Debate Transcripts

LB 149 (1999)

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March 10, 1999


CLERK:  Mr. President, with respect to LB 149, the Enrollment and Review amendments were considered and adopted.  Senator Wickersham had moved to indefinitely postpone the bill.  Senator Bohlke laid the bill over.  That's the first motion this morning, Mr. President.


PRESIDENT MAURSTAD:  Senator Wickersham.


SENATOR WICKERSHAM:  (Microphone not activated immediately.) ...draw that motion.


PRESIDENT MAURSTAD:  The motion is withdrawn.


CLERK:  Mr. President, Senator Kristensen would move to amend the bill.  (AM0715 is found on page 878 of the Legislative Journal.)


PRESIDENT MAURSTAD:  Senator Kristensen, you're recognized to open on your amendment.


SPEAKER KRISTENSEN:  Thank you, Mr. President, members of the Legislature.  I assume, by this morning, most of you have gotten a frantic panic call from your superintendent.  Obviously, the K-12 educational lobby has probably visited with you.  I suppose part of it is "the British are coming, the British are coming, one by land, two by sea," they're here to storm the state aid bill and we're not going to get our money, and we're going to create terrible calamity, we're going to create unstability, and that you won't have state aid to schools.  Now , that's an exaggeration and I do it just for the point that I'm sure most of you do have a call, and I want to assure you the funds that you're going to got on the blue sheet with the Kristensen amendment are still going to happen.  You're going to get those amounts of money.  If the bill passes, becomes law, we're not talking about taking away the blue sheet monies that you're going to get this year.  This amendment is designed for a very specific purpose.  After our debate the other day, it became very-clear to me that there's a number of people, and I believe them to be statewide as well as members in the Legislature, who knew it but really maybe didn't pause to think about it, what we're really doing here.  And it isn't that there's a flaw in




149.  That's not the issue.  The issue is, who really are the stewards and what really is your job here as a state legislator towards the state budget.  You take your yellow budget book that the Appropriations Committee gave you to, the handout.  If you'd turn to page 13, 1 know that you may not have it right here with you, but I want to do a little bit of math for you, if you take the state aid to education amounts, that's $567 million this year...  584 million, excuse me, and you take Medicaid and public assistance, which are the other two major players, that's the second largest portion of our state budget, that accounts for almost one-half of the state budget is on automatic pilot, one-half of the state budget.  That means that if we have an economic downturn, if we have short monies, half of the budget you're not going to be able to touch.  So where do you go?  Are you going to go down and cut it out of the courts?  Well, that doesn't get you a whole lot, but you probably can't take those out.  Those are constitutional issues.  Are you going to take them out of the prison?  Probably not.  That's another $90 million.  Are you going to take them away from developmental disabilities?  Probably not.  Where do you go?  Well, you can go to the university.  Most of that's contract salaries, though.  That's about 85 percent.  It becomes a very difficult proposition.  Who does watch the state budget?  What is your ultimate role?  This amendment, what it does is says that we certify the state aid figure; this is what schools are going to get.  At the end of the legislative session, if we need to cut and we, in the mainline budget, something less for state aid to schools than what was certified, that those numbers will be recertified and that's what the school districts will get.  What does that mean?  That means that the automatic pilot, if things are bad, you can flip that off and you can do your first obligation, I suggest to you it is your first obligation, is you're stewards of the state budget.  You are not stewards of every local school district's budget.  You're stewards of the state budget first.  You've done tremendous things for school districts and we're going to do more.  But when economic bad times come, and they're going to come,'s been easy to do these things because we've had money.  It's going to change.  It may not change this year, maybe not next year, I think it will, but economic bad times are going to come and this body's going to be forced to look at cuts.  Why do I do this on 149 right now?  Because it may be your last opportunity to effectively do




this.  State aid is extremely important.  When we talked about the first round of debate of this bill, we talked about property tax relief.  Those are the levy limitations.  When we get into a position where you're going to be forced to look for cuts, the first response is, well, we can do 25 votes; we can do anything in the Legislature.  You can.  But think about the situation you're going to be in at that point in time.  Are you going to be able to pass a statute that does this and then cut the money?  It will never happen.  It will never happen.  You're in're in a special session the last seven days to come in here.  Are you going to spend those first seven days and change the statute and then work to reduce those numbers?  It won't happen; as a practical matter, it won't.  The good times won't last forever.  What this is really all about is who is going to pay attention to the state budget when we run short.  The other items that I think need to be discussed a little bit this morning is, is this a controversial amendment?  Sure, it's controversial, but it's one that we all talk about but nobody wants to face.  Is state aid untouchable?  Should it be untouchable?  And there are those that are going to argue, well, there's lots of other untouchable things.  This is high on the list.  This is very, very important to do.  At some point in, time, you're going to be faced...and you're going to look at the Appropriations Committee and you're going to say, Appropriations Committee, you go ...  you go figure out the answer, you go cut for us.  And they're going to come back with the answer, where do we cut; where do we go?  And they will run through, only in better detail and much more articulately than I just did, of the problems that you face it you take half the state budget and take it off the table.  There is some legitimate arguments on both sides.  The other side to this is, well, look, if you're going to Jack us down to a dollar levy limit and now you're going to cut our state aid at the last moment, that creates unstability; what am I going to do; what do you expect the school districts to do?  And I suggest to you there's a second element that works here and that second element, that I'm very willing to do, is that you can allow them, in those circumstances, end I call them, in effect, an emergency circumstance, when the state budget is at such a shape that you need to cut those budgets, you should allow them room under their levy limit to make up that difference.  Now I'm not talking about removing the levy limit.  I'm talking about if our




state budget is such that it needs to have room and we have to some across-the-board cuts or we have to cut from a lot of different places, they ought to be able to make up that difference.  It's not particularly fair to them, but they ought to be able to make up that difference for a one-time exception to their levy if they...  if they are at the maximum levy.  That's not in this amendment yet.  That's what must follow.  That's got to be the second part.  But there's no reason to do that if you don't buy the first part.  Now I look across the...




SPEAKER KRISTENSEN:  ...  the Legislature this morning.  A number of you have never been in a budget cutting session, a true where it is hard to cut budgets.  It is a feeding frenzy.  Everybody comes to you about why they shouldn't be cut and how terrible it in to cut, and most of them have very good stories.  Cutting budgets, when you have to, are very painful to do.  When you have a very well-organized and you have this much money on the table, you will never ever in a special session be able to change the statute and make the cut at that time.  Now what does it do practically?  Well, it makes K-12 education participate in the legislative process from February until we adjourn.  It's not on autopilot, because once they get to February their problems are over.  That's not an unreasonable burden.  Does it set up institutional fights?  No, I don't think so, because we really are going to only do these things, and should only do these things In bad economic times.


PRESIDENT MAURSTAD:  Time.  Thank you, Senator Kristensen.  Senator Matzke would like to announce the following guest is visiting the Legislature:  seated under the north balcony, Dorothy Elias of Omaha.  And Senator Robak would like to announce that Dee Kucera from Columbus is here, believe under the south balcony.  If you would rise, we'd certainly like to welcome you to the Nebraska Legislature.  Mr. Clerk.


ASSISTANT CLERK:  Mr. President, Senator Wickersham would move to amend the Kristensen amendment.  (AM0728 is found on pages 883-886 of the Legislative Journal.)


PRESIDENT MAURSTAD:  Senator Wickersham, you're recognized to




open on your amendment to the Kristensen amendment to LB 149.


SENATOR WICKERSHAM:  Thank you, Mr. President.  This amendment should have been released on your device or gadget, as Senator Chambers would call it, and it is also being distributed to you in hard copy.  Obviously, I would have filed it yesterday and made it more widely available had I been aware of what we were going to be discussing today.  The amendment does what Senator Kristensen suggested would be necessary or appropriate in the event we did not appropriate the amount of money called for in the February 1st certification that is call ...  that is provided for in LB 149.  What the amendment does is provide an exception to the levy limits for the difference between the amount certified on February 1st and the amount we finally certify.  What does that mean?  It means that if the schools had to go back to the property tax base because we wouldn't keep our commitments to K-12 education, that they would go back to property taxes.  They have no place else to go.  Within the framework that we have imposed on them, they have no place else to go.  And if we won't keep our commitments, at least we ought to be honest about it and say that we know what the impact of failure to keep our commitment is, and that is higher property taxes.  We ought to recognize that that is what Senator Kristensen's amendment is about and not play games with our constituents.  Senator Kristensen's amendment is about the potential for higher property taxes if we do not keep our commitments.  Now, I'm going to ask you to vote for the amendment to the amendment even though I don't like it, but I think it's the only fair way that we can frame our discussion this morning.  And even if the amendment to the amendment is adopted, I'm not going to support Senator Kristensen's amendment because I will not vote to reverse the course that we have set to reduce our reliance on property taxes.  I will not vote to do that.  And at its most fundamental, that is what the Kristensen' amendment is about.  It is cloaked in terms of budgetary discretion, prioritizing.  Fine, I've set my priority.  My priority is the reduction and the continued reduction on the reliance on property taxes in this state.  I'll set that priority.  I'll keep that priority.  I will do what is necessary to maintain that as a priority.  And if things get so bad that some time in some way I have to change that commitment, I will do that as a deliberate act.  I will do that because of a bill




that's introduced in this Legislature that coordinates all of the changes and all the policy assumptions that are necessary for me to change that position.  I won't do it because somebody had an A bill and wanted to fund a particular project on the floor of the Legislature and somehow they got that passed and somehow the Governor liked that better than he did property tax relief, I'm sorry, she, he or she.  I won't do it for that reason.  I will change my commitment to reduction of property taxes when the time comes, if it must come, but I will do it in a coordinated fashion and I will do it for the reasons of that moment and that time, not because somebody liked a pat project better than they did reduction of property taxes.  That's the risk you take with the Kristensen amendment, always pitting some special project against property tax relief.  That's not the way we should do it.  We should set property tax relief as a priority, keep it there, maintain it there and then, if we must, change it, but not change it because we just feel like doing something else on some day.  I hope that the discussion on -the amendment to the amendment that I'm proposing will focus us on that real issue--what is our commitment and our continuing commitment to reduction in reliance on property taxes in this state.


