Committee on Revenue

January 21, 1999


Page 55


LB 194


GEORGE KILPATRICK:  Thank you, Chairman Wickersham and members of the committee, my name is George Kilpatrick, Legal Counsel for the Revenue Committee here to introduce the committee bill, LB 194.  1 don't want to take a lot of time doing this, Cathy Lang, whose department is the sponsor and developer of this particular bill, does intend to go over it in some detail, so I won't, I certainly don't want to do it twice.  So unless there are nonspecific questions, I guess, I'll go around to the other side.


SENATOR WICKERSHAM:  Any questions for ...  Thank you.  Proponents.


CATHY LANG:  Senator Wickersham and members of the Revenue Committee, good afternoon.  My name is Cathy Lang and I am the Property Tax Administrator for the state of Nebraska and I appear in support of LB 194.  Our division, Property Tax Division, provided this information to the committee and we appreciate the committee taking this as a bill.  I do have two handouts that I would ask the Pages to present to you (Exhibits 7 and 8).  one of them is a section by section synopsis of the bill and the other is an amendment, which I will discuss with you.  It is the amendment we would offer to a couple of sections of the bill but there is also another option that I would like to discuss with you so that when you go into discussions on this bill that you may choose to look at the option for a particular set of provisions.  I would ask, if you would like me to proceed to go section by section, I'd be happy to do that, otherwise I could, if you like, highlight a few of the sections that I know might come of issue with other testifiers and then leave it to questions.  Do you have a....


SENATOR WICKERSHAM:  Why don't you do the latter, please.


CATHY LANG:  Okay, I'd be happy to do that.  Many of the sections are technical changes, some of which are in some other bills and George already mentioned those to you,..  Let me touch on a couple of them that I believe will come up in testimony.  Section 8 of the bill defines the assessment roll which has not been defined in statute.  Let me tell you


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first of all that there is, we are reviewing all of these statutes to try and bring about better consistency of definition.  We have a definition of what assessment is, statutes use the word "assess", they use the word "value", they refer to an assessment roll, the assessment roll is intended to provide an inventory, particularly on the real property side, of what is in the county, sort of on a parcel by parcel basis what's out there.  It has been brought to my attention and I would agree that there definitely needs to be an amendment to this section to remove the statement that it should have all exempt personal property, because we do not intend the assessment roll to list the fact that there are household goods and personal effects that are property but not taxed.  We don't intend to do that.  But on the real property side with regard to exempt parcels, the assessment roll lists those as parcels of property.  They are not taxed and there would be no associated value.  There is no intention that the assessor would value a parcel that is otherwise exempt.  But the assessment roll, in my opinion, needs to list the parcel on the assessment roll, show it as an existing parcel in the county particularly in light of the fact that parcels go from exempt to taxable during the year.  There needs to be a smooth transition between a property that exists, that is on the assessment roll, that might be exempt at one point and time in the calendar, but be added to the tax roll later if it were to become taxable.  By allowing for that mechanical process through those various records, it is my opinion that the assessment roll needs to list the exempt parcels, showing them as exempt, showing them with no value, but it needs to recognize that those parcels are there in the county.  Section 10 deals with the issue of an exempt entity that buys a piece of property after August 1st from another exempt entity.  if that happens, that new organization that now owns that otherwise exempt piece of property can't apply for an exemption, it goes on the tax roll.  And that...  it is our understanding from conversation and so, therefore, we offer this amendment, that that seems to be causing some administrative problems in the county, so we have provided in Section 10 the ability for a piece of property that is exempt is purchased after August I by an organization that would be seeking an exemption and using it for exempt purposes and would otherwise qualify through the whole application process, to get an exemption should be allowed to jump through those hoops otherwise the statutes cut them


