Debate Transcripts

LB 1059 (1990)

Select File

March 21, 1990

their time here in Lincoln today with us. We'd like to thank them for that. I know that they appreciate us, the work we do here, and we appreciate the contribution they give back to us.

PRESIDENT: Thank you. Senator Schellpeper has some guests in the south balcony. They are 38 Government students from Wisner-Pilger High School, with their teacher and principal. Would you please stand so we may recognize you. And thank you for visiting us today. Under the north balcony, we have Nadine Fricke of McCook, Mary Jane Morris of Lincoln who are with the Nebraska Wheat Hearts. Would you folks please stand and be recognized. Thank you. And Senator Scofield has some teachers from Chadron State College, Lou Jensen., Carol Wright, Bob Reynolds, under the north balcony. Would you folks please stand. Thank you from the far west. Senator Beck has a special guest with her under the south balcony, Naomi Smith is from Omaha and a friend of Senator Beck from District 8. Would you please welcome Naomi this morning. Thank you, Naomi. We will move on to LB 1059. Mr. Clerk, where were we?

CLERK: Mr. President, 1059 was discussed yesterday. I now... the next amendment I have to the bill, Mr. President, is by Senator Schellpeper and Senator Dierks. Senator, I have your AM3090 in front of me.

PRESIDENT: Senator Schellpeper, please.

SENATOR SCHELLPEPER: Thank you, Mr. President, and members, this amendment is more or less a clarifying amendment. At the current time, in LB 1059, there is no place in the bill where it says what the money shall actually go for. And this amendment will say that, after you go up to the limit that you can go with your budget, the money shall go for property tax relief. We have been talking about it all the time but this amendment will say that the money will go for property tax relief. I think the people of Nebraska are wondering what the money will really go for and, like I said, it's more just a clarifying amendment but yet I think it's very important that the people know where the money will go to. Thank you.

PRESIDENT: Thank you. Senator Moore, please, followed by Senator Withem and Senator Crosby.

SENATOR MOORE: Well, yes, Mr. President and members, I rise to support Senator Schellpeper's amendment. If you didn't hear

11541

what he said, Senator Schellpeper's amendment simply puts in the bill that the money that a school district cannot spend because of the lid, that money will go to lower property tax. That's what the bill says, but we're saying it point blank. And we do it this way to try and... as I said yesterday, we're trying to answer legitimate concerns people have. Some of those concerns are legitimate and some of them aren't. Now I have been accused of beating up on the northeast corner, I'm going to give some other folks equal time. You know, if you read Monday's paper, Lincoln paper, you know, Governor hopeful, Boyle says 1059 has lost support. He says LB 1059 is additional taxes, not property tax relief. Then he shows that courage of we should do something along the line of 1059. I'm certainly for that. But people are convinced that LB 1059 is not going to accomplish that goal. People see that bill as additional taxes now. And this morning's paper, the cowardly lion, Ben Nelson, takes powerful stands on the abortion bill; says 1059 has laudable objectives. It tends to create a bigger problem for the average working family by raising sales and income taxes with only a promise of property tax relief. People are skeptical of the latter ever occurring with this bill and Nebraskans don't want that, to happen anymore. You know, I wonder if either of those people ever read the bill. I'm sure they have not. I mean, they can take the political stands like that and I'm wondering, to paraphrase LBJ, I'm wondering if either one of them could pour liquid out of a boot if the instructions were written on the heel. I don't know. You know,. people keep trying to raise arguments that this don't do what it says it does. The bill has two goals, one is to shift the burden away from property. The bill does that. Two, is to equalize school funding and equalize some disparities. The bill does that, you know. And then people like Mayor Boyle and candidate Nelson can say those things but have they ever read the bill? Do they even know what it does? The answer to that is no, probably not. I don't know but, I mean, I'm guessing probably not. If that's their concerns, the bill the way it was written takes care of those concerns, and with Senator Schellpeper's amendment you say it point blank. I mean, short of actually writing out a check to the property taxpayer, the lids contained in the bill, Senator Schellpeper's amendment, that's about as far as you can go to "guarantee property tax relief". Now if people like Boyle and Nelson want a zero percent lid on schools, then you can have dollar for dollar relief. I don't think they're going to propose that. They don't want to do that. I don't want to do that. But, yes, we need to have some lids in the bill to make

11542

sure that that money goes for its intentions. Senator Schellpeper's amendment simply says what people will keep saying is missing in the bill, even though the way it's written it says it not directly. Now we're saying it. The money a school district cannot use to satisfy its budget growth must go to lower property taxes. It's as simple as that. And I hope the candidates I quoted are listening. I hope the candidates I quoted would take the time to read the bill and maybe talk to some people before they make statements that they don't understand. I urge the adoption of Senator Schellpeper's amendment.

PRESIDENT: Thank you. Senator Withem, please, followed by Senator Crosby.

SENATOR WITHEM: Mr. President and members of the body, Senator Scott Moore said it very well. I would ... he had his light on first and he took the shots at Boyle and Nelson which were very deserved and should be taken. This time of year when candidates are running for office they tend to run off at the mouth things that they don't particularly understand and I think that's pretty clear in this case. I would just second what he did have to say in that regard. Oftentimes when we write bills in the Legislature we write them for the agencies that are to administer them. The agencies that are administering them know what they mean and know what they say. Sometimes we don't write in good, common English language that anybody can understand what a bill does. one of the criticisms of 1059 is that it "does not guarantee property tax relief".

PRESIDENT: Senator Withem, may I interrupt you. (Gavel.) Please, let's hold it down, it's very difficult to hear the speakers. Thank you, Senator Withem.

SENATOR WITHEM: One of the criticisms of 1059 has been that it does not guarantee that property... that increased state' aid will be used to lower property taxes. Those of us that understand funding formulas know if -.there is a budget limitation on, that that will, in fact, happen. What the amendment does though, it writes it in in clear, concise English language that any and everybody can understand. It both says in the intent language that this is what is to happen and it also forces the school districts in their reporting forms to include this money in their other sources so that it will, in fact, result in lowering of property taxes in districts that are beneficiaries of the

11543

Marc h 21, 1990 LB 1059

formula. And, again, we know that not everybody in the state is going to receive a set reduction in property taxes because the philosophy behind the bill is that we need to be equalizing and not just reducing property taxes for everyone across the board. So I think it's... I think it's a good amendment that Senator Schellpeper is bringing, not because it really changes the bill markedly but because it does state in the bill in clear language that is understandable what the bill will do. So I commend Senator Schellpeper and Dierks for bringing this amendment.

PRESIDENT: Thank you. Senator Crosby, please, followed by

Senator Dierks.

SENATOR CROSBY: Thank you, Mr. President, and members, it is a real pleasure to support this amendment of Senator Schellpeper's because I think this amendment is what we have been discussing from the very beginning on this. I have said this before and it's a trite thing to say and -I'm sure somebody much wiser, Mark Twain or somebody, said it's like the weather, everybody talks about it and nobody does anything about it. It's fashionable to talk about the property tax and say we have to do something to relieve property tax and then it doesn't really happen in a significant way. When I signed onto this bill I said I would sign onto it but I would reserve the privilege of not voting for it in the end if I didn't feel that it was actually going to have some kind of significant impact on relieving property tax. The phone calls that I get about LB 1059 from what I call voter constituency types, not from organizations, not from Chambers of Commerce, not from city council people or from educators, from board members of school boards, and so on, but from people who vote and who feel that they're the ones who pay the taxes which, of course, we all do. So I am pleased to have this spelled out in the bill that it must have... that it must come down to reducing the property taxes. We have talked... all day yesterday it seemed that we talked about a lot of things except what this bill is all about, two things really, trying to equalize and shift the burdens of... to different incomes, from income tax and sales tax and away from property tax and also quality education. That is what my phone calls... that's the second thing they talk about is quality education. Is this going to ensure quality education? That's what the schools-are all about. I have gotten a copy of the Lincoln Public Schools' budget and if any of you would like to see the percentage pies, I will be glad to show you because most of the money, the higher percentage of the money comes from property tax and most of it goes for

11544

instructional purposes, for teachers' salaries, all the things that- are related to instructing the children in the classroom, classroom equipment, classroom materials that they use. So, from that point of view, I think we all need to pay attention as to what the school budgets are all about and that is quality education. So this particular amendment ensures that the local school districts must look at their budgets and be sure that they aren't inflating just to inflate because they're going to have more money but because they are going to try to work with the shift and help the property owners feel that they aren't carrying the big burden. So it is ... I am pleased to support this amendment and I hope that all of you will. I don't know why you would not because it does seem to me that this is our opportunity. And I like what Senator Withem said, is that we take a lot of things for granted when we bring a bill in that everybody understands what we mean. But I like this that it's spelled out and so I will support the amendment and hope that by the time we get done with all these amendments we have a bill that all of us can understand. Yes, we have read the bill but by the time we get finished it's going to be a whole new bill in many ways, so we'll have to pay close attention. And thank you very much.

SPEAKER BARRETT PRESIDING

SPEAKER BARRETT: Thank you. Senator Dierks, please. Senator

Dierks. (Gavel.)

SENATOR DIERKS: Thank you, Mr. Speaker, members of the body, I had visited with Senator Withem about this several times and found out then that Senator Schellpeper was bringing the amendment and asked to sign on it. This has been one of my concerns and I asked this question even up at Platte River at our special little gathering last fall, last winter, and I think that it is necessary to spell this out. And I think, along with that, it should go on the record that the responsibility of fulfilling this obligation rests with the local school boards. I think that the integrity of those boards is necessary for this to occur*. And I believe that people should know that. They should know that the school boards are the ones that if we're going to have this local control, why they're the ones that have to provide the impetus for this particular amendment. I think that... I read in the paper a little bit ago when Senator Moore was talking about the gubernatorial candidates and one of them mentioned that we had been doing this piecemeal and I think that

11545

that's not really true. I think this has been more than piecemeal. This legislation is a result of a year and a half long study and the study was done with a cross-section of Nebraskans who I think entered this study with a great deal of validity and I was satisfied with the way the study was done. I think that we all should be. The effort was made by people from all segments of education and from all segments of industry in Nebraska. There was a ranch wife, for instance, from Valentine involved. I think that... I think the study was well conceived and was done well and I certainly support this whole concept and I think that it's well for us all to do that. Thank you.

SPEAKER BARRETT: Thank you, sir. The Chair recognizes Senator Schmit.

SENATOR SCHMIT: Mr. President and members, I appreciate the attempt by Senator Schellpeper to write into the statute some attempt to guarantee that there will be property tax relief. it was stated on the floor here this morning that those of us who understand funding, I forge the rest of what was said, I can tell you who understands funding, ladies and gentlemen, the gentleman and the lady who walks up to the County Treasurer's office and pays the taxes on a major piece of property understands funding. I would like to know, as long as this bill is supposed to provide equity, where do you find equity on a farm that pays 15,000 in school taxes as opposed to a home which pays 1,500 or a 1,000? Admittedly, some farms pay a 1,000, not very many of them because there isn't any way that a farm which has only that amount of tax base could possibly support the owner. As of today, there isn't any way that there is equity so long as there are a preponderance of individuals who own a small portion of property... a large portion of property who support an inordinate percentage of the school load. I have said it before, I'm going to say it once again on this floor, in my own school district 52 percent of the property valuation is rural, 37 percent is urban and 13 percent is other valuation. Approximately 300 of the students are urban. Approximately 66, I believe, are rural. It is evident that the rural valuation carries a load of education, so you reduce my cost by 10 percent. I don't need to save a 1,000 or $1,500 on my tax bill. I need to save 7,500 or 8,000. There are people who are going to lose their farms, ladies and gentlemen, because under this proposal, notwithstanding the very best efforts, notwithstanding the many attempts that have been made, there are people who are going to find that within three years their

11546

property tax valuations will be just...the property taxes will be just as high as they are today. There will be one additional kicker and that is that they will then be paying an additional quarter of a billion dollars in sales taxes and income taxes, except that by the time three years rolls around, given the normal attrition, we will have 50, or 60, or $70 million of additional money for schools from that source. The other major inequity which has not been addressed and which no one wishes to speak about is the fact that the income taxes from a school, the income taxes from a school district are all paid back to that school district. They're not collected statewide and then sent out as state aid. So if, in fact, we pay 20 percent of the taxes from District 56 as income, the same people pay them, the same people pay them as those who pay the property tax, no difference. You just one as an income tax and the other as a property tax. I would like to ask someone and maybe Senator Withem can answer this. I know, and I do not know the details, but I know that over the years 'the federal government has made a payment to the schools, I believe, in Bellevue for what they call impact assistance, impact aid. Does anyone know how the federal government determines the relative wealth of a district, the relative need of a district and the relative income of a district? Is it the same formula, Senator Withem, or Senator Scotty Moore, as is employed in this bill? I would like to ask that question if I still have time.

SPEAKER BARRETT: Senator Withem, would you respond, please, in 45 seconds.

SENATOR WITHEM: No, it is not the same formula. It is a different formula based upon the amount of impact that a federal facility has on a local district. Federal property takes property off the local tax rolls somewhat like our in lieu of tax payments from education lands, which I know is a subject I probably shouldn't have brought up with you on the floor because that's another one of your favorite topics, but somewhat that same philosophy, I believe. Senator Hartnett is much more of an expert on it than I thought.

SENATOR SCHMIT: I would just like to ... maybe he could speak on it if he has his light on. I would just like to say this, I believe if you will check that when the federal government makes that payment they take into account the entire wealth of a district which includes the property, the real ... both real and personal and the intangible property of that district. I

11547

believe they take in all of the income that's in that district...

SPEAKER BARRETT: Time.

SENATOR SCHMIT: ...and then they assess the need based upon the impact of the facility on that district. Those are factors which I believe if they are determinable for the federal government, they ought to be determinable for the state government. As long as we do not do that, ladies and gentlemen, you've got a three-legged stool with only two legs out there and it isn't going to work.

SPEAKER BARRETT: Senator Hefner, please, followed by Senators Hartnett and Elmer.

SENATOR HEFNER: Mr. President and members of the body, I rise wholeheartedly to support this amendment. I think we want to be absolutely sure that this is property tax relief and not just additional spending. But, Senator Schellpeper, I would like to ask you a question if I could or I would like to have you giveme an example on the second part of your amendment, where it says, such certified amount shall be shown as budgeted nonproperty tax receipts and deducted prior to calculating the property tax request in the school district's general fund budget statement as provided to the Auditor of Public Accounts and the department pursuant to Section 15 of this act. Give me an example, would you, please, on how this would work?

SPEAKER BARRETT: Senator Schellpeper.

SENATOR SCHELLPEPER: Yes- Senator, I guess what we're saying there, we're just more or less saying that this puts it into statute that when you get your funds you will go up to the limit of your budget and then everything over that has to go for property tax relief. Yeah, you have a budget lid, you can only go that high and then everything after that will go for property tax relief.

SENATOR HEFNER: okay, thank you, Senator Schellpeper. I think that this is where we want to be absolutely sure. Okay, one more question. When we say the district's general fund, now do they have other funds that they could use that would allow them to go over the limit?

11548

SENATOR SCHELLPEPER: Senator, I can't really answer that but I think there are other funds that they have that do not... I think Senator Withem could answer that better than what I could.

SENATOR HEFNER: Okay, I will address that to Senator Withem then.

SPEAKER BARRETT: Senator Withem, would you respond?

SENATOR HEFNER: Senator Withem, did you hear my question?

SENATOR WITHEM: I did not, no.

SENATOR HEFNER: Okay, in the second part of Senator Schellpeper's amendment 'it says, the district's general fund budget statement. Now do the school districts have other funds?

SENATOR WITHEM: Yeah. Yeah, the cap is not on...the building fund already has a cap of seven cents, I think. The bond fund is one that the people have already voted to approve the bonds and that's not covered under this bill.

SENATOR HEFNER: Okay, thank you. With that explanation, well, I certainly will support the amendment wholeheartedly.

SPEAKER BARRETT: Thank you. The gentleman from the 45^th District, Senator Hartnett.

SENATOR HARTNETT: I will call the question.

SPEAKER BARRETT: The question has been called. Do I see five hands? I do. The question is, shall debate now cease? Those in favor vote aye, opposed nay. Shall debate close? Have you all voted? Record.

CLERK: 21 ayes, 6 nays to cease debate, Mr. President.

SPEAKER BARRETT: The debate does not cease. The Chair recognizes Senator Elmer, followed by Senators Labedz, Warner and Schmit. Senator Elmer. Thank you. Senator Labedz.

SENATOR LABEDZ: Thank you, Mr. President. Inasmuch as I was very interested in what Senator Schmit had to say, I'm going to relinquish my time to Senator Schmit.

11549

SPEAKER BARRETT: Senator Schmit, please.

SENATOR SCHMIT: Mr. President and members, Nebraska is not the only state in the nation that has a problem with the funding of schools. There are many other states that have learned long ago that the property tax is not an equitable method of supporting the funding of schools. I would just like to point out a couple of inequities which I believe you're going la find even though... even though no matter how well you try to nail down the lid, Senator Schellpeper, there are going to be more leaks in it than a colander. We, yesterday, I believe, we passed Senator Ashford's amendment which provided for a major exemption. Someone raised the question about the general funds. We know there are other funds that, of course, are available to schools, funds from the rental of school lands, fines, etcetera, which all come to the schools. I do not know, I'm not an expert on it, I never paid much attention to it except twice a year when I pay the taxes, what of those... what percentage of those funds come from extraneous sources. What I do know is this that no one has ever said this bill is going to improve the quality of education or which at the outset is going to help because we're throwing more money in it. I think the Appropriations Committee has found years ago that throwing money at a project does not necessarily improve the performance of it. No one has addressed the fact that Nebraska has a low pupil-teacher ratio. Does anyone know what percentage of the employees of a school district, in your own school district, for example, are engaged in nonacademic activities? I doubt it. Does anyone know what percentage of the budget goes for expenses such as busing, transportation and that sort of activity? I doubt it. Does anyone know what percentage of those busing costs are associated with extracurricular activities? I doubt it. During the Kerrey years and the Thone years we knew we were in hard times and on this floor we actually rolled back expenditures several times, 2 percent, 3 percent. We were told of all of the dire things that were going to occur. People were going to quit. There were going to be major loss of services, a whole host of events were going to take place. You know what? No one quit. Maybe a scattering did. No one quit. State government jobs, school jobs are not that bad of jobs. One of the things they do not like, and teacher have told me, they do not like to be told, okay, tonight you have to ride the bus with the pep club, even though we pay them extra. School teachers, strange as it may seem, have families of their own. They like to spend some time at home with their husbands or wives or children as well as

11550

anybody else. We have added to the responsibility of the schools, this body, and I've been a part of it, time, after time, after time, extra activities. We provide them or require them to provide the largest transportation system in the state. They provide the largest restaurant system in the state. They provide a substantial amount of health care. We all know that they provide, by far, the largest amount of recreation in the state and children now enter into competitive sports before they go to school, four or five years of age they're engaged in wrestling. I might add that some of the antics that go along with some of the parents leave a lot to be desired insofar as teaching young people anything about sportsmanship.

SPEAKER BARRETT: One minute.

