Hearing Transcripts
Committee on
Education/Committee on Revenue
LB 1059
January 23, 1990
The Committee on Education and
Revenue met at 1:30 p.m. on January
23, 1990, in Room 1517 at the State Capitol to hold a public hearing on LB
1059. Education Committee members
present were Senators Ron Withem, Chairperson and "Cap" Dierks, Dennis Baack,
David Bernard-Stevens, LaVon Crosby, Jim McFarland and Arlene Nelson. Absent: Senator Jerry Chizek.
Revenue Committee members present were Senators Tim Hall, Chairperson
and Elroy Hefner, Rex Haberman, Paul Hartnett, Richard Peterson and Carson
Rogers. Absent: Senators Bernice Labedz and David
Landis.
SENATOR WITHEM: We have a presentation on what LB 1059
deals with and then also hear plenty of- testimony both pro and con on the bill
that is before us this evening.
This is a joint hearing of the Revenue Committee and the Education
Committee. Rationale for that is
that we have a bill here that changes significantly the way in which schools
are funded in our state. It also
changes significantly the tax base of the state. Senators Hall, Moore, and I met in December and talked about
when the bill is introduced what we should do in terms of reference, and we all
three agreed that it has too much revenue impact and too much education impact
to go to any one committee. So we
both requested that it be jointly referenced to the two committees. We'll kind of, probably, make up the
rules with joint committees as we go along because there isn't a whole lot of
information written about how joint committees operate, but we will be
conducting the hearing here jointly.
Tim has asked me to do most of the presiding, although he'll get his
fair share as the evening goes on.
We'll conduct it like a normal hearing. Senator Moore is here who will introduce the legislation. We'll then follow it up with a list of
individuals who are from the School Finance Review Commission to add an
explanation to what Senator Moore has to say. Maybe it would be helpful. We have a list of people, fairly lengthy list already up
here of people who would like to testify.
Most of them supportive; there are some anti individuals up here. It's my desire to kind of flip-flop
that so that we don't have all pro followed by all con. I think that doesn't lead to a very
good hearing if the purpose is to get the senators to balance the viewpoints
that they hear. How many people
here would wish to offer testimony to the committee tonight in a positive vein
in terms of the legislation? I
counted right at seventeen hands, I'm not sure if that's accurate or not. How many people are here wishing to
testify in an "anti"
January 23, 1990
Page 2
position? We have ... about ten of those.
What we'll do is flip-flop, I'm going to as long as I'm presiding, other
than the main introducers of the bill that are explaining, I'll going to fairly
rigorously enforce five-minute rule here tonight so we get as many people up
here as possible testifying. With
that let me introduce the Education Committee members here and then let Senator
Hall have an opportunity to say a few words and introduce the Revenue Committee
members that are here. Senator
Arlene Nelson from Grand Island is -on the Education Committee, Senator Jim
McFarland from Lincoln is on the Education Committee, the Vice Chair of the
Education Committee is Senator Cap Dierks, Senator Dennis Baack from Kimball is
on the Education Committee and Senator LaVon Crosby is on the Education
Committee. The Chair of the
Revenue Committee is Senator Tim Hall, and Tim, if you have some words to say
and introduce your committee members, please feel free.
SENATOR
HALL: Very few words, Senator Paul
Hartnett to my right is from Bellevue, Member of the Committee. Senator Rex Haberman to my immediate
left from Imperial, Nebraska, and Senator Elroy Hefner the Vice Chair of the
Revenue Committee from... Where
are you from? Coleridge,
(laughter) Coleridge, Nebraska, for Elroy from God's country, northeast
Nebraska.
SENATOR
WITHEM: Thank you, Tim. Senator Moore, would you like to go
ahead and tell us about LB 1059?
LB 1059
SENATOR MOORE: Thank you, Senator Withem and Senator
Hall. For the record, my name is
Senator Scott Moore, representing the 24th Legislative District and it is my
pleasure to appear tonight to introduce LB 1059. 1 guess it's a, really it's flattering or humbling for me to
be able to do this. I firmly
believe that this piece of legislation has the potential to be probably the
biggest piece of legislation we passed in this Legislature in the last twenty
years and probably the next twenty years after that. And it's that big a deal and it's only by luck of the draw,
or however you want to call it, that I'm here to open. It's been the culmination of a lot of
work. Obviously, the Senators and
the Legislature...
SENATOR
WITHEM: ... Senator Moore, actually
it's the fact that you don't chair one of these two committees. (laughter)
January 23, 1990
Page 3
SENATOR
MOORE: Hey, you're ruining it, you
know. You're absolutely right, but
the Legislature members with the guidance of Senator Hall, the Revenue
Committee Chairman last year, we passed LB 84 and passed LB 611, two
significant bills dealing with property tax relief. At that time many members of the Legislature, including the
members of the Gang of Four at that time, said it's in 1989, the Legislature is
going to put some pain killer on the property tax wounds. We said at that time we're going to spend
the next year trying to come up with a solution to do some major surgery to the
property tax problem in the State of Nebraska. it's been under the guidance of Senator Ron Withem and the
Chairman of the School Finance Review Commission, which I am also a member,
worked diligently this summer and LB 1059 is a result of that commission's
work. Quite simply some few basic
premises to be kept in mind as we worked through the summer and, now I'll give
you the finished result of that commission, is introduced tonight. Two things we kept in mind. We looked at it from the point of view
of the taxpayers in the State of Nebraska. We looked at it from the point of view of the educational
system and the kids of the State of Nebraska. The taxpayer, it's rather simple. The fact of the matter is that Nebraskans pay high property
taxes. You can divide it a couple
different ways, you know, we rank in the ten probably in property tax in the
fifty states in the nation. We
rank, according to some sources, thirty-eighth in the nation in income taxes
collected and forty-second in the nation for sales tax collected, somewhere
roughly in those figures. Fact of
the matter is we rank, when you total state and local taxes combined, we rank
about twenty-seventh in the nation, right on average. So, at least from a taxpayers point of view, we're not by
comparison at least, overtaxed or undertaxed in the State of Nebraska. We're right on average. It was our intent to quite simply
recognize the property tax were high so the income taxes were low, we think
it's time when we reshuffle the deck in the State of Nebraska, while at the
same time maintain roughly that same figure of the total tax take. That's what we tried to do. I think there'll be some more
testifiers after me that will explain that in more detail. We're talking about a tax shift, and
yes, your sales and income taxes will go up; and yes, at least as an aggregate
statewide, property taxes will go down.
Fact of the matter is, if you're going to inject $230 million dollars
into the school finance system in the State of Nebraska, there is at least one
school of thought is you can't just dump that money in there and have no
January 23, 1990
Page 4
strings
attached. Obviously, a big string attached
is the budget growth limitation, I'm sure we'll hear a lot about. But that's just a guarantee. We can try, an attempt, so we stay
right in the middle as we reshuffle that deck. We looked at was from the education perspective was from the
kids' point of view. The first
thing we do is, we just overhaul a system that we know is wrong in this state
and it causes a lot of problems.
If we don't fix it, it's going to cause a lot more problems, and more
importantly, cause some problems for those kids out there. Secondly, for once the State of
Nebraska is going to have a major commitment to the cost of education in this
state and catch up with our peers nationwide on what commitment the state
should have that cost of education.
Thirdly, we're basically going to try to guarantee that there's, you
know, an average dollars per student out there. And so that you, you know, just by accident where a child
resides, there's not money there to finance his or her education. That's the two basic premises that we
had entailed in LB 1059. 1 know
there's going to be some here tonight that may oppose our measure. It's one of those things that is,
Senator Withem and myself have travelled the state, I've used this quote a
lot. I'm reminded of when Franklin
Delano Roosevelt came in the office of Presidency and those first one hundred
days in depths of the Depression, and he often said to some of his advisors
then, he goes, there's nothing more terrifying to be out in front of an issue
look over your shoulder and see nobody there. Luckily tonight, the work of, right, there are a Lot of
people over my shoulder here to support this and I compliment those people for
having the intestinal fortitude to do that. Also, there are some people here to oppose that. They're going to tell you that the
lid's no good. They're going to
tell you that you're raising the sales and income taxes. They're going to tell you it's
basically unfair, well, you're going to hear two things. You're going to hear that it's a rural
bill and you're going to hear it's an urban bill. I don't know how it could be both, but you're going to hear
from both sides of that probably.
The fact of the matter is that.
When you hear all of those things, keep in mind though that the whole
bill we have here, yes, there are thirty-two senators that signed the bill that
says, there is no magic to fixing our tax system in the State of Nebraska. The magic isn't there. if you're going to permanently lower
property tax in this state, it has to come from somewhere. If you're not going to cut services, it
has to come from increased taxes somewhere, and we're saying that has to
happen. I guess the thing that
makes me tingle, is I believe it possibly can't
January 23, 1990
Page 5
happen this year
because, as you all know, we have thirty-two cosponsors, we have Republicans,
we have Democrats, we have rurals, we have urbans, we have school types, we
have taxpayer types--all gathered here to say that, yes, the system is broken,
we need to fix it. And yes, there
are some... you know, I'm not
saying our plan is perfect, the fact of the matter is, is that we can make a
giant step forward and just brief summary in closing, the fact of the matter
is, that this isn't going to fix our property tax problem in the State of Nebraska. I mean, it's probably now where you
can't fix it, but it's going to be a giant step forward and I urge this
committee, this joint committee, to simply listen to the testimony tonight and
those that have problems, please bring your problems to us. The fact of the matter is, we are
closer than we have been in a long, long time to making this giant move. I just hope the committee will see fit
to advance this bill from the joint Education and Revenue Committee.
SENATOR
WITHEM: Are there any questions? Senator Haberman.
SENATOR
HABERMAN: Senator Moore, you
alluded to the possibility of this legislation having property taxes go
down. Is that correct?
SENATOR
MOORE: Uh humm.
SENATOR
HABERMAN: Senator Moore, as you
know, real estate taxes on farm land took quite a jump.
SENATOR
MOORE: Uh humm.
SENATOR
HABERMAN: And in looking over this
proposal, there are some schools that lose a hundred percent, seventy percent,
eighty percent, ninety percent of their income under this formula. One school, for example, loses
forty-nine thousand dollars; another one loses ten (thousand dollars); another
one loses thirty-four thousand (dollars); another one loses twenty thousand
(dollars); forty-six thousand (dollars).
How are you going to get this money back if it costs that much to run
the school without raising property taxes?
SENATOR
MOORE: As you know if you look at
the printout, the printout is the figures that were, if you had this bill in
effect today, what it would have done two years ago. I assume you're referring to the fact that there are some
school districts in there that are net losers, so to speak.
January 23, 1990
Page 6
Is that what
your... ?
SENATOR
HABERMAN: The ones I mentioned are
losers, that much money.
SENATOR
MOORE: Yes. Well, you know, to begin with, the
figure escapes me, maybe Larry Vontz, to begin with, it's like ninety percent
of the kids in the state are in districts that win, obviously. They win as far as getting additional
dollars. Secondly, I think there
may be some proposals here to try and recognize the plight of those districts
that we're going call net losers.
Maybe there is something that can be done as far as the hold harmless, I
don't know. The fact of the matter
is usually if you look at those districts, if you apply this formula which I
think is a very fair formula, regardless of any political ties, there are some
districts there that don't fare as well as others. I think as you look at those districts, there are some
varying reasons why that is, either that they're, tremendously, valuation
wealthy, or maybe they're a district that spends well above average. There is a variety of reasons there
that, I don't know, right or wrong is besides the point, that don't fair as
well.
SENATOR
HABERMAN: Well, Senator Hall,
or...
SENATOR
MOORE: I thought you were Senator
Schmit with that cigar.
SENATOR
HABERMAN: I fully intend to
support the increased sales tax or increase in income tax and basically to
support for legislation. However,
a clause to "hold harmless" to fix this for at least one or two years so these
people can at least get their breath because I don't think they can stand this
kind of a loss. So something
... I'll say I'll support the
legislation if we can work out some type of compromise to help these folks out.
SENATOR
MOORE: You know and the commission
and all those involved purposely, you know, when you're getting the printout,
you're getting to the down and right mentality. You go down the page over to the right and see whether you
win or lose and make your decision on that. We basically postponed that the last possible moment in
December so we could really look at these things in theory and principle
without getting to the winner and loser syndrome, but now we're there, we have
to deal with it politically, obviously.
January 23, 1990
Page 7
SENATOR WITHEM: Okay. Thank you, Senator Moore. Additional questions?
Senator McFarland. Yes, I
remember you. Senator
McFarland... great remembering
senators names tonight. Senator
James McFarland from Lincoln.
SENATOR
McFARLAND: You've got a number to
remember, it's confusing sometimes.
(INAUDIBLE) And
he's from Lincoln. (laughter)
SENATOR
McFARLAND: Senator Moore, I note
that the idea is to get some kind of property tax relief, and you're quite
right that we do as a state rank high, very high in property tax, when compared
to other states. I have a concern
I thought you might respond to.
One of the concerns I've always had about the income tax changes that
were in 1987, with the Orr administration under LB 773 was that the
progressivity of the income tax in Nebraska was reduced in that , it seemed to
me, I think the figures would generally bear it out that middle income people
suffered the tax increase, while the upper income people had tax relief or tax
relief, in general. The concern I
have is that I'm assuming that property owners generally have higher incomes
than non-property owners. In effect,
people who rent homes, don't have homes for their own, my assumption is
probably have less income or more middle income, than people who have a lot of
property. Do you know whether
there was any consideration given to changing the progressivity of the state
income system as an adjustment in order that middle income people, particularly
those who rent, rent their homes and live in apartments, are not hit as hard by
the tax increase as the wealthy and affluent?
SENATOR
MOORE: Senator McFarland, as you
remember I voted "no" with you on that particular bill you're talking about.
SENATOR McFARLAND: Thank you. Yes. Even more
reason to try to correct it.
Right?
SENATOR
MOORE: But the answer to your
question is, no. We basically used
our present tax system and all. If
there are inequities in there, we observed them, if there are good things in
there, we absorbed. Basically we
just used the present system.
SENATOR
McFARLAND: Present system.
SENATOR
MOORE: Obviously, I'm not ... the possibility of
January 23, 1990
Page 8
doing something is
there, but our commission and our work did not go into that sort of argument
that you're talking about, no.
SENATOR
McFARLAND: Okay, thank you.
SENATOR
WITHEM: Other questions? Senator Hefner.
SENATOR
HEFNER: Senator Moore, on the one
percent increase in sales tax, do we dedicate the one percent to this
fund? Or do we appropriate that
out of the General Fund.
SENATOR
MOORE: Well, there's a variety of
school of thoughts on how you do that, and actually I'm trying to remember
it. We went back and forth and for
the life of me, I can't remember how the bill ended up being drafted, to tell
you the truth. But either way, I
don't think it is and we don't want it to be. It's not dedicated specifically.
SENATOR
HEFNER: It's not dedicated?
SENATOR MOORE: No, the cent sales tax increase is not
dedicated to school districts.
SENATOR
HEFNER: Okay, then...
SENATOR
MOORE: Twenty percent of income is
dedicated to the school to the new program.
SENATOR
HEFNER: Okay, then my next
questions is, say that after two or three years, we know that the school
budgets are going to go up.
SENATOR
MOORE: Um humm.
SENATOR
HEFNER: Okay. Where are they going to get that
increase? from raising property
taxes then? or are we going to appropriate
more sales and income tax money?
SENATOR
MOORE: Well, you know, the one key
component which is contained in the local income tax portion, you know
something I've been championing in for some time, the fact of the matter is the
property tax don't grow that much.
By giving school districts an income tax base to place their budget on,
you're giving them a tax base is elastic.
it's been growing, you know where that sales tax grows something like
three percent. Income tax is
growing like nine percent. So part
of their increased needs can come from
January 23, 1990
Page 9
that increased
tax base- Secondly, fact of the matter is the State of Nebraska, our track
record is not too good, quite honestly, in keeping... you know, state aid has not increased maybe the way it
should of to have an equal value.
SENATOR
HEFNER: We probably should
increase state aid by the same percentage rate that we increase state budgets.
SENATOR
MOORE: Yes, and we've not done
that in the past. Now, one way to
make sure that happens is to earmark the sales tax, but actually if sales tax
only grows at three percent, if you inflation rate is more than that, that
isn't enough, and so quite simply, I think, we as lawmakers need to keep up our
end of the bargain better, and I just hope we do that. There's guarantee that happens now.
SENATOR
HEFNER: Okay.
SENATOR
WITHEM: I think, Senator Hefner,
the fiscal office has done some analysis projecting that the current rates,
projected rates of growth that the program under these current rates would fund
itself at the forty-five percent level through about the year 2001, 2002 with a
slight lag behind that my interpretation is could be made up by sharing in the
growth of state budget also. But
we can get that information for you to show those projections.
SENATOR
HEFNER: Okay, then my next
question, if I may.
SENATOR
WITHEM: You bet.
SENATOR
HEFNER: Okay, in some of the rural
areas, we're in a drought, and per capita income isn't growing at a four, five,
or six, or nine percent rate. How
are we going to handle that then?
SENATOR
MOORE: Well, the fact of the
matter is that the whole formula which Larry Vontz is going to explain, you
know, will basically say that we guarantee the average of your share per
student. Now if your income goes
down, the state is going to make up a bigger chunk up to that average and so
... now if you're spending over
the average, some of that is going to have come out of your own pocket. But in theory, if your income goes
down, your state aid will go up.
SENATOR
HEFNER: Okay, my question was
probably premature then. I'll
watch.
January 23, 1990
Page 10
SENATOR
WITHEM: Senator Peterson has a
question.
SENATOR
PETERSON: Senator Moore, you and a
number of them have spent eighteen months devoted to this issue, but it seems
to me that there's only been about two or three weeks in regards to funding the
mechanics of it. Now I'm concerned
that this aspect of the proposal needs further analysis. Analyzed how that's going to effect
Nebraska taxpayers, their sales and income tax, and specifically the concern
about the elderly, the low income, the people that don't pay rent, how it's
going to effect them because they're going to be paying more. Where are we going to end up in this
regards? How are they going to be
effected? Has anyone performed
such a, analyzed the tax burden how it's going to show on which taxpayers are
going to be hit?
SENATOR
MOORE: The first part of your
question, your first statement you made about the fact that the ... how are you going to fund it has only
been talked about in the last two or three weeks. I beg to differ, because the commission and, me, myself, and
you know, Senator Peterson, I'm not one of the wild-eyed spenders of the
Legislature- I don't like, in 1987, 1 wore a T-shirt that said "just say no tax
increases." I don't like to do that.
But we've been talking about a tax increase to fund this from day one
that I've been on the committees since January, and we can go back to a variety
of public hearings that both the School Finance Review Commission had across
the state and the Revenue Committee under Senator Hall's leadership had across
the state. We talked about point
blank; we're talking about a tax shift, and the way you're going to pay for
this is increasing sales and income taxes. And so, we have not ducked that issue. That has been something we've been very
up front with, something that I've been very up front with because the fact of
the matter is the unfortunate thing is that politicians, in general, in the
state and all of us in the Legislature, we campaign on the fact that we're
going to lower your property taxes, we're going to increase your services and
we're not going to raise your sales and income tax. That's what we say, and that can't be done, in my opinion.
SENATOR
PETERSON: But you haven't shown
any figures, I don't think, that substantiate which taxpayers will benefit and
which taxpayers will pay.
SENATOR
MOORE: I think you are going to be
hearing some testifiers tonight that will address that to some degree,
January 23, 1990
Page 11
both that are
for the bill and supposedly neutral.
SENATOR PETERSON: I think that's a question that Nebraska
taxpayers are looking for before we pass any type of legislation, is how it's
going to effect them and that hasn't been addressed yet.
SENATOR
MOORE: Well, I said it, if you pay
sales and income taxes, yes your taxes are going up, is an aggregate as a whole
at least, we pay property tax, your tax will go down. Now, how you personally fit into that is going to depend on
how property you own, but fact of the matter is, if you disagree the property
taxes are- high then you don't do anything, I happen to think they're high, and
they need to be lowered.
SENATOR
WITHEM: Senator Nelson.
SENATOR
NELSON: In response to Senator
Peterson's question, I remember in the last couple of years, we have removed
thirty thousand of the low income elderly from the tax rolls and also remember
there's not a sales tax on food, and I don't think there is in this
proposal. Usually the low income
and the elderly are not heavy users of sales tax, and because of the fact that
we've reduced their income tax considerably, I think that would show up. Wouldn't it?
SENATOR PETERSON: That's what I'd think we need to have.
SENATOR
WITHEM: Other questions of the
introducer? Again, we have lots of
testifiers here. I don't want to
shut off questions. Oh, okay...oh,
okay, waving at the TV cameras so they make a picture of you there? (laughter) Thank you, Senator
Moore. I appreciate it.
SENATOR
MOORE: Thank you, and Senator
Withem, I know you'll be closing and will do a fine job of that.
SENATOR WITHEM: Okay. We now have, and hopefully we can do this fairly quickly,
although the first one, I want the committee up here to feel free to ask
questions of because these folks here that are coming up now are the number
crunchers over at the Department of Education who really do understand the
formula the way it operates. We
have Larry Vontz, the Deputy Commission of Education. Is Mr. Kemper going to help you with this testimony?
LARRY
VONTZ: I think he's going to
applaud for us.
January 23, 1990
Page 12
SENATOR
WITHEM: oh, okay. We'll listen to see how vigorously he
applauds when you finish then.
Okay, we have Larry Vontz, the Deputy Commissioner of Education who will
give us a little
more of a technical explanation of the program.