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out.  So Section 10 allows for that to happen.  Also, if there was an owner of exempt personal property, and it is now owned by someone who is taxable, but it is after May 1, there was no ability for anybody to file a personal property return to report that property as taxable because it would become taxable and so we have allowed then for an ability of the person who purchased the otherwise exempt personal property and it is now taxable to be able to file within 30 days so that they are not subject to any penalties at that point and time because they couldn't have applied before May 1st they didn't own it at that time.  So, we allowed for that administrative process to occur.  The other section, and this will go to one of the amendments, has to do, and I want to talk about it now because we are talking about exempt property, has to do with the exemption, the penalties that can be assessed against otherwise exempt property because the entity filed late, the organization filed late.  There is a technical error in the statute right now.  It says that if there is a penalty assessed, because they were late in filing, and it is a dollar amount penalty, that it is assessed against the organization.  Assessors don't assess taxes or penalties against organizations or individuals or people, they assess taxes and penalties or taxes and penalties are assessed against property.  So the amendment we are offering you would be to allow for that penalty to flow with other real property taxes.  It would follow the property, it would be a lien on the property and it would go the way, and it would be distributed the way of other property taxes.  That is what they are doing.  So the amendment that we are asking you to consider to this bill would match with, by and large, what counties are doing with these penalties that are being assessed.  Let me offer you an idea.  And actually, I suppose bottom line, I can see some merit to this idea and that is penalties against exempt organizations are difficult.  They are not used to getting a tax statement and counties are not used to distributing fixed dollar amounts back to everybody that levies a tax, it is an odd administrative thing to do.  So the other way to look at that penalty, and this is for your consideration, is to look at it as a flat penalty not related then to value at all, ever, that would be paid to the county treasurer and that the current year's exemption wouldn't even be granted until that penalty was paid.  These penalties can be no more than $600.  There is some merit administratively to doing that.  I don't have an opinion one way or the other.  I


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offer it to you because it came from a county assessor, the Lancaster County Assessor's Office, the Deputy Assessor offered it as a possible different way to look at that penalty, but it is not currently in the bill and it doesn't match up with the current process so I know that that causes some concern about offering those kinds of amendments when they haven't already been in the bill.  I would leave that to allow George to have that language and should you want to consider it, we have drafted it.  I think the easier way because it is currently the way things are going is the one that we have actually offered to you today.  We do make in Section 11 of the bill, we offer to you a change in the personal property penalty and it is offered to you directly from us without necessarily the support of the County Assessors Association and I'll tell you why.  The penalty on personal property has sort of become a bug-a-boo.  it involves some subjective judgment as far as when the ten percent applies or the fifty percent applies.  This is a penalty on personal property.  We have tried so diligently to make personal property somewhat more straight forward and simple.  And I am offering to you a manner in making that penalty a little bit more straight forward.  If you are late in filing your return, it is after may 1st, but it is before August 1st or July 31st, a ten percent penalty.  If it is after that date and it is just a ten percent penalty, we have no minimums at that point and time, at all, we removed those minimum penalties.  If it is after August 1st, it is 25 percent.  The reason for that is we want to encourage people to get in there to file so the differential in the two penalties, we think, is reasonable because we want to get them in there because when they certify that value out for levy setting, we want as much of the taxable property that should be on the tax roll, that will be on the tax roll, to be there for levy calculation.  We want the levy to be as accurately calculated as possible.  We do not want it to be over inflated.  Now does personal property late returns make that much difference?  No, but all it takes is one.  You know one large entity that didn't file and you can cause your levy to be ever so slightly off.  So we want to encourage the earliest possible filing and we want to encourage people to file before May 1.  So we think it is reasonable to have a penalty.  We think it is most reasonable to have it date, a date issue that triggers the penalty in the first place and the second penalty later because you are so much later.  So we have offered that to


