Debate Transcripts

LB 87 (1999)

General File

February 9, 1999

SPEAKER KRISTENSEN: (LB) 362 advances. LB 87.

CLERK: LB 87, a bill by Senator Wickersham. (Read title.) Bill was introduced on January 7 of this year, that time it was referred to the Revenue Committee, advanced to General File. I do have committee amendments pending, Mr. President.

SPEAKER KRISTENSEN: Senator Wickersham, you're recognized to open on LB, 87.

SENATOR WICKERSHAM: Thank you, Mr. President. I think -that the easiest way to discuss this bill is in the context that Senator Beutler started discussing Senator Hartnett's bill in, and that is an option to be used by any governmental subdivisions, including state and federal agencies, to rearrange the way they deliver services and to find funding streams for those services. Now, they have some ability to do that within the context of the existing Interlocal Cooperation Act that Senator Beutler noted in his comments, and within the Interlocal Cooperation Act they have two different organizational structures that they can use

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if they wish to cooperate without merging. They can form a board without forming a legal entity. They can form a board to govern an activity and then fund that activity in some way. They can create a legal entity to carry out their activity and then staff that legal entity with employees, with an executive director, with all the things that are necessary, including property, maybe vehicles, maybe a building, but it is a separate legal entity from the political subdivisions. What kind of a legal entity is it? It is a nonprofit corporation. That may sound familiar to you, but you have a nonprofit corporation carrying out a governmental activity. Now, what happens within that nonprofit corporation? It has to go out and buy its own insurance policies, doesn't it? Has to provide health insurance coverage for its employees, if they make that choice, so you wind up with a potentially small pool for a group health insurance policy. Does it provide retirement benefits? Probably, but it's going to be restricted in the way it provides those retirement benefits and it may be a relatively small plan. Does it have to provide for general liability insurance? Yes, it does. Does it have to provide for insurance for its directors, its employees? Yes, it does. Does it have to apply for property tax exemption? Yes, it does. Does it have to apply for federal income tax exemption? Yes, it does. But it is, in fact, carrying out governmental functions, but it is carrying out those governmental functions through a private organization, albeit all the members are governmental subdivisions. So how does LB 87 relate to that current structure? LB 87 gives the political subdivisions another option. It says, political subdivisions, you can create a legal entity, but this time the legal entity is not going to be a nonprofit corporation. In this instance, the legal entity is going to be a joint public agency and, for purposes of Nebraska law, we're going to treat your joint agency as a new legal entity within the state of Nebraska, but we're going to treat it like a political subdivision. And its employees are going to be covered under, potentially, any retirement plan that you have in place for one of the members. You can extend the insurance policies that are in place for one of the members to this new legal entity and you can take advantage of the state tort claims immunity laws and you can take advantage of the other provisions of state law that would apply normally to a political subdivision. In addition, we will allow you, if you wish to,

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assign some of your taxing authority to this new entity. So you don't have to fund it directly out of your budgets, you can assign some of your taxing authority to this new entity. The restriction, one of the restrictions, that is placed on this new kind of agency is that only elected officials could serve on the board. That is not the case now with the nonprofit corporations that are frequently formed to carry out Interlocal Cooperation Act activities. In fact, one of the complaints is occasionally that persons who are either employees or other persons, not elected officials, serve on those boards. LB 87 makes it explicitly the ... explicit that if you're going to be on the board and you're from a Nebraska political subdivision you're going to be an elected official. Now, the state government would have the potential to participate. Obviously, its representatives wouldn't be appointed and the state agencies the same. They're not going to be elected officials, but other folks are going to be elected officials. Now, in broad frame, that is what the bill is designed to do. It is to provide an option for any political subdivisions in the state of Nebraska that want to cooperate with themselves, with a state agency, or with the federal government to carry out a governmental function, and should simplify the ways in which they can do that. Now there are requirements in the bill to cause a reporting of the creation of one of these agencies to the Secretary of State so that we know that they exist, so we know what their purposes are, so we know who their board members are so that we can keep track of them, and that consumes some of the provisions in the bill. There is a large committee amendment and, Mr. President, I think I would carry on the rest of the discussion with relationship to that committee amendment.

SPEAKER KRISTENSEN: Senator Wickersham, you are recognized to open on the committee amendments. (Standing Committee amendment AM0157 is referred to on page 433 of the Legislative Journal.)