SENATOR SCHMIT: We have expanded the role of schools far beyond that which was, as somebody says, the original intention. We will continue, ladies and gentlemen, to encourage that expansion so long as we encourage the funding without any kind of accountability as to how the money is spent. Most of the people in the teaching profession would prefer to go back to the basic responsibilities rather than to expand continually the role of the schools in the community. I know they're going to say Schmit's an old-fashioned fuddy duddy, and they may be right, probably on target, but the facts are, ladies and gentlemen, that I do not believe that my grandchildren get as good an education as my children got, and I'm not going to go any farther than that. I think that it is an unfortunate situation that we are going to expand substantially the amount of money spent on education. We are not going to improve the quality of education and in three years' time there will be no property tax relief and, in fact, property taxes will, I believe, have increased for the support of education.

SPEAKER BARRETT: Time. The Chair recognizes Senator Warner.

SENATOR WARNER: Mr. President and members of the Legislature, first I wonder if Senator Schellpeper could maybe respond to a question. When I am looking at part two, I was trying to figure out for the property taxpayer they will want to look at what they had last year or what they paid last year in comparison. How does LB 84's numbers will show in this when someone is comparing? Will the property tax that the school district...

SPEAKER BARRETT: Senator Schellpeper.

11551

SENATOR WARNER: -collected last year show the amount less LB 84, or will it show the full amount prior to ... without LB 84? It would seem logical that it should show the amount without LB 84 but I...do you know how ... which way it would work?

SENATOR SCHELLPEPER: -I guess I'm not following you, Senator Warner, what you really... you mean last year we had LB 84 that gave 8.5 percent and you're wondering whether this shows that or what?

SENATOR WARNER: I assume that your second part here is to show the impact of the additional state support. Maybe I'm not understanding your...

SENATOR SCHELLPEPER: I'm going to let Senator Withem try to answer that, Senator Warner.

SENATOR WARNER: Well, it's not important if you don't have the answer.

SENATOR SCHELLPEPER: Senator Withem can answer that.

SPEAKER BARRETT: Senator Withem.

SENATOR WITHEM: Yes, that second portion of the amendment, as I understand it, Senator Warner, does not relate to the tax statements that go out to individuals. That is a specific line item in the budget report from the school districts.

SENATOR WARNER: That's filed to the Auditor?

SENATOR WITHEM: Yeah. So the...

SENATOR WARNER: The only thing I wanted to comment and this is not meant to be critical of legislation, it's... I'm trying to sort my way through, as all the rest of us are. But, as I understand, and we discussed this the other day with an amendment I had offered to have the income tax take effect earlier, but, as I understand it, currently we have 135 million in the bill to be appropriated the first year and it has been discussed that that would be ... would... could be phased in later, that there are amendments pending that are dealing with this. But, as I understand the cap that's in here, at least from the earlier calculations, and, obviously, that cap was adjusted

11552

yesterday with some amendments and what its impact is, I don't know. But on a statewide basis, it would appear if we had normal growth for all governmental subdivisions with the cap that property taxes next year with LB 1059, as it now stands, would roughly go up 4 percent statewide. Senator Conway, I believe, has an amendment which would have the income tax take effect retroactively this year but at a lower rate so that withholding would not be doubled and which, as I understand, the estimate is about 161 million would then be available. And under that basis, property taxes with the lid added before yesterday statewide would go up 1.75 percent. LB 1059, if the full 212 million that is projected was, in fact, raised so that the bill was funded in its entirety...

SPEAKER BARRETT: One minute.

SENATOR WARNER: ...then it appears that the sales tax... or the property tax statewide, if the lid was not loosened up that much yesterday, would go down about 2.5 percent. The real kicker, however, is that the dilemma that you have is if you have normal growth with no legislation, property taxes next year could go up 16.49 percent. So the choice is, as has been said several times, that the issue is only what pro ... what tax is going to be increased without extending LB 84 and doing nothing, or you're talking maybe a 16.5 percent increase in all probability. So I ... all the discussion about property tax reduction, at least the way the numbers look on a state-wide basis, and certainly it would be different in any individual district, perhaps is not that significant. I think the logical discussion ought not to be one about property reduction but simply whether or not the current system of support of K-12, elementary and secondary education is appropriate, is it a good method of providing or. should that base be expanded...

SPEAKER BARRETT: Time.

SENATOR WARNER:' ...because you're kidding yourself or you're going to be kidding an awful lot of people if you're going to be talking about property tax reduction because I don't think it's going to happen.

SPEAKER BARRETT: Thank you. The Chair is pleased to note that we have about 30 Nebraska Municipal Power Pool Wives in our south balcony from all over the state. Would you ladies please stand and be recognized by your Legislature. Thank you. We're

11553

delighted to have you visiting with us this morning. Additional discussion on the Schellpeper amendment. Senator Schmit, followed by Senator Withem.

SENATOR SCHMIT: I don't know how many of you followed Senator Warner's comments. I just want to let you know that all of us are aware, painfully aware of the growth and expenditures, not just for schools but for all sources of government in the past two years. I want to point out also that if we do pass LB 1059 and we provide a major increase in funding for schools, some of it, hopefully, will go for salaries. That is where we would hope most of it would go. Let me just tell you what you can expect next then in relative to your own local community, be it your city or your county. Do you really believe that the city employees or the county employees are not going to come back and expect adjustments in their salaries? Do you realize that having channeled 1 percent of sales tax and a substantial amount of income tax to schools that we have then cut out the counties and the cities from state aid from either of those sources? They are going to have to go somewhere which leaves it with property. There are going to be needs out there. We do not today sufficient funds in most county budgets to maintain roads and to maintain the bridges that were built 80, 90 years ago. And so in the country you drive around because you do not have facilities to service those roads, you do not have the ability to build those bridges. Those counties and cities are going to have to find some source of revenue -also. It's an amazing thing to me that we can pick on one entity, schools, which is very important because they consume a substantial amount of money, and we think if we do this, we have resolved the problem. Ladies and gentlemen, I know, as I have said on this floor before, I know why many of us are nervous on this floor. With the passage of LB 361 last year in any legislative district with a Class I or Class II city is going to see a major increase in rural land taxes, due to the valuation and because of other factors. So there is an attempt being made here to try to reduce that impact by a one-shot system. Ladies and gentlemen, a few of you were here, not very many of you were here, when we passed LB 518 and I led the fight on that and we were successful and everyone supported it. Two years later the court said the distribution formula is inequitable. Originally, we were going to return to those subdivisions of government the exact amount of the money they lost as a result of the passage of LB 518. And so what happened? We had to come up with a new formula. Several of us rural area legislators drafted a new bill which we

11554

thought we could probably handle. We sent it to the Revenue Committee where for once we thought we had stacked the Revenue Committee on the side of the rurals to the point where we' could not fail to get our bill to the floor. I'm not going to go back over the exact details because it is too painful but I can remember the number of the other bill, LB 816, Senator Vard Johnson and Davey Newell. They called me one day and gave me the bad news. They said 816 is on the floor. So what happened? A massive shift of dollars that were supposed to go back to the rural areas to replace the funds lost from the repeal of the personal property tax were suddenly shifted, shifted to the urban areas, and those local subdivisions who had lost tax dollars didn't have them anymore, didn't have them anymore.

SPEAKER BARRETT: One minute.

SENATOR SCHMIT: I don't have the time to tell you all of the scenario that will happen here today, ladies and gentlemen, but I just want to tell you, the bill as drafted, provides a little bit of bait for rural people. But, ladies and gentlemen, once the bill is enacted into law, the bait can be removed, the formula can be changed, the tier formula can be changed, a whole host of things can happen and rural area people will not get the amount of state aid that is even projected in the bill today. I make that as a flat out prediction and, ladies and gentlemen, it will not take too long to prove me right.

SPEAKER BARRETT: Senator Withem, please, followed by Senator Elmer.

SENATOR WITHEM: I would call the question.

SPEAKER BARRETT: The question has been called. Do I see five hands? I do. Shall debate now cease? All in favor vote aye, opposed nay. Please record.

CLERK: 25 ayes, 0 nays to cease debate, Mr. President.

SPEAKER BARRETT: Debate ceases. Senator Schellpeper, would you like to close on your amendment?

SENATOR SCHELLPEPER: Thank you, Mr. Speaker, and members, I think there has been a lot of good comments about this amendment. One of the things that the people, I think, kind of forget sometimes is that if we do nothing, property taxes will

11555

go up. They have to. You know, if we do nothing at. all this year with any bill, like 1059, property taxes will go up. So... and if we... last year with LB 84, they did not go down because there was no lid there to control the spending. With LB 1059, there is a lid, so there should be funds there for property tax relief and, hopefully, the amendment is just saying that the funds that are in excess of the budget lid will go to property tax relief. It's just a clarifying amendment but yet I think it's putting the language in the bill so that the people will say, we are getting some property tax relief. I just urge you to adopt the amendment. Thank you.

SPEAKER BARRETT: Thank you, sir. And' the question is the adoption of the Schellpeper amendment to LB 1059. Those in favor of that motion please vote aye, opposed nay. Please record.

CLERK: 34 ayes, 0 nays, Mr. President, on adoption of Senator Schellpeper's amendment.

SPEAKER BARRETT; The amendment is adopted. For the record, Mr. Clerk.

CLERK: I have nothing at this time, Mr. President.

SPEAKER BARRETT: The next amendment, sir.

CLERK: Mr. President, Senator Coordsen, I understand you want to pass yours over temporarily, Senator.

SPEAKER BARRETT: Passed over. Senator Coordsen.

SENATOR COORDSEN: Yeah, I would like to withdraw that amendment now, Mr. Clerk.

CLERK: Thank you, Senator.

SPEAKER BARRETT: It's withdrawn.

CLERK: Mr. President, the next amendment I have to the bill is by Senator Conway. Senator, I understand you would like to withdraw and substitute your AM3099. Is that correct?

SENATOR CONWAY: Yes, if I could.

11556

SPEAKER BARRETT: If there are no objections, proceed. Senator Conway.

SENATOR CONWAY: Mr. Speaker and members, amendment 3099 that I'm offering to LB 1059, that was passed out yesterday afternoon, it's a short amendment and there's some handwritten information at the bottom of the page as well, if you can identify that on your desk. Hopefully, you still have those materials with you. What this attempts to do... yesterday, during the discussion, there was some time spent relative to the implementation date of the income tax, whether to have a retroactive go back to January 1st of this year which would then necessitate to have a 17.5 percent increase for the entire year but not start until the middle of the year, would necessitate a 35 percent withholding. A withholding to probably most taxpayers from a budgetary pressure situation for their personal income situations is more than I think many of us and all of us could probably believe was possible to do to have that much burden at the tail end of the year with respect to holding, even though the rate would be applied across the entire year. And so we rejected that and moved the date, in essence, allowed the date not to be implemented until 1991 with our 3.7 rate. Well, the more I thought about that, one, I certainly did not want to see a double withholding in the second half of the year to accomplish that but, by the same token, when we finish this process, if this bill advances and there is an income tax rate imminent that is going to come along, I would like to see it get started because, otherwise, in January when we actually kick that in to the average taxpayer, once they heard that there was a tax increase, they do not experience it for six, eight, nine months, then have it, I think the perception is going to be that their taxes were raised again on them. I think once we complete this, we ought to kick it in, plus we need the funds to start contributing to this process. So if you will see what the amendment simply does is, it says for...and I worked the amendment out in the sense of being backwards. What I did is I created...what rate would we need to have in the year 1990 to start the withholding at the 17.5 percent rate in July, and for the second half of the year that rate would...17.5 percent withholding then would establish a rate for the entire year of 3.43. What that, in essence, will do, will generate 50,600,000, roughly, relative to the income for the 1990 year. We will have that much money to help fund the proposal going into this next concern. Senator Warner was quite concerned in terms of not having the monies available. This is over half of

11557

the contribution that will be necessary to go ahead and kick off the project from the income tax contribution. So, basically, what it says is that we have a 3.15 rate now for 1990, backing back into January we raised the rate to 3.43, that will then allow a withholding of 17.5 percent which is going to be the withholding rate next year at the 3.7 rate. It will generate, like I say, a little of $50 million. It will be the withholding and the actual same impact on the taxpayer starting in July. It's what we are going to put on them in January anyway. That way we don't Lose any time. We do not lose any money but we do not put a higher withholding burden on the taxpayer than what they're going to experience once the bill gets kicked in at 100 percent level. So, basically, that's the amendment and I offer it for the body to, hopefully, attach to the bill.

SPEAKER BARRETT: Thank you. For purposes of discussion of the Conway amendment, the Chair recognizes Senator Moore, followed by Senators Schmit, Withem and Crosby. Senator Moore.

SENATOR MOORE: Well, yes, Mr. Speaker and members, yesterday I opposed Senator Warner's amendment on the premise that you would have in effect double withholding rates effective July 1. And I opposed it for the reason stated, I didn't think that was the right thing to do, collect a year's worth of tax in the last six months. Now what Senator Conway has fashioned here is quite simply a method in which we can, July 1 we can raise that withholding rate the equivalent of. 17 percent and then come January 1, '91, that withholding rate would be into effect. So you would have a continuity, so to speak, of that tax increase. As I mentioned yesterday, one of the many accusations the opponents of this bill have is that we're once again trying to duck the issue and have the income tax increase go into effect in January. As I said yesterday, the reason we went into effect January of '91, if it went into effect January of '90, at least when we drafted the bill we would have generated far more money than (inaudible) necessary. Now with the Conway... everybody should understand with the Conway amendment, come July 1, '90, people's sales taxes are going to go up, people's income taxes are going to go up. We probably should put a sign on the bill anyway, I mean, ye, of weak political stomachs, should not tread on this issue because it's a tough one, simple as that and showed the courage of certain gubernatorial candidates today, I already mentioned that. Yeah, we're talking about a sales and income tax increase, we're not ducking from it, we're going to put it into effect July, '90, July before an election year

11558

because that's when it has to happen. That's when the tax rates need to go into effect to generate adequate amount of money because you're going to have the offsetting property tax decrease statewide this year. If you adopt the Conway amendment, you're still, you know, arguably 20, $30 million short. We don't know that yet. We can still address' that. But I will support the Conway amendment. It covers about half the gap left by the Revenue Forecasting Board when they met in February. It covers about half that gap. It gets us awful close to the desired $211 million and it does that by raising both sales and income tax rates in July. And, like I said, if you... ye, of weak political stomach, don't enter here because it's a tough one, it's a tough decision that has to be made and I encourage the adoption of the Conway amendment.

SPEAKER BARRETT: Senator Schmit.

SENATOR SCHMIT: Mr. President, first of all, last things first, Senator Scotty Moore. It doesn't take any strong political courage to spend other people's money. That's the easiest thing in the world to do. We do it around here all the time. We do it with impunity and we do it with some degree of regularity. I recall in 1987 this Legislature enacted LB 773 without my vote, I might add, and without yours, Senator Moore. LB 773 they said was necessary, we were told, because without the passage of 773, which adjusted income taxes upward and downward, more upward for lower income people and downward. for upper income people, without that bill high level executives would leave the state. Is there someone here today who can tell me what impact this income tax increase will have upon those individuals who we were trying to entice to remain in Nebraska by the passage of LB 773? And I recall at that time we were told that the passage of 773 would save an income earner in the $150,000 bracket $850 a year. If he made a million, it would save him 17,000. What impact will this tax have upon those brackets and then, incidentally, upon those in the $30,000 bracket? How much more: will they pay or is the income tax increase an across-the-board increase? if so, would it then serve to negate some of the benefits, I guess you'd call them, of 773 to high income earners? Does someone want to answer that question? Senator Withem.

SENATOR WITHEM: What was the question, please.

SENATOR SCHMIT: Will the income tax increase embodied in LB 1059 serve as a discouragement to those upper income category

11559

persons who we were trying to entice to remain in the state by the passage of LB 773?

SENATOR WITHEM: I don't think so.

SENATOR SCHMIT: You don't think so. How much will it increase their taxes on a $150,000 income?

SENATOR WITHEM: It's 17 percent.

SENATOR SCHMIT; From what?

SENATOR WITHEM: From whatever the applicable number is now, 5.9, 1 think, might be what the applicable number is now.

SENATOR SCHMIT: But you don't know how much of that $150,000 is going to actually be transferred into tax increase?

SENATOR WITHEM: Seventeen percent of what their tax liability is now.

SENATOR SCHMIT: Is there someone perhaps on the staff who have worked on this diligently can tell me how much of that $850 tax saving which was vitally important to the individual back in 1983, how much of that will be erased by this income tax increase? I would like to have that information if I could before the bill becomes law.

SPEAKER BARRETT: Senator Withem, please.

SENATOR WITHEM: Very brief comments on the Conway amendment, I believe it is an acceptable way out of the dilemma concerning the cash flow of this bill. If we wait and do not fund the bill in its entirety until next year, we decrease significantly the state aid dollars that will be flowing out to schools, we decrease significantly the property tax benefits. If we make it retroactive full increase for all of 1990, it will unduly burden the taxpayers. What Senator Conway, in effect, is doing is putting the income tax... the load of the... the burden of paying the increased income tax that's called for in this bill will go into effect on July I instead of January 1, is the effect of what he is doing and I think it's a good idea and I'm going to support it.

SPEAKER BARRETT: Senator Crosby.

11560

SENATOR CROSBY: Thank you, Mr. Speaker, and members, Senator, I wanted to talk just a little bit about the income tax withholding and so on, psychological effect, because I think that that's probably a pretty good idea to get a little spring board there before you have to file in 1991 to have some of your taxes withheld and have a little piled up there. I'm going to go back to the wonderful good old days when I first had my first job and I made the princely sum of $15.60 a week for 48 hours. That was 12 hours at 30 cents an hour and then I got 45 cents for Saturday. And they took out, if I remember correctly, 12 cents for Social Security, so I got $15.48. But I was there in forty-two, three, along in there when the new plan came in for federal income tax and then they started deducting that. So I do remember how good it was the following year when you filed your income tax that you had that withholding, that was a revolutionary way to pay income taxes because everybody was going to pay, not just the really wealth people who had big incomes but everyone who worked. And so I go back over that little history just so we understand, I think, what Senator Conway is trying to do here and I think it's a good idea. But, Senator Conway, would you yield to me just and answer a couple of questions and worry along with me so I sort of understand some dates?

SPEAKER BARRETT: Senator Conway, would you respond?

SENATOR CONWAY: Yeah.

SENATOR CROSBY: All I want to understand correctly is that your... the whole point of this is what I just said that people who have withholding from their regular salaries then in 1991, April 15th, when they file they will already have the benefit of that six months income tax withheld, right, this increase if it goes into effect?

SENATOR CONWAY: What they will have, by having a 17.5 percent increase in their withholding for the second half of the year'...

SENATOR CROSBY: Yeah.

SENATOR CONWAY: ...in reality will accumulate enough money to give an 8 3/4 percent increase this year but they will be...

11561

SENATOR CROSBY: Yeah.

SENATOR CONWAY: ... in the same track as they will be then where there is a full 17.5 percent increase next year.

