LB 271 (1997)
May 21, 1997
... engrossing. All in favor say aye. Opposed nay. The bill is advanced. Mr. Clerk, LB 271. Senator Bruning.
CLERK: Mr. President, I believe 271...
SENATOR COORDSEN: Oh, excuse me
CLERK: ... Enrollment and Review amendments have been adopted, Senator. I do have other amendments to the bill. Mr. President, the first amendment, Senator Beutler, a floor amendment, 357.
SENATOR COORDSEN: Senator Beutler, to open on your amendment, please.
SENATOR BEUTLER: Senator Coordsen, I'd withdraw the amendment.
SENATOR COORDSEN: It is withdrawn. Next item, Mr. Clerk.
CLERK: Senator Withem would move to adjourn (sic) ... or to amend. (Laughter) (AM2361 is found on pages 2220-21 of the Legislative Journal.)
SENATOR COORDSEN: Senator Withem, to open on your amendment please.
SPEAKER WITHEM: Mr. President, members of the body, as I indicated yesterday in one brief comment that I had to make on this bill was that ... and my perception is most of the discussion on this bill has centered around the distribution of the pain involved in paying property taxes and fees to get an automobile licensed to drive on a highway in Nebraska. And historically on this issue, from the old days when we called this the clunker tax to whatever we call it today, it's ... there has been a desire by the advocates of the bill, because they don't want to add any additional enemies to their list, to make the ... whatever changes. they do to make it revenue neutral which, in effect, then means that the ... what it means is that any proposal will lower the cost of higher priced vehicles, raise the cost of lower priced vehicles but always in the end there is this desire to make the pot of money, because we don't want to do ... our argument in the past has been we don't want to do any additional damage to our
subdivisions, schools, cities and counties by actually lowering the taxes and fees on automobiles, so we're going to make the pot the same. And as I recall from yesterday the discussion that we had was that there's right about $190 million collected .in ... 151. My numbers aren't...okay, 150, right around $150 million currently collected from automobile taxation, and so far the ... so far the desire has been to find a way of reallocating within the formula so that we still collect roughly $150 million, give or take, and I heard the number yesterday, give or ,take $6 million. Because I understand how we can't, with precision, know exactly how much will be raised when we go to. a new scheme. That was the old era though and it's continued on with this bill. The thing I want to put in perspective is juxtaposing this bill with what the impact will be when 1114 goes into effect. Two years from now the largest sum of money that school districts can charge to support local government will be $1.10 per $100 of assessed valuation. The cities and counties will be under a lid. We're bringing other people back in, putting them under a lid, so again, I'm not always good with numbers, but as I remember when LB 1114 goes into effect it will be about a $2.20 cap on property. If we do nothing, if we don't pass this bill at all, those owners of automobiles, because most of what they pay to license their automobile now is a property tax, they will receive the benefit of LB 1114. The average reduction in property taxes in the state will be about .15 percent. Now admittedly, it does not hit every taxpayer exactly the same when you factor in school aid, local valuations, local spending, et cetera, et cetera, et cetera, but the aggregate property tax collection in the state is estimated to go down about 15 percent. If, however, we pull the lion's share of the cost of registering automobiles out from the property tax and hold that fund harmless, the automobile owners will, in effect, not get an advantage from 1114 because- they will be held harmless, or harmful I guess would be the way I would say it, they'll be held harmful at the higher level so that we can continue to generate $151 million. I think all of these calculations, and I'd be interested to hear either George tell me off the microphone a little later on or one of the people on the Revenue Committee tell me on the microphone all of these estimates we've seen about lost revenue when we go to the $2.20 cap I'm assuming, because automobiles are in that property base, there's an assumption that the ... there's an assumption that'
there will be lower taxes collected on those, and those are already built into our assumptions. We're: already doing replacement revenue for schools. We're already looking at doing things for counties. I don't know what we're doing for cities, but there are things on the horizon for that. They're doing. things for community, college. We already built in some replacement revenue. for them. If we leave these fees at a hold-harmless to raise $151 million, in essence, we're Just providing more replacement revenue and we're getting it from those people. I don't know about you as individuals. I don't want, you to think about the letters you get that are generated from county boards and city councils and school boards. Don't want you to think about what you get from organized farm groups. But in my case, whenever I do town hall meetings or whenever I run into somebody. in the grocery story and they start complaining about taxes and they talk about Nebraska being such a high tax state, I'll ask them, well, what are you. talking about? Most of the time they will come back with I moved here from another state and this same car that I was able to, put on the highway for $100 in another state, it cost me $300 or $400. here in Nebraska. So for us to get through this property tax mess that we're in and not give the automobile owner, which is probably the most universal piece of property owned in our state, some type. of benefit from the tax breaks that we're hoping will be there with 1114, 1 think is unfortunate I guess, is the word I come up with because I don't want to use anything harsher than that. Having set that climate, what I have done is I've asked the Revenue Committee to draft an amendment that would show lower fees so that...and I'm hoping that it is close to being as revenue neutral, not with what's currently collected but what would likely be there when 1114 goes in effect. What we've done is we have taken all of the ... what we have done is taken all of the fees that were agreed to in the Chambers-Kristensen exchange yesterday and we have put a $20, reduction on those, and that's what you see in Amendment 2361. Up to 99...up to $10,000 it would be $80, and I think the current fee in the book is $100. And that's the goal I had in another amendment, candidly, that we drafted in our office that was simply a percentage decrease of 15 percent on both of them, so this is the one we chose to go with. That is the goal of it. Conceptually what I'm trying to do is hold ... do this shift, if that's what the Legislature wants to do, do this. shift of
taxation, because I think there is an argument that ... that the burden on society by auto ... caused by automobiles is not created in as overwhelming a fashion by the new automobiles as our current property tax based system would make it. It's just that .I don't want to see ... if... I want to see those current people that are property taxpayers paying taxes on their automobiles, I'd like to see them receive the same benefits in a lower tax rate aggregate as other, owners of property. So that's the intent of the amendment.
SENATOR COORDSEN: Thank you, Senator. Senator Bohlke, your light is next. Did you wish to spoke to ... speak to the Withem amendment? No? Okay, Senator Hilgert.
SENATOR HILGERT: Thank you, Mr. President, members, Senator ... Speaker Withem mentioned that he uses the figure 15 percent. According to the Legislative Fiscal Office the correct figure would be 16.8 percent, so this is ... doesn't even go all the way that we would really need to make things fair and. equitable in my belief. Also it does... it focuses on the $1.10, not the $1.00. So although his amendment is certainly ... goes in the correct direction, I would think... I would say that it doesn't go really far enough. That being said, I think this is one of those amendments where you can actually use the term "compromise" and "agreement" and, therefore, although this doesn't go as far as I'd want it to go, I would certainly support LB 271 if the Withem amendment is adopted. I would reiterate and certainly underscore the statements that Senator Withem, made regarding the reason why he has this amendment. I would also add that as far as people who rent property in the state of Nebraska and do not own their own home, this is where they will see the property tax reduction. People might say that, well, the facility, the apartment complex let's say, when the property taxes are diminished, those savings will be passed on to the consumers, and I think if you think that's going to happen you're living in "lala" land. Certainly I think that that just increases the profit margin of those who own such properties, so I think this is a very important amendment. I wholeheartedly support it. It certainly doesn't go far enough to totally satisfy the concerns I had yesterday, but I think this is one of those amendments that if put on a bill I think, that the responsible position for those who oppose 271, at least
for the reasons that I opposed it and had problems with it, I think at this point I think those should realize that this goes: to a large extent to satisfy our criticisms and I think the bill would earn the support of those who are currently resisting, at least on this basis, I think that would encourage those individuals to support the bill and I'll certainly state right now, speaking only for myself, that I will support LB 271 if the Withem amendment is adopted. Thank you.
SENATOR COORDSEN: Thank you, Senator Hilgert. Senator Kristensen, please.
SENATOR KRISTENSEN: Thank You, Mr. President, members of the Legislature. I want to rise this afternoon, and I know that we probably don't want to spend a tremendous amount of time with this bill, but this is an important issue and I don't want to minimize the importance of what this amendment brings to you for a policy choice. (LB) 271 was not brought to the floor of the Legislature as a mechanism and as a means of reducing property taxes on motor vehicles. It was designed to redo the system so that- the system would withstand scrutiny better. It was designed, as we've talked several times here, to try to be revenue neutral. In trying to be revenue neutral, you've got to balance the mechanisms on how you structure the system. In other words, you'll see the rates in here, the percentages of decrease are done so it comes out to whole dollars. There are some things that are done just so it will mechanically work a little better and not done because there's magic numbers that make it fair or unfair necessarily, but that you have to do it. Senator Withem's policy choice, as I understand it, I would hope that his light is on to continue the discussion a little more, I think is to reduce the tax portion. He said "fee", but I think it is ... it's the tax portion that he's reducing. The net effect of that is if you do reduce the amount of tax collected, in counties that have low levies you're just going to bring in...it will make, for example, Senator Beutler's situation, in my terms, the 12 percent cut that you're going to take, it would just reduce that down again another percentage. Maybe it's 16 percent or something. It would compound those that think they're going to gain less tax. At the same time, Senator Withem brings to you the policy of, well, we've got to look at this as a whole state, and I tend to think that that is ... that's
a good approach and that's one that we've adopted as well in the .committee, that you should look at the broad impact of the entire state as to what...what impact are you going to have. it raises, even with the amendments that we did yesterday, you still have about $11 million that is going to be done on the fee end and the fee end, remember, is the $5, depending on the value of. your car, up to 20, up to $30, as it goes higher. Those are fees that are going to be used to assist people to live within levy limitations and so that ... Senator Withem brings into focus that you're making a policy choice. By taking those fees away, there will be less tax collected and distributed to those subdivisions. Now I think and, Senator Withem, I'm going to let you on your time expound on that, but I assume what you do by lowering the tax rate, that's just less money generated from the property tax or the motor vehicle owners and, in effect, they are going to get some 1114 relief because they'll, in some counties, in some counties they will be a lower rate.. That includes a lower rate on their motor vehicles., you're taking the broad view, looking at the entire state, saying as a whole we want the entire state to roughly have the same reduction if you're a motor vehicle owner than if you're a homeowner. In any one given county, you're not going to have reductions in your homeowners either, because if you're under those levy limitations you're not there. If you have a city for exam...if you have a city that's under the levy limitation now...
SENATOR COORDSEN: One minute.
SENATOR KRISTENSEN: ... and you have a county that's there and a school district that's there, 1114 is not going to have any impact on you. Now I don't... I'm not bright enough to be able to, off the top of my head, tell you what happens to their state aid under that scenario, but my guess -is that they're not all ... they're also not going to be given state aid because they have the local ability to generate the money needed because they're under the limitations in all their taxing areas. So Senator Withem brings to you the broad view. I'm trying to make up my mind. I want to listen to that discussion about whether you want to do that for the entire state. Our goal was to try to become revenue neutral. I'll bet, and I've not seen your printout, Senator Withem, enough to study it, I assume that you're somewhat close to where we were or maybe down a little
and so you're probably closer to revenue neutral or maybe even a little less. And I know my time's running out and so I want to look at your numbers. I know staff had it. And I'm going to listen to the debate and...