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you.  We think it clears up some issues that continue to revolve around the penalty on personal property, which we hope would just go away, but they don't seem to be going away.  The other thing that we offer in here in Section 13 of the bill is an area that I am drifting into anyway, that our division is drifting into, and that is the education of assessors and the continuing education of assessors to maintain the certificate.  For years and years and years the Assessors Association has wrangled with what to present to you regarding the certificate.  You could have taken and passed the exam fifty years ago and hold the county assessors certificate and have done nothing in the business and run and be elected as county assessor.  The question is, is that what we mean by having a county assessors certificate?  Do-we want that county assessors certificate to rise to a higher level, to have continuing education requirements, to have requirements of working in the business before you can simply just run for office.  Now you could go and take the test again but we want to keep those people current in what is going on.  This is an ever changing area, maybe not so much ever changing as we go forward, but it is ever changing and so what we've put in here is one way of drafting this and that is that you allow the division through promulgation of rules and regulations to establish this.  Now I can guarantee you absolutely that, as the Property Tax Administrator, that I would never go down that path without working with the County Assessors Association to develop it.  The other way you could draft it is to not put it in our lap to do, but to actually set it up as a structure in the statute.  We offered you the rule and regulation approach and it is up to you.  We would be happy to redraft and offer a more structured approach, but maybe for consideration in another year.  We think this needs to happen.  We agree with the Association that something needs to happen with that certificate and we look forward to the challenge of developing that.  But if you are uncomfortable with the rule and regulation approach, I do understand that.  The other section that, I don't know if there will be testimony on it because I don't know if the witness is still here, is Section 21.  Now, if you read Section 21, 1 think there are a lot of people that would go, how can we give that Property Tax Administrator that much power.  Well actually Section 21 doesn't give the Property Tax Administrator any more power than already exists in statute and I would argue that the way it is drafted, which takes


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from three different sections of the law.  We have actually added some more due process requirements in the whole process of how I can get my hands inside a county that is not a state county, not a state-assessed county, and order things to happen.  I don't think the manner in which we drafted it gives me any more power than I already have.  I would argue that it provides more due process than already exists in statute.  But, it is a taking of those three provisions and putting it into one place, but it already exists.  But it is a manner in which the division, the administrator can get in there and order things to happen in the counties and we have exercised our authority under those provisions in the past.  If there is a concern about the process, we would be happy to consider working with the committee to redraft it, if there is a concern about the authority that the PTA or the PTD has.  Section 25 of the bill, we have worked with the Tax Equalization and Review Commission on this issue, it deals with the petition process where counties can petition the state board at the end of the individual protest time to make a class or a subclass adjustment.  This last year what happened in one of the counties is the county offered up a subclass to be adjusted, and I believe that had other things happened that the commission may have actually approved that adjustment.  The problem was that the county during protest process had made adjustments to some of those properties that would have been in the subclass that would have been adjusted so you would have ended up having those properties double adjusted, and that was never the intent of that.  But, what happens is counties have those protests in front of them and they act on them and they make adjustments because maybe the evidence is right and then they go as Senator Wickersham always intended, ya know, this is a big problem, this is this whole area and we want this whole area adjusted.  Well, what we have done to them now is say, oh don't adjust those protests, hope that the commission grants your petition, but if the commission doesn't grant your petition, and you would have otherwise wanted to adjusted those properties, they now have to go to the commission on individual appeal and you could, as a county, confess judgment and get the property adjusted anyway.  I think that is not what was intended.  So what we have done is said, the commission can carve out of that subclass those properties that the county board already adjusted in the manner that the subclass adjustment would, have allowed.  So nobody gets double adjusted.  Nobody


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doesn't get adjusted if the commission does grant the adjustment, but you don't have all of this other stuff going on trying to get the same end result that was always intended.  That, and oh, there would need to be a.  date coordination to LB 140.  If LB 140 goes, we have got a date in here that is different from what is in LB 140 right now, July 26th is the date.  So our bill would want to be coordinated with that.  I would be happy to answer any questions.  I would also be happy to be available to committee members should other testimony today trigger some more questions of me and I would be available for you.


SENATOR WICKERSHAM:  Senator Hartnett.


SENATOR HARTNETT:  Cathy, back to your ...  on Section 8, the assessment rolls ...




SENATOR HARTNETT:  I think as I understood it, and maybe I will put it as an example, I have an exempt property, I'm an organization and it is, say its value was $100,000, in County X, does that appear on...  someplaces does the value that that property is worth a $100,000 so that and its, when you were giving your talk and so forth I am getting, I am doing my income tax, I have non ...  non-bonds that I have to report on, tax exempt bonds and I have taxable bonds that I have to report on.  I have to list them on the federal income tax now.  I have to list them all, but I only have to pay taxes on the one source, is that what you are proposing to do, that we list this property but when we get down to the assessed valuation for the whole county it is...