SENATOR CROSBY: Also, the other thing, just to... so I have these... I think dates become very confusing sometimes. For instance, right now when we talk about our property tax, our real estate tax, we are paying, April 1st, the first half of the property tax for 1989, correct? Yes, we are. So in 1990... so in 1991 we're paying 1990. So I guess my point is I think that people... I think you almost realize there are a tremendous number of people in Lincoln and across the state, Omaha, that watch EduCable, that watch the Legislature and they listen to what we say. And I want us to be honest and up front with them about this property tax thing because even though we passed Senator Conway's amendment, which I think is a good one, and we passed Senator Schellpeper's amendment, which I think is a good one, still when this goes into effect in 1991 when we file our April 15th taxes we have a little accumulation there for income tax but unless we're looking ahead and understand whether our property taxes are going up or down, which they may or may not, I'm still not convinced that that's going... that this bill is going to really have a significant impact on property tax, then they will come up against, in 1991, 1 think a lot of people are going to notice a big increase or an impact all the way around on their... all of the taxes that they pay. So my point is I will vote for the Conway amendment. I think it's a good idea, but I still think we must be honest with the people who pay the taxes, which include all of us, so like on April 15th or April 1 when they pay their income... their property taxes...

SPEAKER BARRETT: One minute.

SENATOR CROSBY: ... next year they realize that these things don't go into effect or they are still on the... in 1991 when they're paying 1990 taxes then they're still...some of this will not be in effect by that time. So, for all those people who are watching and listening, I'm trying to be straightforward with you. Thank you.

SPEAKER BARRETT: Senator Elmer, please.

SENATOR ELMER: Thank you, Mr. Speaker. Would Senator Conway yield to a question, please.

11562

SPEAKER BARRETT: Senator Conway, would you respond?

SENATOR ELMER: Senator Conway, in the debate on your amendment we have been talking about instigating withholding the first part of July at the new rate. How would this be collected for this part year from those individuals who are self-employed and pay their taxes but once per year?

SPEAKER BARRETT: Senator Conway. (Gavel.) Go ahead.

SENATOR ELMER: Shall I repeat the question, Mr. President?

SENATOR CONWAY: I didn't hear the last of it, so if you would begin again.

SENATOR ELMER: Oh, okay. For those persons who are self-employed and pay their taxes but once per year, how would this half-year increase be related to them?

SENATOR CONWAY: By virtue of the language, what we're doing is we're increasing the tax liability for the whole year. I'm only putting in- half as much increase as what we had recognized. Therefore, the withholding would be at a double rate, at 17.5 percent, but it would only be double of 8 3/4, which is the same rate increase we going to have for next year. Now they'll have that liability so it's not, as the law reads and as I have printed it, it is for the entire year from January until the next... end of December that I'm raising the rate from 3.15 to 3.43. When they pay it is a separate subject of the cash flow, it's a separate subject of creating a rate difference over their liability period. Does that answer your question, Senator?

SENATOR ELMER: So by averaging it out, then the guy that pays for the whole year will actually be paying the same kind of tax liability as those who just paid on their withholding from the 1st of July?

SENATOR CONWAY: Correct.

SENATOR ELMER: I understand. You know, thinking about the bill as a whole, if LB 1059 does not pass, budgets for schools will not go down. They will continue to grow at their past rate. if LB 1059 does not pass, the subsidies that have been enjoyed at

11563

the 8.5 percent provided by LB 84 last year will not be given this year. We have not the money for it unless we raise taxes again to pay for it, and it would be provided the same inequitable way it has been in the past. That will be added to the tax bill. If 1059 does not pass, the effects of LB 316 and the increased valuation on agricultural property will still be there, property taxes will increase 15 to 20 percent, increased 15 to 20 percent, especially in rural areas if LB 1059 does not pass.. My question to anyone who cares to answer it in the debate that goes on, what will happen to property tax levies and the current inequity in tax base between school districts, what will happen to those if we do not pass this bill? Thank you.

SPEAKER BARRETT: Senator Warner, please, followed by Senator Hefner.

SENATOR WARNER: Mr. President and members of the Legislature, I was just going to comment this funds in part the gap between the bill and fully funding it and I believe...I'm not sure of the number that Senator Conway used, but it would raise additional funds to the extent that if these estimates are somewhere close, why property taxes would probably only go up about 1 percent. Statewide, next year with this additional funds it should raise about 68... 62 to $68 million. And Senator Elmer made the question how much... or if you do nothing, how much they go up and I will repeat the number that, assuming normal growth, traditional growth in all governmental subdivisions, why it would be about...in the absence of LB 84, of course, why property taxes would go up on the average ... or statewide basis about 16.5 percent. With this amendment they will-go up about 1 percent. It's not a question of whether they're going up or down, it's just they're going up, it's how much.

SPEAKER BARRETT: Thank you. Senator Hefner.

SENATOR HEFNER: Mr. President and members of the body, I have a problem with the Conway amendment. As I understand it, Senator Conway increases the state 'income tax to a rate of 3.43 percent and that's effective after January 1, 1990. And we're three months into the new year already and when this... and the withholding will start, as I understand it, about the 1st of July, 1990 at a rate... at an increased rate of 17.5 percent. Well, I think we have the same problem here that we had with Senator Warner's amendment yesterday. I think this just confuses the issue a little more and, what we're doing, we're

11564

changing the income tax rates at the middle of the year. I just think that that's very confusing to the public. And I want to say here, what's the hurry on this? At the present time, I'm a supporter of the bill- but if we get this on, I don't know whether I can keep supporting it or not. Also, we must remember that agriculture is our number one industry in Nebraska and a lot of farmers do not estimate. Isn't that right, Senator Schmit? A lot of farmers do not estimate their state income taxes. So I think it's going to affect these people, it's also going to affect the people that are self-employed because they do estimate theirs and they will have to change that in the middle of the year. So I think Senator Conway is just confusing the issue here and let's wait till January 1, 1991 and then go in with the increase and this will be the full increase and I think it will be a lot easier for the people to understand it. Thank you.

SPEAKER BARRETT: Thank you. Before recognizing Senator Hall, the Chair is pleased to observe that Senator Johnson has 26 eighth graders from Osceola High School in our south balcony, with their instructor. Would you folks please stand and be recognized. Thank you. We're glad to have you as our guests. Senator Hall, further discussion. Senator Schmit. Thank you. Senator Langford.

SENATOR LANGFORD: Mr. President, I call the question.

SPEAKER BARRETT: Senator Langford moves the previous question. Do I see five hands? I do. Shall debate now close? Those in favor vote aye, opposed nay. Please record.

ASSISTANT CLERK: 25 ayes, 0 nays to cease debate, Mr. President.

SPEAKER BARRETT: Debate ceases. Senator Conway, to close on the adoption of the amendment.

SENATOR CONWAY: Thank you, Mr. Speaker. Very simply and, hopefully, briefly again I will reiterate what this does. Rather than having a 17.5 percent income tax increase, retroactive, as we had originally talked about, which would start this January or would have started this January, we all realize that in order to accumulate those funds, the withholdings would have to double for one-half of the year to accumulate that and we would be talking about a 35 percent

11565

withholding. Everybody agreed no way can we put that much burden in such a short period of time even though it is the equivalency of the same amount of money. So what I'm suggesting what we do is we increase the rate for the year 1990 to up to and not including '91 of just half that amount. We increase the rate from 3.15 to 3.43 or, in other words, an 8.5 percent increase now. We will start accumulating those funds. The taxpayers are expecting to have the rate increase via this bill if it passes and so, at that point, withholding to accumulate that 8 3/4 would take about a 17.5 percent increase in withholding which is what the taxpayers are expecting to be paying anyway. The burden will not be there. Then in 1991 we will kick in the 3.7 rate, which is in the' bill, and at that point the withholding will remain the same because there will be a full year facing us for that withholding and that collection. So in its simplest terms we have that 8 3/4 percent increase for the year 1990 and by having only one year or one-half a year to collect that the burden will not be any greater than the 17.5 that we've been talking about originally, then the rate will increase and so we're just stair-stepping the rate increase, getting into that in '91, rather than losing the six months or even this year's accumulations toward the benefit of the property tax relief bill. And if we don't have the money, this whole bill is for naught with respect to the property tax relief. So it's an attempt to start generating enough funds to get this whole bill to the taxpayers of the State of Nebraska and start doing the things that we said this bill is designed to do rather than losing six months trying to get there. So, with that, I offer the amendment.

SPEAKER BARRETT: Thank you. The question is the adoption of the Conway amendment to LB 1059. Those in favor of its adoption, please vote aye, opposed nay. Have you all voted? Record, please.

ASSISTANT CLERK: 30 ayes, 4 nays on Senator Conway's amendment, Mr. President.

SPEAKER BARRETT: The amendment is adopted. The next item, Mr. Clerk.

ASSISTANT CLERK: Mr. President, the next amendment that I have is offered by Senators Schimek and Wesely and I believe copies have been distributed.

11566

SPEAKER BARRETT: The Chair recognizes Senator Schimek, please.

SENATOR SCHIMEK: Mr. President and members of the body, I apologize for not having this on your desk sooner but I thought it would be in the Journal this morning. So you might want to go to the handout that you did receive just about 15 or 20 minutes ago. It's amendment 3057. Let me try to explain to you why I thought and I think probably... I'll let Don explain his own reasons, but why I thought that we needed to take a look at this kind of a concept. First of all, if you recall, several years ago we had a shift in our income tax formula and many people had complaints that their income taxes went up. Last year when we adopted LB 84, which was a property tax relief bill, there was no relief to the renters in this state at that point and I had some of my constituents come to me and say, first you raise our income taxes and then we're supposed to get tax relief but you give it only to homeowners and we're not getting any relief. Well, LB 1059 just exasperates that problem and increases again sales and income taxes and gives no relief to renters. Now some would say that for renters, in the long haul, they will see either a decline in their rents or their rents will not go up progressively as fast. That may be true. I had a gentleman tell me this weekend that, since his income taxes were going to go up, he was just going to raise the rent on his renters to help offset that. Now that's probably an exception. He may have even been just kiddingly threatening, but I am concerned. Many on the floor have talked about this problem. When we started investigating it, it really...I wanted to do it for all renters. That would be the ideal situation. We looked at several other states, among them Oregon and Kansas, and finally decided on the Kansas model since that's what LB 1059 is based on in the first place, is the Kansas relief bill. Political realities finally convinced me that we couldn't possibly cover all renters and so we decided to look at those at the bottom of the economic run. And if you will look at this bill, first of all, this kind of a program has been in place in Kansas for about 20 years and it costs Kansas about $5 million to implement the program. It's a tax refund program. It goes directly back to the renter and it's limited to a maximum amount of refund of $500. The average benefit is about $175. The bill is targeted to low income families who are renters, people over 55 who are renters and people with disabilities who are renters. And these are the same ones that were targeted in Kansas. Mr. Speaker, I'm having trouble hearing myself.

11567

SPEAKER BARRETT: Thank you, Senator Schimek. The Chair is also having a problem. (Gavel.)

SENATOR SCHIMEK: Thank you.

SPEAKER BARRETT: The house is not in order. The speaker is entitled to be heard.

SENATOR SCHIMEK: Thank you, Mr. President. As I say, this bill is targeted to low income families who are renters, to people over 55 who are renters and to people with disabilities who are renters. Income includes taxable income and it is approximately, it will cover approximately those whose income goes up to 13,000 to 15,000. It depends on how many people are in their family, those kinds of things. The higher the income, the less the refund. It's on a sliding scale. The Kansas program, you might be interested to know, in their state they have about 950,000 households who are renters. In Nebraska, we have about 608,000 households so we have only about two-thirds the number of renters that Kansas does. They have about 15,000 claimants under this program. I guess you could estimate that we might have about a third less, maybe about 10,000, but that's kind of iffy. It depends on how much publicity the program is given. Possibly, in its first year because it would be well publicized, it would have more impact than it would in later years. Kansas has had the program in place for 20 years and it still has only 15,000 claimants. I guess, with that, I would like to make myself available to answer questions on this. it's really quite a simple straightforward bill. A lot of it deals...a lot of the printed pages deal with its implementation and how it would be implemented by the Department of Revenue. Thank you, Mr. President.

SPEAKER BARRETT: Thank you. For discussion of the Schimek amendment, the Chair recognizes Senator Wesely, followed by Senators Hall, Robak and Moore. Senator Wesely.

SENATOR WESELY: Thank you, Mr. Speaker, and members, the Governor has spoken and' Senator Schimek and I have heard her voice of concern about this legislation. Actually, that's a joke. We... Senator Schimek and I talked about this concept of concern about the renters long before the Governor had expressed that as one of her main concerns about the bill. And, as we have looked at the situation, we have put together this amendment in hopes that we could address that concern. But one

11568

of the things that I think we need to be up front about right away is that there are some concerns about the constitutional aspects of this amendment and I know Senator Hall and Senator Moore and others will probably raise those issues and so I'm going to anticipate that issue coming up. It's wonderful to get up and talk about the need and concern for the renters, as the Governor has, but it's another thing to try and raise that issue and know that there is a problem in trying to address it constitutionally. It's something that I think is a misleading sort of argument because there is a recent opinion, that indicates that this would be a difficult constitutional measure to pass. And I think it's wrong. I think the Attorney General is wrong on that opinion but, nevertheless, it is not simply a magic wand that you snap your fingers and twirl around your head and you take care of the renters. There is some problems here in accomplishing that goal. And so, the Governor raising that objection either didn't know or didn't recognize some of these difficulties that Senator Schimek and I are trying to address. I, nevertheless, feel that we should proceed and try and attach this amendment to the bill. Perhaps it will be the amendment that will bring the Governor back onto the measure and ease her concerns. Now, here's a little more background, about a third of the people in this state live in rental situations, so about two-thirds of the people in this state have homes that would directly receive property tax relief. Then you have also the commercial properties and other types of property, and agriculture, that would receive relief under this legislation. But for those renters out there, there is a problem. I grant you that those individuals are not going to have their rents reduced as a result of the property taxes going down and the owners of that property being in their good-hearted, generous ways, reducing their rent. That simply isn't going to happen. But that didn't happen last year, with LB 84, and that was an issue that I raised last year and was not raised by the Governor last year. All of a sudden she's got a concern for the renters that simply was not there a year ago. I had that concern, though, and I did offer a couple of amendments to LB 84, one of them would have been a tax rebate back to every citizen in the state, under $50,000 income, so renters and property owners alike would have received that relief. But I didn't hear the Governor talking about that concept. We also had a sales tax reduction as a proposed amendment last year to LB 84, and I didn't hear the Governor talking about that concept. But now, all of a sudden in 1990, election year, there is a new-found concern for that constituency of a third of Nebraskans who are

11569

living in rental housing. I don't think it's a legitimate or sincere concern. I think that that concern should be there, but I see it on the part of the Governor as pure politics. Well, as we try and respond, though, nevertheless to that concern and to the legitimate aspect of the policy involved here, we are finding some difficulty in how we accomplish that goal. Nevertheless, I think that this proposal is one that accomplishes, as best as we can in the short time we've had to work on it, the idea of trying to provide some assistance, some relief to low income rental families. The cost of the proposal is, as Senator Schimek talked about, about $5 million, a modest sum in light of the two hundred some million dollars we're talking about under this legislation. It would bring some equity to the problems involved and I think is the fair way to go. I do believe that the arguments that will be coming forward, dealing with the constitutional problems involved here, are legitimate. But I do think that the Attorney General is wrong. Here's the basic concept, what they're saying is because we have a uniformity clause in our Constitution dealing with the assessment of property, then we can't turn around and provide...

PRESIDENT: One minute.

SENATOR WESELY: ... property tax relief, other than in a uniform, across-the-board fashion. We can't single out renters, we can't single out low income individuals and provide them relief, outside of the homestead exemption, which is expressly granted in the Constitution. However, I feel that that is too narrow a view of the Constitution. It talks about the assessment, uniform assessment of property, it doesn't talk about the Legislature and our ability to use the income tax or the sales tax to relieve property taxes for individuals in need of that relief in a targeted fashion. And so I simply feel that at some point we need to test that concept and recognize that we need to be able to deal with particular problems in property tax relief, that there are people out there that need assistance, like these renters, that need to have targeted assistance, and ought not be bound by an interpretation of the Constitution that I think is far too narrow for the circumstances we're dealing with here. So, I, for one, feel that this is a good amendment. I appreciate the good work of Senator Schimek in drafting it and trying to work with myself and others interested in it, and that this is a good step forward and would alleviate some of the concern of some of the citizens of this state who have expressed their desire to see renters have some relief under this

11570

legislation.

PRESIDENT: Thank you. Senator Hall, please, followed by Senator Robak.

SENATOR HALL: Thank you, Mr. President and members. I rise to oppose the amendment offered by Senator Schimek and Senator Wesely, although I do applaud their efforts, because I do appreciate the fact that there are literally a third of the people in the state who don't own property and would feel the effects of a sales and income tax increase that we would put into place with 1059 but yet not receive any benefit from at least property taxes that stay at a static level instead of property taxes that continue to rise. But the flip side of that is that there will be people, for example, in my district who will feel the effects of a sales tax and an income tax increase, and their property taxes clearly won't go down, that money will be sent to other areas of the state where property taxes bear a greater burden of the cost of education, and I can support that. The problem I have with the amendment, if you've taken the time to look through it, and I apologize for not being able to look through it that thoroughly, but the mechanics of how it works, I think, are very burdensome. And I, again, I understand the short amount of time that both Senator Schimek and Wesely have had to work on this. I do applaud the efforts. I won't touch on the constitutional issue, because, Senator Wesely, I'm not sure I don't agree with you that the Attorney General's office is possibly not quite right with regard to their interpretation. But this provision, I think, deals with a number of different areas, and there is a number of different areas that it doesn't deal with. It talks about dealing with, for example, persons... included low income and dependent children and rent their homestead. But what about the individual, and I happen to be involved with subsidized housing, does it apply to somebody who is renting an apartment in a subsidized housing project? That individual, currently, only pays 30 percent of their income toward rent. In the project that I'm familiar with, we have individuals who pay as little as $30 a month for their rent, now that still represents 30 percent of their income, but do those individuals then receive a proportion of the property tax relief, if they're available, based on their living in that, currently, what is already subsidized by the federal government, in other cases local housing authorities. Do they receive the benefit of this amendment? I don't know. There are some other things in here with regard to the appeal process, determinations

11571

on the part of the tax commissioner and some other things that I believe would add considerable cost to the implementation of this renter's provision. I think that it could very likely, possibly, outweigh the impact that would be felt by the renters. And you have to also keep in mind, I feel that in many cases, although there are a number of people who have no choice, they must rent, the low income being one of them. But a number of people rent because of the convenience that they are allowed. They do that because they choose to do that. They don't want to deal with some of the things such as property taxes that are lump sum payments, in many cases, on rental properties. They don't want to deal with maintenance and repairs. They are elderly and choose not to own their own home anymore. You see more and more, I see more and more of it in my district, it's the oldest district in the state. I see more and more of these folks selling their homes, because (a) they can't keep up with their property taxes; and, (b) they can't keep up with the maintenance on the home.

PRESIDENT: One minute.

SENATOR HALL: They have to leave. They choose to go rent, yeah, they'd like to stay in their home, but they can't afford it anymore, so they choose to go rent, because everything is taken care of. They don't have to worry about twice a year coming up with a lump sum on property taxes. So there are advantages for those folks. It clearly is not a perfect situation or a perfect world when we do these kinds of things. But, again, we felt property taxes were important enough to address it last year, a little bit. We didn't put the cap-on that we should have, but we addressed it last year. We didn't deal with the renters, although we talked about it a little bit. I don't think that, at this point in time, that this proposal is the one that should be attached to LB 1059. 1 don't think that it is in a workable form, although I do appreciate the concern that Senators Schimek and Wesely expressed.