SENATOR WICKERSHAM: Mr. President, the committee amendments, while they are extensive in volume, do practically nothing to change the purposes oil. the bill. The committee amendments were the product of a discussion with bond counsel for a group in the state of Nebraska. They wanted to make sure that LB 87 had no impact on their existing structure that they're using to carry out an interlocal agreement. There are ... there were provisions

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in the bill that made it clear that the changes that are proposed by LB 87 weren't to affect any existing interlocal agreement or the entity that anybody had formed to carry out an existing interlocal agreement, but the bond counsel said that they thought ... they still thought it would have some impact and they would have difficulty writing letters, opinion letters, for future bond issues out of their organization explaining that they were one type of organization when another type of organization was permitted. So the committee amendment simply strips out all the provisions, makes them stand separately from the other provisions of the interlocal cooperation agreement. And there were a couple of little technical changes that were made but they're not...they're not substantive. The main thrust of the committee amendment is that it separates out the joint public agency within the Interlocal Cooperation Act so that it stands clearly as another option for cooperation amongst governmental political subdivisions and is not folded into the other provisions of the Interlocal Cooperation Act. That is done solely to placate bond counsel.

PRESIDENT MAURSTAD PRESIDING

PRESIDENT MAURSTAD: Thank you, Senator. Chair recognizes Senator Beutler, discussion on the committee amendments.

SENATOR BEUTLER: Senator Wickersham, perhaps I can make a few comments and then maybe we could have an exchange on all this, and since the committee amendment is the bill, I suppose it's as good a time to begin as any. I want to restate and ask the Legislature to think about where we're going 10 or 15 or 20 years from now if we proceed down this path of joint entity transactions and the formation of a multitude of additional public entities, public bodies, same as a county, same as a city. We're going to have a state, if this goes as Senator Wickersham would want it to go, because the thing we're concerned about now is efficiency and getting people to work together, if this goes as our current temperament would want it to go we will soon have a multiplicity of completely separate political subdivisions, every one of which is a hybrid of sorts, and every one of which, in order to understand it, you will have to understand the operating agreements relating to that particular public entity. In order to compare it to other

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public entities, you will be hard-pressed to do that ever. I mean now we compare counties to counties, school districts to school districts. We have some methodology, at least, for making some judgments as to how the system's working, how it's working in different parts of the state, that sort of thing. As these hybrids multiply, you will be hard-pressed to make any sort of comparison, because each one will argue that it's a little bit different and, in fact, may well be a little bit different. So what I'm asking you to think about in the long term is, is this going to be a good thing in the long term? I mean, I think now's the time we've got -to think about that very seriously. Right now, our big mentality is simply this--government is inefficient, we want to make it more efficient, but we don't want to deal with the problem head-on, we don't want to force the consolidation of school districts or of counties or of any other political subdivisions, all of which right now are neatly laid out by types. Counties deal with roads and a few other things. School districts deal with school districts. Each one has a set, a categorical set of prerogatives and defined duties that you and I know and understand, that the public, more importantly, knows and understands. But we're now, because we don't want to face the question directly of combining, we are now going to encourage them to combine with different kinds of mechanisms. One important way is Senator Wickersham's various suggestions over time with regard to efficiently using or getting entities to work together on things. And please understand that I'm not being critical of that whole effort, because I think there has to be that too. And I'm a little uncertain myself about where we're going here, but as he proposed this last bill, which is extremely broad, extremely well-done, but it opens up that second long-term scenario which will certainly come to be and we will certainly be asking ourself whether the increased complexity of government that we are creating, this amorphous world of multiple entities, each a little different, whether...

PRESIDENT MAURSTAD: One minute.

SENATOR BEUTLER: ... whether that's a more governable world and a world that the public can understand better than the one we have right now. There are no limitations in this bill, as far as I can, see, on what types of entities can merge and, if I'm

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understanding it correctly, with respect to what duties and/or obligations they can merge. In other words, a school district, for part of its function, could merge with a county or a city, as I understand it. I don't think it was designed, and correct me, Senator, if I'm wrong, for total merger, necessarily. You could split out functions that one entity or another may have, and participate with another entity with respect to those functions, and have a separate political subdivision with separate taxing authority, albeit with some limitations on the taxing authority, I assume, Senator,...