PRESIDENT MAURSTAD:  Thank you, Senator Wickersham.  We have a number of lights on.  The order is Brown, Wehrbein, Bohlke, Wickersham, Beutler, Vrtiska, Kristensen, Bromm, and Janssen.  Senator Brown.  I


SENATOR BROWN:  Mr. President, members of the Legislature, I rise in support of the Kristensen amendment and the Wickersham amendment, but I will speak mostly to the Kristensen amendment.  I believe the Kristensen amendment does what needs to be done.  I have spoken a great deal on this bill, and ...  and it's sometimes not been easy.  Questioning those things that seem to be a done deal is not ever easy.  But I believe that our role as policymakers is to be very thoughtful about what we do, even sometimes when it seems to be already done.  And I would say about the Kr18tensen amendment that you need to understand that what it does is exactly what 149 is doing is recertifying the amount of state aid at a time different than what we had put in place prior.  And it just allows us to address the circumstances that are different than what we...  they may be right now or what




we may imagine them to be right now.  In the future, we couldn't do what 149 does without this amendment.  We can't add or subtract.  Senator Kristensen focused mostly on the subtracting part, but we can't add either.  What are the chances that we're actually going to change the certification amount once it's been put in place?  I think very slim.  I think it would take very unusual and very bad economic times to subtract, and pretty unusual circumstances to add since we've added so substantially to our state aid figure and it is such an enormous part of our budget now.  We've almost ...  well, we have doubled it in the last eight years.  But do we need that opportunity?  I believe we do.  The reason I ...  the reason I think it's slim that we would change it is that I think most of us were elected because we care about education and we care about kids and we care about their future, but we were also elected to use our good judgment to do what's right for the state budget, to do what's right for kids, to use our good judgment in responding to whatever the circumstances are.  And I believe the Kristensen amendment just gives us the opportunity to use our good judgment, as we were elected to do.  Thank you.


PRESIDENT MAURSTAD:  Thank you, Senator Brown.  For discussion on the Wickersham amendment to the Kristensen amendment, Senator Wehrbein.


SENATOR WEHRBEIN:  Yes, Mr. President, members, I guess I was lucky I heard about this yesterday at five o'clock, so I've had all night to think about it.  If I got it this morning, I'd really be in a quandary.  I'm still in a quandary, but I believe I'm leaning toward supporting Senator Wickersham and then Senator Kristensen's amendment.  To give a little history, you know, a hundred and some years ago when the constitution was drafted, it says the education is one of the primary goals of this state, one of the primary responsibilities.  And, historically, it's been just property taxes, property taxes, property taxes, property taxes.  And I guess I'm going to give a little philosophy.  It may not be all correct, but we've had property taxes, we have sales tax, we have income tax.  Historically, it was only property taxes, and I guess a lot of that was because of the stability of support of government; used to be state government as well as local government.  And there is stability in property taxes and, even though people hate




property taxes, there is stability.  And when you go through tough times, property taxes are there and it was a burden on those that owned land or owned property.  And then now we've switched and, to my agreement, we've gone from sales...  or property tax to sales/income tax.  Now we're in the stage where we've gotten so we're almost 50 percent support of state...  of schools with sales and income tax, and we've been through some good times and it's been fairly easy, in my mind, to make this decision.  And if I may back up, I think it was under LB 89, but at least it was back ten years ago we had a goal of 45 percent funding by the state for education, schools, and guess what.  We didn't keep that commitment very well.  We dropped from 45 percent, I'm not even sure we ever did hit 45 percent, but we dropped to 44, 43, 42, 41, 40.  Roughly, before 806, we were at about 40 percent of state support for local school districts, based on the goal of 45 percent, and guess what.  We did balance our budgets in some of those tights years on the backs of schools.  And so 806 came along, as I recall it, and we said we were going to make a stronger commitment than ever for our state funding of local school districts.  And now we're in this dilemma here today.  Do we become an entitlement?  Has it become an entitlement just like Medicaid has?  And Senator Kristensen's right, we have a high degree of entitlements built into our budget, a big chunk of it mandated by the federal government.  We have no control.  And so, as I've been saying as we've gone along here, we ...  we don't have many places to change ...  to balance our budget today.  We balance it on the backs of higher education, by and large, or state operations.  Twenty percent of our budget's state operations.  A lot of that's constitutional.  We can't abolish the State Treasurer or the State ...  Secretary of State or others because those are constitutional and so we must fund them.  The courts are constitutional and we must fund them.  In fact, the courts almost are an entitlement today.  I think if we ever went to a constitutional question, it'd be my understanding the courts can have about whatever they need to run the courts successfully.  In fact, we're in those throes and we're seeing some -if those coming forward in bills, and we have an issue in the Appropriations Committee right now which is going to take another big increase in the cost of courts, potentially.  And so, as I see it today, and in spite of the fact that I feel strongly about keeping the commitment to schools, and I said we wouldn't have had probably the demand for




806 if we'd kept our commitments of supporting at 45 percent, but we didn't keep it.  But, on the other hand, Senator Kristensen's right, many of you haven't seen the case where we've had to balance the budget...




SENATOR WEHRBEIN:  ...  from ...  because of shortfalls in budget.  And so here we are today and I've come to realize, perhaps in the last few hours, that we've got to share the grief in times ahead with local school districts, because we've changed over the years.  In times past, when they had rough years, property tax picked up the difference.  Now we're in a boat where we have 50 percent of the state interests is in local schools.  But it still appears to me...I think we're going to hear some ...  hit some tough times ahead, the demands are there, it's probably better to make this decision today, when it has no direct impact for the next year, than it is to wait till another year and then try to figure out a way to balance those tough times ahead.  Because I predict we probably will head into some times, and that's dangerous to foresee, that it's not going to be just one or two bad years.  We may have ...  will have some really tough times.  And we ...  we've built more ...




SENATOR WEHRBEIN:  ...  and more in ....


PRESIDENT MAURSTAD:  Thank you, Senator.  Chair recognizes Senator Bohlke.


SENATOR BOHLKE:  Sorry.  Thank you, Mr. President and members.  I rise to really address the Wickersham amendment and talk about what I see that we've seen in a number of attempts, I believe, this session and it's been packaged with a little different wrapping, and I think it's something that Senator Wickersham alluded to, that this is really about the discussion that we've been about since 413, and that is the shift off of property to sales and income.  It's like an onion and, as you peel it back, you finally get to the core again.  And what would happen if we passed the Wickersham amendment and then passed the Kristensen amendment and then we would come in at the beginning of a




session and we would certify aid February 1, and then schools would not know until we ended that session, after they have set their budgets, hired the teachers, as to really what they ...  what amount of aid they would be receiving?  And if, if we change that, the only thing they could do, even with the Wickersham amendment, is go back to property taxpayers.  And that's what, every time we start to unwrap a new proposal, inside we find the issue--property tax versus sales and income.  I think this brings that very back to that ...  that, and that may not have even been Senator Kristensen's intent, but I think that's where this leads us.  It's unavoidable, because the other thing that I think it sends ...  sets us down a different road is up to this point we have been talking about predictability and stability.  We've been talking about the necessity of that for schools.  That's been really one of the main reasons we've been working for LB 149, and there's been a great deal of agreement between the Governor, you've heard the Governor talk about it, myself, a number of people saying that that's the goal we were working towards.  If you do this, I believe it pulls the rug out from underneath the whole issue of predictability and stability.  It's no longer there.  And so I think it goes very counter to the argument for why we need 149, part of the reason.  And so that I don't know how...  it's always the temptation to make an amendment better.  The other consideration is you don't want to make the amendment so good that it may pass.  And so I may be voting red on the Wickersham amendment because I don't want to improve the Kristensen amendment because I plan to vote no on the Kristensen amendment.  That doesn't come to any surprise to Senator Kristensen.  But I do believe that everyone really needs to understand, when we unwrap the package, what we're discussing and what we're debating, it's about property tax and how we fund our schools.  We've been talking about it for a long time.  I have always said I had two goals.  Senator Wickersham said to reduce property tax.  We've been about that.  My second is to make sure that schools are funded at the level they need to be funded, and I think to assure that they at least have to know when they are certified the amount of money that they can begin to budget, begin to process, begin to plan for the classrooms that they are going to have,...