PRESIDENT: Thank you. Senator Robak, please, followed by Senator Moore.

SENATOR ROBAK: Thank you, Mr. Speaker and members. I have a question for Senator Schimek, please.

PRESIDENT: Senator Schimek, please.

11572

SENATOR SCHIMEK: Yes, Senator Robak, I'll try.

SENATOR ROBAK: Okay, I'm just curious. I did not read your amendment, I just read the handout where claimants would include those with a disability, those 55 years of age or older, dependent children under age 18. I'm wondering how this will affect farmers that rent. I have quite a few farmers in my district that rent. will they be exempted from ... will this include them in their exemption?

SENATOR SCHIMEK: Rent their homes...

SENATOR ROBAK: How about... they get an income from their farmland, though.

SENATOR SCHIMEK: This ... this refers only to living quarters, Senator Robak.

SENATOR ROBAK: So this would not affect farmers then.

SENATOR SCHIMEK: That's ...

SENATOR ROBAK: Farmers would not come under your rental exemption.

SENATOR SCHIMEK: That is correct.

SENATOR ROBAK: I will give the rest of my time to Senator Nelson. Thank you.

SENATOR NELSON: Thank you, Senator Robak. Certainly can tell that Senator Schimek happens to be city raised. (Laughter.) The farm rental is usually not specified, sometimes it is and sometimes it isn't. It could be an amount of 2,400, 3,000 dollars a year for use for those farm buildings, which could be a cattle feedlot, it could be feeding facilities, and so on and so forth. So there is more in it than renting of that home. And, as you probably_ should be aware, the 1 cent increase in sales tax or in this bill, I really, honestly, cannot think of a larger group of people that will be affected and to a large extent, and that is the young farmer that is renting and does not own any real estate. Taken... granted, he may have had a that he's not paying a set amount for his children to go to that Wood River High School. But, again, that was my question coming up, what were you going

11573

to do about that? And that is probably the biggest group affected. Another one is the revenue code, I have a little problem with that, is that you say illness or disability. I've run into this, it could be, a severe case of multiple sclerosis, impossible for them to hold a job and so on, and yet they are not considered disabled when it comes to the homestead exemption, or not the same as maybe kidney failing or heart failing. So that is a question of mine right now. And then, again, this young group, earned income credit. As you know, any income under $19,000, and we made that a little bit better in our income tax adjustment last year. In other words, an income of approximately about $10,600, there is $900 or 900 plus, and it's a varying degree down ... up to 19,000 with no credit. So there is some tax advantage for that young working family, or a family that has dependent children. And low income people, most of them, can take advantage of it. The only thing is you have to file your tax return to get that back, which sometimes they may not own anything. But that was a question, what are you going to do about that young farmer that is probably the highest payer of sales tax?

SENATOR SCHIMEK: Well, Senator Nelson, this bill would address that young farmer, if that young farmer rents the house that he lives in. Now, I did not attempt to address anything more than the actual home that people live in, that's an entirely different question.

SENATOR NELSON: You probably then ought to put somewhere in there that the farmer's residence would be equivalent to $200 a month or something, because...

PRESIDENT: One minute.

SENATOR NELSON: ... otherwise there is no proof or, you know, of that figure. And ...

SENATOR SCHIMEK: If a farmer pays rent, there would be proof of the figure.

SENATOR NELSON: Yeah, but is the rent for the hog lot, or for the house? It's all combined.

SENATOR SCHIMEK: The house.

SENATOR NELSON: How you going to find that out?

11574

SENATOR SCHIMEK: By records of whomever they pay rent to.

SENATOR NELSON: No, it's usually not separate, my dear, I mean that's why I say you're... the...

SENATOR SCHIMEK: I'm sure that the Revenue Department...

SENATOR NELSON: ... the buildings are... are...

SENATOR SCHIMEK: ...can help determine that, Senator Nelson.

SENATOR NELSON: You've got more confidence than I do. (Laughter.) Thank you.

SENATOR SCHIMEK: Did you want an answer to your other question?

SENATOR NELSON: Yes, the...if you want to, I'll give you the time.

SENATOR SCHIMEK: Regarding the illness and disability, this would be... this would be based on existing statutes. I mean, we didn't attempt to go in and change those.

SENATOR NELSON: I knew that, I wanted it in the record.

PRESIDENT:, Thank you. Senator Moore, please, followed by Senator Withem.

SENATOR MOORE: Yes, Mr. President and members, I also rise to oppose Senator Schimek's amendment, basically for two reasons. The first reason, which already has been touched on, on the constitutional clouds trying this amendment. And for those of you that wish to, if you want to turn to page 805 of your Journals, an Attorney General's Opinion in response to a question asked on LB, 1115, I'll read it briefly into the record, just so it's there. It says, no property shall be exempt from taxation except as provided in the Constitution. Emphasis added, while the Legislature has the power to classify and exempt personal property under this constitutional provision, the Legislature does not have such authority with regard to the classification and exemption of real property under subdivision 2(b) of state statute 61. A credit against income tax liability is granted as to real property taxes paid by certain taxpayers. In our view, the provision of relief from the payment of a tax

11575

on real property, in this manner, would likely be viewed as an unconstitutional attempt to indirectly grant an exemption for real property not authorized by the Constitution. And, like Senators Wesely and Hall, I certainly don't wave that in your face as the absolute truth, but it's certainly an issue I think you all need to consider. And it does ... it's a concern that I, too, have. But the second reason that I, other than the constitutional grounds that I oppose this, is that I think we all have to sit back and take a look at what is the goal of LB 1059. And I think one of the goals is to shift, to some degree, the burden of our tax from property, to a certain extent, to sales and income. As I mentioned, as I mentioned a number of times on this floor, you know, according to tax research council figures, we rank 38th in sales tax, nationally, 30th in income, 14th in property, that's right now. If you pass LB 1059, it is projected that our ranking would go up from... sales tax would go up from 38th to 22nd, income tax would go up from 30th to 24th, property tax would go down from 14th to 22nd. That's the goal of the bill. The goal is to shift the burden from property... from the property taxpayer to the sales and income taxpayer. That's our admitted goal. I mean, you do that, you're shifting who pays the taxes, the type of person. And the renter that does not own property will pay a little bit more tax. Right now, you know, maybe that person is paying below average sales and income tax. With this bill, they're going to be right at average. That's the goal of our bill. Now, as I mentioned before, there are legitimate issues that opponents of this bill have raised. I feel this is a legitimate issue. I'm glad Senator Schimek and Senator Wesely brought it to us. But the fact of the matter is that the whole thrust of the bill is to make ... shift the burden from the property to the sales and income taxpayer. One of the problems with doing that, admittedly, is you do hit this type of person. And I understand, you know, that there are some renters, obviously, that don't like the bill.. And I guess in some ways I view this amendment as a Washington, D.C. style amendment, you don't want to hurt anyone, so you try and make everyone happy. And by being afraid to step on anyone's toes, you see what the national deficit is, the problem is created like that. You can't afford to make everybody happy. I think we've all 'agreed that we're trying to shift the burden from the property taxpayer, not totally shifted, but lessen the reliance, to some degree, on property, increase the reliance on sales and income. The down side of that is exactly what this amendment tries to address. But I think it's a... that's the incidence of the bill, that's

11576

what we intend to do. For those two reasons, the constitutional reason, and...

PRESIDENT: One minute.

SENATOR MOORE: ... the fact that we simply cannot afford to make everybody happy with this bill, I would urge Senator Schimek to withdraw this amendment. If we really need to address problems with renters, then let's do it with either homestead exemptions, or maybe you want to deal with rent control and things like that, if you want to put a shiver down everybody's spine back behind the lobby. But that's the way to deal with the problem, not like this. I would urge Senator Schimek, and I would first urge her to withdraw the amendment, if they do not decide to do that, I would urge the body to defeat it.

PRESIDENT: Thank you. Senator Withem, please, followed by Senator Wesely and Senator Lynch.

SENATOR WITHEM: Yes, Mr. President, members of the body. I'm going to give another version of a speech that I've given previously when good ideas are brought forward. I'm going to say, to paraphrase a political concept that was going around here around the lid law, or the bottle bill Situation, that they bring a right problem, but this is the wrong bill. This bill is not a bill designed to perfect all of the inequities that exist within our current tax structure. No single bill can do that. It's easy when you're on the ... not one that's been part of the process of developing legislation to say, well, you left out a problem, there are still problems in our tax code that aren't solved. And, agreed, there are, there are a multitude of them. There are a multitude of problems, the problems that Senator Schmit talked about on General File, on what's in our personal property tax situation, the problem with how renters are affected is another one of those problems. If this bill's primary purpose was to decrease property taxes, if that were the primary purpose of it, I could understand wanting to get the renters involved, too. But that really isn't the primary purpose of this legislation. The primary purpose of this legislation is to affect the way in which schools are funded. We have tremendous inequities in our state in the way in which schools are funded. We have tremendous inequities in our state the amount of dollars that are spent per student, and that is the primary focus of this bill. When you get away from the overreliance on property tax, some people are going to have

11577

property tax reductions, those admittedly are property owners. They will be paying less in taxes. The reason that they will be paying more...less is because their district is one that is unfairly treated under our current system. And that's what it is we're attempting to do with this particular piece of legislation. Now, the other problems that have come up, I think they're excellent problems to discuss and to debate. And if, by bringing 1059 out, we are 'uncovering all of these other inequities that exist in our tax system, and we have, you know, Senator Wesely did a nice job, I think, of talking about the Governor's new found attention on this. Don, I hate to say this, you and I have got some people on our side of the aisle, too, that are wanting to be Governor that have suddenly discovered all of these problems that exist with 1059, because it doesn't solve everybody's problems. Whoever is Governor next year, I hope they remember, I hope they remember that this is a problem. And I think we ought to come back and we ought to address the renter concern, the renter problem. I think we ought to address the property tax, personal property tax problem. I think we ought to address all of those kind of things. But this is not a bill that is designed to deal with all of the inequities that exist within our current, our current tax structure. And, for that reason, I think we probably ought not do this on this bill.

PRESIDENT: Thank you. Senator Wesely, please, followed by Senator Lynch.

SENATOR WESELY: Thank you. Mr. President, members, I appreciate the concerns that have. been expressed by Senator Withem, Senator Hall, Senator Moore, I guess Senator Robak and Senator Nelson have raised some in a particular area. There is no perfect solution to the problem. But I do think that Senator Moore's comments, particularly, need to be responded to, because they lack sensitivity, I think, to a legitimate concern here. Yes, you are talking about a shift from property taxes to sales and income taxes., but I think his argument was very weak. I thought Senator Withem had a much better argument against this amendment, if you want -me to evaluate. Senator Moore, what you're talking about is, you know, that's the way it is, you've got to hurt some people, that's fine. Well, I think that that's not necessarily the case. Hurting low income renters is not something I would think is a good, sensible policy decision to make. We're trying to develop a system, hopefully, that reflects ability to pay taxes. And right now, what Senator

11578

Withem argued, about how we fund our schools is not equitable, that we're not dealing with that problem, and that is appropriately the focus of the bill. But, when you shift to the income and sales tax, you're dealing with regressive changes, unless you recognize some of the implications. The sales tax is thought of as a regressive tax, one that all people pay, rich and poor, and it's not a progressive, not a tax that is thought of in the fairest fashion. The income tax is thought of as more progressive, more fair. The problems we have had in that income tax over the years, particularly with the changes that were adopted in 773, three years ago, have caused a lessening of the progressivity, and an increase in the regressivity of that tax. So, what Senator Schimek and I are saying is, we need to respond to that, that we're going to be shifting off the property tax and onto the sales and income tax, and there are going to be low income renters out there getting nothing out of it, other than higher sales and income taxes. Now, these people that we're talking about are 15,000 and less in income, primarily. So we're talking about very low income individuals. These are folks that can't afford to buy a home, can't afford to own property, that are out there living in rental situations. And we're trying to say for those low income individuals, no, it's not fair to shift a higher burden on you without some sort of an attempt to relieve their tax burden, some attempt to try and recognize the need for progressivity in the tax system. So, I, for one, recognize some of the arguments against this. I still feel that we need to adopt the amendment, but I do think some of those arguments against it are not legitimate, and I would ask you to not support those arguments. But this amendment is needed, it addresses a particular need, it focuses in on low income renters, and I would ask your support for it. And I would give the rest of my time to Senator Schimek.

PRESIDENT: Thank you. Senator Lynch, please, followed by Senator.... I'm sorry, excuse me, I'm sorry. You have two and a. half minutes left.

SENATOR SCHIMEK: Thank you, Mr. President and members of the body. Thank you, Senator Wesely. I guess I, too, would like to respond to Senator Moore. Senator Moore, wherever you are, this is a legitimate interest. This is a legitimate issue. One-third, approximately one-third of the taxpayers in this state are renters and not only does this bill not address their needs, but the bill that we passed last year did not address their needs, and I don't think that the income tax bill

11579

addressed their needs. If we had wanted to make everybody happy, Senator Moore, we would have included all renters under this bill, that would have been my preference. But we were being... I think we were being political realists when we realized that that would take too much away from this bill, would have no possibility of being passed on this floor. But I think it's a legitimate issue. I think our bill is a very modest bill. We're not talking about a lot of money. And, frankly, I'm kind of disappointed that the... some of the biggest supporters of LB 1059 are not listening to this concern at all, they're just dismissing it and saying we'll talk about it later. I'm willing to talk about it later, but I really wish that you would be a little bit more sensitive, as Senator Wesely mentioned. Thank you.

PRESIDENT: Thank you. Senator Lynch, please.

SENATOR LYNCH: Yes, Mr. President and members, I understand that Senator Schimek and Senator Warner, Senator Schmit and Senator Chambers like to talk, and I thought about giving each one of them five minutes of my five minutes, so then we could get on with call of the question, if Langford is up next, knowing that probably won't happen, though. I will mention this, when I sat here thinking about renters, I couldn't help but think about a number of issues, especially one raised by Senator Hall about those who are on subsidized housing, in subsidized housing units. Besides what we know as, lovingly, housing authority units, there is also Section 8, there is also Section 236, in fact, to be completely frank, you can make up to $28,000 a year, if you're a family of four-, and still qualify for subsidized units. So I think when we talk about refunding or returning funds, the argument as it involved, and the concern as it involved definitions in the amendment for ag, for example, how it would apply to people in farms is another one that kind of concerns me. I certainly can agree with Senator Schimek and Senator Wesely about their-concern. However, I think we really have to do a lot better job of defining who, in fact, would be eligible for this. To be completely frank, this is a property tax bill, it's a shift. I've had a few apartments, a lot of you have had some around here, I'm sure. The taxes you pay, the cost of maintaining that property determines what rent you pay. I'm convinced, to be completely frank, that the renters will, in fact, benefit just like everyone else when there is a shift, because as the competition out there develops for any kind of a rental unit, of course, the taxes paid on that piece of personal

11580

property, that piece of real property will reflect in that kind of property tax paid. I'm curious about leases, for example. If someone leases a piece of real property, is it the same as rent? If it's a net, net, net lease, for example, where they have to pay all the taxes, do we have to consider them as well? I just, generally, have concern, at the same time we talk about how rentals will be affected, I think you all know and we all know that we say these things and we have to, because when this goes before a vote of the people, renters will vote like everyone else. But let's not make it appear that, in fact, we have to make some extraordinary move that,. in fact, discriminates even again... against even the poor and low income person who decides to own. I know a lot. of people that are making 15, 18 thousand a year that own houses in my district, you can own a house. But they will get no benefit, because they are in the same low income category, but, in fact, take it upon themselves to try to own their own home. And, in a sense, we almost discourage with this kind of discussion, so much concern over the renter, we almost discourage the low income person from even being willing to think about owning their own property, which I think is a commendable thing, indeed. So I have mixed emotions about the amendment. I will not support it, even though I understand why everyone is doing it, because I don't think we have and probably can't more clear ly define who, in fact, should be eligible and justify it at the same time.

PRESIDENT: Thank you. Senator Chambers, please, followed by Senator Schimek.

SENATOR CHAMBERS: Mr. Chairman and members of the Legislature, this is a bill on which I haven't discussed a great amount of the amendments, or great number of the amendments, because I'm not going to support the bill. I'll be frank. I think it's unfair. But when an amendment is offered of this kind, which is aimed at trying to bring about some equity, I have to support the principle that is being articulated and the effort being put forth to bring a modicum of fairness and justice to what we're dealing with here today. -.Now, when Senator Schimek and Senator Wesely bring us a complex amendment, like this, it would be very easy to say there is too much here to digest, so I'm not going to support it. But we've had very complex amendments whose point we didn't even understand clearly. On this one, it's clear what we're doing and why we're trying to do it. When the Governor stated that the renters were not getting any support out of these bills, it's a point that I'm glad she came around

11581

to making. When we're in a political context, a lot of times a person's motivation is the last thing we need to look at. It is the result, pragmatism, hard-headedness are the things that we have to consider. And, for whatever reason, the Governor went to the water and was baptized, as far as concern about the renters and those who are going to be gouged, who have to purchase automobiles, by virtue of this bill, I'm just glad she went. And I'm glad that when she went in the water and came up, she came up a new person. So, I can understand Senator Wesely saying that his opinion about the Governor's conversion is different from mine, I'm just glad that she's converted. The point that this amendment brings to us is that there is a great amount of discussion of equity. I hear people and have heard people talk about a shift in the tax so that there is fairness. But we have a great amount of difficulty on the floor, those of us who are concerned about the renters and the others who do not constitute a constituency that is represented here as a constituency, we find a great amount of difficulty trying to persuade the body that that term "fairness" ought to encompass these groups also. This bill should look at people as people, and those who are renters are not viewed in that vein. It's as though there is some amorphous group that came here from another planet, and they're here for the purpose of exploitation but not fair treatment. I know why Senator Hall is opposing the amendment, because he told me. But as far as the principle is concerned, I don't think he could quarrel with it. I hope that we will get enough votes to adopt this amendment. Senator, my good friend, Senator Nelson was discussing the plight of the farmers or how they'll benefit, and she nods yes. I hate to bring these things up, but Baron is not here, so I guess I can get away with it. A couple of years ago there was a study that showed that farmers in this state, up to 60 percent of their income is the result of direct federal subsidies. And here Senator Nelson is telling me, don't believe all that junk. Farmers tell me that, too. Some are ... oh, the reason I don't believe it is because some get more than 60 percent. Okay, I stand corrected. But the point is this, the farmers have been getting benefits and not once has anybody on this floor stood up, and certainly not myself, and said, cut those benefits that the farmers are getting, because the people in the city, those who have only their labor to sell are not being treated the same way. Never have I done that. So, it seems unfair and inequitable to me to have people stand on the floor and say, don't help the renters, because by so doing you're not directly helping the farmers. Senator Nelson, every year I journey to

11582

Ames, Iowa, to participate in an affair called, the Iowa Agricultural Youth Institute. The young people request that I come back every year. I've gone there for ten years in a row.

PRESIDENT: One minute.