PRESIDENT MAURSTAD: Time. Thank you, Senator. I have two announcements that I would like to make at this time. Senator Kristensen would like to announce the following guests are visiting the Legislature, 18 Delta Kappa Gamma members, an educational group from around the state, and most significantly, Senator Kristensen's mother, Mary Lou Kristensen, is among the group. Would you please stand, under the south balcony, and be recognized by the Legislature. In addition, Senator Connealy would like to announce that there are 30 Agricultural Producers in AgriBusiness from around the state, participating in the LEAD Program, in the north balcony, along with their director (introduced director). Would you please stand and be recognized by your Legislature. For further discussion on the committee amendments, the Chair recognizes Senator Wickersham.

SENATOR WICKERSHAM: Thank you, Mr. President. Well, Senator Beutler raises a terminology of merger that is not what the bill provides for. And I'm going to use merger in a technical sense. In a merger somebody disappears. In this bill the entities that agree to work together do not disappear, they create a new organization to carry out one or more of their assigned statutory functions. So it isn't... it isn't a merger, and in fact it isn't in that respect anything different than what they can do now. They can do almost everything that is provided for in this bill now. But they do it in a way that is cumbersome and awkward, and sometimes difficult to manage because they do most of what's provided in this bill now through a private, nonprofit corporation. But when they form the private, nonprofit corporation they have to create a new retirement plan, they have to create new insurance coverage, they have to create new liability insurance coverages, they have to create a whole

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array of things that you normally find with any enterprise. The bill simplifies that and says, okay, you're got those things in place for one of the parents of this organization, you can extend it to this new entity. If you're going to do that, you have to call it a governmental subdivision. If the one thing that is new, I would characterize as new in this proposal with regard to these entities, is allowing a direct assignment of some of the tax authority of one or more of the parents of the organization. Now they fund it by raising dollars and transferring out of their treasury into the new organization. This simply allows them, if they want to, to assign a portion of their tax authority, no new tax authority, but assign a portion of their existing tax authority to this organization so you don't have to run it through your treasury. Now, the other requirements in the bill that you file with the Secretary of State's Office, that you identify who your officers are, that you do with Articles of Incorporation right now with a private, nonprofit organization. That's how you keep track of them. So there is a multiplicity, there is a multiplicity of organizations out there carrying out governmental functions, but they're carrying them out, in many instances, in an awkward and inefficient structure because we didn't give them another opportunity. We didn't provide explicitly for allowing them to be what in fact they are, and that is an organization directly carrying out a governmental function, and to recognize them for what they should be, if that's what they're doing. And that, I think, is the underlying rationale for the bill. Now Senator Beutler suggests that we'll have all this multiplicity and we won't be able to keep track of it. The entities that are accountable for how they deliver services and whether they deliver those effectively and efficiently remain the same. Those are the school districts, the counties, the municipalities, the NRDs, the current governmental entities that we have in place that have the primary taxing...

PRESIDENT MAURSTAD: One minute.

SENATOR WICKERSHAM: ... authority, that have the primary authorization in statute that they can agree to share amongst themselves. But they still only have the underlying authority that we give to them. This does not create any new authority.

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It creates an opportunity to use the existing authorities in a way that I would argue is more efficient than the current structures that we allow them.

PRESIDENT MAURSTAD: Thank you, Senator Wickersham. Chair recognizes Senator Beutler for discussion on the committee amendments to LB 87.

SENATOR BEUTLER: Senator Wickersham, if I may, let me engage you in conversation. And I do things this way, as you understand, because I'm uncertain as, do I have enough background to state accurately things? And so I want to be sure you have a chance to correct it, if my examples,...

SENATOR WICKERSHAM: Sure.

SENATOR BEUTLER: ...or my statements are not strictly in accordance with your bill. But let's start out with the basic definition of the types of entities that can combine here. And I take it ... and I take it that ... that it's accurate, to begin with, to say that they either can combine in terms of combining certain other functions, or that they can combine in whole. Is that not accurate?

PRESIDENT MAURSTAD: Senator Wickersham.

SENATOR WICKERSHAM: They could... it isn't.... Senator, I think the word "combine" is not precise. What they do is that they give authority to this entity...

SENATOR BEUTLER: Okay.

SENATOR WICKERSHAM: ... to carry out part of their functions. And again it's maybe the distinction between combine and merger. And I don't want to sound too much like a lawyer, but if you...when you combine or you merge, somebody disappears.

SENATOR BEUTLER: Well, let me... let me put it this way to you, Senator. Isn't it accurate to say that, if a county so chose, they could delegate their entire responsibilities to a joint agency, and the county next door could do the same thing, if they so chose.

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SENATOR WICKERSHAM: That's correct.

