LB 397 (1997)
February 7, 1997
PRESIDENT ROBAK: LB 206 advances. LB 397.
CLERK: Madam President, LB 397. Originally introduced by Senator Kristensen and others. (Read title.) The bill was introduced on January 15 of this year. At that time it was referred to the Revenue Committee. The bill was advanced to General File. There are committee amendments pending, Madam President. (Committee amendment, AM0129, found on page 491 of the Legislative Journal.)
PRESIDENT ROBAK: The chair recognizes Senator Kristensen to open on the bill.
SENATOR KRISTENSEN: Thank you, Madam President, members of the
Legislature. LB 397 is a process by which we are changing and continuing the change that we began last year that the voters approved last year with LR 3CA where we switched the responsibility for statewide equalization, from the State Board of Equalization to the State Equalization and Review Commission, which you have known as the TERC. The voters approved that change. This allows for the TERC to do the statewide equalization, and what they were to do in the statutes that we passed two years ago, they were to provide a plan of statewide equalization, a recommended plan, to the State Board of Equalization. When the voters approved switching the powers from the State Board of Equalization to the TERC, it now becomes necessary for us to change the statutes to reflect what the voters approved. And so that's what, in essence, LB 397 does. It begins to make the changes and harmonize the provisions of law. It also does some clean up things with the Property Tax Administrator. I'll have an amendment to the committee amendments that will change that a little bit. The committee amendments make some changes, but again, basically what this bill is. is the moving from the State Board of Equalization now the practical matters of doing statewide equalization. There's an opinion that has been issued that, basically, the constitutional amendment was self-executing, which means if the State Board, even if they wanted to do equalization and this bill didn't occur, that they probably couldn't do that, that the Tax Equalization and Review Commission has the powers. This just sets up the various sections of statutes which deal with that equalization process, moves it over to the TERC, and as we begin to do committee amendments and my amendment, we'll flesh out some of the more specific changes. That's an overview of the bill and my introduction.
PRESIDENT ROBAK: Thank you, Senator Kristensen. The chair recognizes Senator Coordsen to open on the committee amendments.
SENATOR COORDSEN: Thank you, Madam President, members of the body. The committee amendments are not that complex with regard to the idea that they change LB 397 in any way, but they do provide some level of corrections in six different statutes ... six different portions, I mean, of LB 397. 1 will run through those... relatively brief explanation. Number one, it provides that the Property Tax Administrator has a
responsibility to the Tax Equalization and Review Commission to provide information regarding assessment level and quality and other information that's needed. A little clarification of a section of the statute clarifies that county aid is to be distributed based upon a certificate of taxes levied, and number three, strike section 31 which deals with the reimbursement of expenses for commissioners in Districts 2 and 3. Number four, changes the TERC, which is the Tax Equalization and Review Commission Revolving Fund, to the TERC Cash Fund, and provides that it does not lapse into the General Fund after the end of the year so they would be able to keep that amount of money for operation. Number five, strike sections 2 and 39 until such time as there are no more appeals pending or refunds due because of the action of the State Board of Equalization, and finally six, change the name of the State Board of Equalization and Assessment to the State Tax Board in two fuel sections and three sections remaining in the revenue sections, chapter 77 in Article V. With that, I would move that these clarifying amendments be adopted as committee amendments to LB 397. Thank you, Madam President.
PRESIDENT ROBAK: Thank you, Senator. There is an amendment to the committee amendments. (See AM0225 on pages 549-50 of the Legislative Journal.) The chair recognizes Senator Kristensen to open on that amendment.
SENATOR KRISTENSEN: Thank you, Madam President, members of the Legislature. I have an amendment that we do want to file to the committee amendments, and they do the following things. One is that we are under some time pressures here because the statewide equalization process begins April lot. Because we didn't know whether or not the voters were going to approve this in November, there was no way for us to bring the bill to you prior to the election. And we've got a period of time between April lot and May 15th to do statewide equalization. Before that time, the commission is going to have to adopt rules and regulations to carry out the duties for statewide equalization. There is a cash fund in the bill, and there was a provision to reimburse two of the members, one of them, who lives out in Aurora, to come in and out of her own pocket she's paying her travel and expenses to come in. And there was a cash fund in the bill originally created for per diems to reimburse her.