SENATOR CHAMBERS: I'm the speaker most in demand, that's why they keep inviting me back. I get a bigger block-of time than the Secretary of Agriculture, the national speakers, because the young people and I interact. I'm very familiar with the problems that farmers have, and I'm sympathetic, up to a point. And I don't even ask for a quid pro quo. But on the floor, this morning, I would suggest that those who say they're concerned about the farmer not try to deprive the renters of this tiny boon, because it may not benefit the farmers to the extent that you would like to see. If, after we adopt this amendment, you can craft one that relates to farmers who rent, and there are some who are truck farmers and sharecroppers, in effect, and a majority of the farmers, based on the debt that they have, might be considered sharecroppers, I'll help you. But since the amendment to help those in the city is before us today, Senator Nelson, I implore you, I implore you, reach out and touch us. (Laughter.) Thank you.

PRESIDENT: Time has expired. May I introduce some guests, please. Senator Korshoj has a sister here by the name of Marilyn Jackson, from Fremont, and with her is a friend, Ann Benson, from Fremont also, under the south balcony. Would you ladies please stand so we may welcome you. Thank you. Also, in the south balcony, Senator Lowell Johnson has 60 fourth graders from Fremont Elementary School and their teachers. Would you folks please stand and be recognized. All of you students, please stand. Thank you. Senator Schimek, please, followed by Senator Warner and Senator Schmit. Senator Schimek passes. Senator Warner. Senator Warner.

SENATOR WARNER: Mr. President, members of the Legislature, I just wanted to comment that with the amendment that was adopted on the income tax, a few minutes ago, it would appear that property tax, statewide, obviously, will be different from district... the district as far as schools but would appear to go up in the range of 1 percent. So, with these additional sales and income tax, why there would be no reason to increase rent or no reason to decrease, for that matter, the rent that people are paying because of property tax. Perhaps it's more important to

11583

think in terms of if you do nothing. And if the estimate of increase in property tax is 16.5 percent increase, which is making up for LB 84, plus average growth, then I bet you could guarantee the renters' rent will go up, because, if the property tax goes up, it will automatically be reflected in rent. The renter is going to benefit from this by at least not having property tax as the reason for their rent to go up, and it will be stabilized statewide, at least for one year. And so their benefit is not to have an increase in their rent by virtue of increased paid sales and income tax.

PRESIDENT: Thank you. Senator Schmit, please. I don't see Senator Schmit in the Chamber. Senator Langford, please.

SENATOR LANGFORD: Mr. President, I call the previous question.

PRESIDENT: The question has been called. Do I see five hands? I do. And the question is, shall debate cease? All those in favor vote aye, opposed nay. Record, Mr. Clerk, please.

CLERK: 27 ayes, 1 nay to cease debate, Mr. President.

PRESIDENT: Debate has ceased. Senator Schimek, would you like to close, please.

SENATOR SCHIMEK: Yes, Mr. President and members of the body, I won't take my entire five minutes, but I would like to just briefly say to you that I was sincere in bringing this amendment to you. I do think that it is a problem that needs to be addressed, and I recognize the fact that we can't necessarily change tax policy with one amendment to one bill on the floor. I believe and I think that many others on this floor believe that there need to be some adjustments in our overall tax picture and I'm hoping that this discussion today will maybe be one of the things that prompts us to take a wide ranging look at our whole tax situation. I would just like to address a couple of questions or comments that were made on the floor during the discussion of this bill and I don't know if Senator Hall is still on the floor, but I would like to say that the way this bill is drafted is that 15 percent of the rent that anybody pays for their home or for their living space will be credited and be, what we call, implicit rent or implicit property tax. This is the... 15 percent is the amount that we estimate they actually pay in property taxes out of the total of their rent, so that if we have somebody who is living in subsidized housing and they

11584

pay ... the rent on that is $250 a month and $100 of that is out of their own pocket, we have to assume that 15 percent of that or $15 is what they are paying per month for property tax and you can work that out for a total year period of time and then depending on what their income tax is and how many people in their family will give us an idea of how much money they mighthave refunded. Perhaps nothing, perhaps theirs would not be enough to merit a refund. I'd also like to go back to Senator Nelson's comments and questions on the floor and, Senator Nelson, I guess I'd like to just reiterate that farm families, too, could receive a refund under this program, but they would have to prove how much their rent was. If their entire farm is rented, then it would have to be worked, out as to how much actually goes to the rent of their home and I think that you know that but you wanted to make it clear on the floor. Senator Lynch, appreciate your remarks. I think that we do want to encourage home ownership and I think this bill, in fact, or this amendment, in fact, might be a way of doing that or this tax policy might be a way of doing that. If we can give those low income people a refund on their property taxes, then perhaps that money could go towards a payment on a home of their own. So I don't think that we're mutually exclusive in our desires for people owning their own homes. I'd like to remind you that this is a refund bill. It goes directly back into the pockets of the taxpayer and that we estimate that it could not possibly cost more than $5 million, that it, in fact, would probably be less than that and that we think that that is a very small amount to tack onto this bill. So I would just ask you to seriously think about it and if you have some concerns for the renters in this state, particularly those at the lowest level or the lowest rung of the ladder, then consider pushing your green button on this. Thank you, Mr. President.

PRESIDENT: Thank you- And the question is the adoption of the Schimek amendment. All those in favor vote aye, opposed nay. Record, Mr. Clerk, please.

CLERK: 5 ayes, 20 nays, Mr. President, on adoption of the amendment.

PRESIDENT: The amendment fails. Senator Schimek. Senator Schimek, would you stand up, please. Ladies and gentlemen, may I announce to you that this is Senator Schimek's birthday and she provided the goodies today. Shall we wish her a happy birthday? And, thank you, Senator Schimek. Mr. Clerk.

11585

CLERK: Mr. President, the next amendment I have to the bill is by Senator Smith. Senator, I have your AM3017 in front of me. (Smith amendment appears on page 1533 of the Legislative Journal.)

PRESIDENT: Senator Smith, please.

SENATOR SMITH: Thank you, Mr. President, members of the body, I know that we've had a lot of amendments, we've discussed this issue two times before. This is a little different this time, but I still think it merits discussion, particularly since the Conway amendment was adopted a little while ago and we've talked a little earlier today about where is the other 77 million going to come from. This says in this amendment, which you've had sent around the floor and you have a copy of it laying on your desk, that basically if we're going to increase the sales tax to 5 cents and that 1 cent new increase should be diverted to the General Fund and then that money should be earmarked for this bill, or in other words, for education, that's the intent of the money when it goes into the General Fund. So if the Governor's people are correct in assuming that the 1 cent increase to ... that would accrue to the Highway Trust Fund is indeed $17 million, then here is $17 million more, people, that we can use to come up with to fund the bill. It's that simple. I don't know how much discussion there is going to be on it. I know that we're ... people might be getting tired of how much time we're taking on this issue, but I just think that in the name of fairness this is not a bill that we're setting out to try to put money in the Highway Trust Fund. This bill, we should be up front about the fact that this is for education equalization as far as how we pay for education and equity or fairness in how all the students of the State of Nebraska receive their education. With that, I throw it open to discussion. Thank you.

PRESIDENT: There are no other lights on, Senator Smith, would you like to close on your amendment?

SENATOR SMITH: Okay, I will just say in closing that I made the pitch. You can vote your consciences or whatever the lobbyists outside there are telling you you have to do and let's just have the vote. Thank you.

PRESIDENT: Thank you. The question is the adoption of the

11586

Smith amendment. All those in favor vote aye, opposed nay. Record, Mr. Clerk, please. A record vote has been requested, Mr. Clerk.

CLERK: (Read record vote. See page 1534 of the Legislative Journal.) 11 ayes, 13 nays, Mr. President, on the amendment.

PRESIDENT: The amendment fails. Do we have anything else on the bill?

CLERK: Mr. President, I have a priority motion. Senator Chambers would move to reconsider the vote on the Smith amendment.

PRESIDENT: Okay, Senator Chambers, please.

SENATOR CHAMBERS: Mr. Chairman and members of the Legislature, this one moved by so fast that there was no opportunity to discuss it and I was heading toward my button in full flight when Senator Smith was called on to close, so there was nothing that could be done at that point, and rather than say that there had not been an opportunity to debate it and go through a challenge of the Chair and all that, I decided to do it in this fashion. I'd like to ask Senator Smith a question if she will answer it, maybe one or two questions.

SENATOR SMITH: Yes, I'd be happy to..

SENATOR CHAMBERS: Senator Smith, if I understand your amendment, I'll take it as far as I'm sure of and then you can take me the rest of the distance, then I'll continue. This amendment that you're offering would say that the 1 percent additional sales tax on automobiles, instead of going into the Highway Trust Fund would go to the General Fund and then what would happen?

SENATOR SMITH: With the intent that the proceeds are to be for education, that it goes toward the funding for this bill in the first year. We're talking about that deficit we have.

SENATOR CHAMBERS: Yes.

SENATOR SMITH: This is an opportunity for that 17 million that the Governor's people have said would be in this amendment originally.

11587

SENATOR CHAMBERS: Yes.

SENATOR SMITH: The 1 cent increase would be diverted to with .the intent that that money goes into the General Fund, but it is for purposes of funding this bill.,

SENATOR CHAMBERS: Thank you. That's what I had gotten as an understanding, but I wasn't certain whether that was clear to everybody, based on how swiftly things moved when you had it as your offering. This would take away one of the accusations that I and others have made about the bill in terms of its being one of those bills that's flying a false flag, being represented to the public as doing one thing when in reality a substantial amount of money that will be raised under the machinery of this bill being diverted to another purpose that has nothing to do with education or relieving property tax. I'd like to ask Senator Hefner a question, since I see him over there, if he'll answer.

PRESIDENT: Senator Hefner, would you respond, please.

SENATOR CHAMBERS: Senator Hefner, if that 1 percent of sales tax increase that would be on automobiles would go into the Highway Trust Fund, how does that relieve property tax at all?

SENATOR HEFNER: Okay, Senator Chambers, I think you heard my remarks yesterday, and I said we need this money to go into the Highway Trust Fund so we can build roads.

SENATOR CHAMBERS: But I'm asking you, how would that reduce property tax, which is one of the claims made for this bill?

SENATOR HEFNER: Because getting the children to and from school is part of the education system.

SENATOR CHAMBERS: But how does that reduce property tax? It doesn't really, does it?

SENATOR HEFNER: Yes, I would say because if a county or city has to build roads so the school bus can get over them, they have to use property taxes, so this way if we can use some of that sales tax on vehicles, well, it should help relieve property taxes, very definitely.

11588

SENATOR CHAMBERS: Thank you. I'd like to ask Senator Scott Moore a question if he will answer.

PRESIDENT: Senator Scott Moore, please.

SENATOR MOORE: I'll do my very best.

SENATOR CHAMBERS: And, Senator Moore, I can't ask for any more. When you've done all that you can do, who can ask for more? Do you feel, as Senator Hefner does, that if that 1 percent sales tax on automobiles is diverted to the Highway Trust Fund it will reduce property taxes, as envisioned by this bill and presented by those who support the bill?

SENATOR MOORE: I would not necessarily follow Senator Hefner's logic all the way to that extent, though I understand the argument he is making.

SENATOR CHAMBERS: Okay, but if Senator Smith's amendment were adopted, would it, in fact, put more money into the funding mechanism of this bill to go directly toward the stated purposes and goals of this bill?

SENATOR MOORE: The way I understand the amendment, yes.

SENATOR CHAMBERS: Why is there opposition to making more money available to help make up a shortfall?

SENATOR MOORE: The opposition comes from precedent, whether it be right or wrong.

SENATOR CHAMBERS: Senator Moore, is the Highway Trust Fund being beaten out of some money that it was led to believe it would get at the time this session started? Was it their intent to seek a 1 percent increase in sales tax on automobiles to fatten their kitty?

SENATOR MOORE: No, to my knowledge it was not.

SENATOR CHAMBERS: So this bill will give them what could be described as a windfall, and I'm not saying that pejoratively.

SENATOR MOORE: Those are your words?

SENATOR CHAMBERS: It would, wouldn't it?

11589

SENATOR MOORE: Those are your words. I'm not denying that.

SENATOR CHAMBERS: Okay. Now, do you support ... would you support a method whereby more money could go for the funding of this bill without raising any additional tax than what the bill already states?

SENATOR MOORE: I need you to ask me that one more time so I understand it.

SENATOR CHAMBERS: All right, let me ask it a different way. Would you support a proposal whereby without raising any tax rate more than what the bill already does, but that would make more money available for the funding of this bill?

SENATOR MOORE: I would be interested in that, yes. Let me correct one of my previous answers, Senator. There was a bill introduced to do exactly what this bill does, but ...

SENATOR CHAMBERS: But they didn't look for it through this bill?

SENATOR MOORE: No, there was a bill introduced to do that. I spoke incorrectly there. It was 832.

SENATOR CHAMBERS: And that bill, it may not even pass...

SENATOR MOORE: I don't know.

SENATOR CHAMBERS: So this bill, but this bill, as drafted, will give them a windfall through this bill.

SENATOR MOORE: Well, I hesitate to use the words windfall.

SENATOR CHAMBERS: Did those who represent the Highway Trust Fund and the road builders come in and support 1059 because they said it's going to lead to-more money for better roads?

SENATOR MOORE: To my knowledge, no.

SENATOR CHAMBERS: Okay, so that's the way I'm dealing with it.

SENATOR MOORE: Okay.

11590

SENATOR CHAMBERS: Now back to the other question, this bill will require a 25 percent increase in the sales tax, is that correct?

SENATOR MOORE: Twenty... sales tax, yes.

SENATOR CHAMBERS: Right, and 17.5 percent in the income tax.

SENATOR MOORE: It's a penny sales tax increase and an increase in 3.1 to 3.7 income tax.

SENATOR CHAMBERS: I like percentages.

SENATOR MOORE: Okay.

SENATOR CHAMBERS: From what I read in the paper, is that a 25 percent sales tax increase?

SENATOR MOORE: According to my arithmetic, yes.

SENATOR CHAMBERS: Is that a 17.5 percent increase in...

SENATOR MOORE: According to my arithmetic, yes.

SENATOR CHAMBERS: Talk about being a dentist working in the hen yard trying to pull teeth from a chicken. Senator Moore, I'm almost beginning to wish that you hadn't awakened when that pheasant flew into your head when you had no helmet on. (Laughter.)

SENATOR MOORE: I just about didn't. See what I do in relation to that bill?

SENATOR CHAMBERS: Well, maybe we could reverse the process if we arrange for that occurrence to take place again, and if we couldn't find...a pheasant, it was?

SENATOR MOORE: A pheasant.

SENATOR CHAMBERS: We might find a different instrumentality. I have a hammer over here. But anyway, if we, without raising the sales tax above that 25 percent, without increasing the income tax above that 17.5 percent, if some way we could come up with more money to fund this bill while leaving those tax increases at their current levels, would that please you?

11591

SENATOR MOORE: Depends on where you took it from.

SENATOR CHAMBERS: With the i ... okay.

SENATOR MOORE: The idea...

SENATOR CHAMBERS: Okay, you already get the idea...

SENATOR MOORE: I find the idea intriguing.

SENATOR CHAMBERS: Okay. Now, this bill was not designed by those who crafted it to put money into the Highway Trust Fund. So under the mechanism already in place that is going to impose a tax, we can properly route the money derived from that tax increase to the goals specifically stated by those who support this bill, by adopting Senator Smith's amendment. How can you oppose that?

SENATOR MOORE: I should... it wasn't that we were not aware of what it did, I mean ... because we were aware that, by raising the sales tax, there is that situation where there is an increase in the motor vehicle tax.

SENATOR CHAMBERS: But didn't you say earlier that the reason you would oppose it...

SENATOR MOORE: It was not our intent.

SENATOR CHAMBERS: ... was precedent?

SENATOR MOORE: Precedent, and that has always been tied one with the other.

SENATOR CHAMBERS: So you are one of those who believes in precedent to such an extent that yesterday's ignorance becomes today's orthodoxy. You equate...

SENATOR MOORE: I ... I view it on an issue to issue basis. My ignorance is confined to the issue I am talking about.

SENATOR CHAMBERS: And I'm not talking about you being ignorant, I'm saying that that type of precedent goes against the goals stated by those who support this bill. it's to get as much money as possible to fund this bill. You all, when I was not

11592

participating, were talking about various means to make up some kind of shortfall.

SENATOR MOORE: Mmm, hmm.

SENATOR CHAMBERS: Wouldn't this money help do that?

SENATOR MOORE: Senator Smith's amendment? Yes, it would help. I cannot deny that it would help that situation.

SENATOR CHAMBERS: Thank you, Senator Moore. Senator Scott Moore is a very intelligent, logical individual. You can tell that from the way he answered the questions even when he was trying to be evasive. The man is struggling with his conscience. He is struggling for his political soul this morning, and, Senator Scott Moore, this is a means whereby we can convert at least an aspect of this bill into one of honesty. It not only takes the money that is being raised and applies it where this bill says it should go, it prevents an agency not entitled to it from having a windfall, and by windfall I mean something that it did not anticipate or expect to have any reason to expect. Never when this bill was crafted or being crafted did anybody say part of the purpose was to raise money for the Highway Trust Fund. I think Senator Smith's amendment is imminently fair in terms of what is to be done with the money since you're insistent on putting that extra 1 percent sales tax on the automobiles.

SPEAKER BARRETT PRESIDING

SPEAKER BARRETT: One minute.

SENATOR CHAMBERS: that is why I made the reconsideration motion. It is why I'm going to support her amendment. Senator Moore could not give a reasonable or rational reason for opposing the bill. Maybe, as a supporter, he is locked in where he's got to do that. He's got to violate his conscience. He's got to pretend to... Senator Moore, what you're dealing with, if it's ignorance, is vincible ignorance. It can be corrected, it can be overcome, it can be rectified. If it were invincible ignorance, we'd have something different, but that's not what we're dealing with here today. And I hope those others who have listened at all to the discussion will understand what the amendment is designed to do and will support it.

11593

SPEAKER BARRETT: Senator Hefner, would you like to discuss. The motion to reconsider? Thank you. Senator Withem, any discussion? Senator Smith, any discussion on the reconsideration?

SENATOR SMITH: Yes. Thank you, Mr. Speaker, and I will not take five minutes of my time, but I just want to say I thank Senator Chambers for stating better than I ever could what it is was my purpose for bringing this. I would also want to clarify, to those of you that are in the body that aren't paying any attention at all, that a question was asked of me, who are you pushing this for? Who are you promoting this for? I want to make sure you all know that there is no special interest that I'm pushing this for. This is my concern and Senator Chambers said it very well, I think it's a fairness issue. This bill was not intended to raise money for some other fund. It's to fund education and that is why I thought it was only fair then that we take the money that was raised, maybe inadvertently, I don't know, if they were aware of this originally, but put that money into the concern that we have facing us here and that's how we're going to fund it, and it's that simple. In fact, I almost take offense at that question that was asked of me because I feel very strongly that those that are sitting here that are not listening because they already know how they're going to vote have been told that they're not to vote for this and we all know who told them not to. And I usually don't like doing that on the floor but I just do take a little offense at being asked that question. I think it's a fairness issue. It's the same as it was when Senator Haberman raised it on the other issue that we had when we were talking about not increasing it. Now I'm saying if we're going to increase it to 5 cents, let's take that penny's worth of money and let's put it into this concern that we have facing us right now and that's how we're going to pay for this bill. Thank you.

SPEAKER BARRETT: Thank you. Senator Withem, did you care to discuss the reconsideration motion? The question has been called. Do I see five hands? I do. Shall debate now cease? Those in favor vote aye, opposed nay. Please record.

