1990: General Election - Referendum 406

The 1990 Session was considered historic by most state legislators.  "It was the year of education, but it was the year of education from the legislative side of the coin," said Senator Dave Landis of Lincoln, referring to the fact that the Legislature had to override Governor Orr's veto of LB 1059.¹  "I think in five to 10 years history could judge this as one of the landmark years," said Senator Scott Moore of Seward, a co-sponsor of LB 1059.²  "I think it took a lot of guts for people to stand up and say these things needed to be done and do them," said Senator Spencer Morrissey of Tecumseh.³

For some outside the realm of the Legislature, however, the 1990 Session was a launching ground for revolt, in a purely civil sense of the term.  LB 1059, creating a new school finance system, coupled with LB 259, imposing affiliation and combined levies, represented cause for action by citizen groups concerned for the wellbeing of small schools.  Some within the corporate sector of Nebraska were similarly concerned about the tax increases enacted under LB 1059 and the impact it would have on the economy.  In truth, if it had not been for the organized effort of the business community, there would have been no attempt to repeal LB 1059 on the 1990 General Election ballot.

In July 1990 Nebraskans were being asked to consider and urged to sign five different petitions.  Two of these measures had LB 1059 directly in the crosshairs, although the two measures took entirely different angles when it came to scope and purpose.  The business community, or at least some among that community, simply wanted to repeal LB 1059 and its accompanying appropriation bill (LB 1059A).  The small school supporters felt that repealing LB 1059 did not go far enough.  Their petition effort would take matters into their own hands and initiate state law outlining the will of the people with regard to school organization.

* Certified by Secretary of State Allen J. Beermann on August 16, 1990.
** Did not receive sufficient signatures to place on ballot.

Source:  "Voters to See Lid, Lottery, School Issues," Omaha World-Herald, 17 August 1990, 1.

The small school advocates took a rather curious approach to addressing their concerns about school finance and affiliation legislation passed during the 1990 Session.  Lead in part by the Nebraska School Improvement Association (NSIA), Class I supporters formed a petition movement called Operation Fight Back.  The movement chose to utilize the initiative petition process to outright repeal LB 1059, the new school finance formula, although it did not repeal LB 1059A, the accompanying appropriation bill.  The petition also proposed to repeal LB 259 (1990), the affiliation and common levy bill, and also LB 940 (1988), which created intent language to form K-12 school systems and established a sunset provision for use of nonresident tuition fees.  The petition also proposed to repeal the bulk of LB 611 (1989), which among other provisions would cause the automatic termination of the School Foundation and Equalization Act, the old school finance formula, on June 30, 1991.

That mission alone may have been a sellable concept to some prospective petition signers, particularly those who wish to see LB 1059 repealed and may or may not have any opinion about LB 259 or the other bills mentioned.  But the Operation Fight Back movement opted to take the next step in its quest to right the wrongs committed by the Legislature, as they saw it.  The movement decided to add to the petition the appropriate wording of relevant statutes as they wished to have them read.  In essence, they desired to have state law returned to the way it was immediately after the successful 1986 referendum to repeal LB 662, a bill that would have merged all Class I school districts.

The problems with the proposed initiative petition were several.  First, the proposed state law they wished to make part of the petition was so massive in length that it had to be printed in the absolute smallest font size to barely fit two pages of legal size paper.  The average signer of the petition would not, in good conscience, sign such a thing without reading it, and no one in his or her right mind would have taken the time to attempt to read it.  The initiative petition simply asked too much of the average voter to absorb and understand.

Another problem related to one of the less publicized war of words between Senator Ron Withem, who had obvious reasons to oppose the petition effort, and Don Stenberg, the future Nebraska Attorney General.  Mr. Stenberg, a lawyer, represented Operation Fight Back and handled much of the legal work on behalf of the initiative movement.  In April and May 1990, Withem and Stenberg exchanged a series of correspondence through the unfortunate intermediary, Secretary of State Allen Beermann, the chief state election official.