There was some question in committee to do that. What we wanted to do was strike the cash fund, because if we would appropriate any money for doing that it would delay the bill. We would have to wait until Senator Wehrbein and the committee, Appropriations Committee, was done. So, what I want to do here is just take that issue off the table, strike the cash fund and allow the bill to move on so we can have something before... in place before April 1st because we've got to do the rules and regulations. The second thing the amendment does is throughout the statutes there's some inconsistencies here about if there is an order for reappraisal ... or recertification, excuse me, of valuations, in the bill we say the State Board of the Tax Equalization and Review Commission. Actually, who does the recertification of values is the county board, and we go back and make that change to accurately reflect what does occur. The third part of the amendment basically creates an information loop, or a system of reporting. Since the TERC doesn't have a large staff, they can't keep track of everything the counties do. This amendment would just require them to report their changes in their activities to the Property Tax Administrator. And then the Property Tax Administrator reports everything to the TERC. This also helps clarify that relationship between the Property Tax Administrator now and che Tax Equalization and Review Commission. We have Cathy Lang-Morrissey who this body will get a chance to approve soon, I hope, but what happens is Cathy will be able to take her information from the counties, and not only give her opinion to the TERC, but able to tell what is wrong, and not just merely say there is a problem here with this valuation or with this class of property or with this countywide valuation. It would allow her to have some reason for her opposition, and it would help soften this relationship that could come in where she says there's just something wrong, but I can't really tell you why it's wrong, and would make more of a working relationship between the Property Tax Administrator and the Tax Equalization and Review Commission. That's the four things that the amendment does. The amendment should be passed out to you. I don't believe that there's any major substantive change in the amendment to the committee amendments other than taking out the reference to the cash fund, so the bill won't be held up because of budgetary process. We're going to address the reimbursement of the commissioners, but we're going to do that later on in the revenue bill. And at this point in time,
I'd like to adopt this amendment. Then we can begin to discuss the bill and the shape that the committee wanted to have it in. Thank you, Madam President.
PRESIDENT ROBAK: Thank you, Senator Kristensen. Is there any discussion on the Kristensen amendment to the committee amendment? Senator Wehrbein.
SENATOR WEHRBEIN: (Microphone not activated.) ... speaker, members. Senator Kristensen. Senator Kristensen, may I ask a question?
PRESIDENT ROBAK: Senator Kristensen, will you answer a question, please?
SENATOR KRISTENSEN: Yes.
SENATOR WEHRBEIN: 'I just... I ... I was tied up and I didn't get your original explanation. You're changing it from a revolving fund to a cash fund? Is that ... you said...
SENATOR KRISTENSEN: That was the committee amendment.
SENATOR WEHRBEIN: Right.
SENATOR KRISTENSEN: But what I'm doing now with my amendment is Just taking it...
SENATOR WEHRBEIN: Oh, okay.
SENATOR KRISTENSEN: ... completely out. We're riot even going to deal with the issue of reimbursement. We'll do that in another bill.
SENATOR WEHRBEIN: Okay. I ... so, that's what I get for coming in on the ... halfway through your explanation, but I want to be sure I
SENATOR KRISTENSEN: Well, that's what I get for giving you a halfway explanation, so...yeah.
SENATOR WEHRBEIN: Thank you.
PRESIDENT ROBAK: Thank you, Senator Wehrbein. Any further discussion? Seeing none. Senator Kristensen to close on his amendment. Closing is waived. The question before you is the adoption of the Kristensen amendment to the committee amendments to LB 397. All those in favor vote aye; all those opposed vote nay. Please record.
CLERK: 25 ayes, 0 nays, Madam President, on the adoption of Senator Kristensen's amendment to the committee amendments.
PRESIDENT ROBAK: The Kristensen amendment is adopted. We return to a discussion of the committee amendments. Seeing no further discussion. Senator Coordsen waives closing on the committee amendments. The question before you is the adoption of the committee amendments to LB 397. All those in favor vote aye; all those opposed vote nay. Please record.
CLERK: 25 ayes, 0 nays, Madam President, on the adoption of committee amendments.
PRESIDENT ROBAK: Committee amendments are adopted. The chair recognizes Senator Kristensen.
SENATOR KRISTENSEN: Thank you, Madam President, members of the Legislature. I wanted to expand a little bit on the role and explain, perhaps,...as I listen to myself explain the amendment, it probably became apparent that there's a number of people who do not understand what the Property Tax Administrator is, and it would be helpful to the body if I just went back and reviewed that a little bit, and then explained that relationship further with the TERC. A couple of years ago we went and separated from the Department of Revenue, in effect, what would be the Property Tax Division and made a Property Tax Administrator. And the purpose of doing a Property Tax Administrator was to begin a severance in the Department of Revenue because we know that property tax is going to take on a greater emphasis, perhaps for distribution formulas; as we begin to address the property tax problems that we're going to need someone who is removed from, perhaps, giving out the money who could focus on assessment practices, who could focus on the administration of the property tax as a system as opposed to using the system for revenue
generation, dealing with distribution, and that you don't want the person who's working with the system also to be the one in charge of devising and carrying out distribution of state monies for the reduction of property taxes. There would be some conflict in doing that, and we wanted to make that division very clear. What happens is the Tax Equalization and Review Commission is hearing these appeals on equalization and valuations, and now they'll be doing statewide equalization of property tax values. The Property Tax Administrator, what role should she have? Should she be the prosecutor who goes out and finds the violations, drags them in front of the Tax Equalization and Review Commission, and is the advocate against the counties. We don't think that will make for a very good working relationship. What the Property Tax Administrator, under the bill as we now have it amended, would do is basically be able to go in and give her opinion and say, this is what I believe, and be a sort of an advisor and give the cause and the reasons to the Tax Equalization and Review Commission as opposed to being the sword carrier going out to get some of the counties. And it's a better working relationship because the Property Tax Administrator also has %,.o work with these counties, and I think we've seen a real increase in the cooperation between the counties and the state, right now, with doing equalization, doing some of these valuation things that are so painful to do in any one given year. So, I wanted to make sure that we explain that relationship a little bit more. Again, the bill's primary focus and thrust is to carry out the transition and transfer Of state equalization duties from the State Board of Equalization to the Tax Equalization and Review Commission pursuant to what the voters approved in LR 3CA, and I would be happy to answer any questions, Madam President, and I would hope that we could address the compensation of the commissioners in committee. That's another issue. We've taken that completely out of the bill right now. And I'd be happy to answer any questions.