LARRY
VONTZ: I apologize for the fact
the room is really not designed to show you something visual so that all of you
could see, but I know that most of the school people have seen this probably
two or three times and I just want to go through it very briefly, very
quickly. In any state formula to assist
schools basically you have these three components. You have needs, you have resources, and' you have
equalization. Our current formula
has all three components. We have
needs in our current formula and those are described very quickly, very briefly
the fact that there's a problem with those needs because of the amount of. money we distribute to schools we can
only insure them, as far as needs, about thirty-five percent of the cost of
education. In other words for high
school kids, we're saying, we're going to insure you for about fifteen hundred
dollars. We know that it costs
more like four thousand dollars to education a high school student, so we are
by no means anywhere near in the ballpark with our current formula as far as
the needs portion of our formula.
So that's one of our biggest problems, first of all. In our current formula, we use property
tax or property, as well as our only indicator of wealth- We say, if you have
property, you're rich. That's how
we're going to determine whether you can afford an education or not, or pay for
an education. We have two problems
with this. First of all, we all
know there are a lot of districts that look pretty good as far as property is
concerned, and don't look very good as far as income; we have districts -that
don't look very good as far as property and have lots of income; and we have
districts in between. We have one
other problem with property. it's
assessed at county level and it varies in its assessment. Because we use property as the primary
component, if it is not assessed properly we are distributing money
improperly. For the past twenty
years, or more, we've been doing that.
The district, or the counties which are under-assessed are winners as
far as state aid is concerned.
They are entitled to more money.
So one of the things we wanted to fix was that particular problem and
the commission then, and as far as the bill requires the Revenue Department to
examine the evaluations and where they're off, to make adjustments for state
aid purposes. Well, that's one of
the things we're
January 23, 1990
Page 13
correcting. Now in the current formula, there's
nothing about income. This is
void. It's not there. This part is, we have other accountable
receipts and so one of the new wrinkles is to introduce income as a source of
wealth and to give part of that back to the school districts. We are proposing as they do in the
State of Kansas, by the way, most of what we've adopted comes from what they're
doing in Kansas. The commission
was not interested in reinventing the wheel. We looked what other states were doing, and we felt Kansas
was doing a pretty good job and we pretty well patterned this proposal after
what they do down there. So we're
talking about an 'income rebate going back to the school district of twenty
percent, and obviously, to answer Senator Hefner's question a while ago, if you
have a year in which you have a lot of income, you're going to get a lot of
revenue here and you won't get as much over here. But diversely, if you have a poor year over here, then the
state's going to help you over here.
So, that's what a good state aid formula ought to do. It ought to take care of those peaks
and valleys which occur as far as the income of the residents of a
district. So I think that's a very
good feature and I think that probably most people agree that we need to
introduce income as another indicator of wealth and we've done that. So in essence then, our new proposal is
saying, we're looking at needs in today's world. Not only that, we have categorized the schools by enrollment
categories, recognizing that it costs more money to educate youngsters. Smaller districts, we're giving them
the benefit of that situation by putting the districts in enrollment tiers and
then paying toward the average of each tier so that the higher-cost districts
will qualify for more state aid than they would if you were doing it just on
the statewide average. And many
states do it on just a statewide average.
So I think that's a reasonable feature in this proposal and it does
benefit the districts which have to spend more for education, as a general rule
I guess. Okay, so we're talking
about the needs up to what they are in today's world. We're introducing income as another accountable receipt and
take all these resources, add them together, subtract it from the needs, and
the balance is funded from the state in what's called equalization aid. This would be a rather significant
"pot" of money. Right now it's
thirty-three million dollars.
Thirty-three million dollars of a billion dollar expenditure isn't going
to equalize very much as you know.
That's three percent of the expenditure. All right that's basically how the formula works. The winners and the losers in a general
sense, the ones which have still lots of property in the sense that
January 23, 1990
Page 14
we're really
looking at everyone having a minimum levy of about a dollar. When you apply that dollar and give
some of the districts, you add all these other resources, they don't gain much
over here, if any. Some of them
get nothing, and some of them as Senator Haberman pointed out even lose because
they lose foundation aid that they're currently getting. And this, the state income, will not
offset that loss of foundation aid and that's true in some districts. Tim Kemper, I think, has some figures
for you to show you on the composite how much that is on a statewide
basis. As a general rule, the
districts which profit the most in this proposal are those with high levies;
the districts which do not profit very much, if any, are those with low
levies. That was what, I think,
the commission was trying to do was to get the variance levies because in this
state they range anywhere from fifty cents and three dollars and fifty cents,
to get them more towards the middle.
That then, in essence, what the proposal is. That's one side of it.
As Senator Moore mentioned, there is a lid provision written into this
proposal as well, so that there's a guarantee that there is property tax
relief. I'm going to go through
four possibilities of a school district to show you how the lid would
work. Here's a school district
which in 1989-90 had a budget of one million dollars and two hundred and fifty
students. That means they had an
average cost of four thousand dollars a student. Their allowable increase based on the tier placement happens
to be five percent. As you know
the lid, you're allowed anywhere from four to six and one-half percent with
those who are at the lower end of spending spectrum having a higher percentage
increase. Okay. If you have a district that spends five
thousand at the upper end and one spends three thousand at the lower end, and
you let them both have four percent increase, which one has the greatest
benefit? Obviously, the one that's
spending the most money. So you
have to allow those at the lower end a greater percentage of increase or
they're not even going to come close-to keeping up with those at the higher
end. Okay, this example, this
district two hundred and fifty kids, million dollar budget a year ago, they're
allowed five percent increase based upon where they fall in the tier. In 1990-91, they have no special
circumstances, no enrollment increase, the board doesn't feel like they need
any more than that, then the most their budget is going to be one million fifty
thousand dollars. That's the end
of that. We'll take the same
district. This district happens to
have lots of cash that they're carrying over. They want to use part of it. They don't want to go up a full five percent. They only need to go up three, but in
so many
January 23, 1990
Page 15
cases where you
have a lid, you're penalized if you don't use it all. Well we made provisions for that. In this case, this district, all they needed was three percent,
that's all they'd have to increase it.
That would be thirty thousand dollars over where they were a year ago,
with the understanding that that balance they didn't use, that two percent, can
be carried over and added to the next year's entitlement. C. Another possibility.
The district needed the full five percent and in the judgment of the
board they ought to have one more percent in order to meet all the requirements
they feel that they have to meet.
Seventy- five percent of the board members agree, they vote to increase
it by an additional one percent, that means they're at one hundred and six
percent and they could go to sixty thousand dollars. There's one more possibility, and many of the districts talk
about this, assume for a moment that this district is going to have ten more
students next years than they had the year before. Again, since they had a million dollars for two hundred and
fifty kids, that's four thousand dollars a pupil for the previous year. They're a five percent district
... and raise that a ... you divide the two hundred and fifty
into the million, you get four thousand, we take the four thousand times one
point zero five with five percent increase. That means that we're up to forty-two hundred dollars a
pupil. Since we're going to have
two hundred and sixty people instead of two hundred and fifty, you multiply the
forty-two hundred times two (hundred) sixty, then the budget could go up to one
million ninety-two thousand. I
think those were all the possibilities and that's simply how it works. I'll stop there.
SENATOR
WITHEM: Okay. Are there any questions for Larry?
Senator Dierks.
SENATOR
DIERKS: Larry, is there a
possibility that we could phase out the foundation aid over a few years in
order to make up for the budget shortfall that some, of these schools ... ?
LARRY
VONTZ: ...You're talking
about... if you want to do some
sort of "hold harmless"?
SENATOR
DIERKS: Yes.
LARRY
VONTZ: I think you would want to
do it that way as opposed to foundation aid. I think you could do it more appropriately if you said you
wanted to do something and
January 23, 1990
Page 16
hold, "hold
harmless" at some percentage and then we wouldn't have to monkey around with,
calculate foundation aid. We'd
just say, you're entitled to "X" dollars.
SENATOR
DIERKS: You mean as far as the
lid's concerned?
LARRY
VONTZ: Yes. Well, as far as the aid is
concerned. Losing money out of the
formula has nothing to do with how much you can spend the next year. The lid is one component and it's
totally unrelated to the aid on the other side.
SENATOR
DIERKS: I guess I'm just concerned
that there is some method that people could look to in case there's going to be
a great discrepancy for them this first, second, third year
LARRY
VONTZ: Well, I think Senator Haberman
mentioned...
SENATOR
WITHEM: Your answer though is that
the Legislature could do a "hold harmless".
LARRY
VONTZ: Yes
SENATOR
WITHEM: But you would prefer a
"hold harmless" as opposed to...
LARRY
VONTZ: ... maintaining some foundation.
SENATOR
WITHEM: Maintaining some
foundation aid. Why?
LARRY
VONTZ: Because we could more
appropriately do what you want to do.
If you wanted to hold the districts harmless at, and made sure that they
got ninety percent of what they got before. That's real easy to do. You take ninety percent of what they got- If we have to do
it with foundation aid, we're going to monkey around, we'll try to get that
exact figure that gives them ninety percent and I don't know where we'll end
up, to be real honest. It would be
much more complicated.
SENATOR
WITHEM: Okay. It's much more of a mechanical than a
philosophical concern.
LARRY
VONTZ: Yes.
SENATOR
WITHEM: Senator Hefner.
SENATOR
HEFNER: Larry, you said if you
didn't use you full
January 23, 1990
Page 17
five percent,
you could carry it over one year.
LARRY
VONTZ: Yes.
SENATOR
HEFNER: How about more than one
year?
LARRY
VONTZ: It would be cumulative.
SENATOR
HEFNER: Cumulative?
LARRY
VONTZ: Yes.
SENATOR
HEFNER: Okay, so then it wouldn't become
a floor?
LARRY
VONTZ: No.
SENATOR
HEFNER: That's what...
LARRY
VONTZ: That's what's always been a
problem with a lid, is that in the past, the lids we've had, you had to spend
up to that lid in order to maintain that base.
SENATOR
HEFNER: Yes.
LARRY
VONTZ: Well, this one you don't.
SENATOR
HEFNER: Okay, then you also said,
the income tax would be twenty percent initially. Do you think we'll increase that?
LARRY
VONTZ: You may want to down the
road. I depends on what percent of
the cost of education you want income to bear as opposed to property. Still, this proposal still you've got
property picking up forty-five percent of the cost or little more, and income
isn't forty-five percent because you're going to have income and sales mixed
together. But you're going to have
more income than you had.
SENATOR
HEFNER: And that's about
fifty-fifty ratio or not? Little
more income tax?
LARRY
VONTZ: I would think that perhaps
you'd have more income. That's a
decision if you pass this you'll have to make.
SENATOR
HEFNER: Thank you.
January 23, 1990
Page 18
SENATOR
WITHEM: Say you have your existing
hundred thirty-three million dollars plus whatever you raise from seventeen
percent increase in income and a one percent increase in sales. I don't know if you've ever looked at
those particular numbers. Again,
we can get those for you, Senator Haberman.
SENATOR
HABERMAN: Well, Mr. Vontz, did the
School Land Fund have any effect on this formula?
LARRY
VONTZ: No. Other than it's one of the accountable
receipts over here that under the resources.
SENATOR
HABERMAN: Can the formula be
changed or anything particular happens to it if the school land is sold?
LARRY
VONTZ: No. The distribution of money would
change. For instance, the districts
which have the land now but were sold, they would get less money from this
source. They would begin to get a
tax from that land because it would now be owned privately, but they would not
get the in lieu of tax you're certainly getting.
SENATOR HABERMAN: Well, what happens if the money they
receive when it's put on the property tax roll is less than the money they
receive in lieu of tax? Then
where...?
LARRY
VONTZ: ...Then you have the
equalization coming in.
SENATOR
HABERMAN: And they would go to
this fund, or this bill, and get the difference. Is that correct?
LARRY
VONTZ: Yes, if...
SENATOR
WITHEM: If they qualified for
equalization.
SENATOR
HABERMAN: Yes, thank you.
SENATOR
WITHEM: Larry, I have one question
for you that I'd appreciate it if you'd answer because I had difficulty
explaining to people the other day, and the question that was directed to me
was along the lines of, you folks on the commission said you were going to, use
property as a measurement of wealth, like they did in Kansas. As you know in Kansas, in their formula
they have a component that they identify as wealth measurement, where they add
together the property valuation of a district and the income, personal income,
that's produced in that district.
In this formula,
January 23, 1990
Page 19
as opposed to a
measurement of wealth concept we put in property what it could produce at a
low, at a particular levy, the income that could be produced with a twenty
percent rebate, and we have been told that we kind of reneged on our promise,
to count property value as a measurement of wealth by doing that. Can you explain how, in your opinion,
this still counts property as a measurement of wealth?
LARRY
VONTZ: Kansas takes property and a
factor of income, adds them together and then they say everyone has to have a
minimum effort that they apply it against property, totally. Now what you're doing then, it's
possible with following that scenario, if you could take a district that had a
lot of income, very little property, and you could use that particular concept
you're talking about and on paper it would look like they're going to get a lot
of money. it's all going to come
from property, they're going to have a horrendous property tax because you're
not taxing the income. When we
talked to the Kansas people about that when they were here, the only way you
should use income as an indicator as well, is if you get to use it. If you don't get to use it, it is
ridiculously to count it, and that's in part what they're doing. They do give them the twenty percent,
but in addition to that, they have this factor where they use property and
income together and the quickly told that was a mistake.
SENATOR
WITHEM: Okay.
LARRY
VONTZ: And they wished they hadn't
done that.
SENATOR
WITHEM: Thank you. Thank you very much, Larry, very good
presentation. I didn't hear Tim
applaud but we'll deal with that.
(applause) There you go,
Tim. I would like to now, the
first two testifiers, I know did take quite a bit of time but I thought that
was necessary to get some fairly complex concepts out in front of the
committee. Would like to institute
fairly vigorously our five-minute rule at this point., We have, we will move to
three other sets of testifiers from the commission to immerse the committee
fully in what the commission's reasoning was. We will then be moving to a couple of individuals who have
indicated they have to leave fairly early who would like to testify in an
opponent category, Mr. Osborne and Mr. Karmazin. I hope I've pronounced that fairly correctly and then we'll
alternate two or three testifiers in support, two or three testifiers against,
until we either exhaust the
January 23, 1990
Page 20
list of
testifiers or exhaust ourselves, whichever comes first. So we now have a professional musician
who plays in Bohemian Polka bands who is a part-time school administrator in
Table Rock, we have Duane Stehlik.
DUANE
STEHLIK: Thank you, Senator. Polka band business hadn't been very
good lately, so we need this bill.
(laughter) Especially in Table Rock, there are a lot of Bohemians down
there. A lot of what I was to
speak about concerning the income portion of this particular piece of
legislation... for the record, I
am Duane Stehlik from Table Rock, Nebraska, commission member and
Superintendent of Schools of Table Rock and am pleased to be able to address
this body and speak towards this piece of legislation. Much of what I have to say concerning
the income has already been bantered about through the question and answer
process, however, Senator Moore in his introduction said that this was a very
significant piece of legislation and I believe in his time frame said, included
the span of forty years. The
income provision is probably one of the big reasons why. This is brand new territory for the
State of Nebraska. We are now
introducing income as a revenue source for school districts, for local school
districts, which is something that has never been done before. It is, in fact, a local income tax;
it's not collected locally, but it is rebated locally to the extent the twenty
percent of the personal income tax paid within the confines of a given school
district. That's new territory. That's new thinking for this particular
state. It also gives us, in
addition to access to a new revenue source, a more elastic revenue source. One with growth potential that
hopefully can keep up. Now
realizing in times of drought, Senator Hefner, that we also are agrarian in
Table Rock, it's not urban. I
always like to point that out. The
income portion goes down, the equalization goes up. The other thing which Dr. Vontz answered very well in
response to your question, Senator Withem, is the fact that it does become a
measure of wealth to the extent that you're able to utilize it, that's at the
twenty percent level. if you are
in a district with much income, you're going to get twenty percent of a pretty
good sized number and that's going to be in your accountable receipts, and it
therefore, is a measure of the ability to pay. It is a measure of the wealth of the patrons of the school
district and it becomes a resource for your local school district. Now, it is true, as the critics are
going to point out, that our system is still is still a property-based
system. It will always be
apportioned property-based system, I'm certain. The extent
January 23, 1990
Page 21
to which it's a
property-based system is dependent upon you legislators by the amount of income
that you choose to put into the measure.
If you put in thirty percent, it becomes less of a property tax
system,. and if you put in
forty...you know, you play with the numbers in anyway you see fit. The system has some flaws. There are some losers. Dr. Vontz didn't use his statement this
evening, so I'll steal it from him, it's not perfect but it's a doggone sight
better than what we have got. I
would like to make one further point before I conclude and that is, now that I
have sung the praises of the bill and all of the fine work of the commission, I
would like to point out that I would not be true to myself or the organizations
to which I pay dues and also represent, if I did not point out that the lid is
punitive in some nature. I realize
that we have a lid mentality prevailing.
I realize that there are lid proposals out there that are a great deal
more severe than this measure proposes, but Blue Cross/Blue Shield is expecting
to go up twenty-two point six percent for the coming year, and a four percent
lid is just going to be pretty doggone tough to live with. So I would hope in your deliberations
when you consider this measure and you consider the various lid proposals that
you realize that there are certain fixed costs in social security, energy,
insurance, et cetera, et cetera that we don't have a great deal of control on
and that we have to live with the same as you folks do and the same as the
state government does. With that I
would like to conclude, and take any questions.
SENATOR
WITHEM: In four and one-half
minutes, very good. Are there any
questions for Mr. Stehlik? Thank
you, Duane.
DUANE
STEHLIK: You bet.
SENATOR
WITHEM: Next we have two members
who served on the committee representing higher education. We have Dr. Gene Koepke from Kearney
State who is the acting provost at Kearney State. And Don Leuenberger, who is the business director at the
University of Nebraska Med Center?
DON
LEUENBERGER: Vice Chancellor. (laughter)
SENATOR WITHEM: Vice Chancellor in charge of business
affairs. Okay, got it. Sorry, didn't have my cheat sheet in
front of me. Because of that now
you're going to testify opposed to this.
DON
LEUENBERGER: Do we have to split
this five minutes,
January 23, 1990
Page 22
Ron, or can we
SENATOR
WITHEM: Three each, how's that?
DON LEUENBERGER: A bargain.
GENE
KOEPKE: Go ahead.
DON
LEUENBERGER: I'm Don Leuenberger,
I'm Vice Chancellor for business finance at the University of Nebraska Medical
Center and a commission member.
GENE
KOEPKE: I'm Gene Koepke, I'm an
interim provost at Kearney State College and a commission member. For me it's been a pleasure to work on
this committee and I guess I'm proud to say that the final product is a package
that every member of the committee took pride in. Tonight I'm going to be brief, especially if I have three
minutes, (laughter) and I'm going to focus my attention on just a couple points
that were of special interest to me on that committee. I personally had a bias as a member of
the committee or commission in that I was intent on changing our system to
shift part of the cost of elementary and secondary education away from property
tax and to some other source of revenue.
As a state, we forced our local school systems to be excessively, and I
underscore excessively, dependent on property tax and to be honest the property
tax owners in this state are angry.
More than seventy percent of the aggregate cost of running public
elementary and secondary schools in Nebraska comes from local support. The average local support in the United
States is under forty-five percent.
While state governments across the United States have assumed a greater
responsibility for public education, Nebraska in recent years has gone the
other direction, and we have not...
SENATOR
WITHEM: Gene, could you pull the
mike over so you can speak directly into the mike, they're some people in the
other room who are not able to hear.
GENE
KOEPKE: Okay. Okay. School districts have been forced to cover increasing costs
by constantly adjusting their property tax rates up. I'll, argue tonight, and forever I guess, that our excessive
dependence on property taxes had a negative impact on sectors of our
economy. The typical farmer,
rancher in the State of Nebraska paid $1.64 (one dollar and sixty-four cents)
in real estate taxes for every $100.00 (one hundred dollars) of market value of
his
January 23, 1990
Page 23
or her property
in 1986. The national average
was$0.71 (seventy-one cents) per
$100.00. our farmers and ranchers
are paying more than twice the property tax rate that their competitors are in
other states. The typical home
owner in Nebraska paid an
effective property tax rate of 2.29 percent in 1985, while the national average
was 1.21 percent. Again, that's punitive for the people that own property.
There are those in this state that are operating under the mistaken assumption that property taxes
are too high because our schools are poorly managed. That's simply a mistaken assumption. Per pupil expenditure in Nebraska for
1988 were $3,756.00 per pupil. The
national average was $3,977.00 per pupil.
We're spending less than the national average. Our problem is not tied to expenditures; our problem is tied
rather to source of funding. We,
as a state, are not overtaxing ourselves in aggregate. On a per capita basis, Nebraskans paid
$2,644.00 in federal, state, and local taxes in 1986-87. Nationally the figure was $2,919.00 per
capita--we ranked 27th (twenty-seventh).
And trust me, we're not anxious to be first, but I think we are going
to have to do some things to shift
some of the burden away from property tax and over to income. The second and last major point that I want to make relates to
fairness, and Larry has done a good job of explaining this, but I want, I want
to hammer away one more time. As a
commission, we quickly agreed,
this was of the first things we could agree to, that we wanted every youngster
in the State of Nebraska to have equal access to quality education. We didn't care whether that youngster
lived on a ranch in Western Nebraska, in North Omaha, in Fremont, in Lincoln,
or in Blue Hill, Nebraska. I was
appalled, I guess as an individual, as we
studied our current formula for funding to realize that only $33 million
out of the total package of support for public education in this state had
anything to do with the need of the district. Some districts are property rich; others are property
poor. Property-poor districts must
tax themselves at a higher rate than do property-rich districts to provide a
quality education. Our current
system is simply not fair. As you
study our proposal, you'll quickly realize that we're recommending leveling the
playing field. The formula is
simple needs minus resources equal aid.