On April 23, 1990, Senator Withem wrote to the Secretary of State with a request that Beermann review the language of the petition.  "There appear to be a number of rather obvious and serious defects in the petition," Withem wrote.⁴  The principle concern, Withem believed, was that the statement describing the objectives of the petition was vague and misleading.  The object statement is the short paragraph on the petition form that prospective signers would read to understand what they are being asked to sign.  The petition read:

The object of this petition is to submit to the legal voters of the State of Nebraska at the General Election to be held on November 6, 1990, an act relating to schools which would repeal the state sales tax and state income tax increases provided for in LB 1059 (Laws 1990) and would generally restore school finance and organization laws as they existed following repeal of LB 662 by the Nebraska voters in 1986.⁵

Withem was critical of the fact that the object statement did not mention the other legislative acts to be repealed.  More importantly, Withem believed, the object statement inaccurately portrayed the result if the initiative passed.  It would not necessarily restore school finance and organization law to appear as it did in 1986.

Withem provided several examples pointing to an apparent lack of understanding on the part of the petition organizers about their own petition language.  Not the least of these problem areas related to one of the key provisions the petition supporters would most want to protect:  non-resident tuition.  Withem wrote:

The objectives statement would lead one to believe that non resident tuition would change a key component of our school finance and would revert to the formula as was in existence to 1986.  The actual situation would have the petition re-instate the nonresident tuition laws as they existed in 1987 following enactment of LB 182, a bill which was passed in 1987 to avert a constitutional crisis in the funding of schools.⁶

Another problem was that the descriptive language did not mention anywhere that it repealed a provision requiring all public schools to be accredited.  This was an important component of both LB 940 (1988) and LB 259 (1990).  Yet voters would not understand they were signing a petition that would impact the quality of education.  "This petition was obviously thrown together with lack of care and scrutiny," Withem concluded.⁷

Attorney Don Stenberg responded immediately, not to Withem but to Secretary of State Beermann, that the Chair of the Education Committee was wrong on all accounts.  He defended the language and form of the petition and reminded that the initiative and referendum process should grant sufficient leeway to permit the people to act as legislators.  "The presumption should be in favor of the validity and legality of their act," Stenberg wrote.⁸ Stenberg provided evidence that each of the assertions made by Withem had another perspective, another way of looking at the issue.

The war of words continued back and forth for some time until the issue was handed over to Attorney General Robert Spire.  In a letter from Spire to Secretary of State Beermann, the Attorney General stated that it was not within the authority of the chief election officer to "exercise discretion when petitions are filed with you for the commencement of the initiative process."⁹ This, naturally, was what Beermann already knew but, perhaps, was glad to have authenticated by the state's attorney.

The war of words was a moot point, as it turned out, since the initiative movement to derail the school finance and organization laws failed to gather sufficient signatures.  The deadline to hand in signed initiative petitions was four months prior to the election.  On July 6, 1990, Rick Baum, representing the Operation Fight Back movement, admitted to reporters that his group "did not secure enough signatures statewide" to place the initiative on the General Election ballot.¹⁰ However, where Operation Fight Back failed, another group with the same general mission would succeed.

The Nebraskans Against Higher Taxes, a coalition of business interests, was confident that it had obtained sufficient signatures to place a referendum to repeal LB 1059 and LB 1059A on the 1990 General Election ballot.  The referendum petition was much less complex than the initiative effort, and it had the advantage of needing fewer signatures to meet minimum election requirements.  In 1990, an initiative proposing state law required a higher threshold of signatures (39,510), while a referendum proposing to repeal state law required fewer (28,221).  On July 9, 1990, the deadline for referendum petition measures, the Nebraskans Against Higher Taxes turned in 56,807 signatures.¹¹  Upon verification by county clerks and election commissioners, Secretary of State Beermann certified 46,084 valid signatures.¹² The repeal effort was now officially dubbed Referendum 406.

The referendum petition campaign itself was not without controversy or legal challenge.  Shortly after the deadline to hand in petition signatures, a movement aligned in support of LB 1059 formally asked Secretary of State Beermann to review the nature of the referendum effort.  Lincoln attorney Alan Peterson, representing the Progress for Nebraska With LB 1059, wrote that the petition to repeal LB 1059, which also proposed to repeal LB 1059A, violated the constitutional provision prohibiting popular repeal of state acts appropriating funds to state agencies.  The Nebraska Constitution provides that:

The second power reserved is the referendum which may be invoked, by petition, against any act or part of an act of the Legislature, except those making appropriations for the expense of the state government or a state institution existing at the time of the passage of such act.¹³

