, take the values that have been established by her and they a apply their levies to determine the amount of tax. Okay? So you get a vehicle, it gets what I would call a pretty arbitrary assignment of value, and then it's treated like any other piece of property or personal property and it's taxed with the levy. It's collected all by the counties, distributed at the same levy rates and to the same places that it goes. The problem is with the current system. If you look at the Nebraska Constitution, it does tell us, I think it's in Article I, Section 8, that the state ... the Legislature may provide for a different method of taxing motor vehicles. And that's about all it says But it still has a problem, there's nothing in our statutes, there's nothing in the constitution that indicates and tells the property tax administrator this is how you're going to tax the vehicles. And., what. has happened, and it's happening more as there's a lack of standards and some consistency in setting those values. For example, let's take, oh, Senator Schimek may have a car that's a fairly nice car but has a lot of miles on it, a lot of miles on it. And because she smokes and it's got cigarette burns in it, it isn't as attractive a car inside. Senator Hudkins has the same vehicle, except hers is immaculate and it doesn't have near the miles on it, it's always been in a garage, it hasn't been out to the pasture, it hasn't had all those other things, they're the same car, the same year, but in entirely different shapes. The value from the property tax administrator will be exactly the same on both of these. That's not a good system, because if you're going to have a property tax system and you're still going to have to put some equal treatment of that taxation, the trouble is the assignment of those values comes from basically looking at a manufacturers suggested retail price and then putting some factors into it, but it has no relationship because her car has been immaculately. kept, and the other car has been rode hard and had lots of problems to it. Same year, entirely the same value, much different cars. And if you're going to have a property tax system, they bear no relationship to that. The other problem

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that we have is, obviously as we go along, this has been compounded. And so we think, and the Revenue Committee for the past I don't know how many years has had this system of tax and a bill like this in front of us saying, you can no longer, and .it's becoming harder and harder to defend the current property tax system with motor vehicles and how they are taxed. This is not an ... this is not a bill that is designed to make up replacement revenue. The bill's designed to protect the system. And, if you remember, this is consistent with the property tax package we put out last year for this purpose. We changed and had a constitutional amendment that would change where the taxation of these things may be given and where they may be going. And we were going to use that to live with some of these other levy limitations. That amendment did not pass. What we've done with this bill is philosophically broken it down into a couple different factors, but we're going to remain 80 percent under a taxation value system, but have a different system of determining that, and then we're going to go to roughly 20 percent of this is going to be fee-based. And now, Senator Coordsen, I'm going to close on the opening. That gives you an overview of what the bill is about. It's not designed to raise more revenue for the state, it's not going to be 100 percent, it may raise a little, it may lose a little, but it's designed to be as close as we can get to revenue neutral. But we're trying to protect the system and the integrity of the system. And, with that, Mr. President, I appreciate the chance to open and give a thumbnail sketch of what the philosophy, where the current system is at and some basis of why we want to change, and I would yield back my time and allow us to go to the committee amendments.

SENATOR WESELY: Thank you, Senator Kristensen. The Chair now recognizes. the. Vice Chair of the Revenue Committee to open on the committee amendments, Senator Coordsen. (See Standing Committee amendment, AM1255, on page 1304 of the Legislative Journal.)

SENATOR COORDSEN: Thank you, Mr. President, members of the body. The committee amendments replace Sections 1 through 6 of the original green copy bill. For the most part the rest of the bill really is housekeeping, to make the major changes workable when we're moving it into what is currently used for the

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ad valorem tax system. This is, by the way, AM1255, which is a committee amendment to LB 271. As Senator Kristensen indicated, this is a restructuring of how we provide for fees and taxes upon motor vehicles in the state of Nebraska. The first ... or the second section of the statute is dedicated to ... well, actually the first and second section are dedicated to some definitional sections. Section 3 provides. that the county treasurer shall determine the motor vehicle tax based upon the age of the motor vehicle, pursuant to Section 4. And Section 4 will provide a little more direction in that, because that provides the divisions among the various new costs of cars as to what the fee ... the taxes might be. The motor vehicle tax, it also goes on to provide the motor vehicle tax fee and registration fee are paid to the county treasurer. After ... and with respect to the tax portion, after retaining 1 percent of the motor vehicle tax by the county treasurer, the remaining proceeds shall be allocated to each taxing unit levying taxes on taxable property in the county in the same proportion that the levy of such taxing unit bears to the total levy of the taxable property of all of the taxing units in which the motor vehicle is located. Section 4 then is what it of most interest, I think, to both the...our constituents, as well as a member of the body, and it provides for the method that the tax will be determined for each motor vehicle in the state of Nebraska. *Sub (2) of Section 4 gives the multiplier, that is a fraction that is multiplied against the initial fee. An example of Section 2 would be, if you moved to the top of page 5, passenger cars, trucks, utility vehicles, and vans up to five tons, and when a value with new of at I-east 17,000 or less than 27,000, would be $250. To determine the tax on an older vehicle, you would multiply that $250 by whatever the age of the vehicle was. if it was five years old you would multiply 250 by 60 percent. That same process is applicable to all of the types of motor vehicles,. and they vary. in ... depending upon their value, primarily, in passenger vehicles and on other vehicles by their poundage ... by their tonnage. And this is when they're new. It begins with a class of up to five tons, that applies to commercial vehicles and passenger cars, et cetera. The first one is if they have a value of less than $17,000 when new, the first year fee ... first year tax would be $150. Move up ... move down on through there, passenger cars, et cetera, with a value when new of $40,000 or more would have a $550 tax in the first

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that we have is, obviously as we go along this has been compounded. And so we think, and the Revenue Committee for the past I don't know how many years has had this system of tax and a bill like this in front of us saying, you can no longer, and it's becoming harder and harder to defend the current property tax system with motor vehicles and how they are taxed. This is not an ... this is not a bill that is designed to make up replacement revenue. The bill's designed to protect the system. And, if you remember, this is consistent with the property tax package we put out last year for this purpose. We changed and had a constitutional amendment that would change where the taxation of these things may be given and where they may ay be going. And we were going to use that to live with some of these other levy limitations. That amendment did not pass. What we've done with this bill is philosophically broken it down into a couple different factors, but we're going to remain 80 percent under a taxation value system, but have a different system of determining that, and then we're going to go to roughly 20 percent of this is going to be fee-based. And now, Senator Coordsen, I'm going to close on the opening. That gives you an' overview of what the bill is about. It's not designed to raise more revenue for the state, it's not going to be 100 percent, it may raise a little, it may lose a little, but it's designed to be as close as we can get to revenue neutral. But we're trying to protect the system and the integrity of the system. And, with that, Mr. President, I appreciate the chance to open and give a thumbnail sketch of. what the philosophy, where the current system is at and some basis of why we want to change, and I would yield back my time and allow us to go to the committee amendments.