SENATOR BOHLKE:  ...  and begin to reassure ...  be reassured when they open their doors in the fall that the children coming in are going to enter into classrooms and have those, the curriculum, available to them that provides them with that quality education.  I think this removes that predictability, stability, and for what ...  and, as far as I'm concerned, the commitment to seeing and guaranteeing that property tax relief and quality schools remain in partnership.  I believe that's been the road we've been on.  I think this severs the partnership.  Thank you.


PRESIDENT MAURSTAD:  Thank you, Senator Bohlke.  Chair recognizes Senator Wickersham.


SENATOR WICKERSHAM:  Mr. President, the first, and members of the body, the first thing I want to do is apologize briefly to you for leaving out an important piece of the amendment that I'm offering to you.  That piece in a delayed effective date for the Kristensen amendment, and a delayed effective date, obviously then, for the levy, overlevy exception that I described to you.  The amendment would delay both of those provisions until the fiscal years beginning in 2002-2003.  Why is that provision in the amendment?  I wish to protect the dime drop in school levies that is now scheduled to take effect for the year 2001.  1 don't want us running around here dithering, saying we don't have enough money when it comes time to drop the school levy and to provide further property tax relief for people across the state of Nebraska.  if you look at the information that Senator Wehrbein gave you, you can see that we're probabl ...  we're going to be able to fund that unless we make some serious mistakes in the next couple of years, and I would say unless we made serious mistakes.  Some people would say just unless we decide to spend money on something else.  I want to keep our commitment to that dime drop and that's the reason that the amendment, in addition to providing for the levy exception described, delays the effective date until after the dime drop would have taken effect.  Now, I 'relieve that Senator Bohlke touched on an element of this discussion that maybe we do need to remind ourselves about, and why the amendment that I'm proposing to you 13 important.  That is the way the school aid formula works.  In a very calculated way, we define the needs of a school district and tell them that's the amount of money that they should spend




to offer an educational opportunity in their school.  We then balance their needs.  It's an equation.  We balance their needs with resources.  What are the resources that they have available to them?  The money that we provide through the state aid formula and then local property taxes.  If, all of a sudden, we withdraw our support from that resource addition, then they have no place else to turn, unless they are willing to reduce expenditures in their school, which may impair educational opportunities.  In fact, you'll already hear that the school finance formula is impairing educational opportunities, even at the levels we're funding it, when it acts in conjunction with the levy caps.  What would be the effects if we don't keep our commitment?  And, again, I will suggest to you that the only really appropriate policy decision to make this morning is to support my amendment, even though...  amendment to the amendment, even though again I will tell you that I don't like it.  That isn't the policy choice that I will ultimately vote for.  But if weirs...




SENATOR WICKERSHAM:  ...if we're going to be honest with ourselves, if weirs going to be honest with our constituents, then we still need to adopt the amendment, because that's what we'll be voting for, if we adopt the Kristensen amendment is higher property taxes, may as well admit it.


PRESIDENT MAURSTAD:  Chair recognizes Senator Beutler, followed by Vrtiska, Kristensen, Bromm, Janssen, Schellpeper, Coordsen, Suttle, and Wehrbein.


SENATOR BEUTLER:  Mr. Lieutenant Governor, members of the Legislature, I think the debate has tended to get very dramatic already.  I don't see the amendment, I don't see the whole picture here as being all one side or all the other.  I think what we're trying to do, I think what Senator Kristensen is trying to do is to drive some middle course so that the Legislature retains its authority and its options in all situations.  I'm going to depart here from where most of you would predict I might come down on this issue.  I'm going to be supportive of the Kristensen amendment.  And I would have been supportive of the Wickersham amendment, had it not, if I




understand what he said, cut out the reduction of the levy from $1.10 to $1.  1 think...  it doesn't do that?  Okay.  To the extent that it doesn't do that and it allows local districts to go back to a levy, then I would be supportive of the Wickersham amendment also.  But my history in the Legislature for many, many years has been almost down the line support of state aid to education, and down the line support of reduction of property taxes.  And so this is not a decision that I come to very easily.  But I think Senator Kristensen has already made a very good case about the necessity of balancing other interests when times become tough.  And I have been here through one of those very tough times, when we had to cut budgets by 2 percent.  And we didn't save enough money in the good times, and we didn't have enough money in the bad times, and so then the question became, who should bear part of the burden of the tough times?  And if you want to say that all certain state-supported that operations, or all certain local ...  locally aided operations hat are other than education should bear all the burden and education should bear none of the burden, then you won't be interested in the Kristensen amendment.  But I don't think, if you think through the various scenarios that might happen in the future, that that would be the position that you would want to be in.  And there is a sort of discipline that comes out of the process of everybody knowing about the potential of hard times.  If you build things into the budget that are large and significant and guarantee certain elements of our population that they're going to get their money no matter what, then I think you're going to find-that there's less cooperation in hard times to share in a balanced fashion those burdens that have to be shared.  I don't think anybody should be exempted out.  And it's not a matter...  I'm acutely aware it's not a matter, coming from Lincoln, of education versus the rest of the world.  It's education versus education.  It is the University of Nebraska, it is the community college system, it is the state college system that will bear the brunt of all of the burden, almost all of the burden, if you protect secondary education from any possible sharing of the burden.  I think everybody has to think about efficiencies in hard times, the school districts included, not just state operations, not just other local operations that are funded out of state funds.  So, I passed out a chart to you that I think is very interesting, if you take the time to look at it, it's called the use of Nebraska's State General Funds.




And it shows you, for the time period 1977-78, and then 1987-88, ten years later, and then ten years later, '97-98, over in the right-hand columns for each of those three time periods ...




SENATOR BEUTLER:  ...  it shows you the percentage of state General Funds that is used by that particular category.  And you can see the K-12 education has gone up from 16 percent of our General Funds, in 1977, to 30 percent today, which is fine.  I voted for all that.  I support all that.  But you can see also what's happened to some of the other funding and some of the pressures that would be created.  Remember again, that higher education, the universities, the state college systems, the community colleges, those are over...  about one-half of our state operations.  So if they must bear all the brunt of the pressure, it creates an extraordinary problem.  We haven't had to raise sales and income taxes to do what we've done with property taxes.  You know we should all be very thankful...




SENATOR BEUTLER:  ...  that waive gotten this far and not had to do that yet.  And I'd like to talk about that more in a few minutes.


PRESIDENT MAURSTAD:  Thank you, Senator Beutler.  Senator Janssen and Senator Bromm would like to announce the following guests are visiting the Legislature, 44 fourth graders from the North Bend Public Schools and their teachers (introduced teachers).  In the north balcony, if you'd please rise, we'd like to welcome you to the Nebraska Legislature.  Chair recognizes Senator Vrtiska on the Wickersham amendment.


SENATOR VRTISKA:  Thank you, Mr. Chairman, members of the body.  I, like I'm sure many others, looked at this proposition of LB 149 with a great deal of favor, because it looked like it would bring some stability into the local school systems that many of us have been talked about and asked about over the last couple of years.  And it was a difficult thing, when I looked at this, to determine how I should.  in fact, vote for this.  But, you know, it again is somewhat bothersome to think that when it




comes time to make cuts the first thing we take to look at is making cuts at the school level and then determine how we're going to provide the financing for the schools to continue to provide the education that we, as a state, certainly are obligated to furnish.  And when I looked at this, and listening to Roger Wehrbein ...  Roger, can I ask you a question?


PRESIDENT MAURSTAD:  Senator Wehrbein, would you yield?




SENATOR VRTISKA:  Roger, you know, we read the papers every day and we see what ...  what a glowing financial situation this country is in, where are the tough times right now?  Who are having the real tough times as far as trying to make it right now?


SENATOR WEHRBEIN:  Midwest agriculture.