SENATOR COORDSEN: Time.
SENATOR KRISTENSEN: ...I would hope that people would continue it so we can look at that.
SENATOR COORDSEN: Senator Withem, you wish to be recognized.
SPEAKER WITHEM: (Microphone not activated) ... I do and there would seem to be some confusion about the current amendment that I had drafted, so I decided to withdraw 2361, which is currently before us.
SENATOR COORDSEN: It is withdrawn.
CLERK: Mr. President, Senator Withem would move to amend with 2348. (AM2348 is found on page 2221-23 of the Legislative Journal.)
SENATOR COORDSEN: Just a second. Could I introduce some guests of the Chamber, Senator Withem, before we open?
SPEAKER WITHEM: Please do.
SENATOR COORDSEN: I would like to announce that Senator Janssen has guests under the north balcony, Mary and Howard Johnson from Fremont, also Esther and Vigo Christensen from Fremont. Welcome to the Chamber. Now thank you, Senator Withem, to open on your amendment please.
SPEAKER WITHEM: Okay, what I have done is come back with an amendment that the policy argument is exactly the same. It's one that may be harder to model in a specific sense, like Senator Kristensen wants, but easier to understand conceptually, because what this amendment does is it takes all of the fees and property taxes listed in the amendment that the body adopted yesterday and it takes 15 percent out of those. Now Senator Kristensen is ... there appear to be now three different concepts
of comparability. There appears to be the concept. of making cities, counties and schools whole and thereby making owners of automobiles, as an aggregate group, pay toughly the same amount after we get through shifting within the pot as they did before. I do not favor that approach. I oppose that approach and I will not be and have not been a particularly strong advocate of 271 and, as I get a bigger focus on what this problem really is, I become less and less likely to be supportive of 271 unless something like this is done to it. The second thing that Senator Kristensen is bringing up is this delicate sort of thing that has been done, attempted to be done by advocates of this approach in the past, and that is some sort of laser surgery so that. you come at a rate so that not, just the pot itself is the same size but that each individual component within that pot in terms of the subdivisions of government have the same amount. I'm not interested, candidly, I'm not interested in holding harmless subdivisions of government. We're doing that in other places. We're holding them harmless with LB 806. We're holding them harmless to an extent with LB 180. If you then pile on another ... very much, Senator Hilgert, this is very similar to your arguments I think on whether you bring...whether you ... not asking you to get up here necessarily, but it's very similar to your arguments on raising the levy for building funds for schools. We're already holding them harmless over here with more state aid. Why do you need to do that? We're already holding them harmless. We've calculated a set loss of revenue in the whatever level it is for everybody together, 2SO300 million dollars, and we're assuming that they're going to lose this money. Now we come back in and do this bill, we're extracting more. If we don't do something like this to make it hold harmless to LB 1114, we're going to be extracting more revenue for replacement revenue and we're going to be extracting it from those people who, and I haven't heard anybody comment on this case or not but these genuinely are the people that show up at my town hall meetings and pound on the table and talk about how ridiculous Nebraska's taxes are because they have to pay so much to put an automobile on the highway. All we're doing with 271 right now is saying if you put a new automobile on the highway we'll lower your rate, but to make that up if you have an older automobile you're probably going to have to kick in a little more. What this amendment does, rather than the $20 reduction in fee, it goes into each fee and cuts it by 15
percent. Fifteen percent is assumed to be the reduction in .aggregate taxes based on LB 1114 going into effect and that's what I'm ... that's what I'm proposing. I think it's a discussion we need to have. .1 think it's a decision the Legislature needs to make. If you vote yes on this amendment, you will be saying automobile owners ought to get the same advantages of 1114 as farmers, as business property owners, as homeowners. If you vote no on this amendment you're saying they shouldn't; they ought to continue to pay the same rate they are now even though, as I see it, that's one of the more despised taxes in the state.
SENATOR COORDSEN: Thank you, Senator Withem. Senator Bromm, on the Withem amendment please.
SENATOR BROMM: Thank you, Mr. President. Senator Withem, if you would yield to a question just a minute, I think you've explained it very well but I just want to be sure I understand the intent.
SENATOR COORDSEN: Senator Withem, would you respond?
SPEAKER WITHEM: I'd be delighted.
SENATOR COORDSEN: Thank you.
SENATOR BROMM: The intent, as I understand it,, with the adjustments you're making in this substitute amendment is to reduce the property tax on motor vehicles in roughly the same proportion as it will be reduced on real property statewide when the levy limits come in.
SPEAKER WITHEM: That is the goal.
SENATOR BROMM: And that, Mr. President, I agree with. One of the problems I've had with this bill from the beginning, or at least from when I began to feel like I understood it, was that ... was that it prevented the tax savings that we're trying to give to people through 1114 and the levy limits that we are establishing, and it prevents that by establishing a floor of fees/taxes that retains the same amount of revenue coming in, roughly, as what we have... I don't want to say enjoyed, as what we have received under the present tax system. And as we move
to try to reduce the burden of property tax, in my view, even though you don't hear as much from motor vehicle owners, I think it is just as important and in some districts I'm sure you do hear from them but in my district you hear from real property owners. But it is just as important I think to pass that reduction on to owners of personal property, and in particular vehicles, as it is real estate. Now owners of other types of personal property other than motor vehicles, such as. machinery And equipment or buildings on lease ground, they will enjoy or receive the benefits of the reduced levy limits. But if we don't adopt Senator Withem's amendment, the owners of motor vehicles will not receive the same reduction as other classes of .property owners. So I think it is a fair proposal if we're going to change the system, and I ... and the good part about the Revenue Committee proposal is the uniformity and, to some extent, the simplicity that it brings in to taxation of motor vehicles, and I appreciate that. But the negatives on the bill have kept me from supporting it and this is the biggest one of all that we're dealing with here. So I may be somewhat like 'Senator Hilgert and, even though I'm not in "la-la" land, I am from "wa-wa" land (laugh) and I do recognize that this makes the bill somewhat more palatable for me and a little bit more defensible when I go home after the session and people ask questions about this bill. And the first question or the first perception is going to be, oh, you gave a big tax break to the wealthy who can afford the Lexuses and the BMWs and those kinds of cars. That's going to be the perception. But if you're able to say, well, wait a minute here, we created a system of taxing motor vehicles that is uniform across the state, it's simpler to understand, you're going to know what your tax is going to be before you buy the car because you can look and see what the tax is on that price of car, and, furthermore, we gave you or attempted to give you the same tax reduction or tax break as an owner of a motor...
SENATOR COORDSEN: One minute.
SENATOR BROMM: ... vehicle that we were hoping to give and trying to give to the owners of other classes of real property. So I think it is a good proposal and I hope the body takes it seriously and debates it thoroughly and considers its adoption. Thank you.
SENATOR COORDSEN: Senator Chambers, please, on the Withem amendment.
SENATOR CHAMBERS: Mr. President., members of the Legislature, Senator, Withem, Senator Withem, Senator Withem. I'm not going to ask you a question. I'm Just trying to give you some credit, but usually I have to repeat things two or three times before, I get your attention. No, I said I'm not going to ask you a question, I'm not going to ask you a question, I'm not going to ask you a question.
SPEAKER WITHEM: (Microphone not activated) Senator Chambers.
SENATOR CHAMBERS: No, I don't. I just wanted to get your attention. This is one of the better amendments that Senator Withem has brought. Notice I didn't say the best. He has brought some good amendments. This is on one of those literal bread and butter issues. And what he wants to do is give a slice of bread with a pat of butter to those who have lost the entire bakery without his amendment. I think it is, touching on what Senator Hilgert and I have spent so much time yesterday talking about and other occasions when this bill was up, where you are ignoring the breaks that others are getting who have real property when it comes to those who own: the automobiles. Senator Bromm caught on very well and understood Senator Withem's amendment, and whenever Senator Bromm speaks, I have to listen to his entire presentation because he's like one of these good lawyers sometimes who will give both sides of the issue and if you get the first part of what he's saying it sounds like he's for something, but then by the time he gets through you find out really he was just giving you the other side but he's .against it. But let me ask him a question to be sure-that I followed him on this one. Senator Bromm, you did conclude by saying you support this amendment, didn't you?
SENATOR BROMM: That's correct.
SENATOR CHAMBERS: Thank you. And all that you said before led up to that, but I wanted to be sure that you got the right conclusion because you've listen to some of our colleagues on occasion, including my good friend Senator Hilgert in front of
me. This bill is one that I would rather see go away. If it's not going to go away, Senator Tyson, who by the way is becoming my alter ego, Senator Hilgert, I'm recreating Senator Tyson in my own image, after my own likeness And he's coming along splendidly. But anyway, Senator Withem's amendment. does bring about a measure of equity and I believe eve that any time we're talking about property tax relief we have to look at 'everybody who is paying property taxes. Changing the name does not really change the game. We all know that nobody wants to pay taxes and, Senator Withem, one of the additional taxes that people in Omaha scream about is the wheel tax. They feel that they're paying ... when they buy gasoline they think that goes for streets and highways everywhere. Then they feel that somewhere in those taxes they're paying for their registration, their license plates and all these other things when you pay to get a license plate for your car so you can ride legally and you look at all those little things that are taking money from you, even there's a fire hydrant tax in Omaha. Dogs don't have to pay it, though, and they make more use of it than the firefighters. But any ... and the dog owners don't have to pay for it either any more. But you figure that somewhere in there is some money that's going to maintain these streets in Omaha, but apparently not. So they levy this monstrous wheel tax. Then the streets are so badly maintained that you can lose a wheel driving down some of the streets of Omaha. They are really that poorly maintained. So people who drive cars are very justifiably., in my opinion, angry and incensed at the way they are taxed for those vehicles. If we would...
SENATOR COORDSEN: One minute.
SENATOR CHAMBERS: ... leave the bill in the present shape where those who have kept their cars for a period of time will see that they're going to pay even higher taxes now than they did before, what they're going to say is the government is crazy. Lawyers are not a ass; the government is a ass. As my car decreases in value, my price ... my taxes go higher. By the way, that's a quote from Charles Dickens. That's literary, what I just say. But anyway, we should not have a situation where the value of your property goes down and the taxes rise, so Senator Withem has an excellent amendment.
SENATOR COORDSEN: Thank you. Before we proceed, I would like to announce that Senator Cudaback has guests in the north balcony, 16 students and 12 parents from Pleasanton, Nebraska, fourth graders. Would you please rise and let us welcome you to the Legislature. Thank you for doming. Next speak, Senator Hillman please.
SENATOR HILLMAN: Thank you, Mr. Speaker, members Senator Withem, what I'm trying to figure out here is... I think I know what it is you're trying to do, what I'm trying to figure out is what's going to be the results of what you do, and I've identified that owners of motor vehicles will pay lower taxes. Is that correct?
SPEAKER WITHEM: They ... they will pay...
SENATOR COORDSEN: Senator Withem.
SPEAKER WITHEM: ... lower taxes. If this amendment is adopted, there will be 15 percent fewer dollars collected on motor vehicles than there would be if this bill passes without this amendment.