SENATOR COORDSEN: Thank you, Mr. President, members of the body. The committee amendments replace Sections 1 through 6 of the original green copy bill . For the most part the rest of the bill really is housekeeping, to make the major changes workable when we're moving it into what is currently used for the

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ad valorem tax system. This is, by the way, AM1255, which is a committee amendment to LB 271. As Senator Kristensen indicated, this is a restructuring of how we provide for fees and taxes upon motor vehicles in the state of Nebraska. The first ... or the second section of the statute is dedicated to ... well, actually the first and second section are dedicated to some definitional sections. Section 3 provides that the county treasurer shall determine the motor vehicle tax based upon the age of the motor vehicle, pursuant to Section 4. And Section 4 will provide a little more direction in that, because that provides the divisions among the various new costs of cars as to what the fee ... the taxes might be. The motor vehicle tax, it also goes on to provide the motor vehicle tax fee and registration fee are paid to the county treasurer. After ... and with respect to the tax portion, after retaining 1 percent of the motor vehicle tax by the county treasurer, the remaining proceeds shall be allocated to each taxing unit levying taxes on taxable property in the county in the same proportion that the levy of such taxing unit bears to the total levy of the taxable property of all of the taxing units in which the motor vehicle is located. Section 4 then is what it of most interest, I think, to both the...our constituents, as well as a member of the body, and it provides for the method that the tax will be determined for each motor vehicle in the state of Nebraska. 'Sub (2) of Section 4 gives the multiplier, that is a fraction that is multiplied against the initial fee. An example of Section 2 would be, if you moved to the top of page 5, passenger cars trucks, utility vehicles, and vans up to five tons, and when a value with new of at I-east 17,000 or less than 27,000, would be $250. To determine the tax on an older vehicle, you would multiply that $250 by whatever the age of the vehicle was. if it was five years old you would multiply 250 by 60 percent. That same process is applicable to all of the types of motor vehicles, and they vary. in ... depending upon their value, primarily, in passenger vehicles and on other vehicles by their poundage ... by their tonnage. And this is when they're new. It begins with a class of up to five tons, that applies to commercial vehicles and passenger cars, et cetera. The first one is if they have a value of less than $17,000 when new, the first year fee ... first year tax would be $150. Move up ... move down on through there, passenger cars, et cetera, with a value when new of $40,000 or more would have a $550 tax in the first

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year purchased, motorcycles $80, recreational vehicles that are up to 1,000 pounds have a $30 tax, goes on through to trucks, five tons and over but less than 16 tons, $300. These are all when new. And to determine the value for an older vehicle, passenger car, truck, trailer, bus, you go through the system, you would multiply it by the percentage that is determined by the other chart, which is reflected by the percentage of new value. Current model year vehicles are designated the first year vehicle for purposes of the schedules. We provided that when a motor vehicle is registered which is newer than the current model year, by the manufacturers designation, that is a 198 model that comes out in '97, the motor vehicle is subject to the initial motor vehicle tax in the first registration period, 95 percent of-the initial motor vehicle tax in the second registration period. This is something that might.... And then it also provides for something that we don't have now, that is that if a motor vehicle, as a salvage certificate of title, the tax is reduced by 25 percent. It requires that the property tax administration, Section 5, determine the value when new of passenger cars, trucks, utility vehicles, and vans, certify such designation to, the county treasurer or designated county official. And it goes on in some more detail as to how that process is supposed to be done. We've also provided for the opportunity for taxpayers to file objections. It continues in place some exemptions from the tax for motor vehicle for veterans who qualify for nonprofit organizations for government use, and some of the other exemptions that are currently in statute for the ad valorem taxes and registration. In Addition to the taxes, a motor vehicle fee is imposed on all motor vehicles registered for operation. I'm now on page 9 of the committee amendment, Section 7. And that fee is a fee' that's based simply upon the age of all motor vehicles. By the way, I should have mentioned on taxes that that phases out after 13 years, any vehicle that is 14 years or older has no tax applied to it. Moving back to the fees then, the fees are set. for each vehicle, type of vehicle and the percentage of that fee declines with the age of the vehicle. For the first through the fifth year the fee is the full amount of the fee, and in the case of passenger cars the fee is $25 for a new car, and that fee would remain the same until the fifth year, then it drops to 60 percent of that, and for the eleventh year and over it remains at 20 percent. This is in addition to the registration

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fee. What that means, in a practical sense, that any vehicle that is 11 years and older would have a fee of $5 assessed to them. And it goes through, on page 11 of the committee amendment, to detail what the fees are for the various types of motor vehicles and trailers in the state of Nebraska. Then there are some provisions for changes in gross vehicle weight. it's generally that which is applicable to trucks of some type, whether they're pickup trucks or what we might call straight ,trucks. If a new owner or subsequent owner elects to register that vehicle for a higher rate bracket than what might be assigned to it by the property tax administrator, then they would pay the fee for that particular weight rather than the original weight. And the rest of that section, again, is a number of instances, of some, for the most part, housekeeping language imposed throughout the rest of the bill. With that, Mr. President, that concludes my presentation and the opening. And we will proceed on. Thank you.

SENATOR KRISTENSEN: Thank you, Senator Coordsen The Chair now recognizes Senator Wehrbein, followed by Senator Beutler, Chambers, Kristensen, and Coordsen on the committee amendment. Senator Wehrbein.

SENATOR WEHRBEIN: Thank you, Mr. President, members. Senator Coordsen, I guess I'll ask you the questions. I have two primarily at this point, one relative to farm plates. versus commercial plates. Is that distinction made in this amendment?

SENATOR COORDSEN: That distinction on isn't made in this amendment, that I'm aware of.

SENATOR WEHRBEIN: Isn't or is?

SENATOR COORDSEN: Isn't.

SENATOR WEHRBEIN: There will be hone in the ... this is not in the proposal ...

SENATOR COORDSEN: That falls into the registration side, and we don't change the registration side. Commercial trucks have...

SENATOR WEHRBEIN: Okay.

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SENATOR COORDSEN: ... a different vehicle registration charges made than what farm trucks do. This is on the taxes...

SENATOR WEHRBEIN: Okay.

SENATOR COORDSEN: ... and then an additional fee.

SENATOR WEHRBEIN: Okay.

SENATOR COORDSEN: Okay?

SENATOR WEHRBEIN: Got it. Well, then this does raise those straight trucks, that I'm referring to, significantly in terms of your cost, doesn't it?

SENATOR COORDSEN: Well, it depends on the age of it.

SENATOR WEHRBEIN: That's-what I mean, how old...

SENATOR COORDSEN: Any truck that is 1983 or older, it would be reduced. The only ... other than the registration or tonnage costs and those sorts of things that you have to put on them, a truck that was 19 ... well, it would be 1984, 1 guess, now, and older would have a fee, and I'm talking about a farm truck rather, than a... I mean a straight truck that you typically see on a farm, or around town delivering, rather than a semi, would have a fee of $10. Currently, it's my understanding that the minimum valuation in the state of Nebraska for a farm truck, which is a combination of the value of the chassis, the box and the hoist, I was told yesterday by a commissioner it's $1,100. So there would be about $30 in taxes in the ad valorem basis, if you were in a $2.25 taxing district, like I am. So it's actually a reduction of some significance on older vehicles.

SENATOR WEHRBEIN: Okay

SENATOR COORDSEN: Okay?

SENATOR WEHRBEIN: Maybe I missed something, but the values, Senator Kristensen's example of an older... I mean a well kept up vehicle and an abused vehicle of the same type., How does this

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take that into account? Because I see this as if it says it's got an initial value of $16,900, how is that recognized in this new system? Did I miss something?