Districts with greater resources, either property or income, will
receive proportionately less aid than will districts that are poor. That,
senators, is fair. The word, aid,
as far as I know implies that someone needs help. Legislative Bill 1059
represents a simple concept, yet it's complicated in that it represents
sweeping changes. I'd like to
suggest that now
is the time to
deal with the issue. This bill
represents a
January 23, 1990
Page 24
rational
carefully thought-out solution that's fair, and again, I underscore fair. To not act will cause property
taxpayers to resort to punitive lids creating chaos in educational systems and
damaging the quality of education that youngsters in the state receive. I'll say thank you.
SENATOR
WITHEM: Thank you, Gene.
DON
LEUENBERGER: Ron, I won't repeat what
Gene has said. I think Gene good
job of laying out the issues that the commission considered. Whenever you deal with a system as
large as our public education system is, and as large a consumer as tax dollars
as it is, whenever you start talking about shifting, definitions of wealth or
whether you assess that wealth for purposes of that support, you bring up the
kind of issues I've heard here tonight.
Let me say that 1990 is not 1890, income is a source of wealth in this
state; it's one that we do tap disproportionately low compared to other
states. It does represent a
somewhat different set of taxpayers in some areas,' but that's what we're
talking about. If we did not
intend or if we were talking about just simply transferring the color of money,
if I was going to get $10.00 of property relief for $10.00 of income tax paid
in--we'd be talking about aesthetic values and not economic values. In point of fact, Gene's point about
taxpayer equity, equity for school children in disproportionately low property
districts and a shift in the definition of wealth in this state, is central to
this commission and I think central to the bill. I'd be happy to answer any questions. I enjoyed serving on the
committee. I will say that there
has been some criticism that we did not address exactly the tax rates. I thought that was unfortunate, unfair;
we debated them thoroughly as we did all other aspects of the work of the
commission- I'd be happy to answer any questions.
SENATOR
WITHEM: Are there any questions for
either of the gentlemen?
SENATOR
CROSBY: I have a question, Mr.
Chairman.
SENATOR
WITHEM: Senator Crosby.
SENATOR
CROSBY: I think Dr. Leuenberger
you could probably answer this question because I think of you as a financial,
economic expert. I have had a lot
of calls since the First of December when the tax bills went out because last
year's LB 84 was a tax rebate on property tax. I have one woman in
January 23, 1990
Page 25
particular out
in the College View area, the houses and the property out there are
medium-priced, they're not, you know ...
Her bill was $1,500.00, $900.00 of that was the school--approximately 60
percent. The rebate was there on
her bill. She thought she was
going to get lower taxes because of LB 84. How am I going to promise her that when this bill is, goes
into effect, if and when it does, that next year or whenever the effective date
is, that her tax bill on her house will actually come out with a lower total
due? I think that's essential in
this bill. If that continues, if
it happens as it did this past year, then the public is going to say, you lied
to us again. So these people are
older, and I think they need that assurance and I'd like to have it down in... I mean I ran all these formulas and
I've written out some problems, but I'd like to hear it from you.
DON
LEUENBERGER: I could answer that
in a couple different ways. Let me
answer it with the experience that I've had, and kind of the conclusions that
I've come to over the years. I've
not only served the state as Tax Commissioner but as State Budget Director for
a much longer period of time than I did as Tax Commissioner; and I was involved
in the last lid we've had and I've been involved in several attempts at school
aid. The problem with property tax
relief in this state has not been devising a formula for property tax relief,
it's a simple matter, and I think every Legislature has seen men and women
clever enough and genius enough to do that. The problem is that we've never come up with a formula for sustaining
that relief over time. That's been
the policy difficulty and the policy issue. Philosophically I oppose lids, but the amount of property
tax levied and spent in this state is so large and the amount of state tax
resources necessary to relieve that tax, that property tax, is necessarily
therefore so great that I'm afraid that without a lid you cannot have property
tax relief. It was not my
intention on serving on this commission to talk about lids and property tax
relief, the intention was school of finance and the role of income in
that. But I think the deeper that
you got into the issue, the more you looked at other states, the more
compelling the argument came--that you're not to achieve either equity between
school districts or property tax relief without the existence of a lid and an
effective lid. Now, I don't
exactly speak for the commission in that regard entirely, Ron, but I think
that's my particular view on the matter.
SENATOR
WITHEM: Thank you. Other questions? Jim.
January 23, 1990
Page 26
SENATOR
McFARLAND: Mr. Leuenberger, you
mentioned that the tax rate adjustment was considered by your commission. Is that correct?
DON
LEUENBERGER: We debated it
thoroughly.
SENATOR
McFARLAND: Debated it thoroughly?
DON
LEUENBERGER: We debated whether or
not we should recommend one. We
debated whether we should split between sales and income tax. We debated whether or not the marriage
between corporate income tax and the bank tax and some other taxes ought to be
sustained. I believe we met with
the Revenue Committee at one point in time. The general conclusion of the commission was that our role
was to look at the relationship of income as a source of wealth to the
financing of schools. The
recommendations that we would come we want to be very, very clear would require
the state to come up with more resources to replace those local resources. But I think the commission felt as a
whole, very strongly, that the particular mix at a particular point in time of
tax sources was a matter for the Revenue Committee and the Legislature, and
that it was not within the commission's purview to say, so much income versus
so much sales versus so much corporate, or so much cash flow. You know, those were not numbers
presented to the commission or that we could consider. So we did debate that but the result of
the debate was, I think, an admonition that you point out the full cost to the
state of the bill, as well as the relief on the other side, but not try to
specify from what sources that would be taken.
SENATOR
WITHEM: Okay, thank you.
SENATOR
McFARLAND: Let me continue. So if I understand you correctly then
adjustments in the state income rate were really not considered because you
delegated that as a responsibility of the Revenue Committee.
DON
LEUENBERGER: Well, we didn't feel
it was delegated to the commission, I think is the proper response to
that. That's right.
SENATOR
McFARLAND: One more issue, you
mentioned, we talk about a tax shift and you mentioned the example of a person
who gets $10.00 worth of property tax relief and then pays $10.00 more in
income tax. But that is going to
be a very
January 23, 1990
Page 27
unique example,
isn't it, because there are many people who are going to see a substantial
amount of property tax relief, very little increase in income tax.
DON
LEUENBERGER: If it was generally
true, I don't think that we would have an issue or a commission. All that's involved there is not any
economic values but an aesthetic one.
What color of money do I want to pay my $10.00 from. The fact is, is that's not generally
the case as you suggest.
SENATOR
McFARLAND: That's right. For example, if you had a young man
with a family and they happened to be renting an apartment and he's trying to
get started, just newly married.
He and his wife and family are not going to see any significant property
tax relief at all because they don't own property.
DON
LEUENBERGER: That's right.
SENATOR
McFARLAND: But they are going to see
some significant increase in their income tax and their sales tax. Right?
DON
LEUENBERGER: They would see, I
would assume, the full 17 1/2 percent, depending on what their income was on
that, and as well as the sales tax.
That's exactly the case.
SENATOR
WITHEM: Senator Haberman had a
short question you indicated?
SENATOR
HABERMAN: Dr. Leuenberger, what
would your remarks or your answer be to a. dollar-for-dollar reduction? If a school district receives, say $10,000.00 in state aid,
that school district's property tax should come down $10,000.00. Would that work?
DON
LEUENBERGER: That would be a zero
lid under this bill. That would be
a zero lid. That would be the way
to do it, would be a zero lid, and that would be the effect of a zero lid.
SENATOR
HABERMAN: So anything over a zero
lid on that little theory would be a bonus.
DON
LEUENBERGER: That's exactly
right. It would either come from
the property tax or the sales or income tax, or it would be shared in-some
fashion, depending on that school
January 23, 1990
Page 28
district's needs
and proportions. That's right.
SENATOR
HABERMAN: Maybe you subscribe to
the theory also that if this was not done, there would be a penalty of some
sort, financial penalty or something like that.
DON
LEUENBERGER: The way this is set
out in the bill, and this is how it differs from previous lids and I think this
is very important and that is that there is not the... This is ... how to explain it, the lid goes into effect at the budgetary
stage. It is not a matter that has
to be confirmed by the state auditor later, if you remember all the troubles we
had with the later lid, this is something that the Department of Education has
all the data for and can immediately adjust the state aid portion. I should point out one other thing and
this is in aspect of equity, of tax equity in this bill that I don't think has
been spoken to by any of the other testifiers here tonight. One of the concerns the commission had,
is what about the assumption that not all school districts are at 100 percent
of value, and so that the property tax dollars that we measure need by are
somehow distorted and they either get more or less than they would deserve, had
they been assessed properly. The
bill does call for the Department of Revenue to move each school district to
100 percent of value regardless of where their assessment is automatically and
report those figures to the Department of Education.
SENATOR
WITHEM: Senator Hall has a
question.
SENATOR
HALL: Since you brought it up, Mr.
Leuenberger, (laughter) the issue of what the bill deals with, with regard to
assessing school districts. Have
you had a chance to look at the fiscal note from the Department of Revenue?
DON
LEUENBERGER: No, I haven't. I didn't know there was one.
SENATOR
HALL: A million two hundred
thousand dollars. Specifically on
that issue that you addressed because it talks about approximately twenty-three
full-time employees to deal with that issue along--that issue being the issue of
assessing school districts at 100 percent of value, basically what some of us
might call central assessment. A
not very often spoken of term (laughter) around these hallowed halls. Right?
DON
LEUENBERGER: I didn't mention that
concept.
January 23, 1990
Page 29
SENATOR
HALL: That's ... you're familiar with in your term in
any of those positions that you have previously held with the state.
DON
LEUENBERGER: No.
SENATOR
HALL: But do you feel feel that
that's adequate? I mean is that
appropriate? Is that fair
representation of what it would-take to assess and we have county figures, do
we not?
DON
LEUENBERGER: That number is
somewhat less than I would have remembered from previous years, quite
frankly. What you're talking about
is a system that produces a billion dollars of revenue right now on which the
state, at least, in terms of its administration and its constitutional
responsibility for uniform assessment, spends less than any other tax system
including "pickle cards" I suspect.
(laughter)
SENATOR
HALL: A constitutional
responsibility that has been accomplished from year to year, do you feel? Or if we have that constitutional
responsibility, why do we all of a sudden have the cost of a $1.2 million to
keep that responsibility up, I guess is my point? Another thing, don't we currently have figures that are on a
county-wide basis? And are we
saying then that our county figures are that far off from the figures that
would be generated on a district-by-district basis?
DON
LEUENBERGER: I think that's a
marvelous question. I really do,
Tim. Let me answer that. From the various times that I have
served as Tax Commissioner, there are counties but they are not necessarily the
majority that from year to year have enough sales all over the county to
actually derive a county-wide figure of what value is. Let me give you at typical example, and
we can go to South Sioux City, for example. Most of the sales in that county come out of that town, yet
those values that are set in the sales in South Sioux City are then attributed
to every other town in that county.
Many counties don't have enough sales in any one year to really do any
statistical 'analysis on, less than five, and those five then are extrapolated
to the entire county and represent the values for that entire county. What the bill requires the Department
of Revenue to do for the first time is to use other measures and to do what the
County Assessor cannot do, and that is extrapolate actual
January 23, 1990
Page 30
experience in
sales from other areas from other counties and confirm those through other
market analysis so that you, for once, have a legitimate number for that county
or, in this case, that school district.
In this case, the school district is more important because this is how
you're going to do property tax relief.
You're going to do it on a school district basis and not around county
boundaries- But yes, it adds supplemental information that is not now available
and is not, in many instances, available to many County Assessors.
SENATOR
HALL: But if you have within that
county a group of school districts that don't have any more frequent number of
sales, how do you add to that pool of information that gives you the additional
sales or the additional information to generate what actual, or 100 percent of,
value would be?
DON
LEUENBERGER: An analogy would be
the way that we have traditionally handled ag land by soil-type, crop-type crop
reporting district. It's an
extrapolation of experience from other areas when you don't have that
statistical data right there.
SENATOR
HALL: Why can't we do that
currently on a county-by-county basis?
And I think you know where I'm going. My point is ...
DON
LEUENBERGER: That's right. Part of the problem is that as I
mentioned with, what county is South Sioux City in? I can't even recall.
I can't remember.
SENATOR
HALL: Dakota County.
DON
LEUENBERGER: Dakota County. Even within that county you should do
that kind of analysis between towns, between taxing jurisdictions. The county average is that it's an
average. The problem is that the
extremities of that average are so wide that that average loses meaning. What you need is to spend the proper
money to confirm that average. If
you're going to spend hundreds of millions of dollars to arrive at some
reasonable level of property tax relief and 15 percent is modest, property tax
relief, then I think that... and
you're going to redistribute income and state revenue geographically, then you
want to assure yourself that that jurisdiction is properly assessed and
properly valued and it's ability to support services in that area, is
comparable with every other district that you're shipping money to, and I don't
think that you've got that
January 23, 1990
Page 31
with the best
efforts of the Revenue Department and the best intentions of the State Board of
Equalization simply because you have not had the opportunity to gather that
data.
SENATOR
HALL: Do you think that data as a
rule should be done on a county basis, or should it be done by the state?
DON
LEUENBERGER: I'm not sure the
county can do that in terms of extrapolating data from other counties or
similar jurisdictions, or that type of thing.
SENATOR
HALL: Well, at least on a school
district by school district basis within a county. Say we change the proposals within a bill that required the
counties to send that type of information to the Department of Revenue, and
then the Department of Revenue dealt with it and extrapolated it from county to
county. I think the county has the
ability to do that within themselves I think right now, as opposed to requiring
the Department of Revenue to send us that...or put a separate division out
there that was given that job description to do that.
DON
LEUENBERGER: You would not have
... you would have to use the
Department of Revenue in some fashion just simply to collate that information,
and redistribute to other counties.
Because the fact is that there are counties out there, and a number of
them not one or two, that don't have the sales that constitute in any one year
a valid sample. That's just simply
the case.
SENATOR
HALL: We don't disagree on that,
my point is that we don't necessarily have to reinvent the wheel.
DON
LEUENBERGER: It depends on how far
you want to go in setting up a central information system that assures that
culpability. That's the issue.
SENATOR
HALL: I'll start calling it a
central information system.
GENE
KOEPKE: Ron, I wondered if I
could, just to respond to a comment or question that Senator McFarland had a
little ... it'll just take a
second. The question was asked
basically, will a young working couple living in an apartment some place pay a
disproportionate share of the shift or pick it up. I guess I don't want people to believe that they're the ones
that are targeted. Certainly
anyone living in a rental unit is paying for those property taxes
January 23, 1990
Page 32
one way or
another. I guess I've owned rental
property, and certainly as I'd compute the rent, I would look at the property
tax and decide what that rent would be.
SENATOR
WITHEM: We won't ask you the
embarrassing question if when the property taxes go down whether you'll be
recomputing that rent on your property.
We'll just go on to the next...
SENATOR
McFARLAND: That's exact... that's the point, I mean, that's what
we discussed in the bills last year that if property tax relief was given, the
indication was that rental property would not decrease and renters would not
see any resulting benefit of the property tax relief.
GENE
KOEPKE: I think, Senator
McFarland, it would depend on how competitive that rental market is. If it's a highly competitive market,
then indeed there would be a potential of rents actually going down. If we're unwilling to go that far, at
least we have to realize that rents won't be going up as property taxes
continue to rise. I'll assure you
that anyone owning property will pass a tax increase on as it's received.
SENATOR
WITHEM: thank you very much. Appreciate your input very much. It was very good. One more member of the commission to
testify and then we'll get to some anti-testimony. While Charlyne Berens from Seward is coming up who
represented the Public at large.
Just to indicate to people we have a letter from Pat Newjahr from
Valentine, Nebraska, member of the School Finance Commission represents a Class
I school district in the City of Valentine who was unable to be here tonight
because she is ill. She is
represented here tonight in two ways, one with a letter that she sent and the
second way is by Suzie, our page over there, who is her daughter from
Valentine. So give Suzie a little
bit of a plug here, too. Charlyne,
go ahead.
CHARLYNE
BERENS: My name is Charlyne
Berens, I'm from Seward. I'm the
co-publisher and editor of the Seward County Independent, and I am one of the
at large members of the commission as was just said. Because of that I have no particular ax to grind. I don't represent a particular aspect
of education or business or anything else. I am the ordinary Nebraska citizen, and what I'm going to
tell you is not based on statistics.
It doesn't explain the formula; it doesn't defend the tax shift that was
mentioned; it's moral support for what the commission has done. As anybody who
January 23, 1990
Page 33
can read or
think, understands this state has changed just a little bit since its founding
more than one hundred years ago.
What worked then, or worked at different stages of our development as a
state, does not necessarily work now.
One of those things that doesn't work anymore is our tax structure. When the vast majority of Nebraskans
were farmers deriving their livelihood from the land, it made sense to support
local services like schools on the basis of property taxes. After all, nearly everybody shared the
burden and those who earned more land could usually afford to pay more property
tax, but things have changed. The
burden of support for cities and counties and schools has fallen on a smaller
and smaller group of people. Add
to this picture the number of exemptions that the Legislature has seen fit to
grant, and the tax base gets even smaller. It's no wonder people are screaming for tax reform, and they
are screaming. If you can't hear
them, it's because you're not listening, The fact is that Nebraska ranks near
the top of the list of states in property tax rates, but near the bottom in
income and sales tax. With people
who understand that situation, and I admit that they are the minority, are pleading
for some carefully planned change.
Those who don't understand are just plain mad. But both groups would like something done. For years the Legislature has been
thinking and pondering and considering and talking about property tax
relief. Last year LB 84 actually
did something about it, but it did nothing to change the structure of the
system. If LB 84, or comparable
measures, are going to be the only way we get property tax relief than you're
going to have to deal with the problem every year, and you're going to have to
deal with people who don't believe that you're serious about real change. This bill is a step toward real
change--a way to change the system itself. It's a plan that will work, and the commission is sure of
that after all the questions we raised and the details we demanded and the
"nits" that we picked. It can, in
the aggregate, decrease Nebraska schools' reliance on property taxes. But, on the other side of the coin, the
measure should have another pleasant side effect, or pleasant effect, it will
move toward equalizing educational opportunity in Nebraska. No, a good education does not come
about simply because money is thrown at a school or a program or a kid, but,
education can suffer a lot if sufficient dollars are not available to fund
what's needed.. By providing state
aid dollars to a formula that attempts to bring comparable school districts'
resources closer together, this bill helps prevent the kind of funding
shortages that can hamper a school district's ability to provide a quality
education. That, in itself,
January 23, 1990
Page 34
makes this
worthy of support. I am a firm
proponent of the old local control idea when it comes to school districts. I want to see most of the decisions
about schools made by the people whose kids and grandkids and neighbors' kids
go to those schools, but I also believe that we have a responsibility as a
state to be sure that all the children in our state are educated, and educated
well. We will all suffer if they
are not. By increasing the amount
of state dollars flowing to education and beginning to equalize the funding
across our diverse state, we're taking on that responsibility for educating all
our children. We're not doing a
favor just for somebody out in the Sandhills or up in the city, but for
ourselves. I ask you, if you're
going to oppose this measure to do it on the basis of a philosophical
difference. Please don't oppose it
because you're scared to raise the state revenue necessary to make up for the
decreased property taxesPlease don't oppose it because of a school or
schools in your district isn't going to get enough of the goodies. Neither of those arguments is going to
hold up. People want property tax
relief. When those who are at all
rational, realize the dollars have to come from some other source and are
willing to accept that. All
people, senators included, need to think more about the good of the entire
state and not just their own little corners of it. To a very great extent, what's good for Scottsbluff is good
for Omaha, and every place in between.
Please support this bill.
It's good for Nebraska's taxpayers and it's good for Nebraska's kids.
SENATOR
WITHEM: Thank you, Charlyne. Questions? Senator Bernard-Stevens.
SENATOR
BERNARD-STEVENS: Charlyne, first
of all, I haven't said anything so far which is a rarity for me, I think, but I
certainly appreciate all the effort and time and each of the commission members
have spent on it because I know how much effort every took going throughout the
state and getting input. And it's
on that line that I want to ask this question. Being a Member at Large, and not particularly representing
any particular group and going statewide as the commission did, we in the
Legislature are getting closer and closer to political rhetoric time as they
get closer to the elections. How
in your judgment will Nebraska public weigh the issue when it gets down to,
this is a tax increase because we're increasing sales and income and we're not
against tax increases versus we want property tax reduction? When those two points clash, what is
your perspective of what the Nebraska public is going, how are
January 23, 1990
Page 35
they going to
come down on that issue?
CHARLYNE
BERENS: Well, I unfortunately realize
that a lot of people don't care, all they want is, don't raise my taxes and
they won't see it but I believe a lot of people will see if it's explained to
them that in the aggregate this is a trade-off. That it's over all in this state, it's not an increase in
taxes, and I think people also need to be reminded that if they want property
tax relief, they're going to have to take a little bit of pain, maybe, to get
it but they're also in this bill getting a good deal for school that's going to
improve educational opportunities.
And, maybe not for my kid, maybe I don't have a kid in school, but that
it's my responsibility to see to it that everybody does get that opportunity. People just need to be told that--not
just my little corner but the whole state.
SENATOR
WITHEM: Thank you, Charlyne. Anyone else? Thank you very much.
Let's move to Don Osborne who has some concerns he wanted to express
about the bill. We'll follow that
by Mick Karmazin and then, sorry I forgot your name, but from Macy School
District. We'll do those three
individuals.