CLERK: 25 ayes, 0 nays to cease debate, Mr. President.

SPEAKER BARRETT: Debate ceases. Senator Chambers, to close.

SENATOR CHAMBERS: Mr. Chairman and members of the Legislature,

11594

I'm going to give Senator Dierks the first minute of my time.

SPEAKER BARRETT: Thank you. Senator Dierks, please.

SENATOR DIERKS: Thank you, Mr. Speaker and members of the body, I think that from the onset of this discussion on the consideration for the legislation in the first place that we were talking about property tax relief, and I can't think that this amendment of Senator Smith's would do anything but that. It appears to me that this is the purpose of our discussion yesterday and today is to provide property tax relief, and this will do it. It takes that money and puts it back in the General Fund to provide funding for school districts which would then in return provide relief from property taxes. It's just that simple. I think it's a very simple proposal and I think that's the purpose of the entire legislation. I'd urge your support of this amendment. Thank you.

SPEAKER BARRETT: Thank you. Senator Chambers, four minutes.

SENATOR CHAMBERS: Mr. Chairman and members of the Legislature, and Senator Scotty, I spoke a little prematurely when I mentioned I had a hammer over here. I don't have that, but I do have a brick. (Laughter.) We have to come prepared. Members of the Legislature, in all seriousness, I'm going to try to summarize what the point is that I'm trying to make and was trying to make through the discussion with Senator Moore. All of the supporters, undeviatingly, have portrayed this bill as one that will benefit education somehow. I'm not challenging what they say about how that will be done. They also say that the second prong of this bill is designed to provide property tax relief. Now if Senator Smith's amendment which is before us now is not adopted, then instead of saying this is a bill with two prongs, I'd have to say it's a bill with a forked tongue and we know that a forked tongue is a phrase that relates to something which does not deal with the -truth, which misrepresents a position. This bill is being misrepresented by its supporters if this amendment is not adopted. What it will do is take an amount of tax money being raised through the machinery in this bill and apply the proceeds of that tax to the purposes of the bill. Now how in the world are those who have been saying that this is a property tax bill and an aid to the schools bill going to oppose an amendment that would send more money into the pot designed to benefit the schools and reduce property tax? Is it that the purpose is not to aid the schools?

11595

Is that why they oppose it? Is it that they are not interested in property tax relief and that's why they oppose it? If they are interested in aid to the schools, they've got to support it, if they're being honest. Who in here loves the Highway Trust Fund so much that you would misrepresent the position of the bill to the public, that you would take money intended for that purpose and shunt it to the Highway Trust Fund, then go out there and say that you were for aid to the schools and property tax relief? Some have said that if you phase this whole thing in over too great a period of time, the public will not be as aware of the reduction in property taxes because they don't feel that there's a large enough drop. This will assist in the amount of property tax relief they get, if that's the truth that moves this bill. But I'm beginning to believe there is a different motivating engine that provides the power that keeps this monstrosity clanking along toward final passage.

SPEAKER BARRETT: one minute.

SENATOR CHAMBERS: If the true goal is to aid the schools, then that should be done. Was the talk about property tax relief one of the bones thrown to the unsuspecting public by the education industry, and that's what they are? Tricking people into thinking they get property tax relief so the schools and the administration can get what they really want from the Legislature, and when we have a proposal that will put more money there even for that nefarious purpose, then it's going to be defeated by those who support this bill? I've got to watch and, Mr. Chairman, in order that we can all go on record on this, I'm going to ... because there's not many here anyway, I'm going to ask for a call of the house and a roll call vote.

SPEAKER BARRETT: The question is, shall the house go under call? Those in favor vote aye, opposed nay. Record, please.

CLERK: 20 ayes, 2 nays to go under call, Mr. President.

SPEAKER BARRETT: The house is under call. Members, please record your presence. Those outside the Legislative Chamber, please return. The house is under call. Senators Lamb, Coordsen, Ashford, Lynch, Rod Johnson, Withem, Hartnett, Conway, Hall, McFarland, the house is under call. Senators McFarland and Rod Johnson, the house is under call. Senator Chambers, both of them are on their way. May we proceed with the roll call? Senators McFarland and Johnson, Rod Johnson. Proceed?

11596

Thank you. A roll call vote has been requested and the question is the reconsideration motion offered by Senator Chambers. Mr. Clerk.

CLERK: (Read roll call vote. See page 1535 of the Legislative Journal.) 18 ayes, 27 nays, Mr. President, on the reconsideration.

SPEAKER BARRETT: Motion fails. The next item, Mr. Clerk.

CLERK: Mr. President, the next item I have, Senator McFarland....

SPEAKER BARRETT: The call is raised.

CLERK: ... your motion, Senator.

SENATOR McFARLAND: Could we pass over that, Mr. Clerk?

SPEAKER BARRETT: Pass over it.

CLERK: Mr. President, the next amendment I have, Senator Smith, I have a note, Senator, you want to withdraw yours.

SPEAKER BARRETT: It is withdrawn.

CLERK: Mr. President, the next. amendment I have then is by Senator Nelson.

SPEAKER BARRETT: The Chair recognizes Senator Nelson.

SENATOR NELSON: Mr. Speaker, members of the body, this could be a very major amendment to LB 1089 (sic), or possibly so, our whole sales tax, income tax and property tax. As you know, I passed out an hour or two ago, on the floor, the sales tax refunds that have taken place since the 1980 and particularly what is to be noted, the refunds since LB 775 came into play. I have one more graph but I didn't want to labor you with graphs which shows the growth in Omaha. In Omaha, the first page, you will note that in 1981 and '82 there were three major construction projects and so allowed for quite a large sales tax refund. How the sales tax refund works is businesses pay it and then we refund it so that the Department of Revenue knows how much tax was refunded or has a little bit better finger on the tax. You will note that... a very dramatic growth in the tax

11597

refunds from Omaha. The second page of the graph, I will move down in it in this respect, shows Omaha, and as I mentioned the '81 and the '82 and the '83, the large construction projects, and then it leveled off until we come to LB 775. There's no way to pinpoint that it is LB 775, but there is no reason to believe that it isn't that. Actually, my graph, my paper ran out of material. The refund last year was $2,311,000. 1 won't give the cents. Jenny will tease me if I do that, but my graph only goes to a million dollars and actually there was two point... as I say, $2,311,247 refunded and that's a very dramatic increase in tax refund. I have no proof of this at all. It's difficult but the best that we can then bring up in figures, as this makes about a 4.1 to a 4.3 percent increase, would be that portion of personal property tax. LB 1059 is sales tax, property tax and income tax, a very dramatic increase in tax refunds. The Omaha sales, as you can see on the next page, is very consistent. Actually, if you would draw a straight line there, the growth is about 6.33 and in 1988 and '89, if you do a straight line, it is below that, a very important figure because of supposedly the increase in jobs and the increase in construction and so on that LB 775 brought. Let's go to Lincoln then. These figures came from the City of Lincoln, the City of Omaha and our Revenue Department. They... sometimes it's on a calendar year base, one of my figures, and one is on the fiscal year. So that I didn't misconstrue anything, my graph is on the lesser dramatic, but again, you can see where the increase in the tax refunds for Lincoln during this period, '87 and '88 on the fiscal year from 94,000 to 834,000. The news media made me aware of this difference when they had an article and it was about a 4 percent difference in personal tax. Your next one is the sales tax refunds and the graph on Lincoln. This is something that we need to consider because LB 1059, if sales tax are refunded or one city doesn't get the sales tax, then it reverts to property tax or need basis. Just yesterday in the World-Herald, I think the story on 775, 50 percent of the benefits went to 25 companies. One-third of the jobs went to meat packing and high rate and telecommunication, very high rate turnovers and mostly low paying jobs, $5 to $6 an hour. Six percent of the jobs and the investment went to rural counties that are considered ag dependent and only ag income. Let's take Lexington, Nebraska. They will have a very big influx in their schools and their roads and their infrastructure.

SPEAKER BARRETT: Excuse me, Senator Nelson. (Gavel.)

11598

SENATOR NELSON: Using the business in Nebraska as we get,. all of us get to our offices, March 1990, 1 noticed that Lexington had $58,000 in sales tax in November of '89. 1 would hope that that would double, but you take 6 percent times that, your 58,000, and you're talking $348,000 that the city and the Community of Lexington will not get and yet they are asked to increase their utilities, their schools and their infrastructure and many, many, their social services and so on. A group from Lexington headed by a Methodist minister, and six other people, went to Garden City, Kansas to study another similar plant to IBP and, if the same things, and I see no reason to think that it wouldn't take place, and its actually taken place in northeast Nebraska, would hold true in Lexington. It is expected that IBP would get from 12 to $11 million and it could be 20 to $25 million worth of benefits. Actually works out to be a minimum of a million or a million and a half annually. if their jobs go up to 1,400 jobs, as anticipated, and a lot of these will be single mothers. They will move in the community, maybe a month or two months, a lot of them will be workers brought in from southern states that may or may not stay, may be deceived in the job and so on, but it comes to approximately $10,700 per job credit. Some of that is created by the 40 percent jobs credit. In other words, also as an experience in Garden City the turnover, employment as high as 60 percent in the first month or two, averaging out 7 percent a year or 87 percent turnover in employment. That becomes a local community problem. Again, it comes back to, part of it, the sales tax refund in the LB 775. Lexington, I read again, hoping that the new housing apartments will be apartments, new housing will be apartments instead of mobile homes because they may help pay some property tax, a major problem, but by the 1039 or 1059 formula, sales tax is a part of it. I could go on and on in that portion. The turnover...could I have a...

SPEAKER BARRETT: Yes, Senator Nelson, you may. (Gavel.)

SENATOR NELSON: As Lexington says, we're not interested in ADC because that will be state and federal benefits, but we certainly are interested in the other facilities that we do have to provide and... in our community, and I just... I know that there will be a lot of pluses but there are also a lot of minuses. One other final thing that is brought out and if you want, I could give you a lot more of them, but I won't, or two other things. From the Revenue Department the sales tax refunds for six months last year from July to January I of 1990 is the

11599

state, $8,894,000 and cities, $2,204,000 for a total of $11,000,000. Folks, this is a big item when we're talking about funding for schools, increasing sales tax. You know, if these refunds are being given that average person or the renter...

SPEAKER BARRETT: One minute.

SENATOR NELSON: ... that Senator Schimek spoke about or Senator Smith in her hold harmless, these people are paying it. One other thing, we get business in Nebraska, all of us. In March of 1990, if you will notice the percentage of city sales from November '88 to November of 189, Omaha is down 1 percent. Lincoln is up 1.6, Columbus up 8.4, Grand Island 11.4, Ogallala 7.1. Most of these communities that I just mentioned are not recipients of LB 775. on that same thing, business in Nebraska, city business index November of 1989 changed from a year ago. Omaha is down 2 percent, and let's go back up, Grand Island gained 1.5 percent, Nebraska City 5.9, Lexington 7.4. My point is, is we're giving away a tremendous amount of sales tax dollars that again...

SPEAKER BARRETT: Time.

SENATOR NELSON: ... reverts back to property tax without receiving the equal benefits.

SPEAKER BARRETT: Senator Bernard Stevens, for discussion purposes. Thank you. Senator McFarland, for discussion purposes. Senator McFarland. There are no other lights on. Senator Nelson, would you like to close?

SENATOR NELSON: Yes, with that comment, it's something that I thought that should be brought out. I do not want to belabor LB 1059. 1 am a supporter of it but this is something that the body needs to be aware of and this is all property tax dollars. It's right out of the pocket of each and every one of us and the recipients are not the average person up and down the street. And with that, I ask for this amendment to be withdrawn.

SPEAKER BARRETT: The amendment is withdrawn. Have you items for the record, Mr. Clerk?

CLERK: Mr. President, a resolution by Senator Pirsch designating April 22 to 28 as Victims Rights Week in Nebraska. That will be laid over. (LR 379.) I've also received two study

11600

resolutions from the Natural Resource Committee and. the Transportation Committee. (LRs 380-381. See pages 1536-38.) That's all that I have, Mr. President.

SPEAKER BARRETT: Thank you. Senator Crosby, would you care to recess us for lunch?

SENATOR CROSBY: Thank you. I move we recess until 1:30 p.m.

SPEAKER BARRETT: Thank you. You've heard the motion to recess until one-thirty. Those in favor say aye. Opposed no. Carried, we are recessed.

RECESS

SPEAKER BARRETT PRESIDING

(Legislative Journal on page 1539 shows roll call taken.)

PRESIDENT NICHOL PRESIDING

PRESIDENT: May I introduce some guests we have in the south balcony. They are guests of Senator Schmit, and they are 40 fourth graders from Yutan Elementary School, with their teachers. Would you folks all stand up so that we may great you. Thank you for visiting us today. Mr. Clerk, would you remind us where we were before we left for lunch.

CLERK: Mr. President, considering LB 1059. I had disposed of certain amendments this morning. The first amendment I have pending this afternoon is by Senator Wesely. Senator, I have your AM3098 in front of me. (See page 1539 of the Legislative Journal.)

PRESIDENT: Senator Wesely, please.

SENATOR WESELY: Thank you Mr. President, and members. This amendment, frankly, was brought to me by the Lincoln Schools to deal with a problem we have got here but elsewhere across the state dealing with health insurance premium costs. Those of you who are familiar with health insurance premiums will know that they have increased dramatically in the recent past. The last couple of years we have seen increases, 20, 30, 40 percent and

11601

greater increases in premiums in certain circumstances. We. are looking at about a 20 percent increase here in Lincoln. This is on an annual basis. obviously, if you have a 4 percent or 6 percent or any level of budget limitation, when you have an increase of the magnitude of health insurance cost increases, you have got a problem, and if you have an increase extraordinary in one area, such as in health care, you have to then make up for that increase elsewhere with an adjustment, and it didn't seem particularly fair that health care cost increases that are happening across the state, and across the country, would have such an impact under this budget limitation proposal. I note that Senator Moore and Senator Withem follow with a further limitation on political subdivisions. Senator Schmit then would have a further limitation, as well. I would simply point out that in this particular area of health care, we have had an unbelievable skyrocketing of costs that largely is out of the control, though not completely out of the control, of the different employers and employees involved. There are some things that can be done, plan design changes, and changes in benefits, and some of those things have taken effect to cut back the cost of health' care, different benefits have been reduced, and what have you. Further benefit reductions could occur to keep down cost but that is a question that has a lot of people concerned, and so rather than having them forced under a lid situation in this manner, this proposal would exempt out health insurance costs above the budget growth rates that would be established for each school district. So, for instance, if there is a 6 percent increase or an 8 percent, or whatever is allowed under the formula, then if the increase is 20 percent, then that additional 12 percent would be exempted out from the formula that they would have under their budget limitation requirements. So that is essentially it. I am trying to do two things here, is point out once again how much of an increase health care is costing us, how much of an impact it has, not only on schools, but others who are paying premiums, but also the impact of budget limitations on certain areas where it isn't really one that has much control by the district involved. So I would move for the adoption of this amendment, Mr. President.

PRESIDENT: Thank you. Senator Withem, please.

SENATOR WITHEM: Yes, Mr. President, I merely rise to give the rationale for the commission that developed the school finance plan for not including a laundry list of exemptions from the lid. There are, basically, two ways we could have gone. We

11602

could have had a very, very tight lid in terms of numbers, a 2 percent lid, a 1 percent lid, a zero percent lid, and then began exempting specific things out from under it. We chose not to do that, to start the laundry list, because it is something that is difficult to stop after you start it. As an example, in here yesterday, Lincoln Public Schools came in with three exemptions from the lid. We adopted two of them and now here they are back for one more today, so it is a good indication of how the process can develop if you are not careful. What the commission did was we looked at the historical growth of school district budgets over the past five years, and thought, what is a realistic number, and we came up with the 4 to 6 1/2 percent because ... because historically the growth of school district budgets has been right in at the 5 percent category for the past five years. Within that 5 percent, they have paid their teachers' raises, they have picked up the cost of increased health care, which in many cases gets tied in with a percentage of the... reported as a percentage of the salary increase anyway, I think; at least, that has been my experience back in my home town.. They have been able to keep this particular... their spending within this 5 percent range, even with increased utility costs, even with all of these other increases. We came up with what we thought was a realistic number and did not want to do a lot of exclusions. Now we did do some exclusions yesterday because they were, in many ways, cases, specific types of amendments. The special ed growth is not something that is experienced uniformly around the state. It tends to get concentrated in specific districts and Lincoln is one of those where families that have children with special needs move into Lincoln specifically because of the special ed program. The one on the contract, the multiyear contract, school districts that have already signed the contracts for future years, we made that exception. But to make a blanket exception, like health care costs from the lid, really, this would be the one that would break the dam, I think, and there would, in effect, be no budget limitation if this were to be adopted. So I would urge you not to support it.

PRESIDENT: Thank you. Senator Wesely, would you like to close on your amendment?

SENATOR WESELY: Thank you. Yes, Mr. President, I didn't want to take a lot of time on this. I appreciate Senator Withem's concern. He has a legitimate point. I am really trying to raise, again, an issue of the limitation, its impact, that

11603

health care costs are going up 20 and 30 percent and more. This would have an adverse impact under the budget limitations currently in the bill. It doesn't seem particularly fair to do that, and so with that, I would ask for your support for the amendment.

PRESIDENT: Thank you. The question is the adoption of the Wesely amendment. All in favor vote aye, opposed nay. Record, Mr. Clerk, please.

CLERK: 7 ayes, 16 nays, Mr. President, on adoption of the amendment.

PRESIDENT: The amendment fails. Do you have something else, Mr. Clerk?

CLERK: Mr. President, I do. Mr. President, the next amendment I have to the bill is by Senator Moore and Senator Withem. Senator, I have AM3089 in front of me.

SENATOR WITHEM: I will withdraw my half of it. Senator Moore is not here. We will withdraw that at this time.

CLERK: Would you like to withdraw the first half or the second half, Senator?

SENATOR WITHEM: Every other word would be fine.

CLERK: Every other word, very good.

PRESIDENT: Why don't we just withdraw the whole thing?

SENATOR WITHEM: Let's do that.

PRESIDENT: Okay, thank you, it is.

CLERK: Mr. President, Senator Schmit would move to amend. Senator Schmit is excused until he arrives, I believe.

PRESIDENT: Do we have another one we can take in its place or will that work out?

CLERK: Senator Warner has the amendment following Senator Schmit's amendment. He is excused.

11604

PRESIDENT: Here is Senator Schmit, so why don't we take his up now?

CLERK: Senator, I had... I believe you gave me one yesterday, and you wanted to withdraw that one and/or gave me... the one you gave me this morning, offer that one.

SENATOR SCHMIT: That-is right, that is right.

CLERK: Okay. Mr. President, Senator Schmit would move to amend. It is AM3118. (See pages 1539-43 of the Legislative Journal.)

PRESIDENT: Senator Schmit, please.