SENATOR BEUTLER: Okay. So, for all practical purposes, they can in fact merge, at least as I would characterize it in that sense?

SENATOR WICKERSHAM: For all practical purposes they would be merged.

SENATOR BEUTLER: Okay.

SENATOR WICKERSHAM: But in a ... but in a legal sense they would not be.

SENATOR BEUTLER: Okay.

SENATOR WICKERSHAM: Okay.

SENATOR BEUTLER: With that understanding then, the definition of public agency, and this definition is important, it's because these are all the different types of entities that could take advantage of this bill. And it includes the usual cast of characters--counties, cities, villages, school districts. And then it says "or agency of the state government", one, "or of the United States", federal agency, nor political subdivision of another state". Think a little bit about the broadness of these terms, and then think about it in conjunction with Section 19 of the bill, on page 15, which says, "a joint public agency shall constitute a political subdivision, and a body politic corporate and politic of this state exercising public powers separate from the participating public agencies". And here's the important part, "A joint public agency shall have all of the duties, privileges, immunities, rights," et cetera, et cetera, et cetera, "of a political subdivision and a body ... and a public body corporate and politic exercising powers and acting on behalf of the participating public agencies". Okay, Senator, let's work at this from point of view of an example. I take it, if the law of Kansas were such, a school district in Kansas and a school district in Nebraska might merge under these provisions.

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SENATOR WICKERSHAM: And they can do that now.

SENATOR BEUTLER: And they can do that now. And in the event that they merged, whose law applies? The law of Nebraska, or the law of Kansas? Let's say you have one school district across the boarder in each state.

SENATOR WICKERSHAM: You cannot ... you could not abrogate the general terms of state law, and they'd have to find some way to make a molding so that both state laws were applicable. But again, Senator, you're postulating a merger, and what really happens in these entities, and it happens now, and exactly what you're describing could happen now, I'm not sure if it has but it could, is that you find a particular function and you agree to carry that out through...

PRESIDENT MAURSTAD: One minute.

SENATOR WICKERSHAM: ... an agreement. And that agreement is what governs and then, beyond that agreement, state law governs what can go into that agreement.

SENATOR BEUTLER: Well, they ... they don't merge, but it's a separate political entity. And on page 17 of the bill it says that the "Joint agency may perform any governmental service", et cetera, et cetera, "which at least one of the participating public agency is authorized to perform".

SENATOR WICKERSHAM: Um-huh.

SENATOR BEUTLER: So, in the example of working with a Kansas school district, if Kansas law says the Kansas school district can do something which we say they cannot... school districts in Nebraska cannot do, wouldn't we be required, under this law, to follow Kansas law, if the joint entity chose to follow Kansas law because it was authorized in Kansas?

PRESIDENT MAURSTAD: Time. Senator Wickersham, you're recognized.

SENATOR WICKERSHAM: I ... yes, Senator, I think that would be the result. But I ... I'm not so sure that you can't achieve exactly

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that same result under the existing law, because those provisions, if I recall correctly in the bill, and I have to spend a few minutes and go back through the existing Interlocal Cooperation Act, but those simply allow.... In I-act the definition that you read of a public agency is the definition of public agency that is in the existing law. That's not new. That exists in the current law. That's what you can do now. And the essential point is that I don't view this as a broadening of what you can do, except in the area of being able to assign tax authority. It is simply a change in what you call this organization, so that you don't have to form a nonprofit corporation to do this. If you... for example, if you wanted to build a stadium on the line between Nebraska and Kansas, to use your example, you could do that now. You'd have the two school districts enter into an agreement, say we want to build a football field. And it wouldn't make any difference whether that was in Nebraska or that was in Kansas. You could do that. But what you'd do is you'd form a nonprofit corporation to own the football field. And you'd have a board of directors, and you'd have the attendant problems that you would find in trying to operate that football field. You could do that now. And what you would have, as the two school districts maintained that football field, or whatever they chose to do, maybe even ... you could maybe even put in something that people might consider to be more productive. Let's say that you wanted to build a new school facility and share that. Could you do that under the existing law? Yes, but you're going to have a complicated agreement about how to do that, and you're going to have a nonprofit corporation that actually owns the property, more than likely, or else you're going to have an extended lease agreement so that you can provide various legal structures to actually own and operate the property. What LB 87 is intended to do is cut through kind of those artificial discussions about is this a nonprofit corporation? What kinds of things do you have to do to make this nonprofit corporation look like what it is? That's a governmental entity carrying out governmental functions.