DON
OSBORNE: I'm Don Osborne. I am representing the Board of
Education and the citizens of Big Springs and the Big Springs School District-
I've been in education for thirty years and one of the rewards in education
that we have are seeing our students advance to higher levels, and with that
I'd like to recognize Senator Bernard-Stevens. Congratulations, and I issue greetings from the rest of
Cozad where Dave was. There I
don't believe there is a person in this room that does not feel that there
needs to be a change in the state's support of education for elementary and
secondary students. Something has
to be done at the property tax level but when we sit around promising 40
percent, 45 percent state aid and we will do this statewide average doesn't
compute. If I were to pay you
$999,000.00 and I were to pay myself $1.00, and say we're all making a half a
million dollars a year, it wouldn't make sense. I have a gentleman here tonight that might testify for this
bill. He might testify against
this bill. He lives in my school
district. I didn't know he was
going to be here tonight, but when I pointed out to him that instead of
$16,000.00 worth of property tax next year with this bill, he'll pay $20,000.00
worth of property tax, he may change some of his ideas. I think there's some substantial
problems with the bill in the "tiering" system. The very
January 23, 1990
Page 36
smallest school
is set at a level, as the schools get larger and larger, we are allowed to
spend a decreasing amount of money until you reach the very largest tier which
is Omaha. Omaha can establish
their own tier and thus establishing your own tier are guaranteed 100 percent
of the state aid. They will not
take a cut because they're "tiering".
We go and, years ago we said, go reorganize. Get a large per pupil value for your students. Many of the school districts went out
and got a very large per pupil value for the students and now those are the
school districts that are going to be punished by this bill. I'm also concerned with the school land
tax issue. If that land were sold,
we would get 100 percent of the taxes off from it for us, sure we're getting
143 percent "and now you're taking 143 percent away from our state aid. Maybe 43 percent should be taken away
but not 143 percent. I think the
biggest devastation in this bill is not the lid that you people propose, but
the Governor's lid. If we take a
50 percent loss in state aid, and the Governor says, you are limited, you can
go up only 4 percent. What are we
going to do with the children in the school district I represent? If you could see yourself to have a
"hold harmless", I think this would help us a great deal. That's my testimony, Senator.
SENATOR
WITHEM: Thank you, Don, I
appreciate it. Are there any
questions? Thank you very
much. Next individual I had was
Mick Karmazin from Lawrence.
MICK
KARMAZIN: Senators, my name is
Mick Karmazin. I'm from Lawrence,
Nebraska. Lawrence, Nebraska is in
Nuckolls County and I sit on the Board of Education at Lawrence Public
School. Lawrence Board of
Education is opposed to passage of LB 1059 because of the unfairness of the
bill. You got net gainers and net
losers. Lawrence Public School
would lose over 30 percent of state aid but would limit us to a lid of 4 to 6
percent. Our taxes would go up, we
would pay more taxes for education, plus trying to operate under the imposed
lid. We'd pay more in sales taxes,
more in income taxes, and more in property taxes. Lawrence is the ??so-called" rich property district because
of a unique situation. We educate
half of our kids in the private sector and do it a lot cheaper than the state
does. I'm a product of the
Lawrence school system. I feel it
has great benefits. The majority
of kids go on to higher education.
We have a "nil" dropout rate.
We have no school violence.
Over half the kids in one through eight grades are educated at a
parochial school and financed by the income of the patrons of the district,
some of them. The mill has much
January 23, 1990
Page 37
negative impact,
as I said, because of the net losers and the net gainers. From a 100 percent loss to a possible
300 percent gain. If LB 1059
passes it needs several amendments.
First of all you should count all the kids that are getting an education
in one's district, whether private or public. If that was the case in Lawrence, we would gain close to a
quarter of million dollars in state aid.
if it were the case also, we'd rank right in the middle of the state
school systems. We would not be
the "so-called" rich district. The
1 percent sales tax, I'm all for lowering property tax but I think that has to
be "earmarked" specifically for education. And, if you pass the bill, please put in the "hold harmless",
there should be no negative impact when we're trying to lower our property
taxes because that will not be the effect of the bill the way it is
written. I would also recommend
that you, if you want to lower property taxes which is the intent of this body,
to give all school districts a minimum of 40 percent increase in state
aid. I think that would do
it. Thank you.
SENATOR
WITHEM: Are there questions? I believe Senator Bernard-Stevens, then
Senator Hartnett, have questions.
SENATOR
BERNARD-STEVENS: I have one. I can't remember all the figures that
have gone through. The levy that
you have in your school district is at what levy now?
MICK
KARMAZIN: About 1.94 (?).
SENATOR
BERNARD-STEVENS: 1.94, okay,
that's what I wanted to know.
Thank you.
SENATOR
HARTNETT: That was my same
question.
SENATOR
WITHEM: Additional questions? Thank you very much.
MICK
KARMAZIN: Thank you.
DR. SCOTT
BUTTERFIELD: Senators, my name is
Dr. Scott Butterfield, I'm the superintendent in Macy, Nebraska, located on the
Omaha Indian Reservation. I'd like
to address a rather narrow focus, under this proposed legislation that
addresses Macy Public Schools, Winnebago Public Schools and Santee Public
Schools. These are school
districts that have 95 percent, or better, Indian students and are controlled
by elected Indian school board members, as well. As this legislation stand presently, I believe
January 23, 1990
Page 38
some of you
know, maybe others of you don't, that it improperly considers aspects of the
impact aid that our schools receive to help fund our schools. Much of land that we have within our
school districts is nontaxable--federal land held in trust by the tribes by the
federal government. Because of
that, our tax base is extremely low and therefore we received impact aid in
consideration of that. If this
bill stands as it is presently, it would result in an extreme reduction in our
total revenues. In my particular
case in Macy, approximately 25 percent of the total budget for the other
schools ranging from 25 down to 15 percent or SO. I'm not sure that our schools could survive that kind of
reduced funding level. The result
of something like that would be obvious reductions in staffing levels, fixed
costs, and educational services that we can provide to the kids who attend our
schools. It would also make it
extremely difficult for us to meet some of newly-imposed requirements by the
Department of Education under Rule 10.
Any rule or any legislation that finally gets passed in order for it to
not adversely effect us in another manner has to be sent to the Department of
Education in Washington, D. C., to
meet a test requirement established by them to indicate that the state has not
adversely effected the compensation in whatever state aid is a final
result. If it doesn't meet their
test, what they will do then is cut off all state aid to the impacted schools
in this state, which means we get no impact aid at all. We get half of our budget through that
funding source. This is extremely
important to us. With reductions
we may have to increase our pupil/teacher ratios and that's one of the things
that we try very hard to keep low to try to deal with the students that we have
who have real unique needs, and extreme efforts have to be taken to try to raise
those achievement levels for the students that we're working with. I would like mention some points for
you to consider as members in looking at this from our perspective. One is that since we are so heavily
dependent on impact aid from the federal government, it has not kept pace with
the growth of fixed costs that our schools have to deal with--teachers'
salaries, insurance, et cetera. It
has never been fully funded by the federal government, and in fact, in the past
year my school lost $223,000.00, if it had been fully funded; Winnebago lost
$156,000.00; Santee lost over $100,000.00. My school is also growing at the rate of 60 some students at
the kindergarten level per year; visiting classes in the neighborhood of 15 or
less. The other two schools their
population, student population is remaining relatively stable. I believe the bill's intent is to
average 45 percent of the state funding level on average,
January 23, 1990
Page 39
but at present
we're as I indicated much less than that, if the bill was to let stand as is,
it would drop to practically zero.
I don't believe that that's fair, and I don't believe that if you think
about it, you would either. Our
school districts don't get much, or would not get much in the way of an income
tax rebate. Most of the employees
within the reservation boundaries are Native Americans. They're not obligated to pay income
taxes. The same thing is true of
the sales tax, so neither of those are benefits to our particular schools and,
in fact, under this proposal are not positive at all. our recommendations for the committee members would be to
look into ... we're not looking
for the kinds of increases that many of the schools may receive under this bill
but rather would hope that some effort might be made to help us achieve the 45
percent level that the statewide average is hoping to meet. We'd also like you to recognize the
extreme uniqueness that I believe is not an overused word in our particular
case in trying to fund our schools- We wrestle every year with the federal
government on what level of impact aid we will receive. It's very uncertain from year and now
we're turning around and we're wrestling with the same issue with the state. Lastly, if any consideration is made to
take our particular situation into account, we'd ask that we be given some
opportunity to participate in that process.
SENATOR
WITHEM: Thank you. Are there any questions?
SENATOR
BERNARD-STEVENS: I've got just
one.
SENATOR
WITHEM: Yes sir.
SENATOR BERNARD
STEVENS: Would the "hold harmless"
amendment
satisfy your problem then?
DR. SCOTT
BUTTERFIELD: Well, I believe it
would. The concern we would have
is that it not be a one- or two-year "hold harmless" clause because if that
did, we'd be in the same boat two or three years down the road from now.
SENATOR
BERNARD-STEVENS: Thank you.
SENATOR
WITHEM: Thank you very much,
Doctor. Now we'll move back to
proponent, general proponent testimony.
People that talked me earlier in the week about testifying that Dr. Norbert
Schuerman, Larry Dlugosh from Grand Island, and Walt Radcliffe, Nebraska Real
Estate Association, in that order.
Then we'll put back through some people that have
January 23, 1990
Page 40
some concerns
with the bill again. I'll add we
still have lots of people who want to testify, and Dr. Schuerman, obviously not
because you're the one before me at the moment am I making these remarks, but
we would appreciate brevity by any succeeding testifiers.
SENATOR
BAACK: And by the Chair-
(laughter)
SENATOR
WITHEM: And by the Chair, as
Senator Baack so rudely interjected.
NORBERT
SCHUERMAN: Thank you. Senator Withem, Senator Hall, members
of the joint committee, I'm Norbert Schuerman, Superintendent of the Omaha
Public Schools. I would like to
preface my brief remarks with the fact that this particular bill has not been
thoroughly discussed with the Board of Education. We've had it on the agenda several times but haven't been
able to get to it because of some other issues. So as a result of that, I'll be representing my own thoughts
in that and not the thoughts of the Board of Education, but we will be taking
a, and discussing it thoroughly in the very near future. I would also like to express my
appreciation personally of the fact that our district was represented on the
commission by Don Benning and as result of that, the commission did have some
input from the school district of Omaha and we are appreciative of that. I will, and do, want to speak in support
of LB 1059, basically because it does broaden the tax base and it does provides
some shifting away from my judgments, what I think is the over-reliance on
property tax in support of schools and education in the state. Basing that feeling on the, because of
the equalization emphasis, and because it is necessary in the appropriate
public policies that are going to go with that, if in fact you do, if in fact
the Legislature does pass this bill.
I need, however, to indicate that philosophically I do not believe in
lids, especially as it relates to education and meeting the needs of
students. I'm a proponent of local
control and I do believe that local boards of education do act responsible in
meeting the needs of their students.
However, I do understand the political necessity for including perhaps a
provision for some kind of a lid for this particular bill to pass. I would encourage the legislative body,
however, to give some flexibility and to, in the lid, a portion of the bill. and perhaps to consider some of the
fixed costs that school districts are faced with relating to the operation of
the school districts, some of which have already been mentioned ala the health
care increases, the utility cost increases, and we
January 23, 1990
Page 41
are labor-intensive. It does appear that in general the
public is in favor of higher salaries for teachers. So-as a result of that particular statement and believe and
the concerns I have, we still want to say to you that we do feel that the bill
should pass. It will be good for
public education in Nebraska. It's
been a long time in coming. We do
have those reservations because we think it'll be very difficult for us to meet
the complex educational needs of the urban youth that we serve in the Omaha
Public Schools. I do thank you for
the opportunity to appear before you, and if my office or any of my staff, or
our staff in the Omaha Public Schools, can be of any help to you as you
deliberate and change the provisions of the bill, if you change and revise to
improve it, please feel free to call.
SENATOR WITHEM: Thank you. If we revise and damage it, though, you don't want us to
bother you. (laughter)
NORBERT
SCHUERMAN: I don't want any part
of it.
SENATOR
WITHEM: Okay. Are there any questions? Senator
Bernard-Stevens.
SENATOR
BERNARD-STEVENS: Just one. Under the present system that we have
now, I would assume that the Omaha board would be not much different from the
boards I have in the 42nd District and that is when it comes budget increases,
on fixed costs that you can't control whether it be faculty salaries at some
point negotiations that have already been decided or insurance that goes up,
and so on, I assume that there's a tremendous feeling on the board of being
careful about how we finance those increases and yet try to keep our, the property
tax down, at some point. Is
that...would that be a fair assessment that there's some pressure there to
watch that relationship?
NORBERT
SCHUERMAN Undoubtedly so.
SENATOR
BERNARD-STEVENS: Yes. I'm curious, this is the second time
it's been brought up tonight and a lot of people have asked me in letters to
explain it, and sometimes I'm at a loss to explain it well. How would it be different under LB
1059, if it passed, under the lid, flexible lid that you would have, with the
22 percent increase that you may have with Blue Cross/Blue Shield or whatever
percent it may go up in some other year, or some other costs. How would that be different justifying
how to do that with the pressures of, with the lids of 1059 comparing that to
the pressures that
January 23, 1990
Page 42
you now face at
the public level on increasing property tax base with the same type of
increases?
NORBERT SCHUERMAN I think the
pressure would be very similar, but if you had by law to keep your increase to
only 4 percent and you had needs that need to be met, you simply wouldn't meet
them or you cut program, or somehow you would not be able to continue the
thrust of excellence and quality in education which I think our district is
about. And if we are going to
continue to meet the complex needs of our students, we will have to put
additional people power and resources into programming.
SENATOR
BERNARD-STEVENS: Thank you.
SENATOR
WITHEM: Thank you, Dr. Schuerman. Questions? if there are none, thank you very much.
NORBERT SCHUERMAN
Thank you.
SENATOR
WITHEM: Appreciate it.
LARRY
DLUGOSH: I don't have that long a
name, it's just taking, (laughter)
SENATOR
WITHEM: We don't expect you to
fill out the whole thing. Go right
ahead.
LARRY
DLUGOSH: There are a lot of spaces
here. Senator Hall, and members of
the joint committee. My name is
Larry Dlugosh, and I'm Superintendent of Schools of the Grand Island Public
Schools and tonight I am testifying for the Grand Island Board of Education in
favor of LB 1059. First, we
commend the Nebraska School Finance Commission for the excellent study and the
proposals set forth in LB 1059. In
our opinion, the study was conducted in such a manner that we had several
opportunities throughout the period of time for input and review of the
process. I'm going to give you the
scenario of our school district and tell you where we've come from and why we
support this bill. I can go back
as far as five years of personal experience and through examination of records,
historically quite a few years beyond that, but for the past five years Grand
Island Public Schools have been faced with a variety of financial difficulties,
some caused by local conditions, such as the annexation of several housing
areas adjacent to the city which added nearly a thousand students to our
student population in 1985, and some carry-over problems that when I
January 23, 1990
Page 43
arrived, it
existed from the lid bill of late seventies and early eighties. Traditionally, the Grand Island School
District has experienced low valuation per pupil and a lower than average
expenditure per pupil but has also enjoyed an excellent school program for
these students. Because of the
lack of an appropriate cash reserve coupled with increasing costs and unstable
state and federal revenues, we have found ourselves in the position of having
to levy a higher than average local property tax rate. This year it was $1.96 for the general
fund and a $2.16 total. In
addition, we've been borrowing nearly $3.5 million per year through the Tax
Anticipation Note Program to cover our short-term cash flow difficulties. As we followed the progress of the
Nebraska School Finance Commission, we've been particularly pleased with the
attempts to: 1. Provide adequate funds to equalize
educational costs; 2. To broaden
the revenue sources available to school districts by rebating a portion of the
state income tax collected at the local level and back to that local district;
and 3. To provide a more
appropriate overall level of funding for K-12 education in Nebraska. If the formula proposed in LB 1059 had
been in place during the 1987-88 school year, our district would have had to
raise $5,902,000.00 less from local property taxes. The savings to local tax payers of approximately 35
percent. In 1987-88, we derived
$15,995,000.00 from local property taxes and had this bill been in place, that
figure would have been about $10,100,000.00. The formula illustrates that our district when placed in its
tier group, had a cost per pupil that was below the midpoint for the tier of
both the 1-6 and 9-12 levels during 1987-88. We believe that same condition would exist for 1989-90. Legislative Bill 1059 addresses a
situation that has been allowed to exist far too long, and that is funding
disparities that have existed between property-rich and property-poor school
districts. It takes into
consideration each district's ability to provide services based on the
resources available at the local level and provides adequate equalization aid
for those districts who can demonstrate the need. Again, I'd like to go with what some of my colleagues have
said, and while we are not in favor of a lid, we do understand political
realities. We think that if the
lid has some expandability in it that we can probably live with such a
lid. We encourage the committees
to move LB 1059 to legislative floor for positive action and
implementation. It is a ray of
sunshine that many of us have been anticipating for several decades, and I
can't go back too much farther than several decades in the business. Thank you. (laughter)
January 23, 1990
Page 44
SENATOR
WITHEM: You're giving something
away there, Larry.
LARRY
DLUGOSH: Yes.
SENATOR
WITHEM: Are there any questions?
Senator Haberman.
SENATOR HABERMAN: Could you take it a step further here
and tell us, in your opinion, what some of the expanded liabilities would be
underneath the lid?
LARRY
DLUGOSH: Would you
rephrase... expanded liabilities?
SENATOR
HABERMAN: I believe you said, if
we gave you some "rope" so to speak to raise the lid, in what area would you
raise them, would you want to raise ...
?
LARRY
DLUGOSH: No, I was commenting,
Senator Haberman, on the fact that I believe in 1059, the lid has some
expandability, that it is not a certain set percentage, and we favor that kind
of a lid rather than an specific 1, or 2, or 3, or 4 percent lid. That's what I was referring to.
SENATOR
HABERMAN: So with a pretty good
expandability of the lid, then, it wouldn't be a dollar-for-dollar tax
reduction. Would it?
LARRY
DLUGOSH: In our case, as we look
at it for the first year or two, I think it would be a dollar for dollar. Now our enrollment has stayed fairly
stable except for that tremendous impact during the annexation. We do anticipate that we'll be
annexing, the city will annex another housing area in 19-, well, they've done
it in 1990, and we'll take over that area in 1991, so we'll have some more
liability there.
SENATOR
HABERMAN: And this is at Grand
Island, is it?
LARRY DLUGOSH: Yes, it is.
SENATOR
HABERMAN: So what we could say
then that in Grand Island, taxes could have been on the real estate 33 percent
or something like that. I
LARRY
DLUGOSH: The way we calculated it,
if it had been in place in 1987-88, that would have been true.
SENATOR
HABERMAN: Have you figured out
what it would be
January 23, 1990
Page 45
in 1990?
LARRY
DLUGOSH: No, I haven't because I
don't have the information from all of the schools in our tiers.
SENATOR
HABERMAN: Thank you.
LARRY DLUGOSH: Yes.
SENATOR
WITHEM: Thank you, Larry. Appreciate it.
LARRY
DLUGOSH: Thank you.
SENATOR WITHEM: Mr. Radcliffe, Dr. Radcliffe. (laughter)
WALTER
RADCLIFFE: It's pretty late for
any of that. Mr. Chairman, Members
of the Committee, my name is Walter Radcliffe and I'm appearing before you this
evening as a registered lobbyist behalf of the Nebraska Realtors Association,
behalf of LB 1059. First of all,
I'd like to say that the, I know the Revenue Committee is going to have a
number of property tax bills, number of lid bills. This is the only time you're going to get to see me. I know that probably distresses you a
lot, but I think that LB 1059 has the component parts that will permit me to
explain to you what the position of my client is and you won't have to suffer
through my testimony on any of the other bills that you have. I just simply ask that you keep it in
the recesses of your mind when you're deliberating those bills.
SENATOR HALL: Mr. Radcliffe.
WALTER
RADCLIFFE: Senator Hall.
SENATOR
HALL: Do your clients know that,
that you don't intend to appear? (laughter)
WALTER
RADCLIFFE: I intend to send them a
memo in April in that regard, Senator Hall. However, if you'd like to have me come more often, I'm sure
I'd be happy to do that.
Seriously, LB 1059 contains what the realtors believe are the three
necessary component parts for property tax relief/school finance. They're looking at 1059 from its impact
on property taxes. Those three
component parts are these: First
of all, a formula method with regards to state aid to education and a formula
which will be enacted, which will stay in place for a period of time in the
future, at least until the Legislature decides to change that, so we're
January 23, 1990
Page 46
not back every
year trying to reconfigure what state aid's going to be. Secondly, is a lid. Now historically the realtors have not
supported lids on a stand-alone basis.
They do not today support the Jaksha petition. They support lids when, in fact, they are part of an overall
methodology to effectuate and ensure that the state dollars which are going
back to the political subdivisions, in this case the school districts, will
result in a reduction or, and I'll get to this, a stabilization of property taxes. And, finally (third), LB 1059 contains
in it a funding mechanism through sales and income tax to ensure that the
revenues will be there to meet the formula distribution that's in the bill. Now, I'll admit with regards to the
lid, that does effect only school districts. However, school districts fill, you know it better than I,
they consume about 65 to 70 percent of our property tax dollars. Quite honestly, I know I'll ... I probably shouldn't turn my back at
the room when I say this, I don't think the lid in LB 1059 is adequate. That's not because that I'm here to
bash school boards or anything else, I simply don't think that the general
public feels that a 4 percent lid to a 6 1/2 percent lid is sufficient. Let me illustrate to you why. I do not believe that LB 1059 and an
extension of LB 84 from last year is going to pass. it's going to be either/or. if it's LB 1059, let's assume that because that's the
greater of the two. If LB 1059
passes, with the lids that are currently in it, and I'm assuming for the sake
of discussion that this would have a 15 percent impact in overall property
taxes, not just, not the school district's property tax share but overall
property taxes. Out of that 15
percent, 8 1/2 percent is going to be eaten by as a replacement for LB 84 from
last year, so that's going to leave us 6 1/2 percent. If you're over the threshold, you go to the lid, it's a
zero. If you're under the threshold
and you do a 4 percent, it's only 2 1/2 percent. People need to understand that whatever we're talking about
with regards to "property tax relief" is not going to see any property taxes
plummeting. At best it's going to
be a stabilization. That's what LB
1059 does. One it stabilizes and
two, it puts in place a formula and a methodology for funding it. That, quite frankly, is why the
realtors support that. A couple
other tangential comments on 1059 and then I'd be happy to try to answer any
questions. In looking at the bill
from a, purely from a political standpoint, there are two, in my estimation,
problems with it that we're going to encounter. One is going to be the lid--is it high enough, is it low
enough. I'm sure at some point in
time, we're going to have an auction on the floor.