SENATOR HILLMAN: So they'll pay less taxes for their cars.
SPEAKER WITHEM: Right.
SENATOR HILLMAN: Okay. Secondly, there will also be less aid to schools and other political subdivisions
SPEAKER WITHEM: There will not be any less aid to schools and subdivisions. Schools and subdivisions... if we don't pass this bill at all people are going ... there's going to be 15 percent less collected on automobiles because automobiles now are almost totally under the property tax base ... or in the property tax base. When LB 1114 goes into effect, this is an attempt to put the bill back so that the 1114 impact of lower levies will carry over into the owners of automobiles.
SENATOR HILLMAN: Okay, but the fact that we're going to lower the taxing levy... I mean our schools presently, when we look at the ad... I mean when automobiles presently have the ad valorem
tax whether ... and I realize Senator Kristensen says it. isn't taxed that way but I mean, honestly, you know, going out and looking at value, but that is what we use, if we change that, are we changing the ad valorem tax on motor vehicles? And if we are, did any of that tax go to schools, and I know it went to political subdivisions, but to schools? We won't see a reduction there? This isn't an additional reduction? Since we are not...
SPEAKER WITHEM: This is an additional....you ... three options as I see it, Senator Hillman. You can not pass anything, in which case the value of automobiles will stay in the tax base and the $2.20 cap will apply to automobiles, owners of automobiles would get a tax reduction.
SENATOR HILLMAN: Okay.
SPEAKER WITHEM: We could pass 271 in its current form in which we switch, and I'm not conversant on all of the switches between fees and taxes, we can pass the bill in its current form which means that owners of automobiles will pay what-they're paying now in the aggregate. We collected $151 million last year; we'll collect that the next year. Or we could pass this bill...my amendment and then pass the bill, which means we do the adjustment which the Revenue Committee supports of shifting who within the pot pays but we will lower that total pot 15 percent so it will be held harmless against ... so that the taxpayer will be held harmless against 1114.
SENATOR HILLMAN: Okay. Then my third question that I ... by your opening remarks in the idea that there's a lot of people, and I've heard probably not some of the same people but very similar in their remarks in that moving into the state one of the biggest shockers they had is when they went down to pay their taxes on their cars and found out what it costs them to move into the state of Nebraska. So you are looking at this as somewhat also as an economic development tool; when it comes-to attracting people, that this would be, again, in looking at the tax situation, it would be an economic development tool.
SPEAKER WITHEM: Senator Kristensen's cautioning me. I had not, considered that, but I think it's an excellent argument.
SENATOR HILLMAN: Okay. Then the only other thing that I would add is I appreciate the fact that you're not putting a two-year limit on it or it wouldn't do any good.
SPEAKER WITHEM: Thank you.
SENATOR COORDSEN: One minute. Well, thank you. I guess that was the end of that one. (Laughter) Senator Schellpeper please.
SENATOR SCHELLPEPER: Thank you, Mr. Chairman and members. I'm not sure that we're not digging a bigger hole for ourselves with this amendment than what we would be with the actual bill. You're going to have 15 percent less income and any way that you figure there's going to be less income for all these political subdivisions, because I don't see it any other way that it can happen because you have less dollars coming in. If you're going to keep it revenue neutral, well, under the new fee structure under 271 is where the people would get the actual break. Now I don't see how, if you're going to lower it 15 percent more, we'll have 15. percent less money coming in or 20-some million dollars, that's going to be less revenue for the other subdivisions. And if they have to have additional revenue to make up whatever they want to do, that's going ... you have to raise the taxes some way, some local property taxes to get that, or else the state has to come in and do some more ... put some more revenue out there. It seems to me we're digging a hole here with this amendment. Now maybe it's different from what I'm visualizing it. Maybe it will all work out. Maybe that there's... I know they want a reduction in their tax. LB 271 will do that in the original version but it was revenue neutral. Now with this amendment we're 15 percent less, so that's 20-some million dollars, so I guess I'm going to have to have somebody explain to me or maybe the debate will explain how this is going to work with the ... our local political subdivisions and how they're going to operate, because I don't see' how that can happen when you have 15 percent less dollars coming in and they know what they're going to have and with this amendment they wouldn't have it. So it's ... we're getting very complicated with it, maybe it will all work out, but I will listen. Thank you, Mr. Chairman.
SENATOR COORDSEN: Thank you, Senator Schellpeper. Senator Withem please.
SPEAKER WITHEM: Yeah, I'm going to try to be brief so I don't totally dominate the discussion here and let other people talk, but following Senator Schellpeper, I did want to ... did want to make a remark or two., Senator Schellpeper, the cities and the counties and the schools are going to deal with this 15 percent loss that they get from my amendment the same way they're going to deal with it if this bill doesn't pass at all. If this bill doesn't pass at all their $151 million that they get from automobile taxes, they won't get that anymore because 1114 will go into effect and there will be a cap on it. If this bill passes in its current form, in effect, I think that we're looking at what we're doing for replacement revenue and I noticed, you know, we've $100 million for schools, $20 million for subdivisions, another $10 million for schools, community colleges out there. This, in effect, is a hidden $22 million replacement revenue issue because the calculations of lost revenue were done on all property being reduced, the collections on all property being reduced about 15 percent. What this does is it means we're going to collect about $22 million more from ... and these are numbers starting off with that $150 million number that we started with this afternoon,. but if we pass the bill in the current form, they're going to be paying about $22 million more. Now I know you want the farmers in your area to have lower property taxes and I know you want the homeowners in Stanton to receive ... you probably even want Gus Pick to get lower property taxes I'd guess. Maybe that's how he can make up his losses. You want those businesses to pay...to pay lower taxes. If we don't do something to bring the aggregate collections down and we pass 271, automobile owners and a lot of people, a lot of people in this state the only piece of property that they actually own is an automobile. They don't own a business, they don't own a farm, they don't own ... they don't own their own homes, they're rental. The only place they're going to see anything in the area of property taxes is in their automobile, and if we don't bring this down...and ... and ... yeah, I'm sorry Senator Robak is evidently having problems with what I'm saying. I wish she would punch her light and make the comments on the floor if she has comments to make. The only tax
relief some people Are going to get is on their automobiles, and if we don't do something like this, they're not going to get any.
SENATOR COORDSEN: Thank you, Senator Withem. Senator Kristensen, please.
SENATOR KRISTENSEN: Thank you, Mr. President, members of the Legislature. I think Senator Withem's last comment's correct.. I mean I ... that there is a group of people who the only impact they're going to see is going to be on their motor vehicles and, again, it sort of depends on which county they're going to be in because you may have some in the counties that are going to be helped by 1114 anyway. Senator Withem, and part of the time is I'm waiting to see a printout that's coming for the impact of your other amendment, if we've got a county who is going to be impacted by 1114, other words their levy is going to be reduced, they're going to see that under 271 as it stands now under the old system and under* your amendment as well. I mean 1114's going to occur. In those counties, you'll see that break anyway. Where this would happen would it, if you have a county who is under what the levy limitations are, in other words they have a little lower. levy, you're still going to give them a percentage break. I mean isn't that the practical impact of, doing this?
SPEAKER WITHEM: Yeah, you are.
SENATOR KRISTENSEN: And... and ... and I mean I'm not saying that's wrong. I'm just saying that ... understand this whole system is ... there's a lot of things going on at once and so in some counties you will have people who will ... who aren't going to see any impact of 1114. Senator Withem says, look, if they're not going to see that, at least on their motor vehicles I'm going to have a 15 percent less reduction in what they're going to pay, so they're at least going to have some impact on 1114. The only problem I have is in the area of the progressivity and that's where Senator Chambers and I had the discussion the other day and, Senator Withem, I'm kind of going so jump in when you think I may be wrong. But Senator Chambers was interested in progressivity. If you have a 15 percent reduction on an expensive car, you're going to get a larger
break than if you have a 15 percent reduction on a smaller valued car in terms of dollars. The amendment that you had pulled had a little more progressivity. In other words, I you just didn't make it 15 percent across the board. You sort of factored into it so that the lower ones at least got a little more consideration and they got a meaningful break. The higher end ones didn't get as great a break and, Senator Withem, that's my only problem with the 15 percent. I mean policywise I understand and I guess I ... I can understand that. My only fear is that You may have some counties who, if they're below the levy limits, may raise their property taxes to make up for the lost receipts and how do I square that?
SPEAKER WITHEM: You. don't necessarily, Senator Kristensen. That's right, the percentage impact is different from the dollar impact. The problem was we found that the dollar impact amendment that we drafted did not include the sufficient numbers so this is the way to get to the sufficient numbers. I would certainly not object and I think probably some staff are working on an alternative approach that would model close to the 15 percent but would be based, on dollar reductions instead of percentage reductions. I would not object to that as an amendment to this amendment or as a substitute.
SENATOR KRISTENSEN: Okay, because that's ... thank you, and that's important for the body to understand and I think what Senator Withem's getting at is he's got a. figure that he needs ... well, I shouldn't say that. He's got a figure in mind I think that would represent a reduction in receipts of motor vehicles as opposed to where we're at now trying to obtain some revenue neutrality. ours may even raise a little bit more than before, but we erred on that side. Senator Withem just shifts the discussion and says, look, if you're going to err, err on lowering or at least as a policy let's lower it and then we'll talk about how we get to that figure. And so the discussion here is twofold. One is to have a reduction in the amount of money that's collected.
SENATOR COORDSEN: One minute.
SENATOR KRISTENSEN: That's policy choice number one. The second policy is this approach he uses 15 percent. The approach
that I'd prefer if you're going to make that choice is to use a little more progressive reduction and that was his first amendment. And so I would hope that people want to talk about the total reduction. Then we'll have an argument or a discussion on how you get there and that's probably the easiest way to structure the debate. Senator Schellpeper, if I listen to you, you don't want the property owners to pick up the lost revenue that may occur from this. At the same time, Senator Withem's saying, hold it, that's not fair because the motor vehicle owners are going to pick up the reduction on the other side.. You've got to balance here. I'm not saying one's right or wrong, but that's the ... that... I'm trying to hone the policy choice and the bottom line is, quite frankly, as long as you change the system of collecting the tax as we've got on 271, the amount of the change I quite frankly don't...
SENATOR COORDSEN: Time.
SENATOR KRISTENSEN: care about. I want the system to. change, not necessarily the amount of the collection.
SENATOR COORDSEN: Thank you, Senator Kristensen. Senator Wehrbein, please.
SENATOR WEHRBEIN: Yes, Mr. Speaker, members. I was trying to find out if this was included in our estimate of the 139 up to 200 million dollar loss, and apparently it is as a round figure, so that was my concern, Senator Withem. I concur I think with what you're doing. Understand what you're driving at, but my concern is that we were going to add... if I take 15 percent of 150 1 came up with 22.5 or ... that it was potential loss that I was concerned about that we may end up, in theory, wanting to make up, or at least discussing. But apparently at this point we do not have that because it is in the original revenue loss projection as a ballpark figure, understanding that differences may occur but ... and so, at that ... with that understanding, I will be supportive of this amendment based on the points that. I think Senator Withem is making. It's a discussion we probably should have had previously because I admit I really wasn't-aware of this until yesterday that this was going to ... or hadn't thought it through I guess that under the original loss and then with the revenue replacement, which I understood yesterday
coming out about the same. Now we're taking a loss but it does...well, not a loss, but we are taking a ... providing a reduction for those automobile owners that probably is realistic, so I support the amendment.