SENATOR BEUTLER: I appreciate that. I think one of the things that's going to happen under this kind of organizational thrust is that all kinds of different political subdivisions are going to be seeking, through the method of forming a joint entity, authorities that they may not have right now. And I'm not

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sure... I'm sure I haven't, and I don't think the Legislature, generally, has thought through the whole manipulative kind of process that can ensue, if you open up the process to the trading of powers, or to the adoption of powers. When you say that both entities will have any of the powers of one entity, then it seems to me what you're saying is that, if I can figure out the right combination, I may be able to get a power that the Legislature has not otherwise granted me. And we may be in a situation where we are inadvertently bestowing a method of...

PRESIDENT MAURSTAD: One minute.

SENATOR BEUTLER: ... different types of entities, obtaining different types of powers through this mechanism of the joint entity. Let me ask you this, Senator Wickersham, with regard to bonding authority. Once a joint entity is formed, and I'm looking at Section 30 on page 21, is there any limitation, other than what might be put into some form of agreement form? Is there any limitation on the ability of the joint entity to issue bonds?

SENATOR WICKERSHAM: Only that that exists in current law.

SENATOR BEUTLER: Well, let's take school bonds, for example. School bonds, right now, require a vote of the people, correct?

SENATOR WICKERSHAM: Yes.

SENATOR BEUTLER: Okay. Let's say a joint entity is formed...

PRESIDENT MAURSTAD: Time. Senator Beutler, you're recognized to continue.

SENATOR BEUTLER: Let's say a joint entity is formed for some broad or maybe a limited purpose, building a school building. It's formed with a county or a city, can that joint entity now build a school building without a vote of the people? The broad language of page 21 seems to indicate that they may issue all types of bonds, subject only to any agreement with the holders of outstanding bonds, et cetera, et cetera. Perhaps I missed the voting provision. But is that not possible under this bill?

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SENATOR WICKERSHAM: That would depend on the fiscal capacity of the participants.

SENATOR BEUTLER: But the answer is legally, yes, it is.

SENATOR WICKERSHAM: No, Senator. The answer is, it depends on the fiscal capacity of the participants, because if they did not have current fiscal capacity, they would have to have a vote of the people to find the extra fiscal capacity to fund the bonds. If they had a low enough levy, they could do that. It is no different than what they could do now. They could either ... they could institute, in effect, a bond issue by having a building fund.

SENATOR BEUTLER: Well, isn't it a little bit different, Senator, when you can actually give taxing authority to the entity? I mean the school district could turn over ...

SENATOR WICKERSHAM: But that subtracts...

SENATOR BEUTLER: ... taxing authority for purpose ...

SENATOR WICKERSHAM: But that subtracts ... but that subtracts from your existing authority. It's not new authority, it subtracts.

SENATOR BEUTLER: But I'm talking about the objective of getting around a vote of the people, for example. You may have the fiscal capacity to issue bonds right now in any particular school district but, if the people don't want the bonds issued, they're not issued. Under ... under this proposition, as I understand it, the school district could lend the taxing authority or give the taxing authority to the joint entity and have the bonds issued because there's no legal impediment concerning a vote of the people that would be in the way of such a joint entity. Is that not accurate?

SENATOR WICKERSHAM: No.

SENATOR BEUTLER: Okay.

SENATOR WICKERSHAM: The existing law would allow you to do what

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you're concerned. about if you simply formed a 501(c)(3) corporation to own the building. You could do exactly the same thing. The existing law, existing law allows entities created under Interlocal Cooperation Act to issue bonds. You could not, however, issue the bonds unless you had the fiscal capacity to fund them. The fiscal capacity has to be derived from an ability, in this bill or in the current structure, to subtract from whatever other expenditures you have, and then assign that amount of fiscal capacity to funding of the bonds. Now you can vote to have extra fiscal capacity, if you want to. And in that case it is that extra fiscal capacity that funds the bonds, otherwise that's not the case, because you can also fund what looks like a bond issue through building funds. And in fact, school districts have done that. So you do ... you can fund a building, under existing law, you can fund a building without a vote of the people. This bill does not change that. You can do that under existing law.

SENATOR BEUTLER: Well, Senator, we can ... we can explore that further. But let me stop for the moment.

PRESIDENT MAURSTAD: One minute.

SENATOR BEUTLER: I'm sure other people have questions. And I'm absorbing all of the conversation here. Thank you.