SENATOR COORDSEN: It's my understanding that -perhaps Senator Kristensen may have been misinterpreted. with what he said, because it is actually somewhat the same system in that it uses age ... price when new and age of the vehicle in determining what the taxes would be.

SENATOR WEHRBEIN: Can I ask Senator Kristensen to clarify then?

SENATOR COORDSEN: Yes.'

SENATOR WEHRBEIN: Please.

SENATOR KRISTENSEN: Senator Wehrbein, what it does is it doesn't pretend to be ... have anything anymore to do with what the valuation is, the actual valuation. What we do is begin to assign and you start with the base year. Then when you do the fee end of it, this is sort of a transition because we're still going to keep 80 percent of this defined as a tax, 20 percent of it as a fee, so that we're moving towards that system where you don't recognize the disparity that we used to have. So this is a period of coming into it. We really call them for what they are now, you take a look at and factor in and make it factored on age, and just say, look, we're taxing it based on age, not on property value. Although you use property value to define the categories to start with. Soil I mean we're just basically ,recognizing it for what it is and say, look, we're going to start taxing I it on the age of the vehicle and not pretend that these values have any rational relationship to it.

SENATOR WEHRBEIN: So it really will not take in the condition of the vehicle? This does not change...

SENATOR KRISTENSEN: No, we're going to ... we're just going to say that's a system that.... Well, it's impossible to do, unless you go out and have individual assessment, you can never do that.

SENATOR WEHRBEIN: Well, I maybe... I missed your first few

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sentences, and I would agree with you, I don't know how it could be done. And that's what I thought I caught. So I understand clearly now. Thank you.

SENATOR WESELY: Thank you, Senator Wehrbein. Mr. Clerk.

CLERK: Senator Kristensen would move to amend the committee amendments, 1868, Senator. (See AM1868 on page 1801 of the Legislative Journal.)

SENATOR WESELY: The Chair recognizes Senator Kristensen.

SENATOR KRISTENSEN: Thank you, Mr. President, members of the Legislature. In order to get the committee amendment, we've had a period of time since the bill was advanced out of committee. .We've had a chance to look at it further and do some things. These... I guess I'd call them changes,, these are, not inconsistent with the committee amendment. But let me go through them with you. The first thing we do is that we need to create a procedure for refund of a partial year on the motor vehicle tax and the fee., So if you have an unexpired portion, you trade your vehicle, you can get to make your claim and you're going to get your prorated claim, how many months you've got left in that year, for the tax and the fee. Similar to what we probably do now with the tax, but we want to make sure that we do that with the tax and the fee in this one. And so it...that's basically to make it consistent from what we've done before. We've not had a definition of a bus before, we put a definition of a bus so it fits into this schedule. Then we put in there a catchall phrase because there were some vehicles that we're not really sure what they were ... whether they were a truck, a van, a car, thereto a variety. There's just some things that fall in the cracks. To prevent the cracks, we put in a catchall phrase and says if they're not otherwise accounted for in here, we're going to count them as a passenger vehicle with a value of less than $17,000. The other is that we're going to create a right to protest the placement of the vehicle in one of these schedules. So that on the front page of a. handout I've got here, you've got this A through S list of schedules, if you have a type* of vehicle that you want to appeal its placement in there, you can do that. Right now we do that under the existing system. What we do is have the same type of

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system, now it goes to the property tax administrator for that decision, and if you don't like that, you get to appeal that to the Tax Equalization Review Commission. That's consistent with all other appeal mechanisms that we have in the property tax area'. The next to the last thing that it does is it places an appeal to the TERC, rather than to the Administrative Procedures Act. This is a cleanup. We had attempted to do that with most of the other things that we've done in the property tax area, before. And the final thing that it does is there is an exemption there for the tax for nonprofits. This allows and requires an application for that exemption to be filed within 30 days of when they purchased the vehicle so that when you put it on the schedule you know that they're exempt. This is the nonprofit, this is the taxation part, not the fee part for a nonprofit. And so I don't think any of those are major policy changes, but they are things that I think are probably consistent with what Senator Coordsen had explained, and would hope that we could adopt those to the committee amendments and then begin to debate the committee amendments, the merits of that versus the bill as it stood, as introduced. Thank you, Mr. President.

SENATOR KRISTENSEN: Thank you, Senator Kristensen. On the Kristensen amendment, Chair recognizes Senator Beutler. Do you wish to speak on the Kristensen amendment? Senator Chambers, on the Kristensen amendment.

SENATOR CHAMBERS: Mr. President, members of the Legislature, I don't know that I'm speaking on the Kristensen amendment or not. I've got to ask a question about some of what Senator* Coordsen said so I can understand even where we are. Senator Coordsen, I'll ask you these questions, because you did the presentation and, believe me, when I tell you that I listened to you, but I didn't understand the significance of everything that you said. Not that you spoke unclearly, I just didn't get it. On page 5, in lines 3 through 5 we talk about passenger cars. That's the one that I want to look at, and then this amount of $250. That is a base amount for every one of these passenger cars, regardless of the age. Is that correct?

SENATOR COORDSEN: That is.... Yes and no, I guess. It is...

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SENATOR CHAMBERS: Oh, that's the way I got it.

SENATOR' COORDSEN: It is.... Isn't this wonderful? (Laugh.) For the purposes of your question, that is the base value for a car that, when new, had a list price of at least $17,000 and less than $27,000. Then you go to the other page and use the multiplier, depending upon the age of the vehicle. And we have made provisions for program cars that are used, new used cars at the time, but that's sort of off to the side,

SENATOR CHAMBERS: But here's what I want to know, with all those qualifiers, no matter how old this car is, we start with this $250 amount, and then based on age you multiply that 250 by whatever this faction is.

SENATOR COORDSEN: By what.... That's right.

SENATOR CHAMBERS: That could have you paying more than what you .currently pay.

SENATOR COORDSEN: Or it could have you paying less, depending on where you 1 ive in the state. It will have you paying less if your vehicle is 13 or 14 years old, because it goes away after ... the tax goes away in the 14th year.

SENATOR CHAMBERS: But if it's not that old where it goes away...

SENATOR COORDSEN: Um-huh.

SENATOR CHAMBERS: ... people who have a car that would fit into this category...

SENATOR COORDSEN: Yes.

SENATOR CHAMBERS: ... could wind up, when this bill takes effect, if it does, paying more than they pay right now.

SENATOR COORDSEN: The possibility exists that there are some vehicle owners, not only cars, but some vehicle owners that have midrange age cars, in some taxing situations could end up paying more than what they are now. That is ... that's right.

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SENATOR CHAMBERS: And the real beneficiaries throughout are going to be those where ... will come when we're talking about new vehicles. That's what led to all this, isn't it?

SENATOR COORDSEN: Well the bill introduction led to this, as you and I both know, this issue has been around for a long, long time. It's my belief that the Revenue Committee brought this to the floor of the Legislature to allow the debate that's going to happen on the bill because of some legal concerns about the very thing that Senator Wehrbein and Senator Kristensen were talking about, which is ad valorem values, that is one vehicle being worth more than the other vehicle, and yet under our current system we still arbitrarily assign a value on a chart for each vehicle by age. And it doesn't...that taxable valuation today doesn't represent the exact value, or may not represent the exact value of the vehicle.. This doesn't really say anything about...