SENATOR COORDSEN: Thank you, Senator Wehrbein. Senator Janssen, please.
SENATOR JANSSEN: Thank you., Mr. President, members of the Legislature. I am assuming now, Senator Withem, if you would answer a couple of questions please, that the 15 percent will be off of the base as well as the fee. Is that correct?
SPEAKER WITHEM: The current. the draft of the amendment that is before you now., that is correct.
SENATOR JANSSEN: All right, now where are we at on the fees at the present time, on...graduated down on the price of the vehicle? We changed that last evening. I can't remember where we're at.
SPEAKER WITHEM: Yeah, I don't either and I don't even have a copy of it in front of me somehow, but it's in your computer, 20.... Oh, you want to see where we are now compared to where we will be. Is that the...
SENATOR JANSSEN: No. No.
WITHEM: ... the question?
SENATOR JANSSEN: The fee, the base of the fee that we're starting with now, is it $5, $20, $40?
SPEAKER WITHEM: I don't have that in front of me,...
SENATOR JANSSEN: All right.
SPEAKER WITHEM: ... Senator. We'll get that answer and get it back to you.
SENATOR JANSSEN: That's fine. That's fine. Now will we also, if we go over to the recreation vehicles, cabins,, trailers,
these types of vehicles, now will we ... will we be going the 15 percent on those also though and anything that we pay the tax on?
SPEAKER WITHEM: That's my understanding, Senator, and what I think you're asking for is a side-by-side comparison what does this amendment do versus what was adopted yesterday. I don't have that. We'll get that for you.
SENATOR JANSSEN: All right. Well, this is what I'm concerned about. If we're going to ... as long as we're treating everything the same so we're not, you know, we're not making exceptions for certain types of vehicles, and so on. Now we've got ... we've got the prices, the price range set at so many dollars up to a certain amount on vehicles. I'm concerned about tractor-trailers, so on, commercial items like that. Does that ... will that work that way also? Does the 15 percent come off of those? These are some of the questions that I would like to have answered and I'll be listening and maybe someone else will have those answers for me. Thank you, Mr. President, and I'll give Senator Withem the rest of my time if he would like to have it.
SENATOR COORDSEN: Senator Withem, you have about two and a half minutes if you care to use it.
SPEAKER AKER WITHEM: No, I don't other than I hope the people that are caucusing over here in the corner looking at something else can get us an ... get us. that information, that side-by-side comparison that Senator Janssen asked for so we can answer that question more deliberately. Thank you, Senator Janssen.
SENATOR COORDSEN: Was that it, Senator Withem? Was that it, Senator Withem?
SPEAKER WITHEM: Yes, I'm sorry.
SENATOR COORDSEN: Okay. Thank you. Going to have to develop a code signal here for old George, say amen, amen. Senator Vrtiska, please.
SENATOR VRTISKA: Thank you, Mr. President. Senator Withem,
could I ask a question?
SENATOR COORDSEN: Senator Withem, would you respond to a question please?,
SENATOR VRTISKA: He's got so many irons in the fire his fingers are burning.
SPEAKER WITHEM: That's right.
SENATOR VRTISKA: Senator, I'm just curious, doesn't this amendment take effect in January and the ... and actually 1114 takes effect in July?
SPEAKER WITHEM: I am not changing the effective date of the bill. If we need to change that and there's a consensus that we not object to it.
SENATOR VRTISKA: But ... but...
SPEAKER WITHEM: My amendment simply goes to the fees that we re negotiated yesterday...
SENATOR VRTISKA: Okay.
SPEAKER WITHEM: ... and I'm somewhat indifferent to the effective date.
SENATOR VRTISKA: But I'm not... I'm just saying that's ... it is effective January of '98, right, the way it's now written?
SPEAKER WITHEM: If that's the effective date of 271 as its currently written, yes, it is.
SENATOR VRTISKA: Okay.
SPEAKER WITHEM: I do...
SENATOR VRTISKA: Okay.
SPEAKER WITHEM: ... not know.
SENATOR VRTISKA: Okay. Appreciate that. Senator Withem ... or Senator Kristensen.
SENATOR COORDSEN: Question of Senator Kristensen, please.
SENATOR VRTISKA: Can I borrow you for a minute?
SENATOR KRISTENSEN: EN: Yes, Mr. President, I'm sorry, Senator Vrtiska.
SENATOR VRTISKA: We went into quite a discussion yesterday on distribution and I guess at this point we've kind of come to a meeting of the minds of what the distribution formula really works out to be. Is that correct?
SENATOR KRISTENSEN: Yeah, we also have a printout that I've got for you where the fee would go.
SENATOR VRTISKA: Okay. That's what I wanted to find out. And you do have...
SENATOR KRISTENSEN: Right.
SENATOR VRTISKA: ... that and it's available after while or sometime before...
SENATOR KRISTENSEN: Well, I just haven't had time to...
SENATOR VRTISKA: Okay. Okay.
SENATOR KRISTENSEN: ... to get it out. It's white, Senator Bohlke, and, yes, we can take the fee at the $11 million. Now I think Senator Bromm ... not Senator Bromm, 1 get he and Senator Withem mixed up, Senator Withem has...
SENATOR VRTISKA: That's...
SENATOR KRISTENSEN: ... I think goes in and tinkers with the fee too and that's the reason that we're going to try to, when I speak next, I have a suggestion and hopefully it's something Senator Withem can do, but I'd like to keep the fee where we put it yesterday seeing as how that was sort of the negotiated out
fee and, quite frankly, that identifies the 11 million. What Senator Withem really wants to do is adjust the rates because that...
SENATOR VRTISKA: I understand.
SENATOR KRISTENSEN: ... goes to how much money is generated and...
SENATOR VRTISKA: Let me ask the same...
SENATOR KRISTENSEN: ... that's a more surgical way to do that.
SENATOR VRTISKA: Let me ask the same question I asked him. This actually takes effect, 271, as of January 198, is that correct,...
SENATOR KRISTENSEN: I think that's...
SENATOR VRTISKA: ... the way the bill's written?
SENATOR KRISTENSEN: ... I think that's correct. I've not looked at that for a little bit, but I believe that's correct, yes.
SENATOR VRTISKA: I was just curious because actually 1114 doesn't take effect until July, is that right?
SENATOR KRISTENSEN: And that's part of the reason when we did the budgeting amendment for you that we took into account that you're going to have a half year under the old.
SENATOR VRTISKA: Okay.
SENATOR KRISTENSEN: ... system and a half year under the new system.
SENATOR VRTISKA: Okay
SENATOR KRISTENSEN: And that's the reason that we did that.
SENATOR VRTISKA: All right. Senator Robak asked me to give her a couple minutes. She wanted to talk to Senator Withem.
SENATOR COORDSEN: Senator Robak, you have just a little under two minutes.
SENATOR ROBAK: Thank you, Mr. Speaker, members of the body. Senator Withem, I ... you asked me to press my light on if I wanted to say something, so I asked Senator Vrtiska for some of his time and I do apologize for disturbing your train of thought and speaking out loud like that, and I apologize and maybe you should give me some sour pickles later on. At least you got an apology. I did not. I'm still waiting for apology from the Clerk for yelling at ... Friday. It was over the microphone. But at any rate, I do have a question for you.
SPEAKER WITHEM: (Microphone not activated) ... Apologize for getting angry if I did.
SENATOR ROBAK: No, you didn't...I had it...I needed my ears pinned back. No, my question is you said that if that's the ... that might be your only property tax relief you will get this year, is that, your automobile.
SPEAKER WITHEM: If...
SENATOR ROBAK: Now if that's all I get this year, I have ... my car is seven years old.
SENATOR COORDSEN: Ono minute.
SENATOR ROBAK: My husband's car is six years old. If that's all the property tax relief we get this year we might as well, fold up and go home right now.
SPEAKER WITHEM: Could I ...
SENATOR ROBAK: I don't know...
SENATOR COORDSEN: Senator Withem.
SENATOR ROBAK: ... how much time we have.
SENATOR COORDSEN: Was there a question in there?
SENATOR ROBAK: Yes,. 'I mean why are we not getting any more? Why is this so great then if that's all the property tax relief I'm going to get?
SPEAKER WITHEM: Senator, the full statement was for individuals, if you own a farm, if you own a ranch, if you own a house...
SENATOR ROBAK: I own neither one. I own a house.
SPEAKER WITHEM: Okay, then you...then if property tax rates go down you'll get that advantage. I was talking about a person that the only property they own is an automobile, and that was what I was talking about.
SENATOR ROBAK: So I'll get relief on my house too.
SPEAKER WITHEM: Yes.
SENATOR ROBAK: Thank you.
SENATOR COORDSEN: Thank you, Senator Robak. Senator Beutler, please. Senator Beutler waives off. Senator Hudkins.
SENATOR HUDKINS: Thank you, Mister...
SENATOR COORDSEN: Senator Hudkins waives off.
SENATOR HUDKINS: No, no, no, I don't waive off. (Laugh) Thank you, Senator Coordsen, I do not waive off. I would like to ask a couple of questions of Senator Withem, if I may.
SENATOR COORDSEN: Senator (laugh), Senator Withem, I apologize to Senator Hudkins. There were some people standing in front of you and I thought you were waiving off. I apologize for that. We're full of apologies today. Now, would...
SENATOR HUDKINS: We're very...
SENATOR COORDSEN: ...respond to a question, please?
SPEAKER WITHEM: I would. Do I need to apologize before I answer the question or should...
SENATOR HUDKINS: Ph, let's go through the questions and then we'll (inaudible).
SPEAKER WITHEM: Then I could apologize afterwards. Okay.
SENATOR HUDKINS: I'm trying very hard to understand this, how it's going to work, you know, with cars, with motorcycles, with trucks of different weights. And we took a case where under the current system.... Well, let's back up. You tell me if this is my correct understanding. If 271 is adopted, then what we're doing is changing from an ad valorem tax to a fee based on the age of the automobile." and, in the case of cars, on their original value. That's correct?
SPEAKER WITHEM: That's my understanding of the bill.
SENATOR HUDKINS: Okay. Now let's take an example where, under the current system, the taxes on my car are $55. Under LB 271 that would, because it's an older car and not real expensive or whatever the reasons, the tax is now $125. With your amendment that will be. reduced, that 125 will be reduced 15 percent. Okay, so instead of paying $55, now I'm paying $106.
SPEAKER WITHEM: Yeah..
SENATOR HUDKINS: I fail to see the tax reduction in that.
SPEAKER WITHEM: And my concept of tax reduction is one of the whole pot, of the whole $151 million. You may have an objection to what the bill is doing internally with shifting from taxes to fees, and I understand that. What I'm trying to do is say if we're going to go ahead with this policy choice let's at least reduce the aggregate amount and then shift among those. That particular person would still be receiving a greater negative impact by the fee shift than they would get from my particular amendment. I would agree with that.