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

SENATOR WICKERSHAM: Mr. President, I'll try to be brief. Senator Beutler raised the issue of what kind of authorities you could assign to a joint public agency. You could assign to a joint public agency exactly the authorities that you could now assign to a private, nonprofit corporation. It's exactly the same language. That language was changed, most recently two years ago. It was an amendment, I think, that was offered, or a bill that was offered by Senator Warner at the time. When that amendment was adopted we did substantially increase the flexibility and potential uses of entities that you created under the Interlocal Cooperation Act. The main distinguishing component of this amendment and this bill is that the type of entity that you create is changed. And only one, fundamental

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change is made in the authorities, and that is the ability to assign a portion of your tax authority. It's not new or additional tax authority, it is an assignment of some of your existing authority. You can effectively do that now, just through a different mechanism. But, Senator, I will yield some time to you. I don't know how many times you've pushed your button, but I want to be able to continue to try to respond to your questions, but I will ... I will continue to go back to the point that there is not a great deal new in this proposal, except the kind of entity that you create to carry out the function under the Interlocal Agreement. And the type of entity is important because it allows you a more efficient structure to operate under than a private, nonprofit corporation. I would yield the rest of my time to Senator Beutler, if he has additional questions.

PRESIDENT MAURSTAD: Senator Beutler.

SENATOR BEUTLER: Senator, let me ask you a little bit about the power of the board to create committees. Are these new entities under the Budget Act, by the way?

SENATOR WICKERSHAM: They're ... yes, they would ... they would be under the political subdivisions act, the Budget Act covers, generically, political subdivisions, so they would automatically be included. They're automatically included in the open meetings provisions, they're automatically included in the tort claims provisions, they're automatically included in a number of ways, and that's partly what I think would make them a little more efficient. You don't have to file a budget for a current interlocal 501(c)(3) that's formed under an interlocal agreement.

SENATOR BEUTLER: Okay. With regard to the creation of committees and subcommittees, as I understand the language of the bill, once you have this joint entity, you could create subcommittees, and those subcommittees would have whatever powers or duties the board would specify.

SENATOR WICKERSHAM: That's right, and you could do that now.

SENATOR BEUTLER: Well, I don't think you can do it, Senator,

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with regard to a standard political subdivision. I mean we...

SENATOR WICKERSHAM: If you...

SENATOR BEUTLER: ... continually are comparing this to the Intergovernmental Cooperation Act, I take it,...

SENATOR WICKERSHAM: Um-huh.

SENATOR BEUTLER: ... which is a fair comparison. And part of the question I might ask is, perhaps we've gone too far in that particular agreement also unwittingly. But as far as a political subdivision is concerned, as we commonly understand it right now,...

PRESIDENT MAURSTAD: One minute.

SENATOR BEUTLER: ... the ultimate decisions of a county, or a municipality, or whoever, cannot be delegated to a committee, ultimately. I mean those decisions have to be made by the elected representatives. This provision seems to be without limitation in terms of the powers and duties that can be delegated to a committee. And since this is a public entity of sorts, I'm not understanding how such a broad power is desirable.

SENATOR WICKERSHAM: Well, again, Senator, if you formed a 501(c)(3) corporation, that's how you would govern it. You could create a ... you could create a committee, an executive committee, a personnel committee, a property committee. And if the board gave them authority to act on their behalf, they could do it.

PRESIDENT MAURSTAD: Time. Before we proceed, Senator Bromm would like to announce the following visitors, following guests are visiting the Legislature--Ervin and Pearl Bergt, from Schuyler, and Ron Bohaty. They are located under the north balcony, if they would stand to be recognized by the Legislature. Senator Wickersham, you are recognized to close on the committee amendments.