SENATOR WESELY: One minute.

SENATOR COORDSEN: ... the value, other than an arbitrary established range of values..

SENATOR CHAMBERS: But, Senator Coordsen, that brings us back to what Senator Wehrbein was asking about. You seem to be saying again now what I thought I heard Senator Kristensen say, that two vehicles can be of the same age, but one was maintained better, therefore it has a higher value than the one of the same age which was not well-maintained. And there's a difference in what's going to be paid, based on the one having more value than the other, based on its maintenance.

SENATOR COORDSEN: No, under the current system it doesn't make any difference what the condition of a value is, a condition...

SENATOR CHAMBERS: Right, and...

SENATOR COORDSEN: ...of the vehicle, and that's true under this system also.

SENATOR CHAMBERS: Then why...

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SENATOR, COORDSEN: Except, we're not calling it an ad valorem tax.

SENATOR CHAMBERS: This doesn't make sense to me at all. I'm going to listen, 'cause I keep hearing...Senator Wehrbein must understand, 'cause he looks contented, or he's dazed like I am. I keep thinking I hear something, then I think I hear, in the next statement, but that's not the way it is. So, let me ask you like this,...

SENATOR WESELY: Time. (Laughter.) Okay. Senator Kristensen, do you wish to speak next?

SENATOR KRISTENSEN: Thank you, Mr. President.

SENATOR WESELY: Okay.

SENATOR KRISTENSEN: Senator Chambers, let's give it a try. I got to get...I either have to get up to your level or down to it, so I don't know where I'm at. The reason I gave the example between Senator Schimek and Senator Hudkins was to demonstrate for that purpose why it is difficult to defend the current system of property tax. For example, you look... let's say that you've got two houses, their property tax. One house is tumbled down shambles, but it's got the same square foot as the house next door to it, but that house is, you know, in super shape. Now we have mass appraisals, but basically you do take some 'consideration when they go out and do those appraisals of those houses that one's got a higher value than the other one, even though they roughly have got the same square footage, but they're different. And that goes, remember we talked about uniformity, equalization of assessment and all those because it's in a property tax area. Well, if we were challenged in the area of motor vehicles, we don't do that. We just go pick a number out and say it's this value for property I tax purposes. What this bill does is say, look, we can't defend that anymore. We still can't go out and do individual assessments of cars because we couldn't afford the number of people, and the cars trade so often, and because mileage is ongoing it would ... it's never in a state of flux, that's the reason you can tax, under the constitution, motor vehicles a little differently. All the

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committee is doing is saying, we recognize that we can't make those distinctions, and why should we put up a charade that this is a property tax, when it is not defendable as a property tax. So let's change the system of generating money- I mean that's what this is, it's a system of generating money from people that own motor vehicles. We're going to change it. And we can't bite the whole apple, because the constitution isn't going to let me change all of that, or I might-not be able to change all that right now. We're going to call part of this a tax, and part of it a fee, but they're all going to be based on age, not on some arbitrary property tax value that they have each year that we publish in a manual. You're going to have ... you have to start,. and we're going to tax and put them on fees by age now. Okay? Those wheels are turning. I don't know if they're turning fast or slow. I'll just give my time to Senator Chambers, and...

SENATOR CHAMBERS: I'll ask you a question.

SENATOR KRISTENSEN: Sure, you can ask all you'd like.

SENATOR WESELY: Senator Chambers, you have about three minutes.

SENATOR CHAMBERS: Senator Kristensen ... thank you, Mr. President. Senator Kristensen, it seems to me that you're saying what is the way they do it now, they base it now on how old. The older the car is the less you pay in taxes on it. So there's an age factor now.

SENATOR KRISTENSEN: What they do now is that they assign a property value to it, and then each year change what that property value that's been assigned to it. So you, in eff...

SENATOR CHAMBERS: And don't they follow what the industry says about the value of this car, based on its age?

SENATOR KRISTENSEN: When they start at the beginning...

SENATOR CHAMBERS: And then they...

SENATOR KRISTENSEN: ... because they get.... And then after that it becomes, pretty arbitrary, Senator Chambers. It's not a

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very... it's very arbitrary.

SENATOR CHAMBERS: But isn't that what...isn't that what insurance companies do, too? They don't look at the individual vehicle. They will say that the Blue Book value of this car is such and such, and there might be some banks and others, when they're going to give loans, which will...

SENATOR KRISTENSEN: Sure.

SENATOR CHAMBERS: ... accord a greater value for the purpose of giving you the loan. But when it comes to insurance rates, I think that might be based on the age of the car, 'cause they don't look at your individual vehicle. If they're going to say that your car was totaled, even if it could be repaired, they'd say it would be cheaper for us to deem it totaled instead of paying the cost of the repair. So, under this, is there any way that an insurance company is going to have to say you reach. a higher dollar value before you can deem a repairable car totaled?

SENATOR KRISTENSEN: I don't know of a way that I can tell those insurance companies how they can do their underwriting for the rating of those things,. other than some of the territorial things that we've done here.

SENATOR CHAMBERS: But don't ... what I'm getting at, don't all of.these areas that we're talking about, whether it's insurance rates, the taxing...

SENATOR WESELY: One minute.

SENATOR CHAMBERS: ...or valuing, for purposes of loans, take into consideration the age of the car? Isn't that the first thing they look at? 'Cause they'll look at the year, the model, and so forth. But the year is what...

SENATOR KRISTENSEN: Sure.

SENATOR CHAMBERS: ... they look at.

SENATOR KRISTENSEN: Well, but also ... for loans and so on, I

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mean they do go in, because that's an individual examination.

SENATOR CHAMBERS: Right.

SENATOR KRISTENSEN: Your lender can go out and say, that car, I think if I'd sell it on the block I could get back my loan or substantially a portion of it. So I'm not ... the loans I don't... I think is a different deal.

SENATOR CHAMBERS: But the point I'm getting to, age is consider ... is a major consideration.

SENATOR KRISTENSEN: It's certainly a major factor..

SENATOR CHAMBERS: That's a beginning...

SENATOR KRISTENSEN: That's a good place to start.

SENATOR CHAMBERS: And that's what they're doing now, except that they're assigning an arbitrary value to every vehicle.

SENATOR KRISTENSEN: As a property tax.

SENATOR CHAMBERS: And then they're playing like they're considering the age of it, but it seems to me what you're doing now is even more unjust, because you're saying if this car has a market value of $100, but you ... that's all you can' afford so you're going to drive it, you start out with a fee of $250. if, when it was new, it fit into this category, and the fees you're going to pay, the fees and the taxes are more than the value of the car and more than you paid for it.

SENATOR WESELY: Time.

SENATOR WESELY: Sorry, Senator Chambers. The Chair recognizes Senator Beutler.

SENATOR BEUTLER: Senator Coordsen, just a couple questions,. if I may. And I'm just groping to understand also how this all is working. And to begin with, I noticed that the NRD, or Steve

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Oltmans, anyway, from the NRD opposed this bill in committee. And I don't even understand enough about where money goes to understand why, I assume it had something to do with where money goes. Can you just tell me a little bit, I'm interested in the NRDs. As you know, I was interested in why he opposed it.