PRESIDENT ROBAK: Thank you, Senator. Senator McKenzie.
SENATOR McKENZIE: Thank you, Madam President. Senator Kristensen, would you yield for a question?
PRESIDENT ROBAK: Senator Kristensen.
SENATOR KRISTENSEN: Yes.
SENATOR McKENZIE: Just following up on your history lesson for us I which I appreciated, can you explain how the new commission will have authority in instances where there are, obviously, not equalized counties or different categories of equalized valuation, just for my benefit?
SENATOR KRISTENSEN: Okay. Do you want me to go through the process and the calendar, or do you want me to kind of just give you a general of how it will work?
SENATOR McKENZIE: Just ... a general of how it would work.
SENATOR KRISTENSEN: Okay. As we began ... and you know that counties, right now, have been in the process for the first part. The assessment date is, obviously, the 1st of January, and so we're busy now in the counties doing that process. Starting April 1st, the Tax Equalization and Review Commission will begin it's process of hearing appeals and the assessors will be certifying values in. They'll then get to look at statewide equalization, and they will be able to... it's much like the state board did, counties will come in ... they're going to get the abstract of all the rules, they'll be able to see how a county has performed in terms of percentage of market valuation, how that compares to other counties, how it compares ... they could even examine, now, inside a county, for example, residential to agricultural property. Then that protest period is available for people on individual tracts of land as well. And the state board ... or the state board ... the Tax Equalization and Review Commission will have the power to, basically if they need to, order revaluations or changes. They can do it countywide, they can do it by class, and they'll have the chance. By looking at each individual section, but seeing the individual appeals, the State Tax Equalization and Review Commission will have a better feel for what equalization is like...
SENATOR McKENZIE: Um-hum.
SENATOR KRISTENSEN: ... and that's where we think we'll get a
better job done of statewide equalization, is through their experience with all the local things, hearing those appeals, they'll find out where the pockets of problems are and this will really be their first year of trying to do those things.
SENATOR McKENZIE: Senator, thank you. Just ... their authority, then, would be to order the county assessor to revalue that class, as you explained. Is that going to be any different from what happened before with the other board?
SENATOR KRISTENSEN: Well...
SENATOR McKENZIE: And what would happen if a county just chose to ignore the order?
SENATOR KRISTENSEN: They have the power to, basically, go in...
SENATOR McKENZIE: And do it.
SENATOR KRISTENSEN: ... and if the county refuses, they can force...
SENATOR McKENZIE: Okay.
SENATOR KRISTENSEN: ... them to do that. Or they can go do it and ding the county for the appraisal, if that's what needs to be...now, that's a very drastic measure.
SENATOR McKENZIE: Right.
SENATOR KRISTENSEN: And probably wouldn't be done. But see, before, I think one of the only penalty provisions ... I'm going to look over step one ... the only penalty provisions was to yank the assessor's certificate, which was the death penalty for an assessor. If you were a county, you'd say, well, you know, the assessor I s kind of on their own. Those penalties are a little different now. They have the ability to actually go in and do some remedy types of things, and do it... and they don't have to pay for that reappraisal.
SENATOR McKENZIE: Okay, thank you, Senator. That's the part I wanted to hear about.
SENATOR KRISTENSEN: Okay.
SENATOR McKENZIE: Thank you.
PRESIDENT ROBAK: Thank you, Senator McKenzie. Further discussion on the advancement of LB 397? Seeing none. Senator Kristensen to close. Closing is waived. The question before you is the advancement of LB 397. All those in favor vote aye; all those opposed vote nay. Please record.
CLERK: 26 ayes, 0 nays, Madam President, on the advancement of 397.
PRESIDENT ROBAK: LB 397 advances. Senator Kristensen announces that the following guests are visiting the Legislature today: Duane, Deb, Katerina, Daniel, and Jena Kristensen are here from Minden. Duane is Senator Kristensen's brother and family. Will you all please stand and be recognized. Welcome to the Legislature. LB 116.