CATHY LANG:  It is not there.


SENATOR HARTNETT:  It is not there.


CATHY LANG:  It is not part of that assessed value.  It is something very similar to that, yes.  It is the idea that you have got the State Capitol in Lancaster County, it is exempt.  Assessors quite honestly don't spend their administrative time valuing property that is going to be exempt.  They are valuing property that is going to be taxable because that is where the heat is.  So they don't value the State Capitol, but there is a record card and


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there is a parcel identification number and it is there on the assessment roll.  This doesn't change any of that.  It exists as a parcel and it shows.  There is a State Capitol here in Lancaster County and it is an inventory to know that yes, we have accounted for all of the parcels here.  By the way, when they went on the new systems, they found parcels that were missing...


SENATOR HARTNETT:  What you are saying in here, what you said out here, you wouldn't say that this Capitol is worth....




SENATOR HARTNETT:  ...  you know...


CATHY LANG:  No, they don't have to show that.  I have to tell you that yes, there are some exempt parcels that do have associated values because maybe last year they were taxable.  But the assessor doesn't continue the valuation scenario or process...




CATHY LANG:  ...  they list it, so it is a described parcel but ...  and they determined that it is not taxable so they don't value it.


SENATOR HARTNETT:  You just described the land its...


CATHY LANG:  Right, right.


SENATOR WICKERSHAM:  Cathy, does this bill, you have indicated, I think, that you didn't think Section 21 gave you any new powers that consolidated existing powers into a framework.  Do any of the other provisions give you new powers?


CATHY LANG:  Well, not intentionally in anyway.  I don't...


SENATOR WICKERSHAM-:  Okay, well that's, ...


CATHY LANG:  ...  need any more powers.  The only, I'm trying to think of, the education in a sense, yes, does give us more powers in that we would be setting up a frame work for a continuing education requirement to maintain that validity


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of your certificate.  But, I think on that issue, we would have all around support from the county assessors to do that, it's just working out the detail on what it is.  For your information, we are definitely involved in their education process.  In another week and a half, we are presenting our mandatory school.  We are going to have 250 attendees, 50 of which are county board members, which is just phenomenal for us.  We have never put on a school this big.  I hope it is successful.  But we are involved in the education process with them.  So, we would just now be setting up more of a structure by which you can maintain your certificate over a period of years.


SENATOR WICKERSHAM:  Okay.  I noticed a couple of places that the changes would require various persons to attend meetings of the County Board of Equalization, from Motor vehicles to county...


CATHY LANG:  The designated official.


SENATOR WICKERSHAM:  ...the designated official and in one place I think you were going to require the county assessor to attend.  I suppose it might be desirable for them to attend, but why should we require them to attend?


CATHY LANG:  For purposes of the change for who attends on motor vehicle exemption hearings, we have actually said the assessor does not need to be there and the designated official does need to be there because they are the ones that made the recommendation of taxable or exempt status on the motor vehicle.  Assessors are out of that picture all together.  And then the assessors are already required to attend all other meetings of the County Board of Equalization because it usually involves real personal property, taxless corrections and things like that.  So they are already there.


SENATOR WICKERSHAM:  Okay.  I noted that you are wanting to repeal some statutes that I agree with you are old and I think that lending institutions for the most part have taken care of it in their instruments, but do we, in fact, know if we would change anybody's tax base if we would eliminate mortgages as a taxable property?


CATHY LANG:  We have been looking at that...


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SENATOR WICKERSHAM:  I'm sure that is what that is.


CATHY LANG:  That is exactly right.  We have been looking at that now for about a year and we have worked with the Nebraska Bankers Association and I told them, now you are the experts in this area.  It is our opinion and impression of the statutes that these are completely nonused sections any more, they are completely out of date.  And so we are going to offer the repeal and if you, in your wisdom and knowledge of this area, believe that they should stay or they should stay in some modified format, please come forward.  So they are absolutely aware that we have offered in this bill to repeal them.  And, I am leaving that to them.  It is my impression that they are not in any way implemented in our current lending process.