SENATOR VRTISKA:  That's right, agriculture.  Agriculture is having a difficult time, everybody knows it, because the prices are bad.  But what are we saying now?  If we've got tough times, let's raise property taxes.  Let's make up the difference with property taxes, at a time when many of the people who pay property taxes are having a difficult time even being able to pay their bills and keep their operations going.  It looks to me like if we have to talk about a way to finance education, that I had thought at one time, based on the bills that we passed before, that we would turn away from property taxes, and I noticed, as the candidates across the state for local government, state government, whatever, their pledge was to reduce property taxes; we're going to do something about property taxes.  And now we're standing on the floor and saying, well, if we have a difficulty, we're going to raise property taxes to support the schools.  Maybe that's the way to go.  I'm trying to, in my own mind, make ...  come to the conclusion, is that really what we ought to do?  I guess, as I think about it, and I'm trying to get the proper perspective on this, as I think about it, there is sales and income tax that could be adjusted along with property taxes to make this thing more equitable.  That probably is not going to sell.  I think from what Senator Beutler said he's going to talk about that, and maybe he's




right, but I'm trying to put together what I think is the proper way to do this and still leave some stability in what the schools can expect.  All of us know that there's been a great deal of instability in the funding for schools.  I think Senator Bohlke mentioned the fact that the way this...  the way this plays out some of the schools are not going to know what their income is going to be.  If we, in fact, follow through, whether they, in fact, need to reduce their staffs or they need to do some things to reduce spending, and I'd be the first to agree that we need to have efficiency in government at all levels, not only schools but in other levels of government.  We need to look at some of the other areas of spending.  I'm just a little bit uncomfortable to think that when we have difficult times that we have to say, well, schools, you got to be more efficient, and there's ...  there's nothing wrong with that.  But we're not saying to anybody else, you, too, have got to be some more ...  use some efficiency in order...




SENATOR VRTISKA:  ...  to cut your amount of spending.  So I'm not sure where I'm at on this yet except that I do have a real problem in thinking that we're going to, in fact, say that if we have tough times, the first ones who are going to make the cuts are going to be in the schools' budgets and they are going to have to go out and figure out how if they're as efficient as $they can get, then they're still going to have to go out and figure out how they're-going to raise the money to provide the education as I think we, as a state, are obligated to provide for these young people in order to do what I think what is right and proper.  With that, Mr. Speaker, Mr. Chairman, thank you.


PRESIDENT MAURSTAD:  Thank you, Senator Vrtiska.  Mr. Clerk.


CLERK:  Mr. President, Business and Labor will conduct an Executive Session at ten o'clock in Room 2102.


PRESIDENT MAURSTAD:  Thank you.  On the Wickersham amendment, Senator Kristensen.


SPEAKER KRISTENSEN:  Thank you, Mr. President.  I usually don't comment on these sorts of things.  I think that's unfortunate




that we're only talking about $600 million here this morning and this is a very difficult issue for people to understand, and I...I understand there's other business before the Legislature.  But, you know, Senator Vrtiska, you posed what I think most of us struggle with and that is who ...  who does determine those cuts and what are those first cuts?  I don't even like making those cuts but that's my job, I have to do it.  What this amendment says, and I'm going to support the Wickersham amendment, but what this says is that schools aren't the first to be cut.  It says that they're eligible to.  How do I go back to my constituents and say, look, I had to make cuts, but half the budget I couldn't even look at?  I can't even touch it.  I want to be supportive of my local schools.  We've done 10...  since I've been here, we've done 1059, we've done 806.  We've done unbelievable things and I'll go back to my first speech that I gave when this was the first round of debate.  State aid to schools is not the property tax relief.  That was the levy limits.  It makes me extremely uncomfortable to say that I'm going to be a blind follower and whatever it takes, I'm going to write the check.  I can't do that.  I'm going to write most of that check, but I can't just say here's a line of credit, take whatever you need and we'll take the cuts out of the other 10 or IS or 20 percent of discretionary monies that we have.  I can't do that.  I don't like making that cut but I'm.  not going to be a blind follower and just say it's on automatic pilot, there's nothing we can do, because that's what we're doing.  I don't want this to happen every year, by the way, because if it becomes an every year thing, then it's just a matter of you will have instability.  The only time this is going to come into play is when we have significant amounts of money to make up.  If we have to find $20 million, that's not a big deal.  We're not going to go fight the battle of you're going to raise property taxes over $20 million.  What happens if Senator Wehrbein comes to you in the committee and says we've got to make up $120 million because of down economy?  That is going to be very, very hard to make up, and you're going to say half of this budget is off limits, you can't get to it.  And at this point in time, I think the other issue that I want to throw out there is that when I went out and fought 413 this last year, the hardest thing that I had to defend was the entitlement issue because I said trust the Legislature, we can make the decisions, we can go do the tough things that we need to do and we've done it, and




we've made tough, tough calls.  And the response back to me was, yeah, but half of your budget you don't have any control over.  I didn't have a very good answer for that because there isn't a very good answer to that.  And I'm going -to support the Wickersham amendment.  Obviously, I would have liked to have seen it be a supermajority of the board but, quite frankly, when they get to those times, whether they get a supermajority or a half majority, it ...  it isn't going to make a lot of difference.  They'll be able to get those votes.  And so you are faced with a Hobson's choice. 




SPEAKER KRISTENSEN:  This is not raising property tax.  Yes, they have the option, if we come short, they have another tax base to go to.  Are you percentagewise talking about a lot?  No, because the percentage that is going to impact all of the property areas is significantly lower than the impact you'll have on the remaining state budget.  You're the stewards of the state budget.  That's got to be your first concern, and I just think that we'll never make this work if you're going to wait till we have a serious crisis.  We're never going to change the law and make the cuts in the same year.  It will be way too difficult.  It will never happen and you're going to wish that we had some mechanism, some out, and, quite frankly, the Wickersham amendment is complimentary to this.  It makes it work and I'd hope at this point in time we'd vote for that, and then move on to the main amendment.  Thank you.


PRESIDENT MAURSTAD:  Thank you, Senator Kristensen.  Senator Bromm, on the Wickersham amendment.


SENATOR BROMM:  (Microphone not activated immediately) ...  Senator...  Senator Wickersham's amendment really focuses on what the argument and decision and discussion is all about on this bill.  I've had the opportunity to be here while the Legislature was trying to develop the plans to bring some reduction in property taxes, and that was ...  that was a tough battle.  The Legislature took a lot of heat from cities and counties and townships, fire districts, on down the line, schools.  We took a lot of heat but, under Senator Warner's guidance, we Chose to develop a system of property tax




reduction.  It wasn't a year by year, we'll decide next year how we're going to do this, we'll decide two years from now how we're going to do it then.  It was a system that had a deliberate plan of implementation and we're in the middle of that implementation plan right now.  In order for that implementation to work properly, we have to keep faith with ...  with the system that we, ourselves, developed.  We have to follow through with what we started.  Will there be a crisis?  There certainly will be some day.  What are we doing this year?  We certified state aid last December 1, folks.  We certified it -then.  We've done it...we've redone it since then, and this is the proposal to redo it, and then we're going to say, if we adopt these amendments, we're going to say, well, we're just going to do it every year during the session when we figure out how much money we've got.  That is a huge, huge step backwards.  It brings stability and predictability to the system of school finance.  if I don't accomplish anything else in the Legislature, nothing else, when I leave here if I can't have a little more stability in the school finance formula than when I got here, I have failed.  I have failed, and I will ...  I will fight to the end of this session if we're going to inject the amount of instability that this brings to the formula.  we're talking about a system of financing schools, not a ...  not a decision from week to week or month to month.  We're talking about a system.  If we come in here next year and we have a severe crisis or we have a crisis between now and next year, if that decision of the.  federal court results in us-getting a judgment from low-level nuclear activities of $80 million, that's a crisis, folks.  We may be in special session.  We may be doing things next session that we don't even predict that we will do.  But that's the nature of the job.  We can do that.  We can do that.  If the system we're setting up for some reason or other is not appropriate, is not possible, we, the 49 senators of Nebraska, have the ability to change that anytime until we adjourn.  We have that power.  We have that flexibility.  But to put an amendment into the school finance formula that injects instability from the get-go and doesn't allow the schools to know whether they should rif or hire more teachers, doesn't allow them to plan their budget is Just ...






SENATOR BROMM:  ...  is just not...  it's not necessary, and it's not practical, and it's not the right thing to do.  And I ...  I don't fault Senator Kristensen for bringing the amendment.  It's a good discussion.  It's a discussion we need to have but I strongly urge you to not only defeat the Wickersham amendment but the Kristensen amendment.  If you adopt the Wickersham amendment, you will have gone back on your word that you're going to bring property tax relief to the homeowner, to the farm and ranch owner, because you're saying the property limits mean nothing.  If we decide to do this, you can raise your property tax.  That's ...  that's a lifting of the lid, lifting of the levy limit.  That is not consistent with what we set out to do here.  The discussion is good.  The amendment should be defeated.  Thank you.


PRESIDENT MAURSTAD:  Thank you, Senator Bromm.  Senator Smith would like to announce the following guests are visiting the Legislature, Andy Laws and Steve Laws from Gering and Scottsbluff, Nebraska, under the south balcony.  Please rise so we can recognize you.  Senator Janssen, on the Wickersham amendment.