SENATOR SCHMIT: Mr. President, and members, there really isn't any difference in those two amendments except that one includes MUD, I believe, and one other political or entity. The amendment which you have before you and which is printed in the Journal, I think Pat could probably tell you what page it is on, is what is known as the Jaksha amendment. The reason that I have printed this and have offered it is because we have sort of agreed, I believe, that with the introduction of 1059 that a lid is necessary. That is sort of a new point of view, I believe, for many of the entities who are now supporting LB 1059. It is apparent to us that without some sort of lid there is not going to be any kind of restraint, or sufficient restraint, to stop the tax burden of the State of Nebraska relative to education. And so there is an attempt to put some kind of lid into 1059, albeit a rather holey lid, a lid with a lot of leaks in it, and not really a very serious attempt at limitations. But I thought you might want to take a look at this because this is probably what we are going to be living with. I may not like it, and it may be something which none of us want to live with. We probably will have serious difficulties, but I would predict, ladies and gentlemen, that this is what we will be living with, and I know that there are those today who say that the passage of 1059 will forestall Mr., Jaksha. Well, I was here-, as were some of you, when we did that a few years ago, and we thought that by imposing a statutory lid that there would be no further attempts to bring about a constitutional lid. Well, we know what happened. We imposed a statutory lid. It actually became a floor, and everyone raised their spending to the maximum amount allowed, and it, in fact, became inflationary. I do not know how you can justify a lid, no matter how liberal it is, no

11605

matter how many holes you poke in it, no matter how many excuses you make, unless you really want it to be a lid. And so I am curious, I guess, how the vote would go on a real lid, a lid with no holes. And I know that there are those that say, well, it will never pass, and I can read the signs as well as the rest of you, and I am getting a lot of phone calls, a lot of telephone calls, a lot of personal contacts. When I go back to the farm every night, I see a lot of people. I have to say this, that I am getting a lot of persons who are very concerned because I am not voting for LB 1059. In fact, this morning some very fine person volunteered that I would probably be opposed by that person the next time I ran for election, if that ever happens, and that is fine. That is the way the system works. But I would suggest that, based upon the personal contacts that I have with the people in the district, and the people across the state, that far more of them understand what is happening under 1059 than would be indicated by our friends who have been contacting me in support of the bill. I have supported many bills that have increased the sales tax and income tax for the purpose of property tax relief. I would support this bill, if you can find an actual true method of determining the valuation of a district, and if you can guarantee to me that you will not in a year or two change the tier system, and if you can guarantee to me that you will not on the floor of this Legislature re-enact the personal property tax which will, once again, escalate the value of the rural districts. Ladies and gentlemen, we all know that can happen. There isn't any way that we can bind a future Legislature. There aren't this many rural legislators left on this floor, and so when the time comes, and you have to make the tough decision as to whether or not there is a tax on services or whether you reimpose the personal property tax, ladies and gentlemen, it will be a reimposition of the personal property tax because its impact upon business will be minimal as opposed to its impact upon agriculture. I want to caution you that we can confiscate real property, and I know that you are trying to avoid that but you are, in fact, not doing so. It is extremely unfortunate that uninformed individuals will believe the news reports they hear. Senator "Scotty" Moore, this morning, quoted some candidates who may or may not have read the bill. Well, Senator Moore, I would challenge that most of the persons who called me and asked me to vote for the bill have not read it either, nor will they read it. One thing they will read will be their tax statements when they come out. One thing they will read is the withholding tax on their income tax. one thing they will read will be the

11606

amount of sales tax that they are going to be charged. I am going to suggest once again you have now accepted the premise of a lid. You don't want it. You accept it because you think it is inevitable, but once you have accepted the premise, you are duty bound to believe that if it is good in 1059, it is going to be very difficult for you to campaign against it if it is being imposed through the Constitution. Mr. President, I ask permission to withdraw the amendment.

PRESIDENT: The amendment is withdrawn. Mr- Clerk, do you have something else we can work on then at the moment?

CLERK: Mr. President, the next amendment I have is by Senator Warner who is still excused. Senator McFarland had the next amendment, Mr. President, who I believe is also excused. Mr. President, Senator Abboud and Smith have the next amendment. (See AM2953 on page 1303 of the Legislative Journal.)

PRESIDENT: Senator Abboud, are you going to start with that one? Okay.

SENATOR ABBOUD: Mr. President, colleagues, this particular amendment takes off that sunset provision that we adopted during the first... it is tough to remember exactly when we did adopt it. I believe it was adopted earlier on Select File, the Baack-Kristensen amendment that provided three-year hold harmless to provide the protection -for some school districts that are going to be not benefited as some other districts will be, and this particular proposal states that the hold harmless, which is currently estimated at about $2 million, out of the 210 million we are spending on this bill, shall continue beyond and not be sunsetted after three years. The rationale behind this particular approach is that I think it is a good proposal, a proposal that should stay on until we decide later to take it off. And instead of putting the responsibility upon those school districts that are going to be hurt by this hold harmless coming off, I think that those other school districts that are going to benefit by those $2 million should be the ones to come forward and explain why it should come off. It is a small amount of money in comparison to the overall amount, and I think that if you look at it, it is a matter really of fairness, and it would take away a lot, a good chunk at least, of some of the problems that I have with the bill, in that my school district of Ralston gets hit by this bill. It doesn't benefit as greatly as some other districts. I realize there have been some

11607

changes. There are some revisions that have come forward as a result of the Department of Education printouts, but the fact still remains that if this money is taken away in the future after this hold harmless does take effect, they will be losing out. So that is the purpose of the amendment. Thank you.

PRESIDENT: Thank you. Senator Crosby, please, followed by Senator Withem. Senator Withem, you are next, Senator Smith follows.

SENATOR WITHEM: Yes, Mr. President, members of the body, we dealt yesterday, I thought, and I think, I shouldn't say I thought as if it was something in the past, I think yesterday we dealt with this amendment, the concept of the hold harmless in as fair a way as we were going to. Like many issues in here, we have people who feel strongly on both sides of an issue, some people thinking that we ought to have the hold harmless in perpetuity. Others, like Senator Landis in here, gave a good speech the other day explaining why a hold harmless was, in his opinion, was unfair at all. What the committee did was we started with a phased-out hold harmless. What we did yesterday amended the bill to have a hold harmless at 100 percent for at least three years, or for three years, I guess I should say, with a directive to the School Finance Review Commission to bring back a recommendation to us as to how we should deal with the hold harmless question into the future. And like we do with political compromises, both sides give a little bit and I think that is what we did yesterday. I am comfortable with what we have done as far as the hold harmless in perpetuity issue is concerned. It is one, personally, I probably could have supported the Abboud amendment, or the Smith amendment, or even the Lamb amendment as it was listed on General File, but there are those who feel strongly that we should not do a perpetual hold harmless. What the body did yesterday I think is came together in a spirit of compromise on the hold harmless issue, and I think we ought to leave it as we decided yesterday, rather than adopting this amendment at this point, although I certainly understand and sympathize with those people who think perpetual hold harmless is a good idea.

PRESIDENT: Thank you. Senator Smith, please.

SENATOR SMITH: Thank you, Mr. President. Members of the body, the reason that I pulled this amendment was because of the fact that I had this up there before the Kristensen-Baack amendment

11608

came up yesterday, and since it did have the provision for. the three years 100 percent hold harmless, and then with the provision that it should be looked at in that time to see whether it should become a permanent hold harmless, I pulled my amendment. But I just had to stand and say that I don't know whether...because Senator Abboud just visited with me about this a few minutes before we left the floor at noon, I think it was, or whenever this morning, and I don't know whether you even had the information, Senator Abboud, that was provided to me and that is that originally we were told this would be $6.1 million,. but if you subtract out the federal impact, aid to school districts, then you end up with the cost to the state of being only about $2 million a year. So that even makes it better, and this was given to me by the Research Division. So, you know, I will still support this amendment, even though it is yours now. Thank you.

PRESIDENT: Thank you. Senator Chambers, please.

SENATOR CHAMBERS: Mr. Chairman and members of the Legislature, I would like to ask "Two-gun" Withem if he would like to stop leaning against the rail back there and come and answer a question or two.

PRESIDENT: Senator Withem, please.

SENATOR CHAMBERS: Senator Withem, in order that I can understand really what is happening, there is a hold harmless provision in the bill now for a period of three years.

SENATOR WITHEM: At 100 percent, yes.

SENATOR CHAMBERS: And Senator Abboud's amendment would make it forever.

SENATOR WITHEM: That is correct.

SENATOR CHAMBERS: At 100 percent?

SENATOR WITHEM: Right.

SENATOR CHAMBERS: Did you agree with the three-year provision?

SENATOR WITHEM: Yes, I did.

11609

SENATOR CHAMBERS: If it is just for three years, why not just forever?

SENATOR WITHEM: Because the three-year is for purposes of those school districts who will' not receive as much state aid to adjust their programs and adjust their ability to fund their own programs at the local level. It is a phase... a period where they can phase out.

SENATOR CHAMBERS: Why not take away the hold harmless provision altogether, then by three years from now, they will have adjusted to it? The pain will be over.

SENATOR WITHEM: The pain well might be over by that time, yes.

SENATOR CHAMBERS: So would you... I know you don't support this amendment, but would you support one of the kind I am talking about?

SENATOR WITHEM: No.

SENATOR CHAMBERS: You don't believe that if somebody has a sickness that requires the administration of medicine, that you go in and give them a dose right now sufficient to cure the sickness, you don't believe in that?

SENATOR WITHEM: I don't know if they are a sick district, Senator Chambers. I guess I have problems with that analogy.

SENATOR CHAMBERS: Thank you, Senator Withem.

PRESIDENT: Thank you. Senator Abboud, would you like to close on your amendment.

SENATOR ABBOUD: Well, Mr. President, and colleagues, again, it is a small amount of money to make the school districts whole. Two million dollars is a drop in the bucket when you look at the overall impact on this, and since it adversely affects a few districts but the districts it does affect, to a large degree, does cause financial hardship, I think that we should go ahead and adopt the amendment. I would like to also add that we are not really taking away anything here. A lot of these districts, such as the one I represent, Ralston, they have been receiving this state aid for years now, and what we are talking about, actually, is taking away aid that they currently have. We are

11610

not talking about adding onto additionally, we are talking about reducing the level of state aid that they have been receiving at this particular time, and I think that it would cause a lot less anguish, if this bill eventually does become law, a lot less anguish on those school districts that will have to face the difficult decision of how to deal with these cuts in state aid, and I think that it is only fair, considering the small amount of money, that we at least have, at a later date, maybe they want to come back in three years, at a later date show why those school districts' aid should, in fact, be cut. Thank you.

PRESIDENT: Thank you. The question is the adoption of the Abboud amendment. All those in favor vote aye, opposed nay. Mr. Clerk, record, please.

CLERK: 4 ayes, 9 nays, Mr. President, on adoption of the amendment.

PRESIDENT: The amendment fails. Anything else?

CLERK: Mr. President, I understand Senator Withem is going to handle the Warner amendment. (See AM3115 on page 1543 of the Legislative Journal.)

PRESIDENT: Okay, Senator Withem.

SENATOR WITHEM: Yes, with great trepidation, I stand before you attempting to explain this Warner amendment to the bill that Senator Warner shared with me this morning. I think probably it is a technical sort of thing but probably it is the right thing to do. The sales tax increase... good, Senator Warner is here, so maybe I will let him go ahead and explain in some more detail here with my opening time, but it is a change on page 36 of the bill dealing with the operative date of the sales tax provision. We have a July 1, 1990, effective date of the sales tax. The bill currently has the emergency clause on it, and if it passes with 33 votes, there will be no problem with that. If it would pass without the emergency clause, then the effective date of July 1, 1990, will have passed by the time the bill becomes effective. So what this amendment does is it adds the words "or the effective date of this act, whichever is later." It will harmonize potential problems that might develop if the emergency clause is not adopted to this bill, and Senator Warner, pardon me for preempting you, I didn't know when you were coming back, but I relinquish the rest of my time to you to either agree with

11611

what I said or disagree or whatever.

PRESIDENT: Senator Warner, please.

SENATOR WARNER: Yes, Mr. President, I agree, Senator Withem. It was just to make sure that there wasn't an internal conflict as to the effective date in the event it didn't get 33 votes. Obviously, if the bill gets 33 or more votes, why, the amendment would not be necessary for sure. It may raise the question of changing the tax rate in the middle of a month but that would not be as difficult as not being able to raise it at all. So I'd move its adoption.

PRESIDENT: Thank you. Senator Chambers, please.

SENATOR CHAMBERS: Mr. Chairman, and members of the Legislature, I would like to ask Senator Withem to explain again. I was trying to follow what you said.

PRESIDENT: Senator Withem, would you respond, please.

SENATOR WITHEM: Yes, Senator Chambers. The sales tax increase is effective July 1, 1990, in the bill. There is a chance that if the bill does not have the 33 votes on Final Reading to pass with the emergency clause, you are acting like you think I have been smoking something funny even thinking it would have that, but I still think that is in the realm of possibility, Senator Chambers, that it might have the 33 votes to pass with the emergency clause. If it does not, the bill does not become effective until after... until a few days after that, I think it would be something like July 9th would be the effective date, 90 days after. So it places the effective date of the sales tax increase either July 1st or the effective date of the statute, whichever is the latter date.

SENATOR CHAMBERS: And this is the amendment that Senator Warner had put together?

SENATOR WITHEM: Yes.

SENATOR CHAMBERS: That you are offering now.

SENATOR WITHEM: Yeah.

SENATOR CHAMBERS: Okay, I want Senator Warner to know that I

11612

haven't supported many amendments on this bill, and, Senator Warner, this is one of the hardest amendments that I have to vote for because it is reasonable, so I am going to vote for it, and you owe me one and I will tell you when to pay me back.

PRESIDENT: Senator Korshoj, please.

SENATOR KORSHOJ: Mr. Speaker, and members, I have a question for Senator Warner.

PRESIDENT: Senator Warner, please.

SENATOR KORSHOJ: Wouldn't it cause a lot of bookkeeping problems to have a middle of the month cut off for a sales tax increase? I see a lot of problems out in the retail field, not major, major, but-it sure would be a good bookkeeping problem.

SENATOR WARNER: I indicated that that could certainly be a possibility, although I suppose theoretically whether you change it June 30th or July 10th, as a practical matter, isn't maybe that significant, but the problem, as I would think one would want to avoid, is not being able to increase it at all in the event that the effective date of the act...

SENATOR KORSHOJ: And if we waited until the first of the next month, we would naturally lose some revenue ...

SENATOR WARNER: Right.

SENATOR KORSHOJ: ... but we would not know how great a loss it would be. I do see some problems there, but I know we have got to get it started as soon as we can. Thank you.

PRESIDENT: Thank you. Senator Warner, would you like to close on your amendment. There is no closing. The question is the adoption of the Warner amendment. All those in favor vote aye, opposed nay. Record, Mr. Clerk, please.

CLERK: 29 ayes, 1 nay on adoption of Senator Warner's amendment, Mr. President.

PRESIDENT: The Warner amendment is adopted. Mr. Clerk.

CLERK: Well, Mr. President, Senator Chambers, I assume you want to defer.

11613

SENATOR CHAMBERS: Yes.

PRESIDENT: Okay.

CLERK: Mr. President, Senator Conway would move to amend.

PRESIDENT: Senator Conway, please.

SENATOR CONWAY: Are there any others or is this the last one?

CLERK: I am sorry.

SENATOR CONWAY: Are there any other amendments?

CLERK: Senator McFarland, but he wants to defer.

SENATOR CONWAY: I wanted to defer as well.

CLERK: Senator McFarland, do you want to offer yours?

PRESIDENT: Do you both want to defer? Senator McFarland, are you going to go now?

SENATOR McFARLAND: Yes.

PRESIDENT: Okay.

SENATOR McFARLAND: I don't know. We are going places fast here, I can see. This amendment is very, very simple. I purposely requested that it be delayed until this time. It is similar to the amendment that I introduced earlier that got 19 votes but it is a little bit different and it has some benefits that I hope will persuade a few additional senators to vote for it and put it on. This amendment: is the true superbracket amendment. If you take a look, I am having ... what is distributed is the chart that you may have seen yesterday, and I have written in some explanatory information on it. The sole thing it would do is that it would raise the rate on. the highest income bracket by 1 percent. Under the proposal for 1059, the proposed rate right now is 6.92 percent. This one would raise it for the highest income bracket to 7.92 percent, and if you take a look in the far right-hand column, you will see that, in the brackets, each bracket increases until you get to the final bracket under 1059. Under my amendment, the

11614

highest bracket would increase from 6.92 to 7.92, and you can see, the first bracket, the first four brackets would be the same as they are under 1059 as they are. And you can see that the whole idea is to build some progressivity into the system. The rates would then go on the brackets from 2.37, increase to 3.62, to 5.62, to 6.92, and then instead of in the highest bracket remaining at 6.92 percent, as the 1059 in its present form would do, it would increase the bracket to 7.92, a fairly modest increase. The advantage of it is that the resulting 1 percent increase, if you look at the bar graph at the top, would produce and generate approximately 10 to 12 million dollars more in revenue for the state, and we have already been talking about a shortfall in funding this, whole thing. We are talking about bills that have been passed and added, amendments to the budget bill that have increased spending. This would put 10 to 12 million dollars in the General Fund, and it would do so by requiring that the very wealthy, those over $90,000, those married couples filing jointly with an income of $90,000 plus, AGI of $90,000 plus, would have to pay their proportionate share. They would be in a higher bracket than the 45 to 90 thousand dollar taxpayers who are married and filing jointly. They would have a different rate. There is a simplicity to the amendment. There is an advantage to the amendment. I think it is worthy of consideration. It would rectify some of the inequities that were in that system when we passed 773. it would make the upper bracket pay their proportionate share. it would have the benefit of generating 10 to 12 million dollars of additional income, and with the revenue shortfalls we are getting from the forecasting board and from the amount of spending and things that we have passed in the budget, from the concerns people have about whether we are going to be able to fund this property tax relief package, this would be a welcome addition, and I think a fair addition to it, and I would hope and urge that you would adopt this amendment.

PRESIDENT: Thank you. Senator Crosby, please, followed by Senator Hall.

SENATOR CROSBY: Thank you,' Mr. President, and members. I don't know exactly where to start on this amendment. I will have a couple of questions in a minute. I was disappointed when Senator Schmit withdrew his amendment a little while ago. I had something really profound to say about lids, and before I even got a chance to talk, he took it away, but this bill is fast becoming a strange bill because we have talked, again, all day

11615

about 773, 775, wealth, and whatever, and we keep getting away from the original idea, at least as it was sold to me, as a bill to help equalize the tax burden across the state and equalize the tax burden that we use to support education, elementary and secondary education, in the State of Nebraska. so now we are back to trying to set income tax rates, which I think is very confusing, and the thing about this bill is if we ever move it again before it gets to Final Reading someway or another somebody is going to have to lay it out in some kind of short form so we understand what we have ended up with after two days of debate again. I do have a couple of questions for Senator McFarland, if you would just yield for a minute, Jim. When you talk about the' higher income bracket* and you mention 10 to 12 million dollars income to the state, are you meaning the total income that would realize or is that how much would go into it for this 20 percent we talk about that is going to be used for education?

SENATOR McFARLAND: What I am talking about is that this bill, in its present form, will generate a certain amount of money.

SENATOR CROSBY: Right.

SENATOR McFARLAND: This particular proposal with the tax changes in it will generate 10 to 12 million more because of the I percent increase.

SENATOR CROSBY: Total.

SENATOR McFARLAND: And my understanding, and I stand to be corrected on, is that that money just goes to the General Fund.