SENATOR HUDKINS: So the total objective of the bill is to have a revenue neutral tax over the life of the automobile and over
the entire state, so some areas will, in fact, get a reduction; some areas will get an increase. Newer cars will get a reduction; older cars will get an increase. Is that a fair statement?
SPEAKER WITHEM: That's my understanding of what 271 will do with or without my amendment.
SENATOR HUDKINS: Thank you.
SENATOR COORDSEN: Thank you, Senator Hudkins. Senator Hilgert, please.
SENATOR HILGERT: Thank you, Mr. President, members. I speak initially not on behalf of myself but on behalf of Senator Shelley Kiel, who is home sick right now and she sounds 'awful, folks, but she's been watching us on television and she wanted me to convey to you that the only substantial relief that the people who rent, and her district as well as mine have a high number of people who don't own homes but who rent, that the only tax relief they're going to see is through the property tax on the automobiles, and she encourages the body to adopt Senator or Withem's amendment. So District 9 is being well represented even when their state senator's home sick, so that's impressive. Now my comments. I have a printout here that I told you about when we first started on (LB) 306 that I was going to hand out, and I was going to save this printout for when we get to (LB) 306, but I want to put this amendment that Senator Withem has introduced over the top. This is a printout of the unassessed value in the school districts, and it equals the $43 million of additional revenue, to the school districts if the assessments were at the 100 percent mark. Now you're saying that, well, that might be a hard target to meet. Well, if you can hit 92, you can hit 100, and I guarantee you when the cities and the counties and the districts are bumping against their levy limits, they're going to be looking for every extra dime and they're going to get pretty darn close. So 'With that, if I could have a couple Pages, I'd like to hand these out. Senator Withem's comments regarding (LB) 806, (LB) 180, (LB) 306, there's plenty ... here you go, there is plenty of replacement revenue on the 1114 tax cuts. This is just for schools, folks. This doesn't go into the counties and the cities that will also
be ... this doesn't even go for the state average that I am told that the valuations went up on the average 7 percent. Doesn't even assume that, so it's more than $43 million. And if we're quibbling over 10 or 15 million dollars for automobiles, that the whole infrastructure of our political subdivisions is going to collapse if we adopt the Withem amendment, I would encourage you to look at this printout and to think about the other subdivisions that will be getting additional revenue as the valuations go up and as the values go up. Of course, ag is 80 percent. What I meant is the 100 percent of residential, 80 percent ag. Folks, there's an explanation on how we derived it and what exactly it is. I am not an expert. I'm not on the Revenue Committee on taxes. I'm quickly learning though, but the... I really encourage you to look at the printout, put this amendment onto 271 and then so we can advance the bill we need ... there's no need for the concern that people have. It doesn't have to be revenue neutral. We have plenty of relief there already. Please adopt the Withem amendment and let's advance this bill. Thank you.
SENATOR COORDSEN: Thank you, Senator Hilgert. Senator Schellpeper, please.
SENATOR SCHELLPEPER: Thank you, Mr. Chairman and members. Once again, I think the amendment proposed by Senator Withem, it's a Bound good and it really helps the automobile owners, but it's going to be at the expense of the property owners and I'm not sure that that's what this body wants to do. I think if you really take a look at the amendment and the $22 million or $23 million, it's not going to be a way that we need to go. With the ... since we're changing the entire process in the motor vehicle and going to the fee process instead of the tax process, I think that we need to step back and take a look at where we're at and how we're going to actually get there. Now there will be ... LB 271 will be a reduction for almost everyone in their ... the fee that they pay for their motor vehicle and that's where they would get the reduction. I guess I ... I think this body is trying to move into an area where the Revenue Committee really didn't want to be. We wanted to try and hold this part of the fee structure revenue neutral because we thought it was very important that we do that when LB 1114 kicks in for the other entities out there. So even though I know the body is
very sympathetic and it's going to help your car own ers, I'm not sure that this is the way to go because you're going to put it right back on to the other property owners. So this body needs to consider what you're really doing here. there's going to be.. . we're trying to work out an amendment, kind of a compromise, and if that gets there or not in time I don't know, .but I would urge the body to not act hastily at this time until we have a time to work it out with some of the people involved. Because this amendment would not work with the system that we are designing with LB 271 with the new system that we have designed. Thank you, Mr. Chairman.
SENATOR COORDSEN: Thank you, Senator Schellpeper.. Senator Kristensen, please. Senator Kristensen.
SENATOR KRISTENSEN: Mr. President, members of the Legislature, Senator Withem, if I could.
SENATOR COORDSEN: Senator Withem, would you respond?
SPEAKER WITHEM: Yes, I would.
SENATOR KRISTENSEN: I would like to, this is not an offer but this is a suggestion on how to handle this bill in this manner given the time that we have. I think that there is some general consensus that we would reduce the amount of tax collected from motor vehicles in some manner from what the current bill is. I think that the agreement that was reached yesterday with the fees is one that we should not tinker with, but the fees aren't part of your issue. The fees are more of a base, you know, a flat amount 'that are set. What I would suggest is to try to draft an amendment that would go back a little stronger than your first amendment, keep the fees where they're at, adopt that concept, then park this bill. You can either move it to Final or whatever. My preference would be to move it over to Final ,but hold it until we can take, do printouts and do an impact and if there is...there is a number of questions out here about how the bill works, what impacts it will have with some of these changes. My suggestion would be that if there is sufficient disagreement or misunderstanding or there isn't sufficient time, the bill would then sit till next year. If there is some general understanding after this is done, what I'm saying is
basically take a stronger version of your first amendment, put that on, move the bill along and park it there till you I can do printouts and have an understanding of where the distribution and the impacts are. Then at that point in time, if we run out of time this session I understand that, a little of that plays into your hand,, as a far and reasonable Speaker though, even though you may be against the bill, a bill on Final still is a much easier one, to manage than one that sits on Select for extensive debate. We've been here for a number of hours. Is that something that you might look at?
SPEAKER WITHEM: My only question is how do you turn that suggestion into an offer, because it sounds like a very reasonable sort of thing to do?
SENATOR KRISTENSEN: I guess you just did.
SPEAKER WITHEM: Okay. Next question is how do we do that? Is the ... do you have the amendment down to which you're referring?
SENATOR KRISTENSEN: It's on the way. It's kind of close. It's been ... it's been put into that form.
SPEAKER WITHEM: Okay.
SENATOR KRISTENSEN: But I, you know, at this point in time, Senator Withem, my frustration here is that there are groups. that are, for whatever reason, out working against the bill. who really ... confusion reigns. I mean that's their best ally. My point is not to confuse the body. I don't want to do that. It's irresponsible to pass that legislation based on just "trust us At the same time, the system does need to be changed and so the balance of those two are put it in a position that at least a majority of the people say we're willing to put it there to give it a good examination and to explain its impacts and to explain its application, and if that requires an interim so be it. And at this point, I don't want to burn up too many legislative hours either. There are other important issues that need to be discussed. There are other issues that I know people want to get to. At the same time, I suggest to you that this is as important as many of them, because you do risk $150 million here. And with that...
SENATOR COORDSEN: one minute.
SENATOR KRISTENSEN: ... I'll continue on the draft of that amendment and would like to hear if anybody else is acceptable to that, but that would be my conclusion at this point in time.
SENATOR COORDSEN: Thank you, Senator Kristensen. Senator Lynch.
SENATOR LYNCH: Question.
SENATOR COORDSEN: Question has been called. Do I see. five hands? I see three hands. I see two hands on Senator Robak. I have not as yet saw five hands. Question is not called. Next speaker, Senator Hartnett..
SENATOR HARTNETT: (Microphone not activated.) ...ask you a question.
SPEAKER WITHEM: Certainly may, Senator.
SENATOR HARTNETT: You do change the fees, we got, you know, got the tax ... taxes and the fees. You do change, in your amendment, change the fees somewhat?
SPEAKER WITHEM: The amendment the way we drafted it for simplicity sake was to take what was done yesterday and take 15 percent out of that. That's what the amendment before us is now. The conversation Senator Kristensen and I had was he's more comfortable leaving the fees as they were and taking the bigger reduction out of the property tax to get to roughly the same point. I do not wish to interrupt any agreements that were made yesterday so, for that reason, I'm not taking a position on that provided we get to the point where out of this $150 million that number goes down roughly 15 percent..
SENATOR HARTNETT: Yeah, I think, you know, what we have done also with this bill as it was introduced and so forth, we really have set with the fees that we have. That only went to two entities. That went to the counties and the city for roads, and I think that's,. you know, that's been, you know, kind of the
public policy of this state is, you know, our gasoline tax and so forth all go for roads, and I think that was, you know, part of the discussion we have in the Revenue Committee dealing with that. It was that the fees themselves, whatever the amount is, I think $11 million is what, you know, Senator Kristensen figure ... has given to us; is that that has been ... that will only go to those two entities. The tax part which Senator Withem is talking about goes to three entities. That goes to the school districts, goes to the counties and goes to the cities, and so I guess I would prefer if we could keep the fees at the same level because I think that's what I see as a good way to do it, is that we use the fees to help improve the roads in wherever you are in the state. And so if there is something if we can ... if that can be part of the mix it would be very good, and I would give some of my time to Senator Stuhr.
SENATOR COORDSEN: Senator Stuhr, you have about two and a half minutes.
SENATOR STUHR: Thank you, Mr. President and members of the body. Just a couple comments. I feel very uncomfortable on voting even for an amendment and for this bill without really knowing the full impact that it might have on my constituents, my county, my cities that I represent, and I feel that I'm probably speaking for many of the senators here today. Also just another comment, I did have a constituent breakfast, this morning. In attendance were the county treasurer and county assessor. They wondered if any thought had been given to the computer systems that will need to be changed and updated and the time frame then that would be needed to do this. Senator Kristensen, might you respond to that?
SENATOR COORDSEN: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR STUHR: Has some thought been given to that or could...
SENATOR KRISTENSEN: Absolutely. They have eight months to do that. There has been considerable discussion about how that would occur and what mechanisms that would take to do that. It's not a particularly difficult task to do, but it does need
to be... I mean it does need to be done.
SENATOR, STUHR: I ... have you visited with the county officials, because I think that they...
SENATOR KRISTENSEN: Well, obviously not all of them.
SENATOR STUHR: Right, I...
SENATOR KRISTENSEN: Well, see, Senator Stuhr, what happens too is so many of the county officials. don't want to...I mean there's a group of them that don't want to change anything, you know.
SENATOR STUHR: I know how that goes.
SENATOR KRISTENSEN: And so I ... I mean I have sympathy for them particularly the assessors and the treasurers. They've got tough jobs to do, I know that, and...
SENATOR COORDSEN: One minute.
SENATOR KRISTENSEN: ... it is hard for them. Any change is a difficult change and I acknowledge that. I know.
SENATOR STUHR: I'm also ... thank you, we may want to look at that effective date though and be changing' that possibly from January 1st until June 30th or whenever the fiscal year might end instead of making the change also in the middle of the year. That might be one concession.