SENATOR JANSSEN:  Thank you, Mr. Lieutenant Governor, members of the Legislature.  It's going to be kind of tough for all of us to go back and tell our schools that we are going to reconsider; we are going to reconsider what we have done in the past four years.  Senator Wickersham's amendment makes some adjustments, makes adjustments that possibly the schools can work with, but you look at...  look at what that will do, as Senator Bromm had mentioned.  When we all know the situation that the farmers are in now and ranchers and homeowners, especially those that were hit with valuation increases that means that the dollar, even though we capped the levy limits at $1.10 and now pretty soon to a dollar, but dollarwise they are seeing increases now.  Not everybody but those that have had valuation increases, it really didn't mean that much.  Can you imagine what's going to happen if we allow them to go over these lids?  Well, I tell you what, I hope the rest of you have a little tougher hide than what I do.  My hide has got a lot tougher since I've been here, but you're going to...  you're going to be faced with a bad situation.  I always thought we were on the right track.  I thought we were getting close to where we anticipated funding schools.  When




schools have made cuts, let me tell you they've made...  they've made some painful cuts.  Maybe not all of them but I know the schools in my district have.  They've cut back on teachers.  They've cut back on programs.  Maybe some of them weren't all that worthwhile.  I think they were.  And when you offer a course every other year in a school with, say, 300 students in it, it's not...  it's not good.  Children, we've made it possible for kids to move, parents to move their children from one school to the other.  It hurt some schools.  It hurts the ones they are moving into too.  So when you talk about, we've asked schools to consolidate, which they've done; reorganize, what they've done.  What all they really ask for is some predictability, some funding predictability so they know where they're going to be.  I think we have to...we have to take a good hard look at what we're doing now, after all I think we've made some giant steps forward in education, and I'd hate to see us renege, reconsider and go back on what I think we've accomplished in the last...  in the last few years.  I've supported school bills.  I supported 806.  1 supported 1114 because I thought it was the right thing to do and I ...  I, personally, believe that when we get down to a dollar, when we get down to a dollar in next year, it's going to be tougher on some of these other...  soma of the schools that I mentioned that are doubling up on classes now.




SENATOR JANSSEN:  They're riffing teachers.  How much more can we ask them to do?  I don't know what the rest of you think, but that's the way I -feel.  I haven't decided whether I'm going to vote for Senator Wickersham's amendment or not.  I believe we have to have a safety valve there, but I definitely will not vote for Senator Kristensen's amendment.  Thank you.


PRESIDENT MAURSTAD:  Thank you, Senator Janssen.  Senator Schellpeper, on the Wickersham amendment.


SENATOR SCHELLPEPER:  Thank you, Mr. Chairman and members.  LB 149 in its original form is a good, I think, proposal and needs to be passed in that form without either amendment.  The real thrust behind the Kristensen amendment is Governor Johanns' property tax plan.  You know, you can talk about anything you want but that's the real thrust behind the Kristensen amendment.




This body has to decide if we want to support education with sales and income taxes or go back to using more ...  more property taxes.  That's the whole thrust of this amendment.  I, personally, like sales and income taxes.  It's ...  LB 149 is a 19 million dollar, I think, property tax reduction, because if you don't do it, you're going to have to raise it.  When LB 806 was passed, I didn't support it because I thought it was...  I didn't like the formula, but it passed.  The formula now, with the additional revenue that we've put in over the last few years, has made it more palatable.  It's something that we can live with because we put enough extra revenue in from sales and income tax that property taxes have gone down.  Some of my rural schools still I don't think get enough revenue but this body decided that's the route we're going to take so that's where we're ...  we're going to go.  But you need to Just stop and think where we're headed.  The Kristensen amendment is either an increase in property taxes or school consolidation for my area, one or the other, because they'll have to vote to increase their levy.  There is just no way they, because they won't be able to operate if they don't get additional state aid.  So that means that they're going to probably consolidate some Of My schools out there.  In LB 149, everyone of my, I think I have 15 schools in my district, each one gains a little; not a lot, but they all gain some.  It doesn't put them back to where they were but they gain some revenue and it helps.  It keeps them going.  Agriculture, as was mentioned, is having a real tough time in this state.  My schools are all in ag...  ag communities.  Property taxes cannot be raised.  People, we can't raise property taxes; no...the people can't pay them.  They don't have the revenue to pay state property taxes.  The sales and income taxes need to be used to help fund education.  We can say, well, we've got to fund higher ed, we've got to fund all these different types of education, and they do, but the 500-plus thousand kids in this state that go to a K-12 or whatever there is, they have to be educated.  It's a state law.  We have to educate them.  Universities, we hopefully can have money for them, and I think we will.  We always have had money for the universities, but K-12 is a law that we have to help educate them.  Our obsolete property taxes in this state are as high as we can let them go.  We need to move to using more sales and income tax like LB 149.  The original bill is a good bill, and I think the lowering these...  the levy has to happen.  We have to




put that levy down there to $1.




SENATOR SCHELLPEPER:  We're headed in the right direction, people.  We need to Just keep that same course.  We started it, let's not jump off the ship today.  Thank you.


PRESIDENT MAURSTAD:  Thank you, Senator Schellpeper.  On the Wickersham amendment, Senator Coordsen, followed by Suttle, Wehrbein, Brashear, Stuhr, Bohlke, Raikes, Beutler, Baker.  Senator Coordsen.


SENATOR COORDSEN:  And you've almost ran out of lights, Mr. President.  The last time the state of" Nebraska had a reduction in tax revenues was, I believe, 1936, and that was a time, for you historians, when the state of Nebraska was still being supported entirely by property tax levies, and the Great Depression was upon the land and people did not have the money to pay the property taxes that were due on their houses and businesses and farms and those sorts of things, but neither did the financial institutions have the money to loan out.  Most of those were in receivership with their doors closed.  In the 60-plus years that have came about since that time, the worst, the worst, the worst revenues of the state of Nebraska have ever been is a reduction from an increase over -the previous collections, a reduction of an increase over the previous collections.  The administration, with the Kristensen en amendment, seems to be talking about Armageddon, that the end of the world, as we know it, is at hand.  And if we look at that proposition, if there is an Armageddon, if the world, as we know it, is going to end, where will that come from.  The only indicators on the economic map that even exist today are those tremors that exist in production agriculture in the grain and livestock sectors.  I see no...  anybody predicting any signs of economic downturn anywhere else.  So then it'd have to lead one to conclude that what the administration is proposing here in the Kristensen amendment is the solution to the potential of a depression, a reduced income in agriculture, is to create a system under which those people are going to be impacted the greatest by the solution because that is the segment of our economy that is impacted in the most negative fashion by the collection 'of




property taxes, an immutable tax that doesn't vary with your income, that varies with the demand from local governments.  It varies with state aid, and if it is true, if it is true that the potential downturn of revenues that is being predicted in some circles for the cash flow of the state of Nebraska is coming,...




SENATOR COORDSEN:  ...  then it would appear that the more logical approach would not be the Kristensen amendment.  The more logical approach would be a mechanism that would drive up state aid to provide the maximum amount of support for local schools in the state of Nebraska to help those who are undergoing the most duress.  If that's the assumption behind the Kristensen amendment, folks, it is headed in exactly a hundred and eighty degrees in an opposite direction from a rational, logical preparation for what might be a disaster or, at least, a dip in the receipts' of the state of Nebraska.  I, for the life of me, have not been able to understand the administration's position of going in the...




SENATOR COORDSEN:  ...  direction that they're going, and I thank you for not enough time.  I am going to have to learn to talk faster.  Thank you.


PRESIDENT MAURSTAD:  Thank you,.  Senator Coordsen.  on the Wickersham amendment, Senator Suttle.


SENATOR SUTTLE:  I'd like to call the question on the Wickersham amendment.


PRESIDENT MAURSTAD:  Sufficient debate having occurred, the question has been called.  Do I see five hands?  If you have your hands tip, could you please stand so A' can see you.  I see five hands.  Thank you.  The question before us is to cease debate.  Those in favor say (sic) aye, those opposed nay.  Please record.


CLERK:  31 ayes, 0 nays to cease debate, Mr. President.




PRESIDENT MAURSTAD:  Thank you, Mr. Clerk.  Senator Wickersham, you're recognized to close on your amendment to the Kristensen amendment to LB 149.


SENATOR WICKERSHAM:  Thank you, Mr. President.  I don't know how to suggest to you that you need to vote for this amendment but you do because, as I said before, I don't like this amendment.  I don't like what I'm proposing to you.  I don't like what Senator Kristensen is proposing to you, but if we're going to be honest, we need, as I've indicated, to recognize the implications of the Kristensen amendment, and that's what this one does, and that's the reason I don't like it, and that's the reason I want you to support it.  Thank you.


PRESIDENT MAURSTAD:  Thank you, Senator Wickersham.  The question before us is the Wickersham amendment.  Those in favor vote aye, those opposed nay.  Have you all voted?  Please record.


CLERK:  25 ayes, 20 nays, Mr. President, on adoption of Senator Wickersham's amendment.


PRESIDENT MAURSTAD:  The amendment is adopted.  For further discussion on the Kristensen amendment, Senator Wehrbein.