January 23, 1990
Page 47
Secondly, is the
issue of sales tax, or excuse me, of the income tax increase in it? I'll say
this now, I've said it before privately, if the money is there to continue LB
84, the money is there to pass LB 1059 without an income tax increase, at least
for the next fiscal year. In
closing, the other thing I'd ask the committee to consider is the sales tax
increase which is proposed. The
Revenue Committee, Senator Hall, as you know has before it a number of bills
that seek to rectify some inequities with regards to the sales tax; housing
authorities pay sales tax; ag societies; NRDs--those types of exemption bills
have never been considered.
They've never been on to the floor. I think if 1059 is going to pass, and in essence, increase
the sales tax and perpetuate whatever inequities are in the system, perhaps
it's time to look at some of those exemptions and see whether or not this may
or may not be the time, if the sales tax is going to go up to attempt to
address those. With that,
gentlemen and ladies, I would attempt to answer any questions.
SENATOR
WITHEM: Are there any questions?
SENATOR CROSBY: Mr. Chairman.
SENATOR
WITHEM: Senator Crosby.
SENATOR
CROSBY: A question and a comment,
I guess more, Mr. Radcliffe, Walt, because you answered my question that I
asked a little while ago. I think
the public perception, again, with the publicity that's been given to LB 1059,
again, because we talk about property tax relief. Property tax relief, if you ever go door to door, you'll
find that out, to the average citizen means that the taxes go down, that the
property tax bill is lower. In
this past year, the rebate, I had to explain that to every person that called
me to go down the list and find that figure that was the rebate. So I thank you for going through that
because I think you've clarified the point that even that 15 percent is going
to evaporate, more or less, because of the givens in it. I guess I don't really have a question,
I just thank you for the notes that I've been able to take.
WALTER
RADCLIFFE: Thank you, Senator.,
SENATOR
WITHEM: Are there any other
questions? Thank you very much, Walter.
Appreciate that. I'll move
to some individuals who wish to express some reservations about the bill at
this point. Mr. DeCamp. Is he still here?
January 23, 1990
Page 48
SENATOR HABERMAN: He was on the phone a minute ago
... maybe he's out in the hall.
SENATOR
WITHEM: We'll go to Mr. Baum then,
there we go ... Rick, you'll be up
next and then that's the last of the people, John DeCamp and Rick Baum are the
last of the individuals that I have on the list identified specifically as
"anti" testifiers. We will then
allow an additional person, I don't have anybody on the list here identified
specifically as "anti". I didn't
finish my sentence, I have a tendency not to do that. We will hear three "anti" testifiers and then switch over to
do three proponents., and continue that as long as we need.
JOHN
DeCAMP: (Exhibit D) Mr. Chairman,
Members of the Committee, I had a rather lengthy presentation but with the
limitation of five minutes, I'll obviously change that dramatically and hand
out my presentation after I'm finished.
Mr. Chairman, rather than
discuss losers, winners, who gets more money, who gets less money, we would
like to deal with three philosophical reasons why we, the Class VI Schools are
opposed to LB 1059, as written.
The first and foremost most fundamental one is very simply that the bill
belies what it says it's going to do.
In other words, property,
property, property is still the fundamental measure, the fundamental
underpinning of financing education.
Whereas we had thought that we're going to move from property, we
actually moved more solvently on to property. The essence of this legislation is very simply this. If you have property, whether that
property has a million dollar mortgage on a million dollars worth of property,
and is producing nothing; or whether it's a million dollars worth of property
producing thirty percent income, it's all treated the same--it's viewed as
wealth and ability to pay. And if
you have property, then it is property that is going to finance your school
district. That's a simple fact. We
had hoped, we had hoped and believed that the system would move to what were
the other, the other real measurements of wealth and ability to pay moving into
the 21st Century. What are they?
We don't have the agrarian economy of a hundred years ago where everybody had
an eighty or a quarter section, or whatever. Now we have an economy based on wage earners, entrepreneurs;
an economy based on consumption of goods.
The true measures of ability to pay, the true measures of wealth in an
economy like this are income, sales, income tax, and sales tax. But, that is not what the system
does. This system says, if
January 23, 1990
Page 49
you have
property, that's how you're going to finance your school system, primarily and
fundamentally. Best example of
that, a simple example, Omaha has a limited amount of property per student so
they move dramatically down in terms of paying for their school system out of
property. They pay only 48
percent, or thereabouts, and the balance comes from sales and income. Take a school like Northwest out near
Hastings. That school pays about
90 percent of its school expenses from property today under this system, it'll
continue to and increase 90 percent or more in the future. So we say, if your philosophy is that
you're moving off of property and going to move to another source, then it's
not really being done. The
gentleman earlier used the example, well, if I have 99 people and one has
$1,000 and one has $1--we have an average of ... well, it's kind of that way. So we would say, the underpinnings of this system are still
property and once you're grounded into property, you're going to have the same
problems going into the future and the future, ten or fifteen years. The second philosophical argument that
we have against this bill is that we believe fundamentally that you cannot divorce
the financing of education from the quality of education. Repeatedly, when we raised this
question, we were told the purpose of this bill is not to worry about the
quality of education, this bill deals with the financing of education. Now what I'm going to say next is going
to offend some in the room, it offended them when I brought it up before. But one of those ghosts of the past,
Vard Johnson said it far better than I when he had a lot more time in a
hearing, he brought up an example, a good-example. I think the example was Monroe, quite frankly, and the
essence of what Vard explained to the committee then, and it surrounded LB 662,
quite frankly, and some of the other legislations. The essence of what he said was this, let's face it, there
are schools that do not deserve to exist.
We have to worry that our kids can compete in the future. They have to compete against the city,
they have to compete in the universities, they have to compete against the
Korean, the Japanese, the Taiwanese, the German--they have to get that quality
education. We believe the way this
system is designed, it will literally keep in existence hundreds and hundreds
of schools who do not deserve to be in existence. Schools that cannot compete today that would probably go out
of existence will be preserved in existence. And yes, we know, the Class VI schools know that if they're
going to survive in a world competition, that means they either have to be the
best schools or they're going to be ex-schools but that's the world that we're
moving into, that's the world we think you
January 23, 1990
Page 50
should deal
with. If you try to separate, if
you try to divorce the quality from the financing, you're going to end up with
exactly what we see happening--a bill that says, okay, A, B. C, D, E will keep you all in existence. if you're starving now, we'll make sure
you have enough to stay in existence.
We don't think that's necessarily good. We think it'll end up with a two-tiered system of education
in the state. One of fairly good
quality, particularly and primarily in the metropolitan areas and one, quite
frankly, of mediocrity, particularly in some of the rural areas., That we think
is unfortunate and a direction we don't want to take. The final, or other philosophical argument that we have
against the legislation has to do with the whole issue of ability to pay. What is the true measure of wealth? And
as I say, we suggest the real measure is sales and income, and even though,
even though, sales and income dollars are today, if you look at the studies
primarily generated in Omaha and Lincoln, much of that generation starts
outstate. For example, I would
guess I don't know, a half a third of all the medical, major hospital
treatments that occur in the major medical centers emanate from outstate. A person like myself has a number of
clients, even though I'm sitting in Lincoln, owning a house in Lincoln, my
income shows up in Lincoln and probably a lot of the people in this room, that
income is generated outstate. These
are collection points. Under this
system of this legislation, we see a system developing in which with property
being abundant outstate and being the primary measurement of- wealth, property
will finance the schools outstate for a fairly mediocre system and we will
become net exporters of sales and income tax dollars to the very points where
they don't need them the most. In
other words, the cities. So, we
would suggest that if you really wanted to completely fulfill exactly what you
stated in the preamble of the bill, in the intent of the bill, you would do
precisely and exactly what you did in the one bill that attempts to marry the
two concepts--quality and financing--and think about it for a moment. What is it? It's the choice bill. What did you ultimately determine you
were going to have to do. You were
going to have to provide a financing system that essentially treated everybody
the same, a foundation system. In
other words, a kid in Neligh, a kid in O'Neill, a kid in Omaha, a kid in
Lincoln--is a kid entitled to an education about the same quality and probably
costing about the same. And, yes,
you could take your identical bill almost, not almost, literally word for word
on the needs portion on these things but just do the one thing you claimed you
were going to do and that is flip it so that instead of using property as the
measuring device
January 23, 1990
Page 51
for wealth, you
use the sales and income resources of the state as the measurement. And you said every kid in the state is
entitled to 55, or 65, or 75, or 95, or 100 percent of the standardized needs
for education. And, yes,
eventually you would have a system based on sales and income tax and almost
devoid of property tax. And, yes indeed,
hundreds of schools that are now surviving and that the towns want to keep
alive would probably go out of existence because they couldn't compete. They'd have to merge and have regional
schools--a regional school system.
That's what we see as the alternative and a better alternative, and yes
indeed, a hardier alternative to pass but that's what we would suggest as three
philosophical objections to the legislation.
SENATOR
WITHEM: Thank you, John. Do you have a handout there... ?
JOHN
DeCAMP: Yes.
SENATOR
WITHEM: That one of the Pages
could get?
JOHN
DeCAMP: Sure.
SENATOR WITHEM: Appreciate your comments. Rick.
SENATOR
HEFNER: I have a question.
SENATOR
WITHEM: Yes, Elroy.
SENATOR
HEFNER: Senator DeCamp, when you
say "we", who do you mean?
JOHN
DeCAMP: The Class VI schools.
SENATOR
HEFNER: Okay, what association is
that?
JOHN
DeCAMP: We call them the regional
school systems...
SENATOR
WITHEM: We tried to call them that
last year, too, John. We didn't
get that done.
JOHN
DeCAMP: I know it, I know it. Well, we can try again.
SENATOR
HEFNER: Okay, are you a paid
lobbyist then for the Class VI schools?
JOHN
DeCAMP: Oh, I hope so. I hope so. (laughter)
January 23, 1990
Page 52
SENATOR
HEFNER: Okay.
JOHN
DeCAMP: Yes sir, but
SENATOR
HEFNER: Well, I want to know.
JOHN
DeCAMP: Yes, yes, indeed.
SENATOR
HEFNER: Okay, okay. Thank you.
SENATOR
WITHEM: Thank you. Thank you. Rick, you're up next.
You're going to run the risk of giving your handout before you speak,
huh?
RICK BAUM: (Exhibit C) Yes, well there are few
exhibits I'd like for you to see.
SENATOR
WITHEM: Okay.
RICK BAUM: I'll sign this afterwards.
SENATOR
WITHEM: That'll be great.
RICK BAUM: Senator Withem and Members of the
Committee, my name is Rick Baum and I'm here representing the Nebraska School
Improvement Association this evening as a lobbyist, as well as their Field
Service Director, and as you're getting the exhibits, I'll try to summarize as
concisely as possible some, but not all, the things that we're concerned
about. As you get your exhibits,
you'll notice kind of a summary page on top. I'll use that as a prompter but realizing time is rapidly
passing along here. The first
exhibit after that you'll see the vote on LB 662 and it was brought to my
attention by one of the members of our board that this should be brought up
this evening because people were told when the 662 debate was in its height
that they were going to get property tax relief. I'm also told in some of the other debates that are going on
in the Legislature right now addressing Class I schools that the only reason
why LB 662 was defeated was because of the sales tax issue. Why, I don't know, I cannot read the
minds of about 517,000 voters that voted on that issue. Sixty-seven percent voted to repeal
that law. I don't think that they
were necessarily against funding education, but I think they saw a number of
things that were not necessarily the kinds of things that reflected them and
thus that bill was repealed. One
of the main concerns I have this evening that
January 23, 1990
Page 53
I'd like to
represent in terms of the Class I's, we're obviously the most rural districts
in this state. I, too, got the
data as you did, it showed the differences in the state aid that they would or
would not get in comparison to what they're receiving now. Many of them received a reduction and
others act in an absolute termination of their state aid. Rural American-is not necessarily on a
bounce back. In a couple of the
exhibits I've included, show some of the things that are happening. We've seen attrition; we see an aging
demographic pattern; we see a lowering economic issue. And someone said, well, you know if you
get twenty percent of that income back, that's pretty good. I said, well, twenty percent of nothing
is nothing. Just to make an
illustration that the income, of course, is not going to be that robust in many
of the Class I Districts. But one
of the things I'd like to ask of this committee, of these legislators, is to
ask that a run be made. If we were
to take this bill, LB 1059, and not increase any additional revenues and show
how the monies would be distributed to the school districts right now based on
the current $133 million, I think that would show who's going to be really
fairing well in this legislation.
and I'm very serious in that request. I guess the bottom line here...
SENATOR
WITHEM: Pardon me for interrupting
but specifically would that prove?
RICK BAUM: As we understand the bill, our
understanding is that there will be larger districts that are going to get the money,
and even those districts that are getting money now that are not Class I's but
inclusive of Class I's would receive a reduction...
SENATOR
WITHEM: I don't know if that's
true or not. What would that
prove?
RICK BAUM: That would prove that this is not going
to be advantageous to all the school districts across the state.
SENATOR
WITHEM: I guess I don't understand
how showing what $133 million would do in this formula proves anything about
what a different figure of appropriation that we're trying to give to the bill.
RICK BAUM: Well, the point...
SENATOR
WITHEM: I'm, sorry, Just go ahead
with the testimony.
January 23, 1990
Page 54
RICK BAUM: No, that's, no, I'm glad you did
because one of the reasons I wanted to bring that up is that the Class I's have
been receiving a lot of brunt, as you well know of their so-called property tax
havens and there's the same disparity of levies even amongst the K-12 Districts
as there are in the Class I's, and if you take the revenue data, and I don't have
that with me tonight. I thought
about it after I already left the office, but I did a comparison showing the
levies and in the per capita income in that district. I took the top ten levies in the K-12's and the top ten
levies in the state of the Class I's and also compared the lowest ten levies of
the K-12's and the lowest ten levies of the Class I's and showed the per capita
income- The disparity existed in both categories. So I guess what we're saying as bottom line, we see that
this bill is going to hurt rural Nebraska more than it's going to help it, and
that's all I'd like to say.
Everything else has been said and I don't want to be repetitious in that
and respect your time, but as an official position, NSIA (Nebraska School
Improvement Association) would like to go on record as opposing LB 1059, as
written tonight.
SENATOR
WITHEM: Any questions? I guess the
only thing I'd do, Rick, is to ask you to wait until you see the neutral
testimony we're going to be seeing from the Department of Revenue here in a few
minutes and react accordingly to that.
Also I saw when handouts came from a couple of other sources, the Farm
Bureau Federation and Dr. Ossian
from Waverly. Those just happened
to be distributed. Those were part
of your handouts?
(INAUDIBLE) No.
SENATOR
WITHEM: They just happened to come
at the same time. Okay, I was just
slightly confused there. Okay.
RICK BAUM: One of the things that we don't
understand based on the data that exists, or I should say, does not exist is
how, do we know where the income is actually coming from. If we have the data and relationship to
the income from the Department of Revenue, does that show it by districts,
Senator?
SENATOR
WITHEM: To my knowledge, it
doesn't, but I'll wait and let them speak for themselves.
RICK BAUM: Okay.
January 23, 1990
Page 55
SENATOR
WITHEM: I think that's one of the
problems I have with the preliminary look at the data I've seen that it doesn't
show it by district.
RICK BAUM: All right, thank you very much.
SENATOR WITHEM: Thank you very much. Yes sir, will you...
MONTE
ROMOHR: I was anti.
SENATOR WITHEM: Yes, come on up. You're the third individual who... and then Weill go to Mr. May, Mr. Chillcoat, and Mr. Smith.
MONTE
ROMOHR: Thank you, Senator, my name
is Monte Romohr. I'm from Gresham,
Nebraska, I'm a member of the Utica Centennial School District. I'm not going to remember all the
things my superintendent back here tells me to say, or wanted me to point
out... all I can say is that I'm a
farmer and I pay property taxes.
And my school district happens to be one of those schools that slipped
through the cracks on this and we're going to lose state aid to the tune of
$132,000.00, or about 57 percent of what we had been getting in the past,
according to the print that I saw based on 1987-88. 1 guess what I'd like to say tonight is, I'm in support of
the bill, I think you've got a nice bill here. I think it does the things that me as a amateur politician
has done in my little district in my little corner of Nebraska has been
preaching for years and that is, end the reliance on property tax. Get it to the more appropriate signs of
wealth and that is income and sales tax.
But, keep me where it was at.
That's all I'm asking. Keep
me where I was at on the thing and don't penalize the efficiencies that my
school district has been able to do in the past by consolidating three, four
and one-half towns. That's what I
want to get across to you tonight.
Again, I have a bunch of things that I could say on the things we're
looking at. I'm looking at a 5 1/2
percent increase in my own property tax as a farmer--just from this bill--if
it's not "held harmless" for me.
SENATOR
WITHEM: Thank you, Monte. Appreciate your comments. Senator Nelson, then Senator Dierks
have questions.
SENATOR
NELSON: All right, you're about
the first farmer that came up here and I have an idea of some of these
January 23, 1990
Page 56
figures, but
would you care to share with the people here. Are you primarily, you're a young fellow, so I'm assuming
you're renting some and you're a property taxpayer both. Approximately, and I know you buy
probably used machinery, new machinery, and so and so forth, what this 1
percent would cost you. Would you
care to share in your operation, if you're an average farmer?
MONTE
ROMOHR: Ma'am, we bought a new
combine last year for $74,000 ...
SENATOR
NELSON: You're not an average
farmer then, but go ahead.
(laughter)
MONTE
ROMOHR: Well, the last one we
bought was ten years ago, so ...
SENATOR
NELSON: All right, all right.
MONTE
ROMOHR: Divide that by ten. All right. So, you're looking at 1 percent on 74, $740.
SENATOR
NELSON: $740.00.
MONTE
ROMOHR: Right. I also a decent share of income tax in
the good years, but my problem is with the way it's been in the past, if I
didn't make much money, I still had to pay a lot of property tax, ma'am. And there are people that I feel use
the school system but don't necessarily pay the property tax. Okay? I don't know how to say it any
more diplomatically than that.
But, yes, I'm going to be effected from the income standpoint on this
bill.* I'm going to be effected from the sales tax standpoint of the bill.
SENATOR
NELSON: The criticism that we
hear, and I'm very much aware of, is the young farmer if he's not a property
taxpayer, he's going to be the loser here because he's going to pay additional,
maybe he'll pay income tax and maybe he won't, but he's going to pay additional
sales tax. Well, on the other side
of the coin, then, they're saying, well, he's getting his kids maybe educated
without paying a lot of property tax.
MONTE
ROMOHR: Where is this young couple
that's renting a house now, where were they when I was educating the kids with
my property tax? You know, if you...
Senator McFarland...
January 23, 1990
Page 57
SENATOR NELSON: Umm humm.
MONTE
ROMOHR: Anything else?
SENATOR
WITHEM: Senator Dierks, I believe
had a question.
SENATOR
DIERKS: Well, we haven't heard
much talk here tonight yet about the increase in range land values that's
happened last year and will happen again this year and that'll have some effect
on the final printout that we have on this legislation. How does that affect you? How does that
effect you? What kind of difference do you see?
MONTE ROMOHR: That's true.
SENATOR DIERKS: How does that effect you? What kind of
difference do you see?
MONTE
ROMOHR: That effects me even more
than I've let on because first of all the property taxes that I specifically
pay in my district, the increase on it, because of the increase of ag valuation
increased between 20 percent and approximately 38 percent. If we see an additional increase in the
ag land valuation for me next year, I'm hearing figures from 15 to 20 percent,
that again will be added in addition to this "non" hold harmless. Furthermore, sir, if we lose the
effects of LB 84, is it that gave us the rebate, I will get hurt there again,
too. All I'm, I'm pointing that
out that, that's how I'm going to be effected as a farmer and a taxpayer out there. All I'm asking you is if there's a five
percent ... yeah, I know, I'm from
a cheap district, but if there's five cents out there that you can hold me
harmless on, that will help. Three
million dollars, I understand, other than the Native American tribes would
cover some of these things out of $230 million you're going to raise on this
thing. I don't think we're asking
that much, and I'm going to be paying the income in sales tax to do it, to help
do it. But, yeah, the change in
valuation will effect me too.
SENATOR
DIERKS: The percentage is how
much, again, from
last year to
this year?
MONTE
ROMOHR: It varied, depending on
the piece of land on whether I had dwellings, or buildings on them or not,
varied between 20 percent and 39 percent, sir, the increase.
SENATOR
DIERKS: Thank you.
January 23, 1990
Page 58
SENATOR
WITHEM: Thank you very much,
Monte. Appreciate it. I'm going to ask everybody to do one
thing now, if you would. There's
still lots of people I know who want to testify. The committee's been at it for two hours and twenty
minutes. You've been at it for two
hours and twenty minutes. I would
like to ask you to take a look at your remarks, see what you can
abbreviate. We want to make sure
we give everybody a chance to, at the minimum, get up to the microphone and say
who you are, where you're from, who you represent, and what you think about the
bill, but I think we're kind of getting of getting to the point where reading
prepared statements, those kinds of things, if you could limit that, we'd sure
appreciate it. If you have some
new comments to make, if you just want to focus on one or two key points that
you may have heard previous to this, go ahead and do that. We want to give you a chance. This is an important bill but we also,
I think, should be a little bit sensitive to those that are still following you
that have some information to give to us.