SENATOR WICKERSHAM:  No, I have never seen one taxed.


CATHY LANG:  No.  In fact, there was a case that sort of spurred us to look at the fact that maybe they should be repealed, the idea that the owner is saying, oh, wait a minute, do I need to pay these taxes?  Tax my lending institution, which ...  who would just pass it on anyway through the lending -instrument.


SENATOR WICKERSHAM:  Yes, and they were older, we are digressing here.  It is fun ...


CATHY LANG:  Yes, it is.


SENATOR WICKERSHA14:  ...  maybe not for the rest of the committee.


CATHY LANG:  Perhaps.


SENATOR WICKERSHAM:  Are there other...  I don't see any other questions, thank you.


CATHY LANG:  Thank you.


SENATOR WICKERSHAM:  Any additional proponents?  Any opponents?


JIM CUNNINGHAM:  Senator Wickersham and members of the


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committee, good afternoon.  my name is Jim Cunningham, I represent the Nebraska Catholic Conference here to indicate opposition to LB 194.  our concern is a very narrow one within the scope of the bill, but a concern which we fear could be a broader concern depending on interpretation and the way this is carried out.  I appreciated Ms.  Lang's comments regarding no intention to use this as a vehicle to value exempt property.  But at the same time, the way this particular, and I'm talking specifically about the proposed Section 8 on page 7 which, as it exists right now anyway, indicates that all taxable and exempt property would be part of the definition of assessment roll and, of course, that is what indicated to us that the intention here was to subject exempt property to the process of assessment, including assigning a valuation.  on the other hand, it has been a long standing law regarding tax exemption that the only property that is required to be assessed is property that is subject to taxation.  You find specific statutory acknowledgement and authority for that, both with regard to real property and with regard to personal property, Section 77.1201, Section 77-1301.  There would seem to be no need whatsoever to have exempt property, property that is not subject to taxation, contained in what would be an assessment roll when it is not subject to assessment.  A second reason why I think you don't need this definition of assessment roll is that the definition itself is very confusing by virtue of the fact that it does refer to exempt personal property as well as exempt real property.  It seems to me that if the purpose of this is to facilitate an inventory of all property prior to a determination of its taxability, then they have spelled it out the way they want it and that is that you should have to have an inventory of all exempt personal property if it is prior to a determination of its taxability then that should apply to all property that otherwise might be taxable.  go, but that is a confusing aspect of this.  Another confusing aspect of the definition of the way it is stated here is that it uses the term associated assessments as defined in Sections 77-126.  Now I have looked at 77-126, I don't find the term, "associated assessments" nor do I find a definition of "associated assessments".  I have in mind what they intend here and that is those things that are spelled out in this section that are a part of assessment.  That is not what it says and I think it is just indicative of the confusion that is going to exist if yon try to have this


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definition.  Then thirdly a reason why you really don't need this definition and why it wouldn't be a good idea to have it, I don't think, if there is an intention to have some type of an inventory maybe that is a separate policy that could be addressed separately, but not as part of the customary assessment process in use of terms.  What I am getting at here is the term assessment roll appears in several places already in the statutes, it has been there for a long, long time.  If you read, for example Section 77-1303 is one that talks about, and I think this is a consistent interpretation of the law, it talks a-bout...  it is in the bill, an assessment roll of taxable property.  And another place where you find the term assessment roll is Section 77-1316.01 which says that the assessor has the authority to add property to the tax roll that is on the assessment roll but omitted from the tax roll.  Well, exempt property, as I understand it, wouldn't be on the tax roll and that section seems, if you somehow define assessment roll with this new definition then you have created confusion and inconsistency in the usages of that term in other parts of the statutes.  In fact, the usages of the term in the other parts of the statutes are clear enough.  And there is no reason to now step in with a definition of assessment roll when, in fact, if the purpose is inventory, it is just going to add greater confusion to the statutes.  So our suggestion to you is that you just not bother with adding a definition of assessment roll.  Certainly not one that includes exempt property since exempt property is not required to be assessed.  Thank you.