SENATOR WEHRBEIN:  Yes, Mr. President, members of the body, I'm glad the Wickersham amendment is on.  I just wanted to say my discussion this morning, and I don't know about the rest of you, but my discussion this morning isn't necessarily predicated on a disaster coming.  It seems prudent to me that we ought to keep our flexibility.  Nothing that we're doing today, as I would understand it, is going to change the future if the will of this body is what it is today.  It simply gives some more flexibility, and if there is to be pain in the future, it ensures that it's going to be somewhat shared.  It seems to me, as a matter of' perhaps principle, that if we are going to get into some tough times, those dependent on the property tax, wherever they may be, ought to be brought in, if you will, to some degree.  The way I understand the formula, and I stand to be corrected, but at lea least they ...  when a submission for request for aid is given, it's need minus income, I can't remember the term, and then equal what the state aid formula is.  Now I




recognize that locals are under lid limits, so it could be said that the lid limit will hold the line on their requests.  But it still seems to me that there is a possibility into the future of increasing needs fairly...  fairly significant over which we'd have no control.  So it seems to me that it isn't illogical for us to take the position that if we're going to get into tough times there will be a sensitivity, at least, on the part of local school boards in this state to recognize that and react accordingly without simply submitting to the state needs that may be affected by the levy limit, the valuations, lowering of income, or whatever may happen at the local level.  Once again, if it's the will of the body, whether it's a year from now or five years from now, if they want to save that pain at the local and make it up through state aid, you still, that ability is there.  That opportunity is there.  You know, the higher education depends on our goodwill, if you will, and our needs as we see them in higher education.  They are vulnerable year after year after year, many times which they remind us.  Other constitu...  every thing we have in this state is dependent upon the will of this body, the economics, the economy, what' have you.  And so to make someone held harmless, if you will, forever doesn't always seem to make sense to me and we don't have to look at it that way.  This bill doesn't make that major change.  It simply says we're going to have some options if and when that time comes.  And it seems to me that now is the logical time to make that when we are in relatively good times.  As many of you said, there's no foreseeable disaster ahead.  I don't necessarily see a foreseeable disaster ahead.  myself.  But it does give us a little more flexibility.  The will of the body can still be maintained when you get there, and I know you can make the case on the other side, that if we have to make that decision, then we can make it with 25 votes then.  I understand that, but I'll hazard a guess that it's much easier to make that decision now without the pressure of the world is falling in on us, you have to save...




SENATOR WEHRBEIN:  ...  the schools, you have to save the university, you have to save the state colleges, you have to save the community colleges, you have to save the constitutional officers, you have to save the courts.  Where are you going to




draw the line at that time?  This simply gives us some flexibility with the light of day, so to speak, without the pressures of having to make those decisions.  I had debated about putting the amendment in that they're...  one of holding harmless, which I don't think is the right way, or to say that we...  our goal would still be 100 percent of needs.  That's my philosophy.  We ought to do 100 percent of needs and I wouldn't mind putting that in there as a goal.  But to make it an absolute entitlement I think is a mistake in the long run, and that's where we ought to be looking out over the long run, and it doesn't say that that's necessarily instability for schools because I don't think anything is forever and probably shouldn't be forever, and I ...




SENATOR WEHRBEIN:  ...  think locals ought to have that obligation too.


PRESIDENT MAURSTAD:  Thank you, Senator Wehrbein.  Senator Stuhr, on the Kristensen amendment.


SENATOR STUHR:  Thank you, Mr. Speaker and members of the body.  I do want to speak on the Kristensen amendment, and I'm just asking how can we remove the stability and the predictability that we are asking for the schools.  I have a note here from a member that says that the financial resources for teachers salaries, classroom materials, technology, continuous teacher training and development, building maintenance and building renovation, transportation, and other increasing option...  operational costs seem to always fall short of actual needs.  And I think this is particularly true in our rural areas.  I think that we can be very proud of the quality of education systems that we have had in Nebraska, and I've stated that on the floor before, but it is our responsibility to provide for a quality education for all students.  And as I think some of the other members have stated, but I just want to point out the fact that I believe that Initiative 413 sent a very clear message, that the people across this state do want to support their schools, and that they do want property tax relief.  Again, we've talked about the agriculture economy, and being a farmer myself, I want to share just a message that I




received from one of my constituents who said, I am a family farmer, overwhelmed by expenses which exceed income, and particularly my property taxes are exceeding my income, and I'm dipping into savings to pay for them.  Since 1993, the farm dynamic has been changing.  In '93, one of the many social security fixes hit particularly hard on individual taxpayers.  Also property taxes began to increase while income began to decrease.  And I think that's what we've been trying I to do in the Legislature is to look at some relief for our property taxpayers.  I believe that K through 12 is one of our first responsibilities.  I know that we have the burden and the responsibility to look at funding for higher education but I still believe that K through 12 is our primary responsibility.  It is a necessity, and I just wanted to ask Senator Wehrbein, as Chairman of the Appropriations, a question.


PRESIDENT MAURSTAD:  Senator Wehrbein, would you yield.




SENATOR STUHR:  Senator Wehrbein, is it possible, because I'm not into the appropriations bit, but is it possible to increase the Cash Reserve Fund that would allow for a cushion, so that we would still have the stability and predictability that we're looking for when we certify state aid, but would still have some funding available in that area?


SENATOR WEHRBEIN:  Yes, it is, with 25 votes we can, yes.


SENATOR STUHR:  So, actually, we really wouldn't need the Kristensen amendment,...




SENATOR STUHR:  ...  if we had built in some ...


SENATOR WEHRBEIN:  Well, it would be a question of how far $100 million would go over, let's say, two years, if we really did turn into a downturn and/or the temptation is always there to spend it.  I can give you a more accurate answer come May 25th.






SENATOR STUHR:  Okay.  I ...  I just want to close that I will not be supporting the Kristensen amendment.  I believe that we have been working very hard in this body to look for some stability and predictability, and must continue on that route.  Thank you.


PRESIDENT MAURSTAD:  Thank you, Senator Stuhr.  Senator Bohlke, on the Kristensen amendment.


SENATOR BOHLKE:  Thank you, Mr. President and members.  I think we've had a good discussion, and I think people, generally, are deciding this issue for themselves, and deciding ...  pretty much have decided, I think, how they're going to vote.  I think you've heard from people, certainly on the education committee, other people who are concerned about us going back on our word on property tax relief, why they think it's very important to vote no on the Kristensen amendment.  I stand firm on that, that I think we definitely need to vote no on the Kristensen amendment, because I think actually, if we would adopt the Kristensen amendment, it takes us back actually prior to LB 1059, on where we were on determining state aid for education.  And I believe as I've listened to the people and the reasons they've given, whether it be the concern on property tax, whether it's the concern about the instability this provides, whether it's the concern that we are going away from our commitment to children, you have heard a number of reasons that you would vote no on the Kristensen* amendment.  I think that in the end everyone certainly has to make that determination for themselves.  but in my mind, as I looked at this and thought about it, woke up at four-thirty this morning and kept thinking about it until I got here today, that I do think it really, really sets us back years in what we've accomplished towards aid to education.  And I feel that the instability, when we have all been talking about wanting to increase the predictability and the stability, and with the Kristensen amendment we wipe out both of those and we reach instability every .ear until the end of session for what's going to happen for financing our schools.  I think that's a major step backwards that I certainly hope that this body does not choose to take.  Thank you.




PRESIDENT MAURSTAD:  Thank you, Senator Bohlke.  Senator Raikes, on the Kristensen amendment.


SENATOR RAIKES:  Mr. President, members of the Legislature, I voted for the Wickersham amendment with considerable reservation.  I'd like to explain that.  The reservation stems from the concept of equalization.  The state aid formula contributes aid to schools, to local school districts on an equalized basis, a capacity to pay.  Nonequalized schools, you understand, with the Wickersham amendment, are, in effect, held harmless.  If we cut state aid, nonequalized schools will not be affected.  Nonequalized schools, and there are several in the state, have more resources than needs now, that's why they're nonequalized.  Equalization is an effort to bring equalized districts up to the nonequalized ones.  With the Wickersham amendment we're going to allow equalized dist...  or not, yes, equalized districts to fall farther behind nonequalized districts.  The other thing I hope you understand is with the Wickersham amendment you're going to allow levy increases at local levels which are going to be inversely proportional to the capacity to pay.  So the less wealth you have, the less property value you have, let me correct myself, property value you have per citizen, the higher the levy increase that's going to be allowed.  Is that really what we want to do?  The other thing I'll ...  and it's sort of a different point.  I think the way this has been presented is we're talking here about an acute situation, not a chronic one.  We're talking about a situation that occurs every now and then.  If we're talking about a chronic situation, then I think the discussion is different.  So we're talking about an acute situation where in fact we know this is coming.  I think that was said a number of times.  -Well, if you have an acute situation that you know is coming, I think this cries out for a reserve policy.  And Senator Stuhr has made this point.  You set up a reserve fund that is ...  has capacity to address the situation.  If the situation becomes chronic, then you have to change your policy.  But I think the appropriate thing to do here is to look in the direction of creating a reserve fund.  And perhaps we need to readdress the -)olicy we have at the state level on reserves, in light of the fact that we are making continuing commitments.  And I certainly would be interested in doing that.  But I oppose the Kristensen amendment.  Thank you.