So, with that admonition, wouldn't you know it after I "chew" people out
about being brief, one of my constituents is on the list next. So we'll make one exception, I
guess. No, Jim, please. How many people are still wishing to
speak in a supportive position? How many people are still wishing to speak in a
supportive position? We have ...
eleven. How many are going
to wish to speak in an opponent position... four, okay.
JIM MAY: I won't need a Page.
SENATOR
WITHEM: Okay, very good
JIM MAY: Only a page in the book, probably. Thank you, Senator Withem and Senator
Hall, while he was here, and the members of the committee, my name is Jim May
and I live in Papillion. I'm not a
paid political announcement, I'm only a constituent of Mr. Withem's district
and I have children in the Papillion/LaVista School District. I want to congratulate you and the
members of the Nebraska School Finance Review Commission for a fine job on a
difficult task and I know that you recognize a need to modify the current
school funding methods and relieve the burden now being carried by the local
property taxpayers. we've seen a
lot of data and we've crunched a lot of data, and I just want to put this on a
personal level and then I'll get off your case. Seven years ago my company transferred me to St. Louis. My children attended the Parkway School
January 23, 1990
Page 59
District. Parkway is a district that provided a
good basic education and offered programs not available to us in the
Papillion/LaVista District, full-time counselors, full-time nurses, full-time
school psychologists at the elementary level, full-time librarians. Now while that doesn't seem all that
important and it could be argued, they're not really necessary to a good
overall education. I think, and
that's a good observation, I think they provide a means for a healthier learning
environment for our children and the funds available in that district for
$4,600.00 a student. In my current
district, there's about $2,500.00 a student. My property tax bill in St. Louis for approximately the same assessed valuation was
$1,566.00, total; my property taxes in Papillion are $2,522.00 just for
education, my total bill is over $4,000.00. So that says something is really, really wrong and I think
this proposed legislation goes a long way toward helping rectify that problem. As long as you don't have the same
thing happen that happened to the 8 1/2 percent where the local entities come
right in behind you and erode the supposed benefits, and I think the lid does
that but I think you have to have to watch the city and county governments that
are coming in behind you and attacking the property tax bills, too. Whether you do it within this bill or
whether you do it within some other means, I think you have to be cognizant of
that and not allow the other entities to come in and erode what you're
attempting to do because if you do that, then I think what will happen
is... I read one of your reports
and I think we'll end up in the terms of the Russian novel and we'll all die in
the end. Thank you.
SENATOR
WITHEM: Thank you, Jim. I appreciate it. Questions? Thank you very much. Bob Chilcoat... followed by Mr. M. L. Smith from Odell.
LARRY BELZ: (Exhibit E) Mr. Chairman, committee
members, my name is Larry Belz.
I'm speaking in place of Bob Chilcoat. I'm here to testify in favor of LB 1059. 1 live in Stanton, Nebraska. I grew up and was educated in this
state. I spent ten years working
in Seattle, Washington, after graduating from college. My wife and I returned to Nebraska to
raise our seven children, realizing the quality of life that exists here. For the past twenty-five years I have
worked as an industrial engineer.
I've been president of the Stanton Community School Board of Education
for the past three years. Our
Board of Education has been following very closely the School Finance Review
Commission's work since it began.
We applaud the commission's work and the
January 23, 1990
Page 60
resulting
bill. We feel a change in the way
schools are presently financed is long overdue. A closer look at our situation at Stanton will point to the
many problems that we, as well as many other schools throughout the state,
face. The last five years have
been a very difficult and trying time for our board members and taxpayers. Trying to provide a quality education
with dwindling revenues is a tough balancing act. Enclosed is a five-year history of the key statistics that
show our dilemma. I will highlight
a few of them. First, our
philosophy is to have the most efficient school system possible. This translates into value for our
taxpayers. The past five years we
have cut our budget to the bone in an attempt to control expenditures. Even though we have had very large
increases in health costs, our expenditures have increased by an average of
only 2.3 percent per year.
Unfortunately that's all the good news. The bad news is that our local district taxes have gone up
an average of 13 1/2 percent per year.
This is due to the present school financing formula. We have only a $36 million assessed
valuation, so the loss in revenue from state aid and nonresident tuition puts an
ever-increasing burden on our taxpayers.
We are presently in the highest 15 percent of mill levies in the state,
even though our per pupil costs are in the lowest 25 percent. This translates into efficiency. Property taxes have gone up not because
of increased expenditures but to replace other revenue lost. In summary, our children are not given
an equal opportunity at quality education. Legislative Bill 1059 is the light at the end of the tunnel
that we have been waiting for so long.
It is innovative, fair, and timely. Property tax relief coupled with a more suitable method of
financing our public schools is paramount. We look forward to providing efficient quality
education. All we need to achieve
this are proper tools and LB 1059 is one of those tools. We, therefore, urge the Legislature to
have the courage to pass this important bill ensuring that all students will
have this opportunity for a quality education, irregardless of the district
they live in. One further comment
was made about what happens to some of the farm ground, some of the rural. In our situation, one-third of our tax
base, in other words $12 million assessed valuation comes from farm land. These people have not been just hit
with the 13 1/2 percent increase in the tax rate, but also in the increased
valuation. So these are people
that are basically in dire straits.
So, yes, in some cases it would help rural Nebraska. Any questions?
SENATOR
WITHEM: Thank you, Larry. Are there any questions?
January 23, 1990
Page 61
SENATOR NELSON: Larry, you had the figure on the farm
ground then. What does this do to
your district? Does this... I have the printout here, and so on,
but do you know?
LARRY BELZ: I think the last figure I had we would
go from $1.76 general levy to somewhere in the neighborhood of I believe it was
50 to 60 cents in that range without any additional spending. So that would be the impact it would
have here. One other quick comment
was we had Mr. Chilcoat was one of the individuals who is a full-time farmer
within this district. He went back
through, he refigured all his sales tax for the last several years, all of his
income taxes, and everything, his property taxes he paid, his net result would
be $1,000.00 savings in total tax bill.
So there are those things out there where they would be an advantage.
SENATOR
NELSON: Thank you.
SENATOR
WITHEM: Thank you. Appreciate it very much. Mr. Smith.
M. L. SMITH: (Exhibit F) My name is M. L. Smith and
I've given your legislative aide some handouts. I'm going to get right to the meat of the testimony so I can
make my comments short. In my
school district total tax dollars are decreased by 50 percent over the last
seven years. At the same time,
taxes have increased an average of 3 percent over the same period of time, and
in fact, dropped three out of the last several years. The reason has been reorganization, reevaluation of
property, utilization of cash reserve.
But more importantly the local board of education are representatives
who pay taxes, live in the district, and are cognizant of the local needs and
control of the district budget.
They represent their people.
I make no promises that taxes will continue to increase only an average
of 3 or 5 percent, or whatever, in the Odell District, but I can promise you
that my board of education will be fiscally prudent and we do not need a 4
percent lid attached to LB 1059 to see that they be fiscally prudent. Now if you would look on page 2 of the
handout I gave you, this was addressed to Senator Dennis Byars pointing up some
of the problems that I foresaw in 1059.
To make a long story short, last year I spent $49,000.00 out of cash
reserve for roof repair, asbestos removal, furnace replacement, and so forth,
anticipating that I would be able to build up that cash reserve. We've used some of our cash reserve in
January 23, 1990
Page 62
previous years
to hold taxes down. Now in
November and October,. Enron,
and/other subsidiaries have indicated that they're not going to pay their 1989
taxes and I owe them $42,000.00 in back taxes. The first third of the school year is traditionally an
expensive part of the school year.
We pay our bills. We've
used up $49,000.00 of cash reserve, Enron has not paid taxes; I have delinquent
taxes in my school district. We
have 20 percent insurance rates coming up for next year. We've already negotiated our salaries
at 4 1/2 percent increase for next year and that raises us to the tremendous
base of 15.3, which even by Nebraska standards is low. So now I have a low cash reserve, lost
income from investments on the cash reserve, a 20 to 30 percent locked-in
insurance increase, a 4 1/2 percent certified salary increase, an increased
FICA and retirement rate, an accreditation rule that allows no exceptions to
the rule or else you lose accreditation and a possibility of a lid being forced
on a budget from the Legislature.
My statement is we have local elected officials that are cognitive of
the local needs. We should leave
the local spending up to them. If
the Legislature wants to tinker with something, they should maybe tinker with
the 45 percent funding, or the tiers.
I think you have a lid structure imposed in the funding bill
already. And Senator Crosby
earlier asked, what do I say to this constituent that says, how come my tax
bill went up when the 84 went in.
She should have asked the people who passed the tax bill onto her, which
was probably the Lincoln Board of Education, since they control 60 percent of
the budget of her tax bill. It
wasn't the Legislature. If the
Legislature raises state taxes, then she call Senator Crosby; if the local
school board raises taxes, she should call the local school board. That's the way our system in democracy
operates. That's all I have.
SENATOR WITHEM: Thank you. Mr. Smith.
Appreciate it. Senator Hall does have a question.
SENATOR
HALL: Out of curiosity, Mr. Smith,
what have been your, over the last five years, your annual increases in your
budget, percentage-wise?
M. L.
SMITH: Over the last seven years,
it's been 3 percent. Oh, excuse
me, for budget?
SENATOR
HALL: Um humm.
M. L.
SMITH: Budget went probably 4 to 5
percent every
January 23, 1990
Page 63
year. This year it went, I think it was 12
percent.
SENATOR
HALL: And those factors that you
talked about?
M. L.
SMITH: We've dipped in, we've used
cash reserve. We reorganized. Valuation went up in my district about
22 percent, land valuation
SENATOR
HALL: Right. Do you estimate that you're going to go
back to that traditional 4 to 5 percent over the next few years or do you
see...
M. L.
SMITH: When we get our cash
reserve built up, I think we will, but right now, we're going to be in a crunch
and I'm looking for some relief from the Legislature on a 4 percent lid bill. I said to Senator Byars that I thought
it would be judicious for us if we would be allowed to raise our reserve up to
at least a 1988 budget-year level or 20 percent of the total budget cash
reserve. If there would be an out,
and I know you can't do this because everybody has a problem, and you start
putting exceptions in the lid and then you have no lid. So the best way is no lid.
SENATOR
HALL: What was your cash reserve
before you started to dip into it?
M. L.
SMITH: Approximately a third of my
total budget.
SENATOR
HALL: Is that something that you
have set at the local level that is a requirement, a 33 percent reserve?
M. L.
SMITH: By state law you have can
have no more than 50 percent and we were running about 30 percent, 35
percent. We tried to get it down
to about 20 percent and then with all these other problems, it's really created
a crunch for US.
SENATOR
HALL: Okay, thank you.
SENATOR
WITHEM: Thank you. At this point I think we had some more
names on the list. I don't know if
they're pro or con, I don't know who still wants to testify, who doesn't, if
you want to submit written testimony, you may. I think we'll just kind of do a, maybe, pass the list. Ron, why don't you come on up and have
a seat and then pass the list on down.
There are other individuals that may wish to testify. Sir, you're standing, why don't you
come on-up and sit in the on-deck chair and get yourself signed in and
January 23, 1990
Page 64
let's move it
on.
(Exhibit G#1,
Jim Rea, President, Nebraska State Education Association)
RON WITT: (Exhibit G#2) Members of the
Education/Revenue Committee, I'm Ron Witt, Superintendent of the Millard
Schools and I think about everything has been said that possibly was said, so
I'll keep it very brief, other than to carry to you a message that the Millard
Public School, the Millard Board of Education supports LB, 1059. Just a couple comments, I know that we
all don't agree on everything and that's particularly true in the school family. I know the lid presents a problem and
I'd like to just say that I think that school boards have been very prudent
with their budgets and have been watchful for the taxpayers. I heard earlier this evening that this
is a revenue bill and we're not to talk about boys and girls in education, but
I feel compelled to say that you know lids can be rather restrictive at times
and I think we need to remember that sometimes new programs we're asked to put
can't be put in under very stringent lids, and I'd like to have you keep that
in mind. Millard is a growing
school district. We're 16,252
students; we're growing at a rate of 500 students a year. So having a very high tax levy of a
$1.94, we look if no changes are made that we'll probably go at 10 to 15 cents
next year- We need an extensive bond issue to take care of the building
problems, so all we can see is problems with continued high property tax- To
cut my remarks brief, I would just urge the committees to support the concept
and move it ahead.
SENATOR
WITHEM: Thank you, Ron, appreciate
it. Next.
LESTER
RHOADES: Senator Withem and
Senator Hall, Committee Members, I'm a Keith County Commissioner, and I'm a
farmer. I'd just like to quote
mostly to probably the Revenue Committee.
I'll try to make three major points this evening. Let me start with the third that makes
up industry and business. A recent
newspaper article quoted the president of the UP Railroad as saying and I
quote, "Any well-run business doesn't pay taxes." They pass that bill onto the
people that do business with them.
Tax obligations are part of the cost of doing business and are passed on
the margins or the mark ups. My
question to you is, who does the farmer and rancher, or the homeowner, pass the
tax obligation to? In Keith County
we have approximately fifteen hundred households that are not farm and ranch,
with an average income of $18,000.00.
That translates into some
January 23, 1990
Page 65
$27 million of
income to pay a third of the tax bill, of this sector, 90 percent of the school
children originate. Now from the ranch
and farm, there's estimated there are about 250 farmer/ranchers with an average
income of $30,000.00 in Keith County.
Again this translates into a total income of $7,500,000.00 to pay their
third of the tax and only 10 percent of the students come from this
sector. Now unless my math is bad,
I find that 3 to 4 times as much income in a nonfarm household as in the farm
and ranch sector, yet each has the tax bill to pay. Now my second enterprise is the business enterprise. It's still the foundation in economy in
the State of Nebraska, and is the life blood of our cities and towns. The actual value of any property used
as a business can only be measured on ability to pay of such property to
contribute to the return from the ownership thereof. In our current situation, sources of income are not being
treated equally. Let's say that a
large motel which can simply add a few cents a night to their rates and raise
the increase revenue to pay the taxes.
The same goes for the rail and utility companies. This, I believe, is not fair
taxation. Our current economy is
not as healthy and increasing as, I believe, we are led to believe. Our agriculture economy is struggling
with adverse conditions. Taxing
currently is based on possible revenue earning potential, not on actual
earnings. You have the drought,
the winter kill, the hail, and the disease are all variables that farmers and
ranchers have no control over whatsoever.
I sit in a dry land farming community and we get our income producing
crops only every other year due to the lack of adequate rainfall. Current real estate cannot continue to
be our base if taxed to the point that ownership of it makes it a poor
investment. The farmer and rancher
sells it wholesale and buys it retail.
As I said, each year as a Board of Equalization member in Keith County,
I listen to the pleas of constituents that can no longer afford to maintain
farmsteads but we can continue to tell them to either pay the taxes or tear
them down. What a pity for' a
state that once prided herself in the rich heritage we once knew. Our school district, as Mr. Osmonde
from Big Springs was here a while ago, will lose on this bill. The information I get from the
management services that was put out.
My taxes will increase approximately $3,600.00. 1 am paying $16,000.00 taxes now,
that's a total property tax of $11,000-00 is to the school. I pay 73 percent of my total tax bill
goes to the schools, the local school, educational and voc/tech colleges. And far as I believe, we should have
more of the state income tax to support the schools and possibly some of the
sales tax. You know the farmer
does
January 23, 1990
Page 66
pay a lot of
sales tax when he buys equipment, has to replace it, and so therefore, the farmer
is paying a lot of property tax and also the sales tax. I thank you.
SENATOR
WITHEM: Thank you, sir.
SENATOR
HALL: I have a question, your name
is Mr. Rhoades?
LESTER
RHOADES: Yes.
SENATOR
HALL: Mr. Rhoades, your opening
quote, what was that again, you were talking something about chairman of the
railroad said something about a good run business doesn't pay taxes, or
that... ?
LESTER
RHOADES: Yes, I read that article
in the paper.
SENATOR
HALL: Was that private
conversation between he and Mr. Harper?
LESTER
RHOADES: (laughter) Yeah, I think
that's... (laughter)
SENATOR
HALL: I was interested where you
got that from, just out of curiosity.
Nothing more than curiosity, but if you had that in writing, I'd sure
like to see it.
LESTER
RHOADES: Okay.
SENATOR
HALL: Not now, but sometimes.
LESTER
RHOADES: Okay, okay I'll send you
that.
SENATOR
HALL: Drop it in the mail.
LESTER
RHOADES: Okay.
SENATOR
WITHEM: Thank you, Mr. Rhoades.
LESTER
RHOADES: Okay.
SENATOR
WITHEM: Next.
SENATOR
CROSBY: Tim's evidently never been
in business?
(INAUDIBLE): Huh?
SENATOR
CROSBY: Tim's never been in
business?
January 23, 1990
Page 67
RICH
SCHLESSELMAN: (Exhibit H) Good
evening, my name is Rich Schlesselman, I am superintendent of Petersburg Public
Schools. Basically, the things
that have been said, I think, I would support. I am in support of the bill, as far as the concept of it is
concerned. I do have one concern
and would like to see one change in the measure. They are passing around basically what I would say, the one
point is that as several school districts throughout the state have attempted
to curb the increases as land valuations went up and so on, our particular
school district in the last four years has gone with a tax levy from a $1.80
and dropped down $1.41, $1.33 for the 1989-90 school year through a number of
things reducing our cash reserve and a number of other things. We will reduce our levy to $1.01, or
just under a $1.01. During that
same time period in the last year and a half, we have put on a small addition
to the building, made it accessible so that people can get in and out, added
some office space and did it relatively inexpensively. The point that I make with this is the
fact that I think that there is a great deal of efficiency going on out
there. Some of us have taken to
heart the fact that the Legislature and Governor Orr has stated that we need to
reduce taxes, and in fact, in the Petersburg School District, someone that was
owning a $25,000.00 home this year did in fact get a $273.00 real tax
reduction. I guess that is, again,
due to a number of things. If this
bill goes through as I understand it will and we have dropped. our levy down, we will end up losing
the equalization money that shows in the printout, which shows great. Money in the printout shows $73,000.00
we will get without reduction in tax levy. As I understand it, we will then end up losing that
equalization formula money. Maybe
not... and they're shaking their
head, and I think that's great if we're not going to lose that, but as I
understand it, when I drop down to $1.01, 1 automatically lose it. Larry's shaking his head that I don't
lose it, so I think that's great.
SENATOR
HALL: We handled that problem,
didn't we?
(laughter)
RICH
SCHLESSELMAN: Hey, I'm... That's great. The one point that I would make though that if this is going
to become a problem, I would ask that you consider a three-year average on that
levy so that as districts that have attempted to reduce the levy, have followed
the mandate of the state, that they not-be penalized for it. But if I'm not going to lose it, I
would support the thing even more
January 23, 1990
Page 68
completely than
I did before. (laughter)
SENATOR
WITHEM: Senator Hartnett.
SENATOR
HARTNETT: I think you're about the
second or maybe... have brought up
about the cash reserve and that you had to, good management use your cash
reserve to pay some of the current bills.
And I, maybe, is there in the bill, I just haven't looked at it close
because, should there be a cap on how much cash reserve that you can set
aside? Should there be a limit on
cash reserve? I'm asking you.
RICH
SCHLESSELMAN: You're asking?
SENATOR
HARTNETT: I'm asking you, yeah.
RICH
SCHLESSELMAN: I don't know, we run
10 percent of our budget for cash reserve and that is way too low. Way too low, because if you don't
happen to get tax money in at a given time, you can be visiting your friendly
banker far too often. I've been
fortunate not to have to do that in the four years that I've been in
Petersburg, but prior to my coming there, they spent a considerable amount of
time at the bank. So I guess
that's the only, I would like to see it at 20 - 25 percent, though.
SENATOR
HARTNETT: Okay, thank you.
SENATOR
WITHEM: Thank you. Senator Nelson.
SENATOR
NELSON: Would you share with us
how you were say, able to cut mill value every year, or the levy?
RICH
SCHLESSELMAN: Well, part of it is,
I think...
SENATOR
NELSON: You had a big reserve and you... (inaudible)
RICH
SCHLESSELMAN: No, no, no, the big
part of it is the fact that we did have one Class I that closed and we picked
up part of the land. A lot of it
is the fact that valuations have increased dramatically in the last four or
five years. In some cases, some of
the valuations have increased by as much as 50 to 100 percent, doubled in the
last five years. We have
attempted, rather than taking what the new valuation was and multiplying our
levy out and setting our budget accordingly, we have attempted to set a
somewhat restrictive budget from that perspective.
January 23, 1990
Page 69
SENATOR
NELSON: Do you have a lot of
rangeland in your district?
RICH
SCHLESSELMAN: About half of
it. The highway goes right
through, right at the edge of Petersburg and everything west is rangeland and
everything east is pretty hilly farm ground. It's fairly good farm ground if we don't get frozen out and
we get sufficient moisture so that we can operate.
SENATOR
NELSON: Cinch bugs and rain and everything
else. Right. All right.
RICH
SCHLESSELMAN: But the western half
of the district is rangeland and the eastern half is hilly farm ground.
SENATOR
NELSON: Thank you.
SENATOR
WITHEM: Thank you very much.
RICH
SCHLESSELMAN: Thank you.
DENNIS
GENGEBACH: Senators, my name is
Dennis Gengebach. raise corn, soy beans, cattle and hogs in Gosper County in
Southwest Nebraska- I'm a land owner and also a member of the Board of
Education for the Bertrand School District 54. I would first like to thank the
Revenue and Education Committees for the opportunity to express my views. As a taxpayer, I strongly support the
legislative finding that there is an overreliance on the property tax for
school support and that state aid has not kept pace with increasing school
costs. The legislative intent to
provide state funding for 45 percent of the aggregate school operating costs is
an admirable goal, however, my opposition to the bill lies in the drastic
impact that an immediate enactment of this bill would have on our taxpayers and
our school system. According to
the Nebraska Department of Education Management Information Services, the
Bertrand School District would 52.2 percent or greater than $59,000.00 of the state
aid that it now receives. With the
income tax rebate, the state in reality would only provide 5 percent of our
budget. The remaining 95 percent
would have to come from our taxpayers in the form of increased property taxes.