LB 1059A, the appropriation bill to LB 1059, did in fact make a series of appropriations to the Department of Education, a state agency, for purposes of carrying out the provisions of LB 1059.¹⁴  "I respectfully request that the purported referendum petitions not be accepted for filing nor certified for the general election," Peterson wrote.¹⁵

The movement against the referendum effort, comprised of various education groups and other interests, was obviously monitoring the deadline to turn in petitions.  If Nebraskans Against Higher Taxes failed to hand in sufficient signatures, then the constitutional challenge would be a moot issue.  Such was not the case, and it was apparent that proponents of LB 1059 had to move to a secondary plan of action.  But Plan "B", the legal action, also ran into a snag when, on July 20, 1990, Attorney General Robert Spire officially told Secretary of State Beermann to proceed with the signature verification process.  Spire believed there were "legitimate questions" as to whether the object of the petition was allowable constitutionally, but he said the constitutional right to invoke the referendum process should be interpreted broadly.¹⁶

Not satisfied, the pro-LB 1059 group took the State of Nebraska to court on August 10, 1990 alleging the unconstitutionality of the referendum.  Aside the original claim that the petition measure violated the appropriation clause, the lawsuit alleged the petition violated a state law and a constitutional provision that establish the Legislature's duty to provide the "necessary revenue" for state and local governments.¹⁷  The lawsuit also alleged the petition unlawfully interfered with the Legislature's obligation to provide for free instruction in schools.  Lastly, the suit alleged that a "significant portion" of the signatures were "procured unlawfully and should be deemed invalid."¹⁸

Lancaster District Judge Jeffre Cheuvront promised an early ruling, and that he did, but not in favor of the pro-LB 1059 camp.  On September 17, 1990, Judge Cheuvront held that the petition drive was not unconstitutional and that the issue should be allowed to appear on the ballot.  The pro-1059 camp appealed the decision to the Nebraska Supreme Court, but was again disappointed.  The high court essentially said it would review the constitutionality of the petition if the voters approved the referendum on November 6, 1990.¹⁹ If the voters retained LB 1059 and LB 1059A, then the lawsuit would be a moot issue.

With all legal challenges set aside, the only issue remaining was the will of the people.  And there was plenty of assistance available from both sides of the issue to help influence the voters.  Some within the business community urged voters to repeal LB 1059 on the basis that it would raise income and sales tax rates with no guarantee that it would provide property tax relief.  Some within the farming community believed LB 1059 was the best opportunity yet for legitimate property tax relief.  The education community generally supported LB 1059 because it would bring about equity of educational opportunities and bring about needed funding for public education.  Both sides accused the other of misrepresenting the truth about the legislation and both sides had ample statistical evidence to back up their own side of the story.

On November 6, 1990 the voters made their choice in favor of LB 1059, in favor of the Legislature, and in favor of public education.  Over 56% of the voters voting on the referendum supported retention of the school finance law and of raising their taxes to support K-12 education.  Many of the rural counties supported the measure by 2-1 or 3-1 margins.  Voters upheld the school finance legislation in 76 of the 93 Nebraska counties.  Douglas County proved to be the true bastion of opposition to LB 1059.  Voters in Omaha and surrounding areas voted 53% against retention while 47% were in favor.  Lancaster County voters approved retention by 54% while 46% were in opposition.  Twenty counties retained the law by a margin of 66% or more.²⁰

For pro-education interests, one of the best summations of the General Election results came from an outsider.  "There would appear to be no big taxpayer revolt as some people had expected," said Chris Pipho, Director of State Relations for the Education Commission of the States (ECS) based in Denver, Colorado.²¹  Pipho added:

LB 1059 has special significance.  Nebraska made some of the largest changes this year in school-finance formulas.  It rolled back property taxes and moved significantly to state funding of education. ... People like Withem took a bold step.  I never thought you'd get it through the Legislature.  But he put his head in the guillotine and made it.²²

Senator Withem pulled off, with the help of some friends, what no one else had been able to accomplish.  Nebraska voters had repealed previous school finance laws passed by the Legislature in 1974, 1978 and 1985.²³  Withem also won another endorsement in the form of re-election to the Legislature from the 14th Legislative District.