PRESIDENT MAURSTAD:  Thank you, Senator Raikes on the Kristensen amendment, Senator Beutler.


SENATOR BEUTLER:  Mr. Lieutenant Governor, members of the Legislature, I continue to believe strongly that the Kristensen amendment is the right middle course for us.  Are we on the right track?  Have we been on the right track?  I would argue vociferously that we have been on the right track, that we are in fact on the right track.  In terms of further reducing the levy from $1.10 to $1, that is already included in the appropriations budget for the out-years.  The money is there.  With the Wickersham amendment you've protected that drop in the levy.  So the right track will continue.  That's not the question here, in my opinion.  The question here is a matter of flexibility in difficult times.  And remember that this situation is going to continue to be somewhat different from a regular appropriations situation in the sense that the money will be certified to the Legislature before the Appropriations Committee makes any decision on what to put in the appropriations bill.  That means that you all will know, the Appropriations Committee will know, everybody will know exactly what we have to do in order to fulfill the state aid formula and keep the pressure off property taxes.  And that decision will be made ...  will be there for you clearly to decide.  If the Appropriations Committee doesn't fill the certification, then you can reject the Appropriations Committee recommendation and put the money in.  I expect that that's what you would do in almost all situations because, obviously, we all feel strongly about that.  But that notwithstanding, the time will come again when we will be in trouble, if we're locking all of these things in.  And if we lock them in for the purpose of stability in one area, what weirs doing, in effect, is creating greater instability in another area, and taking away our ability to look at the various kinda of instability that will be created in tough times and make judgments about how to adjust those things.  We need to save money, but we need to have everybody conscious of saving money.  We need to put money in reserve.  Earlier in this session, when we argued the 3 percent resolution, there seemed to be a tailing off of interest in making a decision about our overall budget.  But if you want to put another $30 million into a reserve fund to preclude negative effects in




the very hard times, then you need to make a decision about overall spending, we want to spend no more than 3.5 percent this year.  But if you have all kinds of interests coming into the Legislature suggesting that we spend more than that, for example, because they already have a certain portion of their interest protected, then they're going to create the pressure that will not allow us to save money for the hard times and throw us into a crisis situation.  I think we really have to go back to the biblical parable of the seven good years and the seven bad years.  And in the seven good years we should be saving money.  And we haven't been doing enough of that ...




SENATOR BEUTLER:  ...  to clearly avert crisis in the hard times.  And so the objective should be for everybody to be bought into the process of saving money in the good times because, when it comes to the hard times, if you're putting too great a pressure on certain institutions, are you going to raise sales and income taxes in the very hardest of economic times?  Of course you're not, of course you're not.  That's not going to happen.  So what are you going to do, destroy one institution because you want to protect absolutely another, or do you want to be in a position where you can make judgments at that point in time about what is most important?  Isn't that what you want?




SENATOR BEUTLER:  I mean we were against term limits because it took away choices.  Why do you want to take away choices?  And here we want to box ourselves in...






PRESIDENT MAURSTAD:  Thank you, Senator.  On the Kristensen amendment, Senator Baker, followed by Jensen, Don Pederson, Brown, Wickersham, Coordsen, Suttle, Vrtiska, Hartnett.  Senator Baker.


SENATOR BAKER:  Thank you, Mr. Lieutenant Governor, members of




the Legislature.  First off, I want to be on record of being in favor of strong, efficient schools.  I'm not antieducation, by any means.  I come from an education background in my family.  And I also agree with Senator Bromm on stability.  That was one of the things that I worked so hard on was trying to give some stability to state aid.  However, can we do that at the expense of the entire state?  Do we want to guarantee absolute stability for K-12 school districts at the expense of the state?  I think when times are tough, we need to share in those tough times.  When our business, which is based on when agriculture has tough times, we cut spending across the board and so on.  We are still offering those schools the option of increasing property tax, if those local boards feel it's necessary.  They have that option now to exceed budget lids or levy lids.  We're extending that, furthering it.  A couple factors that haven't been brought up this morning, where do the cities and counties come in?  Are they next in line here.  We're talking about schools and state aid to schools.  What about the cities and counties, are they next?  I don't know, I suspect they will be.  And another factor that has not been brought up, and I was amazed at this, is the valuations.  We've addressed the levy lid, but the valuations in that half of the equation have not been addressed.  They went up 5.55 billion dollars last year, that's across the state, 5.5 billion dollars, at $1 that raises $55 million additional potential income.  I realize a lot of districts didn't take that, but we're forgetting that they also have that potential, 55 million plus dollars they could have raised last year had they left their levy at $1, just-with the increased valuations.  Of course, that's a state average.  But that points out that there are other factors here besides just state aid entering in.  They have that ability to raise more money through increased valuations.  I agree with Senator Beutler and Senator Kristensen.  I'd much rather be giving us the potential to address the problem before it hits than to go in a crunch.  I can see, as a freshman senator, it would be very difficult to come back and have to go through this process from square one, when we'd have the university and everybody else saying, don't cut us, don't cut us.  So when times are tough, I think we need to share those tough times, and that means K-12 schools, as well as everyone else.  So I will support the Kristensen amendment.  Thank you.




PRESIDENT MAURSTAD:  Chair recognizes Senator Jensen, on the Kristensen amendment.


SENATOR JENSEN:  Thank you, Mr. President, members of the body.  I'm a product of the Great Depression, born in 1934, right in the midst of that.  And I hope we never see that again.  And through that I saw what my parents went through, and it was very difficult for them, farmers, in trying to adjust and trying to live through those times.  And right now the ag economy in Nebraska is depressed, and it's going through some tough times.  I think we're fortunate enough that the aq economy is somewhat cyclical.  And I hope it's at a downturn, and I hope the upturn is around the corner.  But that's something that I can't predict, and I don't know that anybody else out there is doing that also.  And we are fortunate here in Nebraska that our economy is diverse enough that the business economy has kind of picked up from where the ag economy is down, or we right now would be in a world of hurt in this state at this time.  But the business economy, the banking, the telemarketing, all are doing well, and sales and income tax are up, and they are helping support our state.  But we don't know how long that's going to happen too.  We have a whole generation of people within our state, within our country who have never seen a downturn.  Yes, the stock market rises and falls, but it's been gradually on an uphill course.  And we haven't experienced the really tough times.  I certainly tell my kids and grandkids be prepared for-that.  And I hope all of you are also prepared for that.  I think that's part of the process.  I would certainly agree that this state probably needs to put more dollars, as Senator Raikes has mentioned, into reserve for those times when they come.  But I do stand in support of the Kristensen amendment because I think it does allow some flexibility for us, allows, without, I don't think, injuring in any way the schools.  I support the schools.  I support 149.  And I would...  I can become a stronger supporter if the Kristensen amendment is part of that.  Right now really what Senator Wehrbein said, we really have very little flexibility in that 80 percent, at least 80 percent of our budget is totally fixed, we can't touch it; they're entitlements, they are expenses that need to go on.  I don't think we need to have anymore encumbrances on our flexibility that we have.  Senator Baker was exactly right, one of the reasons that we have such high property taxes is that our




valuations have increased, increased far beyond what any of us ever thought they would go, and so that has resulted in higher property taxes.  Really, the property tax levy has not increased as much as the valuations have increased, and farm property, even through this ag crisis we have, I haven't seen really much of a decline in ag property prices.  I don't understand that, to be honest with you.  But I think this amendment does allow us to have some flexibility, whether we...  I don't see us going into this, only in an extreme circumstance, but I would sure like to see it available to us so that we have that opportunity should...




SENATOR JENSEN:  ...  a depression occur.  So I'll be voting for the Kristensen amendment and then voting for LB 149.  Thank you, Mr. President.


PRESIDENT MAURSTAD:  Thank you, Senator Jensen.  Senator Byars' would like to announce the following guests are visiting the Legislature; JoAnne Frey, Jane Nider, and Megan Waldo from Beatrice.  They are seated under the north...  or the south balcony.  If you'd rise, we'd like to welcome you to the Nebraska Legislature.  On the Kristensen amendment to LB 149, Senator Don Pederson.


SENATOR D. PEDERSON:  Mr. President, members of the body, first of all, I'd like to thank Senator Kristensen for bringing this matter to us.  I know he brings it with mixed emotions and knowing that this will be a very controversial matter, but I think that it's something that we have had to discuss.  It's a situation that we need to view at this time.  In my practice of law, the hardest thing to do was to get people to focus on what would happen in the event of bad times, and I think when things are rolling along good it's difficult to say exactly what are we going Co do if things turn down.  And that's why now is the time that we should be discussing this, rather than waiting until we are under the gun and having to make decisions that are going -to affect people on a day-to-day basis.  I think now we can make a policy decision.  If we don't make that policy decision now, we're going to be making individual decisions later, and I just think that's a poor time to be making those kinds of decisions.