SENATOR COORDSEN: I think there have been several that have opposed it. I think the effect, probably, is going to be the opposite, unless, out in the country we have so many low value vehicles, older vehicles, that there is a total decline. But what this would provide for, suppose we had.... If you need more time, I think my lights' coming up some time pretty quickly.

SENATOR BEUTLER: No, that's fine, take all you need. I just want to hear more.

SENATOR COORDSEN: But anyway, we have a 1990 Ford Escort, and maybe that has a value of $2,000, 1 don't know. Today it has a different tax in Omaha, has a different tax in Lincoln, has a different tax in Dundee County. But this bill provides that that tax would be the same all over the state of Nebraska. And even in those areas where the property levy was low, the tax would be the same. So I'm not so sure that the NRDs were accurate in their fear of this. It may...

SENATOR BEUTLER: They were fearful that less money would go to them under this system than under the...

SENATOR COORDSEN: I think they were fearful of less money coming in because Of switching to this from the ad valorem method.

SENATOR BEUTLER: Okay. Tell me again why there's a fee and a tax?

SENATOR C0ORDSEN: Well, the tax goes to the local units of government in the same manner that the distribution taxes within the county is, depending on where the vehicle is located. While the dollars on the vehicle, whatever that might be,...

SENATOR BEUTLER: The fee?

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SENATOR COORDSEN: ... are the same across the state.

SENATOR BEUTLER: Oh.

SENATOR COORDSEN: The taxes are divided up, depending upon ... among those taxing jurisdictions that cover. where the vehicle is ... where site is, where it's located.

SENATOR BEUTLER: Okay. I'm...

SENATOR COORDSEN: The fee is divided up between the counties and the municipalities, based upon the highway allocation formula in the same... I believe that's how the gas tax fee...gas taxes are divided up. So the fee goes to road repair and construction at the county and municipal levy.. The tax goes to all of the units of government, including, of course, the county and the cities, as well as the school districts, and anyone else.

SENATOR BEUTLER: Okay. And you or Senator Kristensen had indicated that overall this was designed to be tax neutral.

SENATOR COORDSEN: Statewide it is the estimate of our staff that this system should result in the same number. of dollars that are currently realized by the ad valorem tax scheme that comes out in the. catalog, times the tax collection ... the property tax collection on motor vehicles in the state of Nebraska, and the result of this should be about the same amount of dollars.

SENATOR BEUTLER: Okay. And is the reason for the distinction between tax and fee so that the money flowing back to different governmental subdivisions is roughly the same also, or am I jumping to a conclusion there?

SENATOR COORDSEN: Well, it divides it, I believe, on an annual basis, approximately 80-20. 1 think I recall that. But it guarantees that...

SENATOR WESELY: One minute.

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SENATOR COORDSEN: ... some of the money goes to streets and highways out of this also, which doesn't out of ad valorem taxes.

SENATOR BEUTLER: But that's the reason for the tax versus the fee, to be sure. that the money gets to the right ... the right amount of money gets to the right places, or was there another reason?

SENATOR COORDSEN: Well, I think that's the reason, yeah.

SENATOR BEUTLER: Okay. Thank you.

SENATOR WESELY: Thank you, Senator Beutler. Chair recognizes Senator Coordsen.

SENATOR COORDSEN: Did Senator Beutler have anything else he wanted to ask? Senator Chambers, did you need some time? I had my light on, it you want to have at me, have at me right here on Friday afternoon.

SENATOR CHAMBERS: What I really need, Senator Coordsen, oh, and thank you for the money that you all are doing here. I need tome money, not time,. based on what they're going to make me pay

SENATOR COORDSEN: While you're gathering your thoughts, I would share to, you that our current system isn't altogether fair. I recall buying a program car, several years ago, and it had a taxable valuation of about $8,000 more than what I paid for it. So this system we have today... it was a current model year car that had been used, you know. So the system we have today isn't necessarily fair either.

SENATOR CHAMBERS: I agree. But, Senator Coordsen, when we say we re going to change a system, we can then talk about it being equitable because we have the history of the past and what we're trying to do now. But in reality, this is going to help those people who sell new cars be able to sell more, because the ones with these new cars are the ones really getting the best break out of this, I would say. And if you talk about the people at the lower end, the amounts of money actually involved are not

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significant enough to-say they're getting a kind of break that those at the top end are getting. Aren't those at the top end going ... the newer models going to get the best break out of this?

SENATOR COORDSEN: It would depend on where you were located, as far as taxes, but I would say that that would be accurate....

SENATOR CHAMBERS: Generally speaking.

SENATOR COORDSEN: Generally speaking, that would be accurate.

SENATOR CHAMBERS: And that's how the public perceives it. And are you giving me the rest of your time to use as I want to?

SENATOR COORDSEN: That's fine.

SENATOR CHAMBERS: Okay, then I'm not going to question you, 'cause there's not enough time.

SENATOR COORDSEN: Oh darn. (Laughter.)

SENATOR CHAMBERS: No, when I get more time I will, 'cause I'd be in the middle of a question, or you in the answer, and then our time would run out. But what the public perceives, and I think they're right, is that the new car dealers, even though they say that they didn't push for this but they supported it, Better Nebraska, the Nebraska Chamber of Commerce and Industry, they are the ones who want to see that the people they kowtow to are taken care of. I'm not blaming the committee. I hope you all understand that. You all were just weak, like the members of the Judiciary Committee are when bad bills, like 752 come in and they start bludgeoning you, and you put it out here on us to try to rescue you, pull your chestnuts out of the fire. And I'm going to try to help do that. This is something which should be perceived. as what it really is. The perception and the reality in this case, I think, are the same. This is again something the Legislature is going to do, and however they cut it, it's going to benefit those people with the big bucks. They're the ones who are going to benefit the most. And it's something that I'm not going to completely close my mind to. I'm going to listen. But I'm letting you know the point from which I'm

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starting in this discussion. I'm totally against this bill.. But I'm going to listen. And here's something that I think needs to be in the record, when they say revenue neutral, they mean the total amount of money that's going to be raised. And I'm looking at the amount that each one is going to have to put into that pot, and some are going to have to put more in the pot, under this legislation, than would otherwise be the case. And the ones most able to put something in the pot are the ones who are not going to have to ante up. I presume that people who can afford these highpriced cats and trade off regularly are the ones who got the money. But they're the ones who are being given the consideration, and the ones in the middle range, as they call it, who are not that able, who might have young families and other things that will impinge on what they can spend, who will have to put more into the pot than is currently the case. And that's some of the reasons, those are some of the reasons I have for being against the bill.

SENATOR WESELY: Thank you, Senator Chambers. Chair recognizes Senator Hilgert, followed by Senators Vrtiska, Schmitt, Bromm, Chambers, Cudaback, Coordsen, and Schimek.

SENATOR HILGERT: Thank you, Mr. President, members.. Would Senator Kristensen yield to a question?

SENATOR KRISTENSEN: Yes.

SENATOR HILGERT: Senator Kristensen, I had a constituent give me a call regarding ... he itemizes on his taxes, and the tax deductibility of the property tax for the vehicle. I'm not a tax attorney, and I was wondering what impact does this bill have on the tax deductibility and the whole property tax issue? Could you expand on that?