This, coupled with the loss of $35,542.00 as a tax refund to the Trailblazer
Pipe Line Company and Burlington Northern Railroad would create a double
hardship on our taxpayers. Our
agricultural economy is already depressed with the
January 23, 1990
Page 70
drought of the
last two years and the outlook of higher taxes and lower income is a gloomy
one. Our school district now has a
low mill levy because my predecessors on the school board thirty years ago
pushed for and achieved consolidation of several smaller districts to provide
an excellent tax base for our school system. The immediate impact of this bill would be to penalize us
for building a base to educate our children. In conclusion, I wholeheartedly believe that the changes suggested
in Legislative Bill 1059 need to be made, however, I would humbly ask that the
committee gradually make these changes to minimize the drastic impact on our
taxpayers and our school system.
Thank you.
SENATOR
WITHEM: Thank you. Questions? Appear to be none.
Senator Nelson.
SENATOR
NELSON: What county is Bertrand
in?
DENNIS GENGEBACH: Bertrand is in Phelps County, there's
part of Phelps and Gosper County.
SENATOR
NELSON: Thank you.
KEN
BABCOCK: Thank you, Senators, for
hanging in there, and waiting us out.
I'm Ken Babcock, I represent Meridian Public School which is a consolidated
school district. I represent the
board and the children of Meridian, and I wish to speak in opposition of
1059. You've asked for some change
in testimony and I have a little different nuance here in that Meridian is a
"winner" in the formula. We,
according to the printout of two years ago, we would have been a winner of
$22,000.00, but included in that $22,000-00 is the income tax rebate of
$27,000.00, so I see it in a little different light. I see income tax going out, going to the state, income tax
coming back--of $27,000.00 and the entire increase for our district is
$22,000.00. 1 see actually a net
loss for our district of $5,000.00.
With that, if we do say that is an increase, our levy would have went
from a $1.65 to $1.60 that particular year, and that would be very, very
difficult to explain to my patrons with income tax going up 17 1/2 percent,
sales tax going up 1 percent, and our levy going down a nickel. And we are a property rich district
because we are a consolidated district--three communities. I have another problem with the system
and that is, it was alluded to earlier, and it was built into the system that
Omaha's on it's own tier. Omaha defines
it's own average. One of the
previous
January 23, 1990
Page 71
speakers mentioned
that what's good for Omaha is good for the entire state and if what's good for
Omaha is good for Meridian, I could support the bill. If we can define our own average cost, then we are
guaranteed to be very, very near that minimum levy and if you would take this
printout and go backwards to see what would happen to Omaha. Of course, Omaha under this printout
will come very, very close to the minimum levy. It's mathematically impossible to do anything else, and I
think that's a basic inequity of it.
I know Omaha has some special problems but Meridian has some special
problems and I just don't think it's fair. It might be a political reality but I don't think it's
fair. One of my biggest problems
with the lid, and you're probably tired of hearing about this, but I represent
kids here and I don't see boards going out spending money willy-nilly, you
know, for the school districts and we're talking our kids and we're talking our
grandkids. Now, if this body can
guarantee me that if Blue Cross/Blue Shield goes over 4 percent, we don't have
to pay it or propane goes over 4 percent, or gasoline. I got correspondence earlier this week
that the Nebraska Retirement System is going up 5.4 percent and that comes from
the state. Now if I can refuse to
pay those, then I can go along with the 4 percent lid and you know that's
impossible. But, what are we going
to do? I have some other problems
with that because you know that on the Education Committee as well as anyone,
that the school is taking on more and more responsibilities. We're supposed to be looked to
as... or-, we are being looked to
as the parents, as the church.
We're supposed to have elementary counselors and I think that's an
excellent idea. We don't have one
right now. Under a 4 percent lid,
how are we going to get one?
Technology, we should be on the cutting edge of technology, and we're
not; we're only about five or six years behind. How are we going to do that? We're talking our future here. What about preschool?
I think that's a need.
Where's that going to come from?
Special problems, in my district, 180 kids this year, we had three
students move in that will require a lot of special education. They're not covered under this
lid. What if these kids cost us
$60,000.00? That takes care of our
5 percent, if the board would vote to go over the 1 percent. What do we do about grants? For example, this morning I received,
or Meridian Public School -received a grant to participate in a satellite
learning session. What it is, it's
through SERC, it's through a state, well, it's a cooperative situation but we
get to set up a satellite so we can tie in to some learning networks and our
kids can take Japanese. They can
take Russian, and they can take so on,
January 23, 1990
Page 72
you know, some
advanced courses. Well, this is
going to be split situation. We're
going to share half of the cost, but it's still going to cost thousands of
dollars, and those thousands of dollars are going to show up on the budget,
even if we get reimbursed for half--they're going to show up on the
budget. Do we not do that because
that will put us over the lid? I
think...
SENATOR
WITHEM: We're going to have to ask
you to get... lots of people still
want to talk.
KEN
BABCOCK: Yeah, I'm sorry, I get kind
of carried away when I start talking about kids. My final point is I don't think that you can get a more
conservative group of people, generally, than a school board, and I think what
a lid is telling a school board is that you are irresponsible; that we don't
trust you. And I think that's
actually a slap in the face to the school board. Thank you. I'm
sorry for going over.
SENATOR
WITHEM: Oh... thank you, thank you for your
testimony. Just one point, the
grant money, it's probably not your local match but the external money, you'd
get the grant money, is apart from the budget, at least that's the intent of
the bill and we need to clarify that.
KEN
BABCOCK: Well, the wording of the
bill doesn't state it that way.
SENATOR
WITHEM: Okay, okay. Marge.
MARGE
YOUNG: (Exhibit I) I am Marge
Young speaking for the League of Women Voters. We have members in many parts of the state and about three
years ago we did a study of financing public schools and I'm happy to tell you
that our position goes pretty much down the line with what this bill has in
it. So we very much support LB
1059. We can see that this does
not mean that we all will pay less taxes and I think that's come out in other
testimony. It does mean that all
taxpayers will share more equally in the costs of education through their
property taxes, sales and income taxes.
A greater dependence on income and sales taxes, rather than the property
tax is shifting the tax burden to tax forms which are inherently more
fair. That's one of the reasons we
support the bill. We are at a
crossroads. We can accept the
findings of the School Finance Review Commission which are expressed in LB 1059
and bring Nebraska into a respectable level of state support in comparison with
January 23, 1990
Page 73
other states or
we can reject it and keep the unfair status quo. The education of our children is of utmost importance. When we fail to educate well, we lose
in many ways and we pay out lots of tax dollars for our failures. We shortchange our children in not
having the educational background to realize their full potential. We shortchange our state in not having
as many productive, law-abiding citizens and taxpayers as we could have. We pay out more in welfare. We pay out more in correctional facilities
and prisons. We, the League of
Women Voters of Nebraska, do not relish the thought of spending more money on
prisons and correcting social deficiencies. We prefer doing all we can to provide the best possible
education for all Nebraska children.
The League believes in a public educational system financed by a
combination of local and state revenues.
Since state government has created the public schools by law, it has a
responsibility to aid local districts in providing adequate and equitable school
financing while maintaining local control. And many people have mentioned the local control. And I'm going to skip a bunch of this. The only part of LB 1059 which the
League does not support is Section 16 which offers a lid, and we've heard many
people speak against the lid. The
League has consistently opposed limitations upon budgets of both local
government subdivisions and state expenditures. We believe it is up to the local taxpayers to evaluate their
program needs according to their own fiscal abilities. The League of Women Voters supports LB
1059 with this one exception; to provide 45 percent state funding for Nebraska
public schools; to reduce reliance on property taxes; and, to use money from
income taxes for the support of public schools. And, we'd like to commend Senator Withem and this committee
and the State Finance Committee, and the Revenue Committee for their dedicated
work to study this issue, and for these long hearings that go on and on. (laughter) I appreciate the chance to
talk to you. Are there any
questions?
SENATOR
WITHEM: Are there any questions?
SENATOR
CROSBY: No, but thank you for
staying.
MARGE
YOUNG: Thank you.
SENATOR
WITHEM: Yes, thank you,
Marge. Deb.
DEB THOMAS: I'm, this neutral testimony that people
keep referring to all evening.
Senators Withem and Hall, and Members of the Education and Revenue
Committees, I'm Deb
January 23, 1990
Page 74
Thomas and I'm
appearing before you this evening on behalf of Governor Orr. Governor Orr has asked me to provide
you with her thoughts about LB 1059.
Legislative Bill 1059 consists of two distinct, yet interdependent
proposals. The first proposal
revamps school finance in our state, specifically by changing the equalization
aid formula and by also increasing state aid to school districts that are
wealth poor. The second proposal
provides a funding mechanism to
achieve the first goal. The second
proposal has also been viewed by
many as a means of achieving property tax relief. While these two proposals can be viewed discreetly from a
policy point of view, they are inseparable and ultimately must be judged by how
their interaction effects all Nebraska taxpayers. For the last eighteen months, Senator Withem and the members
of the School Finance Commission have performed yeoman work in studying the
question of school finance. The
commission has made responsible recommendations to improve the equalization
portion of the state aid to education formula. These are contained in LB 1059. The concept of moving away from property ownership as a sole
determinant of wealth seems appropriate as our state's economic base broadens
and as capital expands its dominant role in production agriculture. The effects
of changing the equalization formula, specifically in relation to increasing
the portion of operating expenses borne by the state, have been well documented
in the commission's report.
Governor Orr feels that it is imperative that such impact information be
available for study by both the Legislature and herself before coming to a
final judgment on the merits of LB 1059. To that end, the Governor has asked
that the Revenue Department study the impact of increasing sales tax rates by
25 percent and income tax rates by 17.5 percent to finance the concomitant increase
in state aid that will provide property tax relief through LB 1059. She is particularly aware of the need to make everyone patently
aware of the ramifications of tax shifts when changing state tax policy. Three
years ago such information detailing estimated shifts of income tax incidents
was made available and printed extensively regarding LB 773. Notwithstanding, there remains much
consternation, as you all know, among the taxpayers in Nebraska regarding these
shifts, which have been perceived simply as tax increases,. Given her personal experience, Governor
Orr recommends that the effect of a funding mechanism be studied and discussed
to the same degree as the formula changes were studied and discussed by the
education community. In addition,
she would like to have assurances that income and sales tax increases would
January 23, 1990
Page 75
indeed providing
property tax relief. When Senators
Withem and Moore announced their recommendation for the specific funding
mechanism a couple of weeks ago, the Revenue Department began to analyze the
impact on taxpayers in two different ways; one, they used a sampling of data
from twenty representative school districts and then they were able to do some
macroeconomic analysis for this state as its entirety... and I'll pass these out... ah, good still a Page, I have
twenty-five...
SENATOR
HALL: We have tough Pages with
this committee.
DEE THOMAS: Hey, you know, these are loyal to the
end. I'm really impressed.
SENATOR
HALL: That's right.
DEB THOMAS: I want to emphasize that this
information is really preliminary and within a month or so, there's hopefully
going to be complete estimates that will be modeled for taxpayers in all school
districts. As soon as it's
available, it will be provided to you in its complete form. The data in the handout is pretty
self-explanatory. It presents the
estimated total tax shifts by taxpayer type. These numbers will change when an analysis is done for all
the school districts. However, the
analysis does include the majority of income taxpayers as the Lincoln and Omaha
school districts are part of the twenty districts modeled. I'd like to make just general notations
about this information. On the
front page under the "Macroeconomic Change in Tax Burden" you'll note that it
indicates that there is a shift from "farm" to "nonfarm" households when it is
looked in the aggregate between income, sales, and property. That's been discussed somewhat this
evening, I think, and then second of all, when you go to the next three pages
and you look at the total tax dollar changes of various taxpayers, there
appears to be whole lot of plus columns which is not to indicate in any way,
shape, or form that there aren't shifts, because there are indeed folks who are
going to have a decrease in their tax burden. I mean there's always going to be winners and losers, it's
been discussed, and basically as Senator Moore indicated in his opening, you're
going to see losers anti renters, and you're going to see owners in lower
income homeowners. I mean that
just makes sense. You know, just,
just generally speaking, renters aren't going to get the property tax relief
unless the landlord passes it on which you cannot model, and folks who have
moderate income and own their homes will, will
January 23, 1990
Page 76
derive more
benefits. I mean, that's just
somewhat logical, but anyway, that's basically what, those are the highlights
of that handout. Again, those last
three sheets are only the "Weighted Averages" off the twenty representative
school districts that you'll find on the last page. So that is not in any way, shape, or form, I mean, this is
going to change. I don't mean to represent that this is absolute. This is a model; it will be fluid. The Governor would like to take time to
study the information for all the school districts when it is done, before
coming to any judgment about 1059. She's particularly pleased with the efforts
and the results of the commission regarding the recommendations to change the equalization
formula. She believes that it's
very appropriate and desirable for the Education and Revenue Committees to now
be reviewing the bill jointly as the two distinct parts must be thoroughly
harmonized before passage of any successful school finance legislation. Thank you for your attention and at a
very late hour. I'll be happy to
answer any questions or I'll be happy to leave.
SENATOR
WITHEM: I don't think the latter
is an option at the moment, as I do have some questions and I appreciate your testimony,
and I appreciate the manner and the spirit in which it was given. But, there are some concerns I have
both about the data and about the testimony. You indicated that there has been a lot, eighteen months
worth of work, discussion about the equalization concept, the school funding
concept, and those sort of things.
You made allusions to the same type of attention needs to be given to
the revenue sources. Does that
imply we need another eighteen months of...
DEB THOMAS: No...
SENATOR WITHEM: What do we need?
DEB THOMAS: No, I guess... the point of the testimony, Senator,
simply is that it's only been that the financing mechanism has only been before
the public for two weeks, which means that there just simply hasn't been the
time to put the sorts of numbers together that just because of the time the
commission was able to take.
SENATOR
WITHEM: Yes.
DEB THOMAS: It is not to mean that they should
parallel each other in terms of time whatsoever.
January 23, 1990
Page 77
SENATOR
WITHEM: Okay, but it was possible
to get something done tentative sort of information done for the hearing
tonight.
DEB THOMAS: And it's very tentative and it's only
off of the twenty school districts, as opposed to the nine hundred plus.
SENATOR
WITHEM: Yes. I was going to ask some, thinking of
some "cutsie" sort of questions to ask, but it's a little too late for
that. I was going to ask if they
had compared blue houses to red houses, or any of those things, because I think
that information has as much validity in understanding the proposal, as
comparing business farms to household farms to industrial to commercial to
nonfarm to household. The purpose
of the bill is to deal with inequities that exist between school districts, and
until such time as we have that information that talks about the inequities
between school districts, I think the information you present is not
particularly worthwhile, and frankly, I think it's a little bit misleading.
DEB THOMAS: I guess the point is, is that you can
look at where the shifts are going to be in terms of the dollars that the
districts will receive through the new formula but to look at that information
by itself and not similarly look at where the money is going to come from
because there can be as many inequities built into the finance side as through
the delivery side. And I think,
the Governor's point simply is that those two must be harmonized
SENATOR
WITHEM: Okay.
DEB THOMAS: I think that was brought up earlier.
SENATOR
WITHEM: I would agree with that, I
think though that had we come forth with a printout that nearly showed Class I
Districts getting "X" percent increase, Class II Districts getting "X" percent
increase, we would have been roundly criticized, justifiably. I think the same criticism applies to
merely lumping together farm versus industrial to a nonfarm household, and I
wonder if it may not just engender greater debate concerning urban/rural splits
that too often dominate this type of discussion. The effect of it may not be more to do that, than it is to
illuminate anything. Frankly, I
don't know what this illuminates.
DEB THOMAS: I don't know, there certainly has been
a lot of
January 23, 1990
Page 78
discussion this
evening whether or-not this is a pro-rural or pro-urban bill, so I think to a
degree that discussion will always be there and if you have the numbers to at
least put that argument to rest on way or another, you can set it aside and
deal with whether or not you're going to deal with the equities and inequities
that exist within the school system.
But the question will be there until it's answered to whatever degree
your data permits you to answer it, I think.
SENATOR
WITHEM: Are there other
questions? Senator
Bernard-Stevens.
SENATOR
BERNARD-STEVENS: I had two. Deb, I'm real curious, and I know
you'll have a good response because you always do. Why if the data is very "rough" and where it could change at
any time as we get and really look at it a little closer and we figure out what
we're really doing on this stuff, why then come to this committee this evening,
put out for the public, put out for the press, information that you know is so
"rough" that we may not even have some valid conclusions to be made by this?
DEB THOMAS: Well, because... As I indicated in the testimony, while
the numbers may change to a degree, this has been modeled off a majority of the
taxpayers. It is not going to
change that much. I mean, the fact
that you're gonna have renters having an overall increase in tax burden and
home owners of moderate and low income having a lesser total tax burden is
pretty predictable without even going through an analysis. Second of all, I could have brought and
did not think that the committee would wish to be burdened, but perhaps I should
have, 1 could have brought, as Senator Withem indicated, these numbers by each
school district. These numbers are
all "weighted up" by school district, but I could have told you exactly what
these numbers were for each of these categories for Omaha, for Lincoln,
for... you know, the four Class
I's, et cetera. if that would have
been more illuminating, I could give you that tomorrow. It just gets to be kind of burdensome
and kind of bulky. That is what I
believe they are intending to do for all nine hundred districts.
SENATOR
BERNARD-STEVENS: The second
question I had was more up from the testimony in the beginning, you know, I
guess I'm kind of like Senator Withem, I almost take offense at the numbers
presented this evening because it's so misleading in what we're trying to do in
the state overall
January 23, 1990
Page 79
on education
policy and equalization of education fairness to our children. Has anyone, to your knowledge on the
committee or that has talked about the bill, from the commission ever stated or
stated... I want to say this
carefully, that the bill 1059 and its funding mechanism was revenue neutral?
DEB THOMAS: No, and there's nothing in my testimony
that would indicate... I mean, the
whole point that's... for example,
that was discussed earlier by the commission is that the commission really did
not feel that it was in their charge to spend a lot of time -dealing or making
recommendations as to the specifics of the funding mechanism. And, the point of my testimony merely is,
is that if you're going to deal with inequities in the tax... you know, if... there's two parts to this, there's
school finance and there's property tax relief, and, and, and financing
mechanism of the school finance that you cannot truly bifurcate them, that they
really are intermingled, and if you're gonna start running numbers, you have
run numbers on both sides to determine whether or not you're creating an
equitable or an inequitable tax policy because while you may deal with the
school districts in terms of the dollars you give them, depending upon how you
raise those dollars, you could end up with more inequities in the end than you
had in the beginning.
SENATOR
BERNARD-STEVENS: How do you define
inequities?
DEB THOMAS: the... certainly there have been plenty of studies to determine
what the inequities have been in terms of school district finance. Whether or not you're average per
student costs and funding have been inadequate. You can do it by school district; you can do it by per
pupil; you can do it by Vard Johnson's method who has sued me to argue that our
current formula and funding is inadequate. But, that obviously comes down in that being a policy choice
by the policy makers as to what is going to be equitable.
SENATOR BERNARD-STEVENS: And would you also agree then when
we're trying to deal with inequities that it is fair for the Legislature, and
as for the executive branch, but mostly for the Legislature in at least this arena,
to decide levels of inequities, in other words, yes, we may have this as
inequitable, and the other's inequitable, but this is by far a better inequity
and more fair inequity?
January 23, 1990
Page 80
DEB THOMAS: Absolutely, and the presentation of
these numbers is simply a means to say, when you make those decisions you ought
to look at this information and those facts, because you have to harmonize...
SENATOR
BERNARD-STEVENS: Exactly.
DEB THOMAS: ... the package and make the decision.
SENATOR
BERNARD-STEVENS: Exactly, which is
why I would have liked to have seen if we're going to show, to allude to one
inequity, let's make sure and have the other side as well, so we have the whole
picture.
DEB THOMAS: Well, that's the whole point, you
already had that in the commission's numbers that had been put out in terms of
what the funding would be to the different school districts. This is supposed to be the other side,
Senator.
SENATOR
NELSON: Deb, is this what you're
talking about?
DEB THOMAS: I can't see that far.
SENATOR
NELSON: Well ...
DEB THOMAS: I'm sorry I don't have any glasses on
and I really can't see that far.
SENATOR
NELSON: The equalization formula
aid, equalization aid, some of the rebate and equalization and the aid under
the existing formula...is that what you're referring to?
DEB THOMAS: Basically what I'm referring to is the
winners and losers on the school district side
SENATOR
NELSON: Well, that's ...
DEB THOMAS: And the information that's been
prepared.
SENATOR
NELSON: That's ...
DEB THOMAS: If that's what that is, Senator.
SENATOR
NELSON: That's what I have here.
DEB THOMAS: Okay.
SENATOR
WITHEM: Senator Hall, I believe,
had a question.
January 23, 1990
Page 81
SENATOR
HALL: Just two. Deb, on the front page of your handout,
right below the "Macroeconomic Changes" you have how Nebraska currently
compares with other states and you deal with sales, income, and property
tax. You show how we would rank
now and if 1059 were in place.
Could I make a formal request that you give us a, show us what these
same, through the same methods and the same states how we would have compared
in the income tax arena prior to 773's passage in 1987?
DEB THOMAS: Sure. It would be no problem.
SENATOR
HALL: If you would supply that to
us?
DEB THOMAS: Can I ask you one question? What tax rate should I assume that 773
didn't pass? 21 percent or 24
percent?
SENATOR
HALL: Use both.
DEB THOMAS: Okay.
SENATOR
HALL: Give us, just give us both
figures.
DEB THOMAS: I'm sure we've got, I'm sure Revenue
Department's probably got that off the top of their head, but...