SENATOR KRISTENSEN: The thing that you got to remember though, Senator Stuhr, about doing it, the reason you change in January is that what do you do with the people that come in and, remember, you're taxed, they come in for that tax year, you have people starting at various times throughout the year...
SENATOR STUHR: Right.
SENATOR KRISTENSEN: ... and so that's the reason ... that's the reason that's a little harder to do. Because you've got people that come in, they don't all come in at one point in time in the
.year to pay that tax.
SENATOR COORDSEN: Time.
SENATOR STUHR: Thank you.
SENATOR COORDSEN: Thank you, Senator Stuhr. Senator Hilgert.
SENATOR HILGERT: Thank you, Mr. President, members. Can I ask Senator Schellpeper, would he yield to a question or two?
SENATOR COORDSEN: Senator Withem.
SENATOR HILGERT: No, Schellpeper.
SENATOR COORDSEN: Senator Schellpeper. Pardon me. Senator Schellpeper.
SENATOR SCHELLPEPER: Yes. Yes.
SENATOR HILGERT: You said that if this amendment would be passed that we'd be doing so at the expense of the property owners.
SENATOR SCHELLPEPER: You will in some counties, yes.
SENATOR HILGERT: Now can you explain how that works? Because -it almost says that we didn't go low enough on the 1114 levy limits or....
SENATOR SCHELLPEPER: No, because you're taking $22 million, Senator, out of the revenue that's going there now, and if the local subdivisions have to have so much revenue,...
SENATOR HILGERT: Right.
SENATOR SCHELLPEPER: ... they're going to have to raise their taxes on the local property tax in order to get that difference.
SENATOR HILGERT: Okay. So in other words, you're referring to those areas that are...
SENATOR SCHELLPEPER: Mainly...
SENATOR HILGERT: ...that are under the 1114 levy limits.
SENATOR SCHELLPEPER: Mainly the rural counties, yes. They're not to the levy lid, but...
SENATOR HILGERT: Right.
SENATOR SCHELLPEPER: ... in order to get the revenue they'd have to put it on...
SENATOR HILGERT: Okay.
SENATOR SCHELLPEPER: ... to property taxes.
SENATOR HILGERT: So in some places maybe we didn't go far enough in 1114 to provide property tax relief for those rural people you're talking about, apparently.
SENATOR SCHELLPEPER: Well, yeah, that's why...
SENATOR HILGERT: Okay
SENATOR SCHELLPEPER: ... the Revenue Committee wanted to keep it revenue neutral, this bill. You know, 15 percent is just a little bit too much., You want to go 5-10 percent, I think they could absorb that, but 15 is a little bit too much.
SENATOR HILGERT: And I have another question. Was this ... when this bill came to us, when it was first on General File was it revenue neutral then?
SENATOR SCHELLPEPER: Yeah. Well, the committee considered it revenue neutral but within 5 to 6 percent, because we really don't know...
SENATOR HILGERT: Okay.
SENATOR SCHELLPEPER: ... until you get the actual printouts, that we haven't had any printout, but the legal counsel says it's basically revenue neutral. It...
SENATOR HILGERT: Okay.
SENATOR SCHELLPEPER: ... fluctuates in amongst different counties.
SENATOR HILGERT: And as you know, much to the chagrin of our colleague, Senator Chambers, we did exempt the church vehicles and school vehicles and still we hear that this is revenue neutral. So even though we exempted all of those from the fees, it's still revenue neutral, 5 or 6 percent?
SENATOR SCHELLPEPER: It's. still in that same bracket, yeah, will be.
SENATOR HILGERT: Okay. Thank you very much, Senator Schellpeper. I appreciate your answering these questions. I, you know, certainly I hear more from the people who are paying higher property taxes and that the lids will be actually impacting their districts and counties and cities and I certainly don't have the ... that many people writing me saying that we didn't cut enough on 1114, but I guess that that exists in some places. I really have to maintain my support-for the Withem amendment and I certainly hope that if a compromise 'is worked out our good friend Speaker Withem does make sure that there isn't a tax shift. Frankly, we're getting to the point where with (LB) 180, with (LB) 306 as proposed, with (LB) 806A, that at first we talked about some replacement revenue, now it's getting to be where there's simply a tax shift and now we're increasing taxes on the people who own old automobiles. Some of this is starting to be a tax shaft, frankly, for some of the taxpayers in this state. So I do not support this bill. I will support it with the Withem amendment and that is my stand, and thank you very much. Please adopt this amendment so we can move the bill forward. Thank you.
SENATOR COORDSEN: Thank you, Senator Hilgert. Before we proceed, I would like to announce that Senator Don Pederson has guests in the north balcony, ten high school students from Platte Valley Christian Academy in Hershey and their teacher. Please rise and let us welcome you to the Chamber. Thank you for being with us. Items for the record, Mr. Clerk.
CLERK: Mr. President, study resolutions: LR 201-235, those will all be referred to the Executive Board. In addition, Senator Wehrbein has an amendment to (LB) 387 to be printed. (See pages 2223-40 of the Legislative Journal.)
Mr. President, Senator Withem, I understand you want to withdraw the amendment we're on, Senator.
SENATOR COORDSEN: It is withdrawn.
CLERK: Senator Withem would move to amend with AM2367. (See page 2240-42 of the Legislative Journal.)
SENATOR COORDSEN: Senator Withem, to open on your amendment.
SPEAKER WITHEM: Yeah, I apologize for the confusion here, but I think what we have in front of us now is an amendment. signed on by both Senator Kristensen and me that accomplishes procedurally what Senator Kristensen suggested that we do. First of all, this leaves the fees as they were and. does, as opposed to a percentage reduction in the other portion, in the base tax portion of the bill, it goes to a ... reduces what is in the bill now in each category by $40. As I understood what Senator Kristensen suggested we do before is that we adopt this amendment to show conceptual agreement that the pot of money collected from automobile motor vehicle owners ought to decrease in roughly the same proportion as the pot of money collected from homeowners, farmers, businessmen. We then advance the bill, wait until we get a, I like the word, thorough analysis, as opposed to printout. I'm tired of the word printout, I know Senator Bohlke likes the word printout, but I'm tired of it now. So ... and then take a look and see what this does. This new amendment, the third version of the amendment we have today, leaves the fees as they were, as they were negotiated yesterday, and as opposed to a percentage reduction, which the previous amendment would have done, it is a dollar reduction, and as well as we could, this approximates the net reduction that we were ... that I was trying to accomplish with my original amendment. With that, Senator Kristensen also signed-on this amendment, I would yield the balance of my time.
SENATOR COORDSEN: Senator Kristensen, you have about eight minutes.
SENATOR KRISTENSEN: Thank you, Mr. President, members of the Legislature. Thank you, Senator Withem. I want to talk just, a second about some of the, confusion, because there are some legitimate issues that are before the body. Senator Stuhr raised the effective date. That ... that's a legitimate policy discussion in terms of how do we get this all worked out. I understand that one, and that one's not... I mean that's a yes or no, that's a good policy discussion. That's not my issue of confusion. The confusion that sometimes has reigned is people who have other groups that are out there, who, for one reason or another, want to try to manipulate the policy, they've not been involved in the policy discussion all along, and who don't bother to come in and there are sort of little terrorists out there opposing issues, and those are the ones that I think have created a lot of confusion. However, whether it's real or perceived, the fact is that the body shouldn't be confused. So what I suggest that we do, and Senator Withem and I cosponsored this amendment, this would make a reduction in the schedule and it would do dollars, and they would be $40 reductions at each level, as opposed to saying 15 percent across the board. Whenever you do a tax policy, you want to try to keep what's called some progressivity. And the 15 percent just was an axe across the board. This is a much better way, it's a more progressive way and preserves the system that we wanted to keep intact. Now whether it gets the right dollar amount or not, something we need to look at. It keeps intact the fees, though, that we talked about last night. And so what I'd suggest that we do is adopt this amendment, move it over to Final, and then have ... we will do all the numbers, we'll try to get. as much of that out as we can. If there is general acceptance, we'll try to take the people who have talked on the floor and try to bring those people together. If there's somebody else who's not talked on the issue, please come to my office and we'll include you in those discussions. And if we can get some consensus, we'll try to bring it back yet this session and deal with it. If there is true problems, true confusion, then I suggest you're better off looking at it over the interim and acting on it next year. And so, with that, I would hope that you'd adopt this amendment. What this does is make, at $40 increments,
reductions. You remember the old sheets that you had, they were done, I think, in... I'm going to look, at one point we had them in 15, then they were in 20, now they're at $40, so it's ... it's a little better system, it's better than the 15 percent. With that, I'd hope you'd adopt these amendments and let's move it on and then have the good examination of it. And if we have to let it sit, let it sit. Thank you, Mr. President.
SENATOR COORDSEN: Thank you, Senator Kristensen. Senator Bromm.
SENATOR BROMM: Thank you, Mr. President. As I understand the amendment and the change, I rise to support the proposal. This is even a bi-; more fair than what Senator Withem was proposing before in that when you make a flat dollar change, it does result in a little more progressive change to the schedule, with a higher percentage of the change occurring at the lower dollar levels, and the lower percentage change occurring at the higher dollar levels. And I would support that. I'm interested also, as Senator Stuhr indicated, in seeing exactly what this does to our political subdivisions. And I'm happy to hear that we're going to try to get some numbers. And, Senator Kristensen, if I could ask you a question, please.
SENATOR COORDSEN: Senator Kristensen, would you respond to a question?
,SENATOR KRISTENSEN: Yes, I will, sure.
SENATOR BROMM: Senator Kristensen, while we let this bill sit on Final, or Select, or wherever, what numbers are you asking to get? What information are you requesting be furnished to us?
SENATOR KRISTENSEN: Well, the numbers that I want to get is to ... and we have a...we've taken a number of counties, because we don't have all the county numbers, we just don't have all that information, so we, by hand, have taken about, oh, a dozen counties and done those by hand and done impacts on those. And we know the total state number, so we can work off of those as well. We'd also like to create a sheet and see how it works when you do those increments. And you know we've always talked about $151 million of current tax that's collected, I know that.
If I can then take the values that are out there, run them through what this amendment does, I can come out and give you a pretty good range of how much reduction we'll have. So those are... I'm going to look again at those same dozen counties that we always have had and then look at the total state numbers. We also have done the fee numbers now, and that's something we've run through the highway allocation formula. I've got that completed. The trouble is that revenue and the Revenue Committee isn't as sophisticated with its printouts, its models and those things of the Education Committee, we always deal in policy and not necessarily in the printout.
SENATOR BROMM: But you will have basically, at least on those 12 counties, how this change will affect them.
SENATOR KRISTENSEN: Yes.
SENATOR BROMM: And hopefully it will show what dollars would have been paid in personal tax had the system remained as is...
SENATOR KRISTENSEN: Using last year's value, yes.
SENATOR BROMM: ... using last year's value, using the mill levy limitations that are coming up, or using the existing mill levy?
SENATOR KRISTENSEN: Well, we've done them both ways. It's hard again, with those 12 counties we can do that, we can take them, maybe we can expand the number of counties a little bit, too. But again, that all has to be done by hand and so....