SENATOR WICKERSHAM: Well, Mr. President, I appreciate Senator

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Beutler's questions. I suspect that he has more. And frankly, I think.. the kinds of questions that Senator Beutler is asking are good questions, and they are important so that you have an understanding of what the committee amendments do and what the bill, in general, does. That's one of the most important aspects of our process. Whether we decide that we agree, or we disagree, at least we do have to have a sufficient basis of understanding so that we can make a decision. But when you cut through all of the questions that Senator Beutler has been asking, and I hope that you've been listening to both the questions and the responses, the bill is not designed to confer really new authorities on political subdivisions that don't already exist through a different mechanism, with the exception of being able to assign some portion of their taxing authority to a different organization. But they, in effect, do that now, because they can assign part of the revenues that they derive from their taxing authority to a new entity anyway. Current law allows political subdivisions to cooperate through ... across all the range of their functions, and, in addition, allows them to cooperate with organizations, or entities, political subdivisions in other states, and the federal government, and the state government. They just have to form a private organization if they're going to own any property, if they're going to carry out some of their functions. The bill is intended to be simply a recognition of the fact that to have a private, nonprofit corporation formed to carry out some of these functions is unnecessary and causes difficulties in personnel, in insurance, in retirement benefits, and a host of other areas that we can simplify for them, and to make it possible for them to increase or to carry out cooperative efforts without some of the difficulties that they might currently experience. Now they can use whatever structure they want. It doesn't force them to use this structure. They can use the nonprofit structure, if that fits their particular circumstances. But why should we make it difficult for them? Why should we place impediments in the way? Why shouldn't we recognize them for what they are? So I would ask for your support for the committee amendments. The committee amendments, I would say again, are simply in response to ... primarily in response to bond counsel's urgings that they didn't want to have to differentiate between these organizations and the private, nonprofit corporations in their opinion letters.

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PRESIDENT MAURSTAD: Thank you, Senator. The motion.... Senator Beutler, your light is one. You've spoken three times on the committee amendment. I'll leave your light on for the.... Thank you, Senator. The motion before us is the adoption of the committee amendments to LB 87. Those in favor vote aye, those opposed nay. Record, Mr. Clerk.

CLERK: 25 ayes, 0 nays, Mr. President, on the adoption of committee amendments.

PRESIDENT MAURSTAD: The committee amendments are adopted. For discussion on the advancement of LB 87, Chair recognizes Senator Beutler.

SENATOR BEUTLER: Senator Wickersham, I just have a couple more quick questions. It doesn't appear that a lot of people are interested in the bill, and I can only sustain so much interest.

SENATOR WICKERSHAM: Well, you and I are. (Laughter.)

SENATOR BEUTLER: All right.

SENATOR WICKERSHAM: Maybe from different perspectives, but....

SENATOR BEUTLER: Yeah. With regard to ... with regard to the taxing authority....

SENATOR WICKERSHAM: Yes.

SENATOR BEUTLER: And I'm ... and I'm not trying to assert a philosophy here, but simply am asking a question. All of the ... all of the various political subdivisions that we now recognize have levy limitations on them.

SENATOR WICKERSHAM: Yes.

SENATOR BEUTLER: And in the event that any political subdivision should allocate a portion of its taxing authority to this joint entity, in every instance where that could possibly happen under the bill, is that taxing authority then subtracted from the levy limit...

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SENATOR WICKERSHAM: Yes.

SENATOR BEUTLER: ...of the entity that's giving the...

SENATOR WICKERSHAM: Yes.

SENATOR BEUTLER: ...giving the taxing power?

SENATOR WICKERSHAM: Yes, Yes, that's the way it's intended to work, yes.

SENATOR BEUTLER: Okay. That's ... that ... those are my questions. Thank you.

SENATOR WICKERSHAM: And they could also do that with sales tax. If you had a 7.5 sales tax ability, you could assign a half cent to this organization.

SENATOR BEUTLER: Yes. Okay. Thank you.

SENATOR WICKERSHAM: But it's...

PRESIDENT MAURSTAD: Thank you, Senator. The Chair recognizes Senator Redfield.

SENATOR REDFIELD: Thank you, Mr. President and members of the body. On the school board we participated in a number of interlocal agreements. They were on a very small scale. We're seeing Douglas County and the city of Omaha participate in some agreements. I think this is a good bill; it makes it easier. It facilitates exactly what the Legislature is intending, that governments can be more efficient. And so I would like to speak...that this is a good bill. But I would ask Senator Wickersham if he would address the fiscal note. We did have a long discussion in the committee about it, and I do think that I have been asked some questions with concerns, and I would rather he addressed it, please.

SENATOR WICKERSHAM: A ... a ... a...

PRESIDENT MAURSTAD: Senator Wickersham.