SENATOR KRISTENSEN: I can tell you the issues. I can tell you that there's a fairly strong disagreement over that. And I can tell you that we have an amendment coming. That's the first part of the answer. More detailed, the Revenue Department, at someone's urging, and I don't know who it is, but I have a feeling that I know, because there are some people in the administration that don't like this bill, so they're trying to find ways to plant little land mines in it, gratuitously issued

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themselves a memorandum to say that the deductibility, for federal income tax purposes, was placed in jeopardy by the bill. In other words, they think that it's not based on property values, and thus is not a state property tax, or a local ... well, it would be a state property tax, basically, or a tax that has some relation to a state or local property tax, is better put, because there isn't state property tax. But, as we look through there, we still think that there's 80 percent of that fee that is a property tax, or is in the nature of that property tax because of the way it's collected, the way it's distributed, and the way that we describe it. However, we have an amendment that's coming, we don't have it ready for today, but we think that it should clarify that, and at least for the portion, the 80 percent portion of that would make that ... continue to make that deductible.

SENATOR HILGERT: Okay. Senator Kristensen, I heard, and I'm not sure. if you or Senator Coordsen said this. This LB 271 would raise taxes on some instances, but lower it for others. Did I hear that correctly?

SENATOR KRISTENSEN: I'm sorry, Senator Hilgert, I was busy looking at your other question.

SENATOR HILGERT: Sure. I heard, I don't know if Senator Coordsen or yourself mentioned this, but on 271 a statement was made that it would raise the taxes on. the money paid to the government, whether a fee or property tax, it would raise taxes on some individual automobiles, but lower it on others. There is some that would benefit from this and some that wouldn't. Is that correct?

SENATOR KRISTENSEN: Well, as with any system that you're going to change, you can't guarantee that there aren't going to be individuals that are going to pay more or less. What you do when you look at a state policy is you say, overall, if you're going to shift...

SENATOR HILGERT: Is there...

SENATOR KRISTENSEN: ... we're going to ... Senator Chambers was correct, we're going to overall try to make it revenue neutral.

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Are there going to be some people who are going to pay a little bit more? Yes. Are there going to be people that pay less? Yes. More? Yes. But as a whole, you're going to maintain the same amount of money coming in.

SENATOR HILGERT: Okay. And as far as tax exempt organizations, like the YWCA, and Girls, Inc., and the Salvation Army, all of their taxes would go up, correct?

SENATOR KRISTENSEN: Their taxes don't go up, they're not going to be taxed. They are going to pay a fee.

SENATOR, HILGERT: Okay, so the dollars that they take from...away from their services and give to the government, they will have to give more money to the government after this bill is passed?

SENATOR KRISTENSEN: And that fee would be $25,...

SENATOR HILGERT: Okay.

SENATOR KRISTENSEN: ...at the most, unless they've got a bus, then it's 50. But the cars, and vans, and trucks, and so on that (inaudible) insure these, it's a $25 a year fee.

SENATOR KRISTENSEN: One minute.

SENATOR HILGERT: For all of them, or per vehicle?

SENATOR KRISTENSEN: Per vehicle, which is...

SENATOR WESELY: One minute.

SENATOR KRISTENSEN: I mean, how else to you do it? You've got to do it per...

SENATOR HILGERT: Well, I just want to make the record clear.

SENATOR KRISTENSEN: ...per vehicle for years one through five, they pay that $25. For the sixth through the tenth year it would be 60 percent of the $25, and then for anything over ten years they're going to pay 20 percent of $25...

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SENATOR HILGERT: Okay.

SENATOR KRISTENSEN: ... for their fee, which is ... they're going to pay a whopping total of $5 per vehicle on those.

SENATOR HILGERT: Thank you, Senator Kristensen. I think at least that component I certainly have some concern with. We're talking about nonprofit organizations. I mean, we're talking about the Salvation Army, Girls, Inc., the food banks, the American Red Cross, United Way chapters, the Jewish Federation, the YWCA, the YMCA, I could go on and on as far as all the nonprofits that at this time do not have to pay fees for their automobiles.

SENATOR WESELY: Time.

SENATOR HILGERT: Thank you.

SENATOR WESELY: Thank you, Senator Hilgert. The Chair recognizes Senator Vrtiska.

SENATOR VRTISKA: Thank you, Senator Wesely. I'd like to pursue ,one part, I don't know, we talked about. Maybe I missed it. But, Senator Kristensen, could I ask you a question?

SENATOR KRISTENSEN: Yes.

SENATOR VRTISKA: Some of the discussion I've had with the county officials is that some counties, in fact, are going to come up with less money. Is this money going to ... the distribution formula back to the county is going to be different so that some counties will, in fact, get more money, And some will get less?

SENATOR KRISTENSEN: Yes.

SENATOR VRTISKA: How's that going to....

SENATOR KRISTENSEN: It's going to depend on their... it's going to depend on their tax levies, and it's going to depend on what ... how they come out in that highway allocation formula.

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And by and large, I don't know that anybody loses more, and I'm just looking at staff ... was 10 percent ... that 10, 11 percent loss in the value base or the... for political subdivisions was around 10 percent.

SENATOR VRTISKA: So you're going to pick on the little guys again, that's what you're saying?

SENATOR KRISTENSEN: No. Senator Vrtiska, you know, it's statements like that that can get you in trouble...

SENATOR VRTISKA: Okay.

SENATOR KRISTENSEN: ... because it's probably ... it may be the little guy that's going to win on this one. So you don't jump to those conclusions till you see those figures,...

SENATOR VRTISKA: Okay, I'm trying to...

SENATOR KRISTENSEN: ... because there's an attempt here. The reason this is part of the property tax package, and you bring up a good point, this is designed to begin to assist people to live under levy limitations, that's the reason it's part of the property tax package. So if you have counties that are having some difficulty with the levy limitations, that highway allocation formula and the change in where this money goes is going to go assist those people to try to live with that at levy limit.

SENATOR VRTISKA: Well, the reason I bring the question up is because one of the treasurers in one of my counties called and said the way their formula was figured out, by NACO or somebody, they would actually end up with less money. And they wondered if that was going to be true statewide, or if it was just going to be certain counties? And I assume that it's going to be .figured differently in different counties.

SENATOR KRISTENSEN: Could you.... I'll tell you what, don't... let's don't necessarily just protect their identity. How about off the microphone you give me their county and we'll take a look at that.

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SENATOR VRTISKA: okay.

SENATOR KRISTENSEN: And I'll be glad to run that and we'll see what happens. But part of it's going to depend on how much money comes in. We'll have to make some assumptions, but let's look at that one.

SENATOR VRTISKA: Well, it might be that they don't understand the thing, and I certainly don't either, 'cause I don't know how it worked out.

SENATOR KRISTENSEN: Well, that ... and there's nothing wrong with that. I mean I don't blame anybody for the question. But I would object to the conclusion that the little guys are going to get hurt and the big guys...

SENATOR VRTISKA: Okay, okay, well, I'll retract that...

SENATOR KRISTENSEN: ....are going to win. Those are the ones that I have trouble with.

SENATOR VRTISKA: ... and merely say that there is going to be difference in the way counties are being ... the amount of money that's going to be coming back into the county treasury...