SENATOR BROMM: I think it would be instructive to, at least in those counties, to show the dollars that would have been raised if the system stayed in place with the mill levy limits and with the proposed amendment as we see it now. And I realize that's a lot of work, but that would be nice to at least have that as a sampling of 12 counties. In concept, I appreciate the compromise that's being offered. I'm not making judgment yet on how I will vote on the bill, if we come to a Final Reading vote this year. But I certainly will support this amendment and .would encourage the body to support this amendment. Thank you.
SENATOR COORDSEN: Thank you, Senator Bromm. Senator Beutler,
SENATOR BEUTLER: Senator Coordsen, members of the Legislature, Senator Withem, if I could ask you a couple questions it would help me understand the reasons why we're interested in this particular amendment. I'm not sure whether I support it or not. If I'm understanding...
SPEAKER WITHEM: You want me to tell you whether you do or not? Is that the question, or....
SENATOR BEUTLER: No, and you're not supposed to ask questions.
SPEAKER WITHEM: Okay.
SENATOR BEUTLER: I ask the questions. As I understand the intent with respect to the dollar amounts, it's intended that there would be roughly a 50 percent overall reduction.
SPEAKER WITHEM: Fifteen, one-five, yes.
SENATOR BEUTLER: I'm sorry, 15. And as the fee and the tax were originally split, assuming $150 million pot, am I right in reciting that there was then $30 million on the fee side, and $120 million on the tax side?
SPEAKER WITHEM: Those types of distribution questions I would prefer you to ask the introducer of the original bill.
SENATOR BEUTLER: Okay. Then I would direct my question to, Senator Kristensen, if I may.
SENATOR COORDSEN: Senator Kristensen.
SENATOR BEUTLER: How much revenue, Senator Kristensen, under the original bill, was sought to be attained by the fee method, and how much, I thought it was 80-20 percent, and how much by the tax method?
SENATOR KRISTENSEN: Well, roughly, what we were after or had originally was 140 on the tax end, and roughly 15 million, as it worked out, on the fee end. Now what we're at is 140 and
11 million, we're just reducing the total amounts then. But you're still at 140 in tax and 11. And with this amendment...
SENATOR BEUTLER: Eleven is where now?
SENATOR KRISTENSEN: Eleven million was the fee, Senator Beutler.
SENATOR BEUTLER: Under this amendment?
SENATOR KRISTENSEN: No, under the one we did last night. You asked me...
SENATOR BEUTLER: Under the one we did last night.
SENATOR KRISTENSEN: ... where I went originally, where the bill is at now...
SENATOR BEUTLER: Okay.
SENATOR KRISTENSEN: ... and then this amendment. And in this amendment...
SENATOR BEUTLER: So, right now we're at 140-11.
SENATOR KRISTENSEN: And 11,...
SENATOR BEUTLER: Okay.
SENATOR KRISTENSEN: ... before you adopt this amendment. If you adopt this amendment, it's...
SENATOR BEUTLER: If we had adopted Withem's amendment, we would have reduced both the fee...the fee revenues and the tax revenues.
SENATOR KRISTENSEN: Right,
SENATOR BEUTLER: Right?
SENATOR KRISTENSEN: ... the prior amendment that he pulled. Right.
SENATOR BEUTLER: Okay, so we're not doing that. So now we're just reducing the tax revenues.
SENATOR KRISTENSEN: Correct, correct.
SENATOR BEUTLER: Okay. And we're doing that by...
SENATOR KRISTENSEN: I think you're getting down...
SENATOR BEUTLER: ... by 15 percent of the total of the 150,000, right, 150 million?
SENATOR KRISTENSEN: I think that you're going....
SENATOR BEUTLER: So we're going to...
SENATOR KRISTENSEN: Well, go ahead, you ask your question and I'll answer.
SENATOR BEUTLER: Let me finish the question and you can....and you can tell me where and to what extent I'm off. But if the overall reduction is 22 million, and you're now taking that out of the 140, what agreement was it, or why ... tell me again why that's a good thing, and I'll tell you what my concern is. The money that ... the allocation system that's used for the tax portion is more desirable from my perspective than the allocation system used for the fee portion, because the allocation system used for the fee portion redistributes money as among counties and municipalities and different places in the state, whereas the allocation system, under the tax portion, leaves the money, as I understand it, within the county where the tax is raised. So what agreement were we breaking that we made yesterday, and why is it desirable to put further pressure...
SENATOR COORDSEN: one minute.
SENATOR BEUTLER: ...on the part of the system that keeps the fees in the county and protect the part of the system that shifts the fees to other counties?
SENATOR KRISTENSEN: Let me try to answer your questions and then come back to an answer. If you adopt this amendment, you're then having a total of about $135 million. You take out the 11 for the fee, and that takes you down to about 124 of tax with this amendment. That's the practical effect of doing this one. Okay?
SENATOR BEUTLER: I'm sorry, say that once more.
SENATOR KRISTENSEN: Okay. If you adopt this amendment...
SENATOR BEUTLER: A hundred and twenty-four on the tax side.
SENATOR KRISTENSEN: A hundred and twenty-four on the tax side,...
SENATOR BEUTLER: Okay, I follow. Okay.
SENATOR KRISTENSEN 11 million on the fee side, that's...
SENATOR BEUTLER: Right.
SENATOR KRISTENSEN: And again, these are the numbers: that I think you get.
SENATOR BEUTLER: Okay.
SENATOR KRISTENSEN: The policy that's here, as obviously the...
SENATOR COORDSEN: Time.
SENATOR KRISTENSEN: I'm sorry
SENATOR COORDSEN: Senator Jensen, please.
SENATOR JENSEN: Thank you, Mr. President, members of the body. First of all, I rise in support of the amendment, I think. We're kind of, this afternoon, here like shooting at a moving target a little bit. And so, with that, I have, however, stood at the Treasurer's Office, along with other people, and when they had to pay their tax and their fees they would say, gee, I bought the car once, am I going to buy it again here now. And
so, with that, I think we do need to reduce the impact 'and the tax on property. This is a property tax, and on the automobile property tax. Senator Kristensen, would you answer a question for me, please.
SENATOR KRISTENSEN: Yes, Senator Jensen.
SENATOR JENSEN: The impact that we're talking about here, are we still in that $20 million range then? Is that what I'm hearing, or...
SENATOR KRISTENSEN: I've just got to redirect my thoughts a second, I'm sorry. The $20 million range, and the 20 million is for what, Senator?
SENATOR JENSEN: The reduction.
SENATOR KRISTENSEN: Okay.
SENATOR JENSEN: I'm having trouble trying to understand, are we at the $1.10, are we at the $1, are we at ... the figure where we are right now?
SENATOR KRISTENSEN: We are...
SENATOR JENSEN: The last I recall you were at 140 million and 11 million.
SENATOR KRISTENSEN: Yes, that's correct.
SENATOR JENSEN: Where would we be now, and you just answered part of that question, but I'm sorry, I was....
SENATOR KRISTENSEN: No, you're fine. I want to take the time to do this because where we go now with this amendment is on the tax side you're going to go from 140 down to about 124. And the fees would stay at roughly 11. So that gets you to 135. Last night, Senator Jensen, a good way I look at this is last night we had about a 20 percent reduction in the fee, and you're now ... well, it would be 15 percent of what the bill originally was on the tax side. So, in effect, you could say this is a corresponding reduction on the tax side to what we did on the
fee side last night. It was a little more on the fee, but ... and that's the reason I'm saying to everybody, I don't necessarily have an agenda on how much tax you've got to raise, because that's not the purpose of the bill.
SENATOR JENSEN: Yes.
SENATOR KRISTENSEN: The bill was to change the way the system is done. We were going to try to keep it revenue neutral so people couldn't say, my goodness, you raised taxes so there's more money to deal with, or the contrary side was, well, you took money away from the counties. I mean, you know, we didn't win ... yeah, somebody is throwing rocks at you from either side. And so what de were trying to do is keep it in the middle. The policy choice here tends to go on raising less revenue. That's fine as a policy choice. As long as the system and the way we do it changes, that's ultimately what the Revenue Committee is after.
SENATOR JENSEN: Yeah, well, thank you. I certainly believe that we do need to do this, this year. And so with that in mind, I would like to see the bill move to Final, at that time we will have an opportunity to look, the best anyway that the figures that can be derived, to look at those figures and then at that time decide whether we want to- actually. adopt this Policy. I think it does need to be done this year, however. I think we need to show those who voted or at least I think this takes 1114 and tells the people that we are sincere, that we do wish to reduce taxes, not only on homes, but on automobiles. And I think this is a step in the right direction. So I would certainly urge the body to move the bill forward at this time, let us take a look at it on Final Reading, and if there's adjustments to be made, it can be made at that time; if not, why maybe we can pass this bill yet this year and give a break to the taxpayers of Nebraska. Thank you.
SENATOR COORDSEN: Thank you, Senator Jensen. Before we proceed, I would like to announce that Senator Don Pederson has a guest under the north balcony, Caroll Dischner, from Lincoln. Welcome to the Legislature. Senator Raikes, please.
SENATOR RAIKES: Senator Coordsen and members of the
Legislature, I rise to support this amendment. I think it has two desirable features, one is it does allow motor vehicle owners to participate in the tax reduction. The second thing is compared to the earlier amendment, it does have a progressive tax structure. Having said that, Senator Beutler did not have an opportunity to finish his questioning and I'd like to listen to that conversation. I'll yield to him.
PRESIDENT ROBAK PRESIDING
PRESIDENT ROBAK: Senator Beutler.
SENATOR BEUTLER: Thank you, Senator Raikes. Senator Kristensen, if we could continue.
SENATOR KRISTENSEN: (Microphone not activated immediately.) ... Senator Raikes' first speech, I thought that was pretty good, so I'd Just as soon listen to him, but it's okay.
SENATOR BEUTLER: Must be something about being around here for a while, you kind of get off the point and lost and, you know, he just kind of one, two, right to it.
SENATOR KRISTENSEN: I agree.
SENATOR BEUTLER: I think where we were in our conversation is that we had determined that the total amount of reduction to this fund that would occur because of this amendment would be on the tax side, as opposed to the fee side. And as we understand the allocation systems for those two portions, the allocation for the tax side keeps, to oversimplify, county money in the county..
SENATOR KRISTENSEN: Oh, yes.
SENATOR BEUTLER: And on the fee side, it doesn't necessarily I do that, depending on what your situation is, vis-a-vis the Highway Allocation Fund factors that are used for allocation.
SENATOR KRISTENSEN: Right.
SENATOR BEUTLER: I have a lot of trouble, frankly, with the
adoption by the Revenue Committee of the Highway Allocation Fund system for the distribution of any funds in this instance. Now, in my mind, that problem is exacerbated by taking ... by having no reduction in that portion of the collections and reducing the tax portion of the collections bearing the entire brunt of the ... of the objective of fairness to consumers that we would be consummating by the adoption of this amendment.
SENATOR KRISTENSEN: Could we stop right there?
SENATOR BEUTLER: Yeah.