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SENATOR WICKERSHAM: Okay, thank you. Senator Redfield is correct. The bill has a fiscal note. And there was some confusion at the hearing. The fiscal note had an attribution to the Property Tax Administrator; that was a bit confusing because we couldn't imagine ... and then the Property Tax Administrator came in and said, that didn't come from me. After the public hearing we were able to determine that indeed the fiscal note did come from the Department of Revenue, but I'm going to have a meeting with them Thursday morning and we're going to discuss the fiscal note. As I understand it the fiscal note is derived from what they would see as a potential difficulty in auditing for sales tax compliance if one of the organizations was ... that could be formed under this bill had sales tax authority. So, as I understand it at the moment, what they're saying is that they would have to put on extra auditors to go out and to monitor and collect sales tax, if that was a component of funding of one of these organizations. Now, the fiscal note must contemplate a very large number of instances in which sales tax authority would be assigned to one of these organizations, because it seems to contemplate a fairly high number of auditors, if that's the real purpose behind it. I don't know at the moment whether that is realistic or not, but we're going to have a discussion with them Thursday morning to try to fin" out if the basis that I'm describing to you now is really their concern about the bill, and whether that is realistic. But there will be, after that discussion, an A bill introduced so that we can make a judgment about that. But that's ... Senator, if that's enough, at least by the time this bill is on Select File there will be an A bill of some kind, and we need to be able to discuss, with the Department of Revenue, what their real concerns are and whether it does have potentially the fiscal impact that they're noting in their fiscal note. It may be the product of some misunderstanding about the bill as well.

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

SENATOR WEHRBEIN: Yes, Mr. Speaker, members. Senator Wickersham, I do apologize. I got distracted badly here for a minute, so I may ask you some questions you've already answered. One has to do with the fiscal note. The other one is Senator

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Beutler asked you if two ... a Kansas and Nebraska school go together, which law do they follow? And I'd like to know the answer to that. I know you gave it and I missed it. Then I'd like a little more on the fiscal note. May I ask Senator Wickersham a question, please?

PRESIDENT MAURSTAD: Senator Wickersham.

SENATOR WICKERSHAM: Senator, well the question with regard to the fiscal note, again as I understand it from some preliminary discussion with the Department of Revenue, is that the fiscal note would reflect extra auditors to collect sales tax. Now we're going to...

SENATOR WEHRBEIN: Without going clear through the bill, you're anticipating that there should not be, unless there's a misunderstanding? Is that what you...

SENATOR WICKERSHAM: Well, there's a potential for some sales tax authority to be assigned to one of these entities. But whether it just...whether that would increase costs at the Department of Revenue,...

SENATOR WEHRBEIN: It's basically four or five people.

SENATOR WICKERSHAM: Right. Now I ... Senator, I ... everybody would have to make eventually some sort of a judgment about whether that's going to happen or not.

SENATOR WEHRBEIN: Yeah, yeah, year.

SENATOR WICKERSHAM: But to have that happen in the next fiscal year, for example, stretches my imagination a little bit....

SENATOR WEHRBEIN: Okay.

SENATOR WICKERSHAM: ... for one thing. And there may be other concerns, but I can't .... Fiscal notes are an important part of our process, and we do have to be aware that there are costs attached to bills. But.... And I think we do ... also it is necessary in that process to have discussions with the individual or the organizations that produce those fiscal notes,

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so we have a better understanding of their basis. I know that we all stand up, from time to time, and say I don't understand that. Well, you know, I'm in one of those predicaments, I don't understand that. But I'm going to have a meeting with them Thursday.

SENATOR WEHRBEIN: Okay.

SENATOR WICKERSHAM: And maybe after we meet on Thursday, maybe I'll understand it. And when we're on Select File, if we get there, I'll be able to stand up and say, yes, I've had a conversation with them and I agree. It costs $462,000. This is a lot ... this is a harder decision than what I thought it should be.

SENATOR WEHRBEIN: I understand, okay, thank you.

SENATOR WICKERSHA14: But I agree with them. I'm not at that point yet.

SENATOR WEHRBEIN: The one other question I said Senator Beutler asked the question about Kansas and Nebraska law. And I missed the answer, and I would like to know that.

SENATOR WICKERSHAM: Well, there is a potential issue there, but I think it would agree... I think the agreement would have to provide which set of state laws you were going to apply and then those would govern. That's my answer at the moment.

SENATOR WEHRBEIN: Thank you.

PRESIDENT MAURSTAD: Seeing no further lights, Senator Wickersham, you're recognized to close on the advancement of LB 87. Senator Wickersham waives closing. The motion before us is the advancement of LB 87. Those in favor vote aye, those opposed nay. Record, Mr. Clerk.

CLERK: 26 ayes, 0 nays, Mr. President, on the advancement of LB 87.

PRESIDENT MAURSTAD: LB 87 is advanced to E & R Initial. Mr. Clerk.

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