SENATOR WICKERSHAM:  Any questions?  I take it your suggestion might be that we, would you have objections if we created something that %as called an assessment roll and it contained only taxable property and then I don't have any other word to use but then we created some sort of a roll and we called it maybe an unassessment roll, and listed the exempt property and the unassessment property?


JIM CUNNINGHAM:  well, all exempt property has to be published for public review.


SENATOR WICKERSHAM:  Yeah, so there is ...


JIM CUNNINGHAM:  So that is a process that occurs already.


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SENATOR WICKERSHAM:  Yeah, but I mean ...  so that requires compiling it...


JIM CUNNINGHAM:  If there is a need for the assessor to be instructed or directed under the statutes to have an inventory of all property, then that is the thing that needs to be accomplished, as I understood her testimony.  I don't know that doing that within the context of assessment roll can do anything but add confusion and inconsistency to the whole process.


SENATOR WICKERSHAM:  Okay, so have an inventory but call it something else.


JIM CUNNINGHAM:  Well, yeah, if the dilemma right now is that they don't have an inventory of all of the real property in the county then I assume they could make, they could have an inventory, but not in any way that subjects it to the process of assessment if it is not subject to taxation.


SENATOR WICKERSHAM:  Okay.  Well, I think I understand but...let me, it seems to me that there is some advantage in having someplace a comprehensive list of property, whether it is taxed or untaxed, at least if it has a potential for taxation under the statutes.  If I had a business, for example, might have property that was for sale and property that wasn't for sale.  I have some place a comprehensive listing, a kind of an inventory for that property.  I am also kind of intrigued and actually this happened to us in Sioux County as well, we changed our assessment practices, finally counted up all of the acres that we thought were in the county according to the US Government surveys, some of it was federal ground, but we finally accounted for every single acre and we found a few.


JIM CUNNINGHAM:  Well the inventory is one thing but to use it in the context of assessment and making it a part of the assessment roll ...


SENATOR WICKERSHAM:  Okay, well, I just want to make clear that you don't have any objection.  to knowing what in particular real property in the county....


JIM CUNNINGHAM:  Well, if there is a need for that then I


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assume then that that need can be addressed.


SENATOR WICKERSHAM:  Yeah, okay.  All right.


THOMAS O'NEIL:  Senator Wickersham and members of the Revenue Committee, my name is Thomas O'Neill, I am President of the Association of Independent Colleges and Universities of Nebraska.  We are a consortium of 14 privately controlled nonprofit regionally accredited colleges and universities located within the state of Nebraska.  This is one of those esoteric sorts of legal issues that I sometimes enjoy and Jim Cunningham and I have talked quite extensively regarding this issue in the last day or two.  I concur in Jim's comments.  I happen to believe that perhaps the difficulty with this bill is not necessarily what's in this bill but is with respect to our definition of assessment which was adopted in 1997 in LB 270.  In terms of the general context of what assessment is, the way it is used within the statutes 77-1301 which is kind of our seminole provision on assessment.  It says, "All property, all real property in this state subject to taxation shall be assessed as of January 1st at 12:01 a.m." Then in our definition of assessment, which is found in 77-126, we say, "Assessment means the act of listing the description of all real property and taxable, tangible personal property determining its taxability, determining its taxable or assessed value in placing it on the assessment roll.." My position in this is the act of listing the description of property should not be named as part of the statutory definition of the definition of assessment.  Inventory and property is really not assessing.  Therefore, I think that is the context in which we can cone to some sort of a compromise on this issue.  I don't see this as something that is unresolvable.  So I think, you know, we certainly can work with the Revenue Committee staff and Cathy Lang and try to figure this thing out.  The other issue I wanted to touch on just briefly and again Ms.  Lang indicated in Section 21 that the powers and responsibilities of the division would not change, it is just kind of a recompilation of the existing powers and responsibilities.  I do want to say with respect to manuals and directives which go out from now the Property Tax Division to assessors, by not making those manuals and directives go through the administrative rules process does create, in my opinion, a potential problem.  I would say that there are at least should be some sort of a reasonable


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procedural due process requirement before those manuals and directories can be changed because I think there should be notice to taxpayers who may potentially run into those sorts of issues in legal proceedings just as a matter of basic fairness.  So that is the other issue I would talk about and I have no further comments.