SENATOR KRISTENSEN: Because that's a good ... that's a good point to break on. Remember, we originally had the fees raising, you know, a lot more. When we first got started, of course, this...the fees were in that 15 to 18 range. And so they've taken a hit down to 11.1 mean percentagewise we've made a greater reduction in the fee than we have made a reduction in the tax. It's just that we did that last night, we're not doing that...this amendment...
SENATOR BEUTLER: And that's the agreement that you were, referring to then?,
SENATOR KRISTENSEN: Yes, Senator, that's right. That was ... the reduction in the tax, I know, it's not 15 percent, 15 percent of what we originally did. It's probably closer, if you go from the way the bill currently stands to this amendment, you might. be setting in that 10, 11, 12 range. But the fees-certainly took about a 20 percent hit from what we did yesterday.
SENATOR BEUTLER: Okay. And one last question then. Let me ask you to talk about the philosophy of applying the Highway Trust Fund formula to any portion of this money, because...
SENATOR KRISTENSEN: Okay.
SENATOR BEUTLER: by doing that, not only have we changed the taxing mechanism, but we've changed...
PRESIDENT ROBAK: One minute.
SENATOR BEUTLER: ....the allocation mechanism. And one might argue it wasn't necessary to change the allocation mechanism simply to accomplish the goal that you had originally identified As being that of getting away from the property tax type of system.
SENATOR KRISTENSEN: The Highway Allocation formula was chosen because it happened to have some of the features that we were looking for, in that it tended to benefit those areas that were having troubles meeting the levy limitations.
SENATOR BEUTLER: Do you have some information or some figures indicating that that's the case, or is that anecdotal in nature?
SENATOR KRISTENSEN: A little of it's anecdotal. From the counties that we have looked at, that tended to take it to those because those were the ones that had the higher levy that was going to get the restrictions that were going to be a little bit more difficult to live with.
PRESIDENT ROBAK: Time.. But, Senator Kristensen, your light is next, so you may continue.
SENATOR KRISTENSEN: Thank you, Madam President. And, Senator Beutler, that was ... that's how the selection was made. You know, it wasn't any more intellectual than that, although I think that it's a good fit. The other policy that it fitted was that we were concerned about as levy limitations went in, long-term things that are built with the Highway Allocation money, like roads and streets, always tended to be let go. And the reason they're let go is that there were short-term things that people wanted to continue to politically fund, and that they wanted to do. And what got left behind were the long-term things of the streets and roads. Now we didn't do it to infrastructures because primarily we found that the more acceptable manner is those streets and highways. Those are the ones that ... and the county roads, that tended to need the long-term attention. And so it fit two policies that we had promoted for a long time in committee. We had the option of just making it, you know, into another distribution formula. We've got the municipal equalization formula. But we didn't have something corresponding with the counties. And so, since
there was an equal split between cities and counties, this became a logical one for us to use. You know that's probably the extent of my explanation, because that's how it turned.
SENATOR BEUTLER: Well, it's just that...
SENATOR KRISTENSEN: And you can have the rest of my time.
SENATOR BEUTLER: It's interesting that on the education side, in terms of the allocation formulas, we've had these long, intense discussions and several printouts and the matter of the system of allocation, because there was reallocation involved, obviously was the subject matter of a great deal of attention. The reallocation that's essentially taking place with the fee portion in this bill has really not had a discussion, except for a couple of brief conversations that you and I have had alluding to it.
SENATOR KRISTENSEN: That's right.
SENATOR BEUTLER: But we have not gotten into the question of why a municipality or county, which does many, many more things than just roads and highways, why it is that their aid should be distributed based solely on a roads and highway kind of fund, other than the general infrastructure question you've raised. And I would suggest that there are even other forms of infrastructure that a municipality and a county might want to spend money on rather than roads and highways in particular instances. So, I'm uncomfortable. I guess I'm uncomfortable with that whole side of things.
SENATOR KRISTENSEN: The other ... the other ... the response I have to why there's not tons of discussions or tons of printouts comes in the matter of proportionality. And I'm looking for Senator Bohlke, I don't see her. You know perhaps better than I do. We're talking about $500 million of state aid distribution on the education side. Here we're talking about $11 million. I don't want to diminish how much money $11 million is, but in terms of scope of distribution, this is barely a percentage point on the scale of distribution. And I'd suggest to you that's probably the reason for the lack of passion, maybe that's the best word to put in. And I mean we've talked more this
afternoon about the issue of, why we do seven or 271 than yesterday. Yesterday was a lost discussion, to a certain extent, about many of the...
PRESIDENT ROBAK: One minute.
SENATOR KRISTENSEN: ... of the sideline things. Today's has .been a lot more on point about where it fits into the levy limitation scale, your discussion about where the allocation goes. and why it goes there, and then how does it fit in the bigger picture. So I feel a lot better about today's discussion than I did yesterday's. And to that extent, that's the reason that I can live with this amendment. I know that it's a reduction in tax. To a certain extent you're going to have to go out to the taxpayers, there are going to be people who are going to say, I wanted to spend that money. The response to that is going to be there's going to be a reduction in that amount of money on the motor vehicle side, as well as on the property side. To that extent that's something you can walk out of this Legislature with this year as probably another step, philosophically, in the reduction on the reliance of property tax. Your issue goes to, hold it, the replacement side is skewed, at least that's how I'd interpret that. And so...
PRESIDENT ROBAK: Time. Thank you, Senator Kristensen. Senator Beutler.
SENATOR BEUTLER: I think I will pass for now, Madam Lieutenant ,Governor.
PRESIDENT ROBAK: Thank you. Senator Tyson.
SENATOR TYSON: Call the question, please.
PRESIDENT ROBAK: Question has been called. Are there five hands? I see five hands. The question before you is, shall debate cease? All those in favor vote aye; all those opposed vote nay. Have you all voted? Please record.
CLERK: 25 ayes, 0 nays to cease debate, Madam President.
PRESIDENT ROBAK: Debate ceases. The Chair recognizes Senator
Withem to close on his amendment.
SPEAKER WITHEM: Thank you, Madam President, members of the body. The amendment before you is one designed to deal with the holdharmless issue and who you hold harmless. (LB) 271 now holds harmless the spenders of tax money. What I'm attempting to do with this amendment, which by the way is cosponsored by Senator Kristensen, is to hold-harmless somewhat the taxpayers, hold them as close to harmless so that the taxpayers, on automobiles, receive the same type of benefit on their tax rates as do homeowners and other individuals. What it does is this is the third version we've had up here today, and I apologize for that confusion. It reduces the base tax rate by $40 in each category from what it was in the amendment yesterday. That's what the amendment does. Processwise, as I interpreted what Senator Kristensen and I were saying to one another in the dialogue we had oh, say, half an hour ago is, that there's a general agreement that this is a worthy issue for us to be addressing. We're not really sure what the full impact of this amendment will be. So we will advance the bill on, hopefully we'll adopt this amendment, and then advance the bill on, leave it parked maybe for the ... maybe for a week, maybe for the remainder of this session and deal with it next year. But we will get a thorough analysis of the impact of this amendment in terms of lower taxes paid by citizens versus lost revenue by subdivisions of government. With that understanding then that Senator Kristensen is comfortable with that, and I'm comfortable with that, this may not be the full impact that I wanted to, receive, but at this point I'm comfortable having this attached to the bill and then voting to advance the bill, which, by the way, is something I will not do with LB 271 in its current form. With that, I would just simply ask that the amendment be adopted.
PRESIDENT ROBAK: Thank you, Senator Withem. The question before the body is the adoption of the Withem amendment to LB 271. All those in favor vote aye; all those opposed vote nay. Please record.
CLERK: 30 ayes, 1 nay, Madam President, on the adoption of Senator Withem and Kristensen's amendment.
PRESIDENT ROBAK: The amendment is adopted.
CLERK: I have nothing further on the bill, Madam President.
PRE SIDENT ROBAK: Is there any discussion? Senator Kristensen, to close.
SENATOR KRISTENSEN: Thank you, Madam President, members of the Legislature. I LB 271 is another part and another piece of the step to try to begin to address the property tax system. It was introduced to make the system easier to administer, to give it some rationality of how we achieve the value that's placed on a car. You remember the example that Senator Cudaback gave of how he bought a car and yet he was taxed for much more than what he purchased the car for. You've heard the other examples of the senators who represent the border communities, on how people will go and tax and register a car in another area because of the great disparities. The disparities that exist in the, present system range from you could pay as much as 3 percent on a car for tax, down to as low as 1 percent on a car for tax, huge disparities, three times the differences. We're going to make a difference and make a change in the uniformity. of the tax. Now with this amendment there's an overall tax reduction in motor vehicles to mirror what that reduction will be for real property owners. And it's going to be a change. It's going to be a change for the people who administer the tax, I understand that, we know that, but that's the price that you're going to pay for a fairer system and one that's defensible. The Property Tax Administrator has told us and the Revenue Committee firmly believes that you can no longer defend the current system and you've got to make a change. (LB) 271 makes those changes, makes the system ... and the $151 million that we currently collect is at risk. Under this bill, as it's now amended, collects less, it's a safer approach. We've done* things for schools through (LB) 806. We've done things for cities, because of the levy limitations, through the municipal infrastructure formula that we did in (LB) 269. We now do something for counties and for cities through the collection of a fee instead of a tax and we send it to those people who tend to have a more difficult time of living with levy limitations. And so as we move this bill over to Final, what I'm going to do is collect those numbers, the impacts, to the best of our ability and we'll
bring those people who have talked or have had an interest on the floor together and try to gain a better understanding of where we now are and a more precise understanding. But irregardless of that, the system is a better system of taxing motor vehicles under 271 than the current system. And if we don't make those changes, we'll be back here some day in the not too distant future wondering why we've got at risk and if we're going to lose the tax revenue because we can't defend the current system. The other thing that will happen is that if we don't give the Property Tax Administrator any direction on how to value these, vehicles, she's going to be forced to begin-to look at more market values. And that means a raise in the valuation of those vehicles. And that does mean a raise in taxes simply to defend the system. That's not a good result, that's not one we want. We want a system that's easier to administrate, we want one that's more uniform so you're paying roughly the same tax, because vehicles do travel from county to county. (LB) 271 gives us that. I would urge us to advance it to Final and then the burden is on me and the burden is on the Revenue Committee to give you better assessment of where we stand and hopefully give you the comfort level to adopt the bill ultimately. Thank you, Madam President.
PRESIDENT ROBAK: Thank you, Senator Kristensen. The question before the body is the advancement of LB 271. There's been a request for a machine vote and a record vote. All those in favor vote aye; all those opposed vote nay. Please record.
CLERK: (Read record vote as found on page 2242 of the Legislative Journal.) 30 ayes, 2 nays on the advancement of LB 271, Madam President.
PRESIDENT ROBAK: LB 271 advances. LB 271A.
CLERK (LB) 271A, no E & R. Senator Kristensen would move to amend the bill. (See AM2320 on page 2166 of the Legislative Journal.)
PRESIDENT ROBAK: The Chair recognizes Senator Kristensen to open on his amendment.
SENATOR KRISTENSEN: Thank you, Madam President, members of the