SENATOR
HALL: I would be interested in
what, how we would rank prior to the passage.
DEB THOMAS: Okay.
SENATOR
HALL: And if you could, if you
could show us on the same type of...
DEB THOMAS: ... really do an income, I can't do it on sales and property,
right?
SENATOR
HALL: I only ask for income.
DEB THOMAS: Just income.
SENATOR
HALL: That's all I would, that's
all my request is.
DEB THOMAS: Okay. No problem.
January 23, 1990
Page 82
SENATOR
HALL: Secondly, I'd, I'm, I'm
interested in the, in the reason for the, I guess, what I would, for lack of a
better term, the delay in terms of looking at the issue of the financing and
how it would impact based on the, I guess, the not so necessary need to look at
impact with regard to 773 when it was passed a couple of, few years ago, we
found out that after while that because we didn't do that that there was, I
guess, a more dramatic increase than had been anticipated. Is this just a new approach to say, we
should pull back and make sure that we know exactly what is going to happen
when once we put a financing system in place? Or, what is the overall purpose for them?
DEB THOMAS: Well, I supposed that I'd answer in two
ways. First of all, when I was
Revenue Committee Counsel, when 773 was passed in 1987 under Senator Johnson's
signature. More than one memo went
out which I've all kept copies of, that detailed in great, and what I
considered at the time to be pretty great detail that there were going to be
significant shifts and there were discussions of that on the floor of the
Legislature that there were going to be pretty big shifts and they were going
to be in the middle class. As to
whether or not there was a property tax, or whether or not there was a... a net tax increase as many of you may
recall, I early on said it was an unintended tax increase given what the
revenues did shortly thereafter. I
think that the Governor has, had felt in 1987, that she had adequately
participated with the Revenue Committee in alerting both the public and the
Legislature specifically as to what those shifts were and yet obviously we all
know that she's still suffering the consequences of that perceptional lack
regarding the shifts. I think at
this point in time, she is very cautious about... and, and that caution is, is given to you also that you
can't be careful enough in making sure everybody understands what the impact is
on shifts of this magnitude.
SENATOR
HALL: Does the Governor still
intend this... supply, I guess, or
allocate $100 million for property tax relief as she stated a month ago?
DEB THOMAS: To my knowledge, I think that that has
always predicated upon available revenues and I don't know what the February
board will do. But, to my
knowledge, yes.
SENATOR
WITHEM: Yes, Senator Nelson.
SENATOR NELSON:
Deb, does the Revenue Department have
a
January 23, 1990
Page 83
breakdown of farm income and
urban income? In other words, to
arrive at these figures...
DEB THOMAS: Well, the...
SENATOR
NELSON: ... they must have to have a breakdown.
DEB THOMAS: Yes, see in the income tax if you're a
farmer or rancher or a fisherman, you check the box, and 'so they have the ability to go in there and get that
information to the degree that it is checked.
SENATOR
NELSON: Well, not from what they
told me. I tried to get that in my
county, a breakdown, and they told me that was impossible. The only way they could do it was a
little guess number by school district and you can't tell by school district
because ...
DEB THOMAS: That's true.
SENATOR
NELSON: ... you might have a Doniphan address.
DEB THOMAS: And, and, and, and the, and the
economist who prepared these numbers is here and could come up and discuss it
if you'd like.
SENATOR NELSON:
Because I tried to get that very information...
DEB THOMAS: I don't know how late you want to stay
though, I mean.
SENATOR NELSON:
And they told me it was not, it was not feasible.
SENATOR
WITHEM: I, I, yeah, that raises a
question I have, Senator Nelson, because I'm thinking back and I'd like
somebody from the School Finance Review Commission to correct me if I'm wrong
but as I recall midway through this process, we began asking some, what we would
characterize as tax incidence questions--who pays what taxes, where do they
come from to what extent does will a certain type of person pay, more of this
particular tax, and It-hat kind of tax.
And as I recall, we were dissuaded, I don't know if we were discouraged
or told it wasn't available, but we were certainly dissuaded from proceeding in
that line of reasoning under the impression that, gosh, even the Syracuse Tax
Study had done a tax incidence, not done the tax
January 23, 1990
Page 84
incidence study
and the Nebraska Tax Research Council was embarking on this major project to
find out where the taxes are coming from, and that this data just isn't
available but low and behold the bill gets introduced and two weeks later,
Department of Revenue has all of these numbers available. I guess that's a question I have about
how those two situations...
DEB THOMAS: The problem has always been, and the
reason why Syracuse did not proceed...
succeed on doing an incidence study is twofold. First of all, we could not get as
Legislators, even with me being a part-time Revenue Department employee at the
time. We're really not given a
complete access to the confidential data sources. I mean it's just a perennial problem. That's why the Legislature made me a, a
Revenue Department employee and I spent weekends there trying to get at the
data but I still couldn't release it to Syracuse because it would frequently be
in groupings less than ten, which violated all these IRS contractual
arrangements we had. Therefore,
Syracuse said, we're not going to do it because we have to put forth such a
series of assumptions and we'll have all of our assumptions criticized, and
it's not worth it as academicians to do it so we're not going to do it. So that, that's what happened with the
Syracuse thing. What happened with
the commission, I can not speak to, Senator, inasmuch as I was not party to
that as staff in any way. I do
know that of the numbers that have been developed here, there are three pages
of assumptions that are listed and I thought about including them and just
thought we were getting awfully bulky but certainly those will be provided, and
I will bring them by tomorrow.
They are assumptions that can be attacked just like the Syracuse folks
indicated, but if you're going to do this at some point ... in a.. you know...
you're gonna ... you're
gonna have to have assumptions.
SENATOR
WITHEM: I would suggest maybe on
those assumptions that either, or both, committees may want to pursue those
little more detailed, maybe not, at this time because it's getting late and
maybe aren't available, maybe back to some policy-oriented questions. Senator Hall.
SENATOR
HALL: Yes, quick, can we expect
this kind of evaluation from the department on all bills that are introduced in
the future? (laughter)
DEB THOMAS: Ones with this much impact, yes.
January 23, 1990
Page 85
SENATOR
NELSON: All right, you said
SENATOR
HALL: Good. Who determines that degree of impact?
DEB THOMAS: The Governor specifically, when the funding
mechanism was announced the first of the year, specifically instructed the
Department of Revenue to prepare an analysis on this because of the magnitude
of the whole concept of school finance.
SENATOR
NELSON: What are you going to take
a, you said a return, marked farmers' return, or if two-thirds of the gross
income...?
DEB THOMAS: How the analysis is done, Senator, I'd
rather have Franz (Schwartz) answer because I didn't do it and I wouldn't want
to answer wrong.
SENATOR
NELSON: Thank you.
DEB THOMAS: I
mean, I know how I'd do it, but we really should ask Franz how he did it
because he's the expert.
SENATOR
NELSON: Thank you.
SENATOR
WITHEM: Thank you, Deb.
DEB THOMAS: Thank you, Senators.
SENATOR
WITHEM: Does anybody else have any
final parting questions? I tell
you what we're going to do at this time.
It is now three hours and twenty-five minutes into the hearing. It was my goal to close at ten thirty
at the very latest. We'll allow
people to come through as quickly as they can. You'll be limited to three minutes, excuse me, three
sentences--I said that wrong; to three sentences. Look at your testimony. If you, we will leave the record open, if you care to revise
your remarks and submit them in written form later on and we'll make those
available to the committee. It is
important now, I think, the people who came down who wish to get on record,
have an opportunity to do so, please limit your testimony to three sentences,
and revise it in written form for the committee. We'll consider it at a future time.
WALTER
THOMPSON: Would you let me say
right now that I'm a member of the State Board, Walter Thompson, and the State
Board of Education supports 1059?
January 23, 1990
Page 86
SENATOR
WITHEM: Nope, Walter, I'm not
going to let you say that.
(laughter)
WALTER THOMPSON: Okay.
SENATOR
WITHEM: Walter Thompson, State
Board supports 1059. Okay, boy.
SENATOR
BARNARD-STEVENS: You said the
state board, I think, didn't you?
SENATOR
WITHEM: Yeah, I thought that's
what I said, too.
A. LOY
TODD: Senator Withem, members of
the joint committee, my name Loy Todd, I'm a paid lobbyist. I work for the Nebraska New Car and
Truck Dealers Association.
SENATOR WITHEM:
Okay, those are your three sentences.
(laughter) No, no ...
A. LOY
TODD: Obviously why I'm here is
because we're very concerned about the fact that there's a sales tax
increase. I want to point out just
a couple of things very briefly about that sales tax increase and our major
concern about this piece of legislation.
First of all, in our industry sales taxes effect sales. Our sales will be definitely decreased
in some manner by a sales tax increase, and I want to remind this committee and
the Legislature that we're not talking about a one percent sales tax increase,
we're talking about a 25 percent sales tax increase. It's one penny, but it's 25 percent, and that gets me to our
major concern about this bill. We
understand that there is a need to provide property tax relief. We understand that there is a need to
do some kind of major shifting. We
are not necessarily opposed to that.
What scares us to death is that this is this year's increase awaiting
next year's increase because this does not adequately handle the growth that's
going to be out there, and you heard the realtors testify. They've already been hinting at you and
other people have been saying, well, you don't probably really need the income
tax part of this this year. we'll
worry about that next year.
SENATOR
WITHEM: Okay, so your concerns
are: Impact on sales for
automobiles; the fact that it does not adequately provide for growth; and fear
that we may jettison the income entirely and boost up the sales even higher.
January 23, 1990
Page 87
A. LOY TODD: Yes, Senator, without the growth... we don't have growth in sales, the only
growth is in income, and you've got to keep it...
SENATOR
WITHEM: Okay, we'll provide for
you, and I'd urge you to take a look at their work, that our fiscal office has
done. Maybe you should talk to Sandy
Myers, because we went through this couple of mornings ago, how the income is,
in fact, how the growth in fact is taken care of and you can take a look at
that information. Next.
GARY
THOMPSON: (Exhibit L) Senators, my
name is Gary Thompson, I'm President of the Beatrice Board of Education, and I
have presented to you some graphs which simply are an illustration, a graphic
illustration, of what is happening in our district and the reason that we
support 1059 in its concept of equalizing property tax. I want to point out, of course, that
we-in Beatrice being the political subdivision that has been most affected by
the Enron decision, we recognize the vulnerability which we have under the
current inequities of the property tax system as it supports education. A couple of things that I do want to
point out, as far as our position is concerned, just to emphasize that in
1984-85 we received $1,750,000.00 in state aid to education. Five years later in this current fiscal
year, we are receiving $1,062,000.00, less in state aid than we received five
years ago. Our budget has
increased by about 5.4 percent on an average of those five years. The other thing I want to say is that
I'm with the others, I don't want a lid...
SENATOR
WITHEM: ... Okay....
GARY
THOMPSON: ... 4 percent. We have built-in costs for next year of about 2.35 percent,
that we have no control over. So a
4 percent lid, we'd be able to give less than 2 percent increase to teachers'
salaries "if" we did not increase "any other" budget.
SENATOR
WITHEM: Senator Hall has a quick
question.
SENATOR
HALL: Clearly aware that the lid
proposal that Mr. Jacksha and his group is circulating, are you actively
opposing that?
GARY THOMPSON:
Oh yes, we'll oppose that. we certainly will oppose that just as we will hope that the 4 percent on
January 23, 1990
Page 88
this lid would be given.
SENATOR HALL:
Because our lid looks like, you know, a picnic compared to his.
GARY
THOMPSON: Well, I understand that,
but it's still not that much of a picnic, Senator. (laughter)
SENATOR
WITHEM: Maybe a rainy picnic ...
GARY
THOMPSON: Yes, something along
that line, yes.
SENATOR
WITHEM: Next up. Thank you, Gary.
SENATOR
NELSON: Wait, one question.
SENATOR
WITHEM: Oh!
SENATOR
NELSON: You made a comment, and I
guess I know that every year it's anticipated teachers' salaries will increase,
but down on the farm, there's no increase. I mean that grain's down twenty cents a bushel to that
business owner. There's no guaranteed
increase- Why do we always have to say, a guaranteed increase?
GARY
THOMPSON: Because we're in a
competitive market- if we're going to keep teachers in Nebraska, we've got to
compete with them, and we have to.
SENATOR NELSON: There's a big surplus of teachers. That's not a problem.
GARY
THOMPSON: Well, I ... that's not what we find, Senator.
SENATOR
WITHEM: Thank you. Thank you. Next.
DALE
DeRIESE: I'm Dale DeRiese,
Superintendent of Schools, I represent the Holdrege Public Schools. I think I shed a little different light
on a request I have. Number one is
our school system very much supports LB 1059 and that I won't go into all the
reasons because they've been covered.
My only concern that I'd like for your consideration that does effect,
and maybe some of the other schools in the state that rely heavily on
nonresident tuition, and I'm only talking about a two-year period. That is that the when the nonresident
tuition sunsets, I think that's been moved back a year now but whenever it
does, anyhow, there will be a two-year period of time that we will be receiving
January 23, 1990
Page 89
nonresident, we
will not be receiving nonresident tuition but it will be an accountable receipt
within the formula. So therefore,
we will be at a disadvantage, we will be receiving less funds and probably a
related property tax increase.
Now, LB... if LB 259
passes, the consideration for the increase in valuation and it may have to be
taken into consideration, too, but I just wanted to voice my concern that this
could be a substantial consideration for the schools in the state who have
relied heavily on nonresident tuition.
SENATOR
WITHEM: I think we've talked about
that a great deal within the commission, and again... I sound like a broken record, to put in people off on staff,
but I think Tim and Larry here can visit with you a little about that, and if
we still have problems, well, we'll see what we can do about it.
DALE DeRIESE:
Okay, if we we could just be in a
"hold harmless" situation for those two years.
SENATOR
WITHEM: Okay, thank you.
DALE DeRIESE:
Again, we are very much in support of LB 1059.
SENATOR
WITHEM: Thanks a lot, appreciate
it. Next up.
CARL
NEWQUIST: Ladies and Gentlemen,
the hour is getting late, you're probably "tired-er" than I am. My name is Carl Newquist, I am a member
of the Nance County Board of Supervisors.
I am a farmer, a rancher, whichever you choose to call it. As a member of the County Board of
Supervisors, I am here, directed by our Chairman, to support LB, 1059. For years we as board members have been
told that something has to be done about high property taxes on real
estate. it now appears that
possibly something like this is within 'our reach, and that about takes up my
three sentences.
SENATOR
WITHEM: You've got 'em. (laughter)
CARL
NEWQUIST: One other thing, I got
my tax statement right here on my 160 acres, one of them that I own, 85 percent
of this tax is going to education.
The proof is right here.
That's all I have to say.
SENATOR WITHEM: Thank you.
January 23, 1990
Page 90
CARL
NEWQUIST: I'll take any questions.
SENATOR
WITHEM: Next up.
GLENN
UECKER: I want to thank you people
for everybody for staying this late hour.
My name is Glenn Uecker, I'm -from the District II School Board at
Pierce, Nebraska, and most everything has already been said but I would imagine
that you people could very easily lose track of what all the different kinds of
testimony we heard here this evening that basically what we're looking at is
equalization of taxes here. I just
went through a very stressful thing in School District 2, which if you people
remember the papers, we at that school board were under recall up there and all
survived that thing because we told those people what they needed to do is come
down to Lincoln, Nebraska, and that's where you can change things. We were very happy to see that we have
a bill like 1059. We do
wholeheartedly support that. I
also would like to speak as a farmer and a businessman. I think we live in a very average
community in Nebraska. I'm an
average citizen. I also bought a
combine this last year, paid $12,000.00 and it's a pretty good machine, and a
good used big machine. And I pay a
lot of taxes. I own a grain
elevator in the community. I own
some farm land, and I feel that I probably will be paying more taxes under 1059
than I am now, but if I'm making money in my business and if my- cattle are
making money and my farming's making money and I have a good year--I can pay my
increased taxes. If that's not,
then the part of this bill where you have income taxes, it's going to pick up
some property taxes, then that's not going to impact me if my income is hurt. So, I, we really think this is a very
good bill, and I think enough people have said plenty about that tonight. Thank you very much.
SENATOR
WITHEM: Excellent statement. Thank you very much. Senator Bernard-Stevens has one.
SENATOR
BERNARD-STEVENS: I just had one
comment. In case you're trying to
find some of those people that you sent down here to talk to "Lincoln", we sent
them to "Washington" and said it was Washington's problem because they reduced
the funds and they said it wasn't their problem, that it was the World Court,
so many of them are probably in the Netherlands now, trying to solve this. (laughter)
SENATOR WITHEM:
So they'll be sent right back to you.
(laughter)
January 23, 1990
Page 91
GLENN
UECKER: I'm in Senator Hefner's
district, and as you noticed, he went out on the hall, and talked to, he had a
little chat about he did not cosponsor the bill but he said that he's not
familiar enough with a lot of the things with the bill. There is one thing about the bill we do
have reservations in our district about, is the lid. But I will also say that we don't have that much of a
problem with the lid; we do not want to... you know, we would like property tax relief. We don't want taxes to go up in, you
know, just, you know, the income and the sales tax and we end up in the same
area, but we have to be, keep things equal so that... we don't mind paying more taxes, as long as everybody is
helping pay the bill. We need to
equalize the tax burden because we do need to ... we're gonna have higher education costs. There's no question about that.
SENATOR
WITHEM: Glenn, we're not going to
hold it against you that you're in Elroy's district, but keep beating on
him. (laughter)
GLENN
UECKER: He's a good man.
SENATOR
WITHEM: Thank you.
JOHN
HANSEN: For the record, I am John
Hansen. I am a paid lobbyist and I
am the President of the Nebraska Farmers Union, and I testify in behalf of my
organization here this evening. I
wish that I could tell you that I was smart enough to tell you something you
haven't heard before, but no better.
Our organization has been concerned for some long time about property
tax and looking at different ways of remedying the property tax situation, and
we have a long-standing policy of support for a bill similar to this and are
excited about the prospect of being able to finally put a bill into play that
has a chance to address this question.
We are concerned about quality of education and also concerned about
property tax. So we want to say,
thank you for putting this bill before us, giving us an opportunity to talk about
it and we hope that we're able to pursue those kinds of things, those kinds of
remedies that deal with those questions that have been raised here this
evening. We have an excellent
opportunity to move forward in terms of property tax relief and we think that a
mix of property, income, and sales is the best overall remedy.
SENATOR
WITHEM: Thank you, John.
January 23, 1990
Page 92
JOHN
HANSEN: Thank you.
SENATOR
WITHEM: Dale.
DALE
SIEFKES: Dale Siefkes, Nebraska Association
of School Boards, our organization is in strong support of 1059 by delegate
assembly action. I think you've
heard from a lot of members already this evening. You're hearing from them by letter and by other messages as
well. I 'would just simply say,
we'll be available to assist you in any way that we can, and as this
legislation progresses, we certainly encourage its advancement and give
commendations to the work of the commission and thanks to the Senators that
have supported it, with us cosponsors.
Look forward to working with you in all ways.
SENATOR
WITHEM: Thank you, Dale. Senator Dierks does have a question.
SENATOR
DIERKS: Dale, most of the people
that are members of your organization have asked, or expressed a concern about
the lid.
DALE
SIEFKES: Yes.
SENATOR
DIERKS: It's my estimation, and I
maybe need some clarification from the Chairman of the Committee, we're talking
about a 4 percent lid, yet at-the same time we're going to be pumping quite a
percentage of income into these, or a, paid into these school districts by
virtue of the sales and income tax, so there should be a tremendous decrease in
the amount of property taxes that are needed before you ever get to this
lid. Shouldn't that be right?
DALE
SIEFKES: That's correct.
SENATOR
DIERKS: Now we hear people saying
like they're going be at, currently they're- at 2.3 percent income... asking for this much of an increase and
that leaves them less than 2 percent to take care of teachers' salaries, but
there should be a great big (inaudible) ...
DALE
SIEFKES: Well, we're talking about
a tax shift and remember the difference you're talking about is the amount of
money that's in the tax shift and the dollars they're talking about is the
amount of dollars that's in their budget and those are two different things.
January 23, 1990
Page 93
SENATOR
DIERKS: But shouldn't the
amount... ?
SENATOR
WITHEM: The lid is on the budget.
DALE SIEFKES:
The lid is on the budget and not on the tax shift. Okay, and they're two different
things.
SENATOR
DIERKS: Okay, thank you now. What's the matter, June, you don't
think we can read, you already passed out the letter here.
SENATOR
NELSON: You neutral?
JUNE
REMINGTON: For the record, my name
is June Remington, I represent the Nebraska Council of School Administrators
whom you have seen here this evening on both sides of the fence. I'm going to have a hat made that's
black on side and white on the other.
I wanted you to know that the, most of those people that you heard from
that were school administrators, they do pay dues to our association, at least
they did this year, and the association has a formal position in favor of 1059.
SENATOR
WITHEM: Thank you, June, very
much. Would like to, just for the
record, indicate and have inserted in the record, we mentioned before a letter
from Pat Neujahr who is from the Commission. Testimony on LB 1059 (Exhibit J) presented before the
Education Committee by Tom Vickers on behalf of the Technical Community
Colleges, are supporting. Jim
Ossian who is the NASA president, who is supportive of the bill in a
letter. (Exhibit B) Farm Bureau
Federation (Exhibit A), I guess I would say supportive with some
reservations. And the Nebraska
State Education Association (Exhibit G) supportive. With that I have about a twenty minute closing. (laughter)
SENATOR
HARTNETT: You're going to close it
by yourself! (laughter)
SENATOR WITHEM:
Senator Hall, do you have anything to say for the good of the good of the
cause?
SENATOR
HALL: Good night.
January 23, 1990
Page 94
Disposition of
Bills:
LB 1059 -
Advanced to General File as Amended.
committee Clerk
Chairperson