SENATOR WICKERSHAM:  Senator Coordsen.


SENATOR COORDSEN:  Tip, in listening to you and Jim and I don't disagree with that, my question has to do with, actually even the language in Section 8, if we for example, and this is only an example, we establish that Section 8 would begun a property inventory roll shall mean a complete and verified list of all of the taxable and exempt personal property and real property in the county.  well, as I read that, not only would we list those religious and charitable organizations that are exempt but that language would seem to indicate that we would have to list all property...


THOMAS O'NEILL:  That's right.


SENATOR COORDSEN:  ...  that has been exempt by all household goods, all ....


THOMAS O'NEILL:  Livestock, potentially.


SENATOR COORDSEN:  ...  so there is a little more language change than just the title...


THOMAS O'NEILL:  That's correct.


SENATOR COORDSEN:  ...  of assessment roll compared to property.


THOMAS O'NEILL:  That's right.  If I was going to make a suggestion to the committee in terms of how to handle this, and again I'm not necessarily the resident expert, but I would say to take a look at the definition in 77-126 relating to assessment and then strike, "and exempt from", page 7, line 12, in this bill, because I think then that would mean that the assessment roll would be limited to taxable property and I think that is the way the term assessment is generally used in the statutes.


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SENATOR COORDSEN:  Well, a further question on that and I believe this to be accurate.  Isn't there a requirement that exempt property that an action has been taken to qualify it as exempt property...


THOMAS O'NEILL:  That is correct.


SENATOR COORDSEN:  ...  is maintained in a county on a roll and don't I see a notice in the paper listing on an annual or so basis the exempt property.


THOMAS O'NEILL:  At some point...


SENATOR COORDSEN:  Or they could just exempt organizations, it is not....


THOMAS O'NEILL:  ...  County Board of Equalization had to...


SENATOR COORDSEN:  ...  it's not the parcels of property, it is the organizations that's listed.  That's the...




SENATOR COORDSEN:  Well, I was thinking about what current requirements we have for maintaining an inventory of property that has been made exempt by application.


THOMAS O'NEILL:  Well, again real property is a lot easier to inventory than personal property.  It doesn't change and move as much.  We certainly have no objection to being part of an inventory of all of the property that is located, for example in Lancaster County or Douglas County or anything else.  what we do object to is having that property appear on what is called an assessment roll because that would indicate, based on the way the term assessment is used in the statutes, it would be subject to valuation and we believe that once the issue of exemption has been determined then the valuation process should not kick in.




ROGER KEETLE:  For the record, my name is Roger Keetle, I'm a Senior vice President and General Counsel of the Nebraska Association of Hospitals and Health Systems.  Senator Wickersham, it is a pleasure to testify in front of the


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Revenue Committee.  I guess, I have been a part of the somewhat esoteric discussion of trying to figure out that assessed really doesn't mean assessed, it just means a list and , I guess, I agree with the testimony that you had before.  When you start looking at these statutes this particular assessment roll has a meaning that normal people wouldn't attach to it in that it.  is an inventory, it is not a list of what has been assessed a value.  So, I guess, perhaps why I am here is to celebrate the fact we actually have three lawyers that agree on something and think that this definition needs some work and I won't restate the suggestions that have been made before on that.  I would also raise the issue that Mr. O'Neill raised about the idea of the manuals not being subject to a rule making hearing.  I am most familiar with the rules and regulations put out by the Department of Social Services, all of which are in the manual.  And all of which go through a rule making process for their manuals.  And there are very important things in those manuals that we have commented extensively on in that particular setting and have found a number of things that were not quite consistent with law.  So, I would agree with the previous two testifiers and with that kind of a long winded ditto.  I hope that if you have any questions that Tip and Jim can go through the details with me.


SENATOR WICKERSHAM:  Any questions for Mr. Keetle in his guest appearance in front of the Revenue Committee?  Thank you very much.  Any additional testimony?  Neutral?


RUTH JACKSON:  Senator Wickersham and committee members, this is going to sound like yesterday revisited.  But I am going to speak to penalties.  we need a penalty...