SENATOR KRISTENSEN: Right.

SENATOR VRTISKA: ...from this not tax but fee.

SENATOR KRISTENSEN: Well, part of it's tax, part of it's fee, but it is designed for us...

SENATOR VRTISKA: Part of it, yeah.

SENATOR KRISTENSEN: ... to...that's the reason it's a property tax package.

SENATOR VRTISKA: One other part I'd like to pursue, and that is the part you just brought up. Do you think, or maybe you don't want to ... maybe you don't want to deal with the issue. But you brought up the issue about federal tax exemption, or federal tax...where you use the depreciation factor. Is that in

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fact ... do you think that is, in fact, going to be an issue that .you're going to have to deal with, or do you have any conclusion on that?

SENATOR KRISTENSEN: well, let's make sure that we know the ,issue that we're talking about, 'cause I don't think Senator Hilgert brought it out real entirely. He brought it out clearly, but entirely. We're not talking about your ability if that... if you're using that vehicle in your business to deduct it and depreciate or expense it, this has nothing to do with that, because that's a system of cost recovery, depreciation, as you and I ... that's off the board. We're talking about.... I think, Senator Hilgert, and I hear his head shaking, that... (laughter) ... that that's the...that the deductibility is on your federal income tax return when you go to itemize and you take an itemized deduction,...

SENATOR WESELY: One minute.

SENATOR KRISTENSEN: ... not a business deduction. And so obviously there are a lot of people that don't itemize, and so this wouldn't impact, 'cause they use the standard....

SENATOR VRTISKA: Okay, that's all the questions I have for now. I do have some other things I want to talk about, but I don't have anymore time left and I'll bring them up at a later date. Thank you.

SENATOR WESELY: Thank you, Senator Vrtiska. Before the Chair recognizes the next speaker, would like to welcome, as guests of the Legislature, in the north balcony, 125 fourth graders from Niehardt Elementary School in Omaha, Nebraska, constituents of Senator Witek. (Introduced teachers.) Please stand and be recognized. We welcome you to the Nebraska Legislature. Thank you. The Chair now recognizes Senator Schmitt, followed by Senator Bromm.

SENATOR SCHMITT: Yes, Mr. President, members. I guess Senator Chambers, I think, partially answered the question that I had. But I guess I would like to discuss this a little further with Senator Kristensen. Looking at the amendments, the bill, whatever here, when we get down to the final of this, aren't the

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individuals that trade or buy new cars and then trade every year or two going to get a break on this? If you buy one that's say three, four years older, or drive it longer than that, these people, as a general rule, their taxes or fees, whichever you want to call them, are going to probably increase in most cases? Senator Kristensen.

SENATOR KRISTENSEN: Thank you. It's going to depend a little bit on which county they're in. I think as a general premise that may be true. And it depends on the year of car that they're trading. Because if they're going ... you know, if they're getting a little less value of a car, this schedule I handed out, you can see the factors as they go down. If they're constantly trading some of these lower end cars, that's not going to be necessarily true. If they're doing...

SENATOR SCHMITT: But what I'm talking about is I buy a new car this year, and next year I trade it for another new car, or in two years I trade it for a new car. If I'm trading for a new one every two, years, I'm going to get a tax. break under this, right?

SENATOR KRISTENSEN: I think so. It will be a different ... it will be a lower fee.

SENATOR SCHMITT: It won't necessarily be the little guy that's going to get hit with the tax, it's going to be the medium-sized guy.

SENATOR KRISTENSEN: Yeah, I think ... and the large number, I mean where this is, is the large number is where most of the vehicles are and the owners. I mean that's where Most of this is going to be absorbed. They won't absorb as much in the middle, because there are so many more of them.

SENATOR SCHMITT: Right.

SENATOR KRISTENSEN: That's what this.... Plainly put, that's .the reason you can do that to the top, and that's the reason you can do it to the bottom, because there are those in the middle. Their percentage of change isn't that great, but because there are so many more of them, you can allow the system to come into

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place.

SENATOR SCHMITT: But why should we give a break to somebody that can afford to buy that new car every two years, and not to somebody that's buying one that's a few years older or driving it longer?

SENATOR KRISTENSEN: Well, by and large, we like when they trade those because we can gain more sales tax, because that's the real tax we gain.

SENATOR SCHMITT: And helps out the new car dealers.

SENATOR KRISTENSEN: Well, but the people that are probably going to do that on are going to be the people that are selling the used ones on the other side, too. I mean, it works both ways. So...

SENATOR SCHMITT: I heard you mention the land mine. But I think. maybe we ought to throw an A-bomb or something into this bill and get rid of it.

SENATOR KRISTENSEN: Well, I'll tell you, you know what I think will happen is it can be easy to walk away from this change. But I'll just bet you this, if we don't change our system of. property taxation, we're going to be in here on motor vehicles, 'cause we've got $150 million at stake here. And when we lose that system. we're going to be in here in a crisis, trying to figure out another way to do it. And in terms of fairness, I think you're better off and you're fairer to people if you tell them up front, look, we're going to tax you based on the age of your vehicle. You know what it is, it has some relationship to that. And we prevent losing the whole tax base of the $150 million. That's.... You know the Revenue Committee, for the last five years, has put this off and said, well, we're not going to deal with it. We've finally gotten to the point where we feel we got to deal with this because it's a problem that's right in our face.

SENATOR WESELY: One minute.

SENATOR SCHMITT: But we're doing it now, we're taxing it by the

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year and the value.

SENATOR KRISTENSEN: We're taxing it by an arbitrary value that we just assign,...

SENATOR SCHMITT: Right.

SENATOR KRISTENSEN: ... it has no relationship to that. It's a property tax, and it's a big problem, and it's going to get worse.

SENATOR SCHMITT: Okay, thank you.

SENATOR WESELY: Thank you, Senator Schmitt. The Chair recognizes Senator Bromm. Senator Bromm here? The Chair recognizes Senator Chambers.

SENATOR CHAMBERS: Mr. President, are we still on Senator Kristensen's amendment?

SENATOR WESELY: We are.

SENATOR CHAMBERS: Then I will not take time on that one, because some of the other things will probably be better addressed on the bill itself. And this afternoon I don't think we're going to have to just delay . ..just to not ... for certain things not to happen. I think everybody is acting in good faith, so I am, too. And I will not speak just because I have, the opportunity. Thank you.

SENATOR WESELY: Thank you, Senator Chambers. The Chair recognizes Senator Cudaback, followed by Senator Coordsen, Schimek, Robak, and Robinson.

SENATOR CUDABACK: Mr. Speaker, members, I'd like to ask Senator Kristensen a question, please, if he would.

SENATOR WESELY: Senator Kristensen.

SENATOR KRISTENSEN: Yes.

SENATOR CUDABACK: Senator Kristensen,...

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SENATOR KRISTENSEN: Is this on my amendments, Senator Cudaback?

SENATOR CUDABACK: I think you can answer this one here.

SENATOR KRISTENSEN: Okay.

SENATOR CUDABACK: Maybe I can't, but that's why I'm asking you.

SENATOR KRISTENSEN: Okay.