I heard the reference to the word "stability", the schools need stability.  Well, I think our entire state government needs stability and serving on the Appropriations Committee gives you an insight into how this really works, and we have approximately 90 state agencies, every one of which is looking for stability.  So if you ...  Senator Stuhr had mentioned if we don't do something now and do 149 without this amendment, we have a problem; what are teachers ...  what are we going to do about the numbers of teachers, the riffing, the salaries.  That's true of virtually every agency that we deal with.  And every one of them, what, we talk about the court system, we talk about the university system, we talk about the community college system, every one of them in looking for the same thing, they are all looking for stability, and that's what we would like them to have.  I think that we need to strongly consider the Kristensen amendment.  I'm going to vote in favor of that amendment because it gives us the versatility to be able to examine the circumstances at the time that we find that we do have an emergent situation.  I think we can do some of the safeguards, such as adding to some of our reserves and things of that nature so that we don't invoke these things in a chronic situation as distinguished from a long-term situation.  If we have a long-term situation, we're going to have to examine everything that we do, but in a chronic situation we ought to have the ability to finance those concerns, either through the cash reserves or some other method.  And I think this is only something that will give us the opportunity to respond to long-term emergent situation.  So, with that, I'm announcing 'that I'm going to support Senator Kristensen's amendment.  Thank you.


PRESIDENT MAURSTAD:  Thank you, Senator Pederson.  Senator Brown, followed by Senator Wickersham, Coordsen, Suttle, Vrtiska, Hartnett, Kristensen, Bromm, and Beutler.  Senator Brown.




PRESIDENT MAURSTAD:  Question has been called.  Do I see five hands?  I see five hands.  The question before us is to cease debate.  Those in favor vote aye, those opposed nay.  Please record.




CLERK:  25 ayes, 3 nays to cease debate, Mr. President.


PRESIDENT MAURSTAD:  Debate is ceased.  Senator Kristensen, to close on your amendment to LB 149.


SPEAKER KRISTENSEN:  Mr. President, I'd like to have the house placed under call, please.


PRESIDENT MAURSTAD:  We have a motion to place the house under call.  Those in favor vote aye, those opposed nay.  Please record.


CLERK:  34 ayes, 0 nays to place the house under call.


PRESIDENT MAURSTAD:  The house is under call.  Would members please record their presence.  Unauthorized personnel please leave the floor.  Senator Kristensen.


SPEAKER KRISTENSEN:  Thank you, Mr. President and members.  Thank you for your patience.  It's not easy to stand here this morning and talk about difficult things when you don't have to do At.  We don't have to have this debate today.  It's in our bent interest that you do it.  I know that I'm going to have my own school districts are going to be angry at me for doing this.  The easy thing is to walk away and say, look at this blue sheet, be happy, you're going to get more money.  My job is not to be the state super school board.  My job is to be a state senator.  My job is not to blindly close my eyes and say, whatever it takes, you're not going to be held harmless.  We're in this all together.  This morning the most distressing thing to me was this is going to cause unpredictability.  The Wickersham amendment, you got to give Bob Wickersham a lot of credit, because Bob did really what he thinks is the right thing to do in a situation that he doesn't like to do.  He did put back the predictability.  Where is the unpredictability in this?  We certify those numbers February 1st to the schools; they're going to get that money.  They're not going to be ...  they're not going to have that money taken away from them.  That's the predictability and that's the stability, they still have it.  Now we did it in a distasteful way, maybe, for a few people.  But the bottom line here is, who is going to look at the entire big picture and the long term?  If we continue on without some




mechanism like this, to give you the ability, when times turn tough, you're never going to get the opportunity.  You'll never do it, we'll never have that opportunity.  One-half of the state budget, how do you go back to your constituents and say, you know, half the state budget I don't have to worry about, because it just automatically happens.  How do you do that?  My schools are important to me, and we have this debate.  Let me tell you, the hardest thing we did in the 413 fight, when you were out doing those meetings, the hardest thing was to stand up and say, trust us because we use our good judgment, and we do and I believe that.  This amendment gives you that judgment to exercise.  This is not about bad ag economy.  This isn't about an agenda of an administration, this isn't about many other things.  It would be a lot easier for me today to just sit down and never bring this amendment, and we wouldn't have to look at the issue.  At some point in time we're going to have to address what do I do, because I don't have enough money to go around.  This morning don't...don't give up your positions as state senators, you need to keep that position.  And that's a hard position, it's uncomfortable.  Part of being that is looking at the entire state.  You're going to have to make that tough decision some day.  This is going to give you the flexibility to do that.  Remember when we talked about not giving up flexibility and not giving away the state prerogative.  Right now, if you keep all of state aid, at least the equalization aid,...




SPEAKER KRISTENSEN:  ...  under this, you're giving away all of your flexibility and you're giving away your prerogative.  I don't think that's the right thing to do.  This holds those schools, it gives them the out, it gives the...  it keeps that predictability.  'What does it make them do?  It makes them watch and share in the state budget, from February to the end of session.  What does everybody else do, including you?  You watch the state budget from February to the end of session.  I hope you'd vote for this amendment.  This is not the end of the world.  In fact, this strengthens your positions as state senator.  I hope you keep that prerogative.


PRESIDENT MAURSTAD:  Thank you, Senator Kristensen.  The house




March 10, 1990, LB 147A, 149, 164, 216, 274, 331, 389, 585, 656, 793


is under call.  Senator Lynch, Senator Vrtiska.  Senator Kristensen.


SPEAKER KRISTENSEN:  When the members are here, I'd like a roll call vote, please.


PRESIDENT MAURSTAD:  Senator Kristensen has requested a roll call vote.  The question before us is the adoption of the Kristensen amendment to LB 149.  Those in favor vote aye, those opposed nay.  Mr. Clerk.


CLERK:  (Roll call vote taken.  See page 886 of the Legislative Journal.) 18 ayes, 31 nays on the amendment.


PRESIDENT MAURSTAD:  The amendment is not agreed to.  The call is raised.  Further discussion on LB 149?  Mr. Clerk, an announcement before we proceed.


CLERK:  Mr. President, thank you very much.  Agriculture Committee will meet in Exec Session in 2102 now; Agriculture Committee, 2102, now for an Exec.  And, Mr. President, some items, if I might.  Attorney General's Opinions, one to Senator Schrock (re LB, 389), a second to Senator Jones (re LB 274).  Priority bill designation:  (LB) 585 is Senator Bromm's priority bill; Business and Labor have selected (LB) 164 and (LB) 216 as priority bills.  New A bill.  (Read LB 147A by title for the first time.) Senator Landis, amendments to (LB) 331.  Natural Resources, (LB) 656 to General File with amendments; (LB) 793, to General File with amendments.  That's all that I have.  (See pages 886-912 of the Legislative Journal.)


PRESIDENT MAURSTAD:  Thank you, Mr. Clerk.  For discussion on the advancement of LB 149, Senator Wickersham.  Senator Wickersham waives.  Senator Coordsen.  Senator Coordsen waives.  Senator Vrtiska.  Senator Vrtiska, for discussion on the advancement of LB 149 Senator Beutler, for discussion on the advancement of LB 149.  Senator Beutler waives.  Senator Bohlke, you're recognized to close on the advancement of LB 149.


SENATOR BOHLKE:  Thank you, Mr. President.  And I'm not sure if we have everyone present or some people leaving.  And so, just to be sure, I would like to have a call of the house as I begin




my closing.


PRESIDENT MAURSTAD:  The question is, should the house go under call?  Those in favor vote aye, those opposed nay.  Please record.


CLERK:  28 ayes, 0 nays to place the house under call.


PRESIDENT MAURSTAD:  The house is under call.  Would members please record your presence.  Would all unauthorized personnel please leave the floor.  The house is under call.  Senator Bohlke.


SENATOR BOHLKE:  Yes, Mr. President and members.  I think we've had a number of good discussions.  I thank you.  Like I said, once again I thank you.  As we started out on this debate I said for new senators this was going to be a great deal to grasp.  For those of you who have had to discuss state aid, I'm...  I know that you had to endure it one more time.  We haven't had to spend quite the amount of time we have other times, but I do thank you for your commitment, because it is so very important.  And I do believe what I said in the beginning, that we, in the passage of 149, this was an issue that we made here in the Legislature, and that we need to address here, and as Senator Kristensen said, as state senators.  I appreciate the attention, the commitment that we continue to have to quality schools in Nebraska.  And for that I thank you all.  And I request a roll .call vote.  Thank you.


PRESIDENT MAURSTAD:  Thank you, Senator Bohlke.  There has been a request for a roll call vote.  The question before us is the advancement of LB 149 to E & R Initial.  Those in favor vote aye, those opposed nay.  Mr. Clerk, please call the roll.


CLERK:  (Roll call vote taken.  See page 894 of the Legislative Journal.) 46 ayes, 3 nays on advancement.


PRESIDENT MAURSTAD:  LB 149 is advanced to E & R Initial.  The call is raised.  Mr. Clerk, next item.


CLERK:  Mr. President, (LB) 141.  Senator Smith, I have Enrollment and Review amendments, first of all.