SENATOR WICKERSHAM:  Would you identify yourself for the record.


RUTH JACKSON:  I'm sorry, I am Ruth Jackson, Franklin County Assessor, I'm the legislative representative also for the County Assessors of Nebraska.


SENATOR WICKERSHAM:  Good to see you again.


RUTH JACKSON:  On the penalties it is like ten percent if they come in between May 1 and the first of July, or the end of July and then it is 25 percent of the tax due after that.


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I would like to see something identified or if you have a person that comes in voluntarily, that you don't have to send a letter after the first of May, if he has just forgotten and he comes in and I think that there should be some difference in penalty that is applied to a person like that then someone we have to send a letter or two letters or three letters to get him to come in and do his schedule or to prepare the schedule for him.  That is my feeling.  Any questions?


SENATOR WICKERSHAM:  Senator Schellpeper.


SENATOR SCHELLPEPER:  Does your county send out notices before the deadline that they haven't filled out?


RUTH JACKSON:  Yes, we are one of the counties that use the postcard method.  we tried it the other way and we ended up reprinting a whole bunch of schedules one year, so we have gone to the postcard method.  We send a postcard the first of January and then about the middle of April we send another postcard notice that has "Final Notice" stamped on it.


SENATOR SCHELLPEPER:  Our does it too and it really seems to help because January is kind of a bad time, but when the other one comes, oh, I have to do that.  That really helps.


RUTH JACKSON:  Yes, and January is rather early because they don't have their income tax completed yet, they don't have their depreciation worksheet done yet.




RUTH JACKSON:  Thank you.


SENATOR WICKERSHAM:  Senator Hartnett.


SENATOR HARTNETT:  As an assessor are you suggesting that we put in statute that the good person, or the good taxpayer, I'm the guy that forgot and/or Senator Schellpeper here who...


SENATOR SCHELLPEPER:  That never pays taxes.


SENATOR HARTNETT:  That never pays, yeah.  Do you want, should that power be given to you, the county board, I'm


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just asking, you know.


RUTH JACKSON:  I'm saying there should be a differentiation there between the person that comes in voluntarily without me having to send out another letter after the first Of May to remind them to come in.


SENATOR HARTNETT:  You want that power, you want the county assessors to have that power?


RUTH JACKSON:  I think it should be in statute so that it is done uniformly across the state of Nebraska.


SENATOR HARTNETT:  For you, as a person of the county board, or some other body...not us, not us.


RUTH JACKSON:  I think it needs to be put into statute that if the person comes in voluntarily, without having to have notification after the first of May, I'm just pulling percentages here.  Say his penalty is ten percent of his tax, but if I have to send a letter out to this person to remind him to come in after the first of May, I think his penalty should be 25 percent.  Like I said, I am just pulling percentages.  I think we need to make a differentiation there between.


SENATOR WICKERSHA14:  The issue that is raised by Section 13, "The power of the Property Tax Administrator to adopt rules and regulations for the development and conduct of educational programs and tests for assessors." Do you have any ...  you haven't testified about any concerns concerning, about that provision, but are there any concern?


RUTH JACKSON:  I think it is something that needs to be put into place because I have a situation in my county where I have a former deputy that has a certificate and she hasn't worked in the field for 20 years.  All ...  and as it is written right now all she would have to do is come in and file and she would be eligible to run for county assessor.  I think that as far as the education requirements and what we need to do to keep our certificates current, if there is something put in there that that the Assessors Association will work with the property tax department.  I think there needs to be input from the Assessors Association.


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SENATOR WICKERSHAM:  Do you have any concerns about the way the manuals are adopted?  Do you think that should continue to go through a rule and regulation process?


RUTH JACKSON:  Yes, I do.  I think it is something that needs to be through a public hearing.


SENATOR WICKERSHAM:  Any other questions?  Thank you.


RUTH JACKSON:  Thank you.


SENATOR WICKERSHAM:  Any other testimony?  If not, that will close the hearing on LB 194.


SENATOR COORDSEN:  LB 287, our last bill of the day introduced by our honorable chairman, Senator Robert Wickersham.