SENATOR CUDABACK: I made a vow I wasn't going to talk on any bill that I didn't know anything about. And I just come to the conclusion I wouldn't be talking at all. So, here.... (Laughter.) So, bear with me here. So...

SENATOR KRISTENSEN: You don't want me to respond to that. (Laughter.)

SENATOR CUDABACK: Thereto nothing like a good experience to change your mind. I was against this concept a month or two ago. But I recently, this is my question here,...

SENATOR KRISTENSEN: Okay

SENATOR CUDABACK: This is a serious question.

SENATOR KRISTENSEN: Okay

SENATOR CUDABACK: I purchased a used automobile. Some of us can't afford to buy a good used automobile, so we have to buy a used, used automobile.

SENATOR KRISTENSEN: Right.

SENATOR CUDABACK: I bought a used automobile with quite a few miles on it.

SENATOR KRISTENSEN: Okay.

SENATOR CUDABACK: 1 bought a '95...

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SENATOR KRISTENSEN: Whatever.

SENATOR CUDABACK: Okay. I went to the courthouse, now the vehicle that I've purchased is... I will be paying taxes on it, and the valuation that is 4,500 higher than what I paid for it. Is this made to correct such things, or can they be corrected, or is that just the way the cookies crumble?

SENATOR KRISTENSEN: This system will at least recognize that' you're going to be taxed on-the age of your vehicle as opposed to that value. I mean you're the classic example of what happens.

SENATOR CUDABACK: Yeah.

SENATOR KRISTENSEN: Let's say you got a good deal, but you got it out in the marketplace. The market established the value, and yet you're paying on $4,000 more in property tax base than what the vehicle was really worth. And you know that right off the bat. That same scenario is repeated a lot in this state. And what this system would do is recognize the age of that vehicle and say, here's the tax you're going to pay because of its age, we're not going to pretend what the market value is of that.

SENATOR CUDABACK: In other words, there wouldn't be a book you'd go to and say, this 1995 used car with so many miles on it or whatever? There would be a flat fee for every...

SENATOR KRISTENSEN: You're going to look at what its new value is, if it was under $17,000 when it's new, it's going to have an established tax of $150, then you're going to put a factor. For every year it gets older you're going to pay less of that $150. Then you're going to have a $25 fee. And for every year it gets a little older, after the first five years, you're going to pay even less of that fee. So it's based on the age, not on that value.

SENATOR CUDABACK: Here's another, where...maybe you've already stated this, but where does the years kind of level out? Is it after four or five years, six years? Is there....

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SENATOR KRISTENSEN: That's a good question. Remember, we're. talking about we've got two different systems, one that's going to be 80 percent of its tax and 20 percent of its fee. On the 80 percent that's a tax , the first year you pay all of it, the second year it's 90 percent, third year 80, fourth year 70, fifth year 60, and the sixth year then it becomes 51, seventh year is 42, and finally until you get to the ... when it's 14 years and older it's zero, because of its age you paid zero. So that would be a 1983. Anything 1983 and older pays no tax, and it would pay $5 of a fee. So, because of the age at that time, I'm thinking you're paying substantially less.

SENATOR CUDABACK: Well, most of my cars are past '83, so nothing to worry about. If you're past '83 or if it ... that year, you would pay a flat fee and that's it?

SENATOR KRISTENSEN: You're going to pay $5, period. SENATOR CUDABACK: Ok ay, thank you, appreciate it.

SENATOR KRISTENSEN: Plus registration, I mean you still got to pay your registration, tags and those things. Right.

SENATOR WESELY: Thank you, Senator Cudaback. The Chair recognizes Senator Coordsen.

SENATOR COORDSEN: I would like to call the question on the Kristensen amendment.

SENATOR WESELY: Question has been called. Do I see five hands? I do. Question before the Legislature is, shall the question be called? Those in favor vote aye, those opposed nay. Senator Coordsen. Senator Coordsen has requested a call of the house. Question before us is, shall the house go under call? Those in favor vote aye, opposed nay. Clerk, record.

ASSISTANT CLERK: 14 ayes, 0 nays to go under call, Mr. President.

SENATOR WESELY: The house is under call. All senators, please, check in. Those senators not in the Legislative Chamber please come to the floor. The house is under call. Senator Coordsen

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has authorized call-in votes on the Kristensen amendment.

ASSISTANT CLERK: Senator Suttle voting yes. Senator Engel voting yes.

SENATOR WESELY: House is under call, please check in. Senators in their office, please return to the floor. Question before us is the Kristensen amendment, and call-in votes have been authorized. Okay. I'm sorry. The question before us is to call the question on the Kristensen amendment. Sorry.

ASSISTANT CLERK: Senator Kiel voting yes.

SENATOR WESELY: The house is under call. Please check in. Question before us is, shall the question be called?

ASSISTANT CLERK: Senator Witek voting yes. Senator Tyson voting ... you had voted yes, Senator. Senator Dierks voting yes. Senator Stuhr voting yes. Senator Don Pederson voting yes. Senator Matzke voting yes. Senator Robinson voting yes.

SENATOR WESELY: Clerk, record.

ASSISTANT CLERK: 26 ayes, 1 nay to cease debate.

SENATOR WESELY: Debate ceases. The Chair recognizes Senator Kristensen to close on his amendment.

SENATOR KRISTENSEN: Thank you, Mr. President members of the Legislature. I was glad that someone did object to calling the question, because there hadn't been debate for or against the Amendment, because I don't think there were any people that .spoke for it. There weren't any people that spoke against it, but there was a good general discussion of the bill, and so that made discussion very acceptable on the amendment. Very briefly, it does six things. They are mostly cleanup, providing for a refund partial, a definition of a bus, there's a catchall phrase if a particular vehicle isn't included we're going to count it as a passenger vehicle with a value of less than 17,000, gives us a right of protest to the property tax administrator, it allows the appeal to be to the Tax Equalization Review Commission rather than the Administrative. Procedures Act, and

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allows for an exemption to be filed within 30 days, or requires an exemption to have an application within 30 days of purchase if there's going to be a tax exemption claimed on that vehicle. Those are the cleanup items. I would urge the body to adopt those committee amendments, and then we can have a discussion of the bill in the condition that I believe would be good for the debate. Thank you, Mr. President.

SENATOR WESELY: The house is under call. Do you wish to proceed with the vote on your amendment, or do you wish to wait until others arrive?

SENATOR KRISTENSEN: No, Mr. President, I'd be glad to take a board vote at this point in time.

SENATOR WESELY: Okay. The question before the Legislature Is adoption of the Kristensen amendment. Those in favor vote aye, opposed nay. Record, Mr. Clerk.

CLERK: 34 ayes, 0 nays, Mr. President, on the adoption of Senator Kristensen's amendment.

SENATOR WESELY: Thank you, Mr. Clerk. The Kristensen amendment is adopted. Is there anything else pending?

CLERK: I have a priority motion, Mr. President. But I have some items, if I may. Senator Chambers, a series of amendments to (LB) 752 to be printed; Senator Hilgert, amendments to (LB) 271. (See pages 1803-OS of the Legislative Journal.)

Mr. President, Senator Withem would move to adjourn until Monday, May 5, at nine o'clock, a.m.

SENATOR WESELY: Motion is to adjourn. Those in favor indicate by saying aye. Opposed nay. We are adjourned.

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