SENATOR CROSBY: Then it is not into this fund. We would get 20 percent then, right?

SENATOR McFARLAND: I am not...(interruption).

SENATOR CROSBY: Well, the original figure was 20 percent from income tax, from the income tax. We were 'going to get 20 percent from income tax.

SENATOR McFARLAND: Twenty percent to fund the education...

SENATOR CROSBY: Right.

11616

SENATOR McFARLAND: Property tax...

SENATOR CROSBY: So the 10 to 12 million is total that you are talking about?

.SENATOR McFARLAND: (Inaudible)

SENATOR CROSBY: Okay, then do you have any notion or any figures or anything that would tell us how the top taxpayers, and it seems to me I have seen something, and I almost can remember now where I can find it, how they are distributed across the state? Are they mostly in Lincoln and Omaha? Are they out in Senator Lamb's county? Are they in the county that used to have the highest per capita, Hyannis?

SENATOR McFARLAND: (Laughter) ... maybe.

SENATOR CROSBY: Used to have the highest per capita income in Hyannis, way back.

SENATOR McFARLAND: I really don't know how (interruption).

SENATOR CROSBY: You don't know how those are distributed?

SENATOR McFARLAND: No, I don't.

SENATOR CROSBY: Well, you see, all this does to this bill, for me, is it is changing the whole complex of the bill. The bill isn't looking like it was originally when it was presented to us as a tax shift to support education, and I just am coming closer and closer, Lincoln Public Schools has some problems and we didn't pass one amendment they wanted, I am getting to the point where I am not sure I can continue to give whatever support I had for the bill, and continue to give that, because I think this amendment, in particular, is one that would really change the whole idea of it when you start setting tax rates in it. So I am probably going to vote against this amendment. I don't know what the rest of you want to do. Thank you.

PRESIDENT: Thank you. Senator Hall, please, followed by Senator McFarland and Senator Withem.

SENATOR HALL: Thank you, Mr. President, and members.

PRESIDENT: Senator Hall, just a moment, please. (Gavel.)

11617

Could we have it more quiet, please- We can't hear the speakers and it is getting a little difficult. Thank you a lot.

SENATOR HALL: Thank you, Mr. President, and members. I rise in support of Senator McFarland's amendment just to be consistent, I guess, if nothing else. The issue of raising the income tax for everyone across the board, I think, justifies what Jim has tried to do from the first time we debated 773 back in 1987, and that was to make sure that there was a progressive fifth bracket in our income tax system. The amendment that he brings to the bill, I think, allows us to, for me anyway, allows me to justify the increase in the income tax to those people who fall in those two middle brackets currently, that pay proportionately a higher share of their income, I think, than those at the very top end. And that is all Senator McFarland does in his amendment. it happens to increase the revenue that will be brought in.. That, to me, is secondary to the fact that it will make our income tax system a fairer one. That really is the only reason for voting for this. We should have done it back in 1987 at the point in time where we made the major change. We are again making another major increase in our system. This would allow for that fairness to finally be achieved. I would urge the adoption.

PRESIDENT: Thank you. Senator Hall ... Senator McFarland, please.

SENATOR McFARLAND: Yeah, just to follow up. This does not change 1059 as far as any of the other brackets are concerned, like my previous amendment does. It changes the one bracket, the highest bracket, of taxpayer in our state. It generates 10 to 12 million dollars of additional revenue for our state to use, and I am troubled by the argument that this is somehow an education bill. When you have a bill that increases state income tax 17.5 percent for taxpayers on the average, and when you have a bill that increases sales tax by 25 percent, that is a tax bill, and to say that somehow you change... you increase income tax and increase sales tax and then say but you can't make any changes or you can't question those changes because this has something to do with education just does not withstand the test of logic. You have a bill, the amendment is germane to that bill. I think this would be a worthy amendment. It would restore some of the fairness into the income tax system in. our state. It would have the benefit of generating additional revenue for our state at a time we need it. You may have a few people who earn over $90,000 who may not vote for you if you

11618

vote for this amendment, but 99 percent of the people in our state probably will not be affected by this change at all, and I think that it would rectify some of the problems that occurred when we enacted 773. And, again, as Senator Hall said, it would enable him and would enable me, too, if this thing passes, to be able to explain to the middle income taxpayer that, yeah, you are getting an increase, but we rectified the problem by not only increasing the upper bracket, but increasing it like it should have been when we passed 773. The wealthy people are going to be contributing their proportionate share to support the state income tax system as well. So that is why it is there. I think it is a logical and fairly straightforward amendment.

PRESIDENT: Senator McFarland, you are privileged to close if you would like.

SENATOR McFARLAND: Thank you, I would be glad to. This has been an interesting debate on 1059, and we are getting to the end, and I appreciate the patience that the senators are showing, and I really appreciate and admire, to a great degree, the way Senator Withem and Senator Moore and Senator Bernard-Stevens and Senator Baack, the supporters of this bill, have conducted themselves all through it. There has been no motion to suspend the rules or anything. They have handled every amendment as it has come up. It has been almost two days now, and they have responded to each amendment, and I appreciate that. I don't think that this amendment will hurt the bill at all. I think it will even help it and it will help our state revenue situation. I think it would be very beneficial for us to adopt this amendment. I looked at the vote on the previous amendment and I can't help commenting about looking at how those votes lined up. My previous amendment, as you may remember, would have increased the upper bracket, while at the same time decreasing slightly the middle income brackets. That got 19 votes. It would have generated the same amount-. of revenue. This one keeps the middle, the four lower brackets at the same as is proposed by 1059, but would just increase the upper bracket, and would have the advantage of generating additional income or revenue at the same time that it makes the tax rate structure more progressive. The votes on the previous amendment were really quite striking when I went down and looked at them and, for some reason, I often really find the partisanship aspects within this Legislature. 'I recall a few weeks ago when we were voting on workers' comp, there was a clear division

11619

along partisan lines. When I looked at the results on my previous amendment, I found an interesting thing, that that amendment was defeated 19 to 21. Every vote against the amendment was a Republican vote, every one of them. There were no Democratic senators who voted against the amendment. There were some Democratic senators who voted ... were not voting or were excused, but there was not one Democratic senator who voted against the amendment. All of the Republican senators voted against the amendment. I would hope we would put the partisan thing aside and just say, look, what is best for the state? Not what is best for the Governor's image, or not what is best for the party structure in the State of Nebraska, but what is fair and reasonable for the people of our state and the taxpayer of our state? And I would hope that you would lay aside those kind of strictly partisan interests, strictly philosophical interests, and just ask yourself, is this an amendment that is worthy of being put on the bill? And I think it is fair. It is simple. It is direct, and it would have a lot of advantages and, for those reasons, I would ask you to vote for it.

PRESIDENT: Thank you. The question is the adoption of the McFarland amendment. All those in favor vote aye, opposed nay. Mr. Clerk, record.

CLERK: 14 ayes, 15 nays, Mr. President, on adoption of the amendment.

PRESIDENT: The amendment fails. Anything further on it, Mr. Clerk?

CLERK: Mr. President, Senator Conway would move to amend the bill. (See AM3140 on pages 1544-46 of the Legislative Journal.)

PRESIDENT: (Gavel.) Could we hold it down now so that we could hear the speakers, please. Thank you. Senator Conway.

SENATOR CONWAY: Thank you, Mr. President, and members. Just recently passed out to you on your desks is AM3120. That is what I will be talking about, although 3120, rather than having it reprinted, has an additional clause included. It is filed on the desk. The amendment I am talking about running is, in essence, 3120 plus there is also a two-year sunset provision is the only thing that is different in what is on the desk than what you have in front of you. So it did not make it worthwhile reprinting that much of an adjustment and that much of a change.

11620

What this amendment, basically, does, and there has been a lot of discussion on the side in the last few days about the bill, is that it includes a 4 percent lid, if you will, on all political subdivisions, not just the educational school boards and districts as we have been talking about in LB 1059. By having such a provision, there has been charges levied in some circles that there is the possibility that we may take care of the educational financing situation, put a lid on them at that point in time. There is that potential, and I do say potential, of other political subdivisions through the increases in their budgets that may come down over this course and over this transitional period that we are trying to work this thing in that, theoretically, they could eat up some of that property tax relief that we are all asking for, hoping for, and believe that we have planned for. And so, basically, this simply imposes that 4 percent lid on other subdivisions who also...and this is against their receipts, and there is a 4 percent locked-in provision with a 5 percent possibility, or an additional 1 percent by a two-thirds majority of the voting members of that board. And then, additionally, within the amendment, it also has a provision that the voters in any given situation that may be unique or may be the desire of that community, or may be a Lexington, as we have used Lexington as an example, the voters then may go to the polls, and with a simple majority set that budget level higher than the lid that is being imposed via this particular proposal. So, basically, again, I don't think it has been used yet this year, what is good for the goose is good for the gander, and I think it is a situation that if we are going to put these kinds of constraints on the educational community, that probably all of the political subdivisions should be treated literally the same way in terms of trying to hold down on any increases that we may have in our property tax burden, when, in fact, one of the main thrusts that we are hoping for within LB 1059 is to reduce that property tax burden. So, with that, I offer the amendment.

PRESIDENT: Thank you. Senator Moore, please, followed by Senator Withem.

SENATOR MOORE: Well, Mr. President, and members, we are winding down to the end of our debate on LB 1059, hopefully, and the Conway amendment offers the body an option. I sincerely hope the members of the Legislature listen and look as to just what exactly this amendment is talking about. It is talking about placing a lid for two years, Senator Conway, there is a two-year

11621

sunset in this bill? This amendment?

SENATOR CONWAY: Yes, Senator, there is a two-year provision on this.

SENATOR MOORE: Yes, I mean, quite simply what the Conway amendment says is that as we write out a $211 million check, to answer the many critics of this bill, starting with... well, I won't even start naming, some of the critics of this bill that says there is no "guarantee" of property tax relief, this is just one way to further guarantee that. And, basically, it says we are going to write a $211 million check, and for through the transition, for a two-year period, we are going to say those other...the other four of the big five, the big five being schools, cities, counties, tech colleges, and NRDs, and some of those are bigger brothers than others, we are going to say that those big five consumers of property tax dollar, we are, indeed, going to have a lid on all of them. Now, yes, the Conway amendment places a different type of lid on the other four, but it is a short-term lid, for two years, that, basically, helps us get us through the transition of shifting our burden of taxes, shifting it around from property to sales and income. I think the body just has to think about what it is that they want to do. I guess the one thing, if the Conway amendment fails, I would hope that the entities involved in the amendment, the cities, counties, NRDs, and tech colleges, would definitely be aware, because if the Conway amendment fails, we pass LB 1059, and those entities go out there with 10 to 15 percent increases in their budget, gobble up. this money you are throwing out there, I can assure you, just speaking for myself, that I will copy a chapter that Senator Warner and the Governor gave us last year in a retroactive lid that was originally contained in LB 1130. So whatever happens with the Conway amendment, I can go either way, but if it fails, I certainly hope the message is loud and clear to those other subdivisions that, okay; if we don't put a lid on you, you are on your honor. But' if you gobble up that money, you can expect something, you know, something a little bit prohibitive next year. So if it fails, I certainly hope those entities are very aware of the consequences, if they do not adhere to the spirit of tightening budgets. With that, I'd... we'll see what happens.

PRESIDENT: Thank you. Senator Withem, please, followed by Senator Rod Johnson.

11622

SENATOR WITHEM: Yes, Mr. President, and members of the body, this particular question has been one that has plagued those of us on the *School Finance Review Commission as we go around the state talking to citizens about LB 1059 and what it will do. One of the first questions, of course, is, does this bill guarantee property tax reduction? And you explain to them how the funding mechanism works for schools and most of the people out there, once you go through that explanation, they understand how, yes, schools' property tax askings will go down. But the next question you get almost universally is, won't the other subdivisions of government come in and eat up the increase then? If they know property taxes are going down for schools, they will feel more comfortable, and pretty soon those other subdivisions will eat it all up. I have been a defender of the other subdivision in those meetings. I have been a defender from early on when we were talking about budget increases that may be in existence in LB 1130, and the Jaksha approach. But more and more as I hear that, the more and more I am asking, and, frankly, I-don't know what direction I am going to push my button when it comes time to push the button on the Conway amendment, but more and more I understand the rationale for some type of guarantee that the property taxes will go down in those areas that do get increased state aid to schools, that it not be another hollow promise that comes from state government concerning what we are going to do on the local level, and then not follow through with it. On the other hand, I have never'... I have not been comfortable including the other subdivisions bringing them under, in effect, a penalty type of provision because they aren't benefiting from this.' The schools, we have been ... had very frank, harsh discussions with a number of the school people around the state saying, if you expect us to fix the school finance problems in this state, part of the price of that is going to have to be a budget limitation. If you are expecting us to underwrite 45 percent of the cost of education, and expect us to be a signer on a two-party check, one of two parties signing a check, we have to have some input on what those numbers will be. For the cities and the counties and the other subdivisions, we are not doing that. We are not doing that. We are not giving them any increased revenues to fund their programs. So that mitigates against support for this. The Moore approach, that we need to send it very clear that if they do have huge increases in their budgets, we can look at that next year, and we can do retroactive lids. We have seen that proposed by the Governor and in the bill that Senator Warner is carrying. That can be done, and we will look

11623

favorably upon that. I guess everybody in here really needs to make a personal type of decision on that. I, sometimes Senator Bernard-Stevens and I sit back here and kind of joke a little bit about people that stand up on the floor and take the time of the body to give speeches and then not conclude on how they are going to vote or attempt to influence anyone's vote, because I really don't know what direction I am going to go on this, but I thought maybe having had experience confronting this issue, that that experience might be of some benefit to some people. There are strong arguments on both sides of including the other subdivisions in this limitation. If your goal, I guess, is to guarantee that there will be...that property taxpayers in those areas that receive increased funding for education will see commensurate reductions in their total property tax, you probably need to bring the subdivisions in.

PRESIDENT: One minute.

SENATOR WITHEM: I think what Senator Conway has done is he has drafted a budget limitation that is a livable one, and also one that goes out of effect, as I understand it, for...after a couple of years making sure that there is some... that at least in the first couple of years that this increased state aid is out there, that the other subdivisions won't eat it all up. So I think it is something that subdivisions probably can live with, and if you are so inclined to want to place one more guarantee into this bill, this is another way of doing it.

PRESIDENT: Thank you. Senator Rod Johnson, please.

SENATOR R. JOHNSON: Question.

PRESIDENT: The question has been called. Do I see five hands? I do, and the question is, shall debate cease? All those in favor vote aye, opposed nay. Record, Mr. Clerk, please. Continue on, I made a mistake, Senator. Chambers, and I retract it. It is the first one, I realize that. Now record, Mr. Clerk, please.

ASSISTANT CLERK: 26 ayes, 0 nays to cease debate, Mr. President.

PRESIDENT: Debate has ceased. Senator Conway, would you like to close on your amendment, please.

11624

SENATOR CONWAY: Thank you, Mr. President. Very briefly, again simply a situation where we are talking about placing a 4 percent lid on the subdivisions. We are talking about it sunsetting in two years. Hopefully, it will help us transition through to the changes that are going to be resulting from 1059's activity. The 4 percent lid is on the subdivisions, can move up to as much as a 5 percent with a two-thirds majority vote on the part of the governing board of that subdivision, and the voting people naturally then have the ability to supersede even those particular standards. But it does give us that opportunity during this transition to see how this thing settles down without any unique situation that none of us would want to have to explain away, if one of those situations should come about. It is also relative only to the receipts with respect to the property tax and personal property tax levies that are received by that subdivision. If, in fact, there is other sources of revenue, that isn't what we are talking about. We are trying to hold down on the property tax situation, and that is what this affects. So with that, I ask the body to adopt the Conway amendment to LB 1059.

PRESIDENT: Thank you. The question is the adoption of the Conway amendment. All those in favor vote aye, opposed nay. Record, Mr. Clerk, please.

CLERK: 29 ayes, 7 nays, Mr. President, on adoption of Senator Conway's amendment.

PRESIDENT: The Conway amendment is adopted. Anything further, Mr. Clerk?

CLERK: Mr. President, the final motion I have at this time is a motion by Senator Chambers. Senator Chambers would move to reconsider the vote taken on Senator Smith's amendment offered yesterday. The Smith amendment is found on page 1303, and Senator Chambers' motion is to reconsider the vote.

PRESIDENT: Senator Chambers, please.

SENATOR CHAMBERS: Yes, Mr. Chairman, and members of the Legislature, so it is clear, the amendment that I am offering a reconsideration motion on is the one that would take that 1 percent sales tax increase that is going to be on the automobiles and, Senator Smith, this is one where we don't put the increase on it, right? Let me ask Senator Smith a question

11625

because I want to keep the amendment straight.

PRESIDENT: Senator Smith, would you respond, please.

SENATOR SMITH: Yes.

SENATOR CHAMBERS: The one yesterday does what?

SENATOR SMITH: The one yesterday would have simply retained the 4 percent, there would not be an increase on motor vehicles.

SENATOR CHAMBERS: Right. Okay, thank you. I want to be sure which one it is because Senator Smith and I have been in cahoots here a couple of times, and I want to be 'sure that I am not misrepresenting what this amendment does. We came closer than I thought we would this morning to making an honest bill out of this. Usually, they have a situation where a man will say in his arrogance, he is going to make an honest woman out of a lady. And how does he propose to do that? By marrying her and reducing her to servitude. That never made sense to me. This morning we had a lady who was trying to make an honest bill being offered by...for a gentleman. Now this amendment would try to make the bill honest by taking a different approach. it would say that no tax money is going to be raised through the machinery of this bill that will go to any purpose other than that proclaimed to be the main purpose and goal of this bill. By adding a 1 percent sales tax to automobiles, the money goes into the-Highway Trust Fund. I am not going to take a long time to discuss it because we have gone over it and over it, but sometimes, like water which continually drips on a stone, an impression can finally be made. The Colorado River cut the Grand Canyon. What can be harder than that stone, and what softer than water, yet water through its continuous running cut the Grand Canyon which practically everybody who sees it will say is a beautiful sight to behold and a wonder of nature and a demonstration of physics which people might wouldn't project as being possible if they hadn't seen it actually occur or the results of it. I don't think anybody's heart, in this Legislature, is as hard as the stone from which the Colorado River carved the Grand Canyon. I don't think anybody on this floor speaks with words or purposes which are softer than water than myself. Senator Hannibal and I had a disagreement on an issue the other day and he said he is not going to take unfair advantage of me as a result, but he is over there violating his promise. What I hope the Legislature will do, to be rid of me

11626

in terms of my offering amendments or reconsiderations, is to grant this modest request that will do fairness for the citizens without hurting this bill. I could understand the supporters of the bill opposing the amendment if it reduced the amount of money that they contemplated would be available for carrying out the purposes of the bill. This amendment will not reduce that amount of money at all. So what I hope is that thoughtful people, such as Senator Hannibal, who have in the past been misled and misguided in their votes on this issue, will think deeply and search the inner recesses of their heart and find their way clear to do that which is right. I have not heard one person who has opposed this amendment, anytime it was offered, who said that what is being asked for is unjust. I have not heard anybody stand on this floor and say that what the bill does without this amendment is that which was an incentive for seeking the bill in its present form. So why do they oppose it? Because LB 1059 has become the LB 775 of the 1990 Legislative Session. There is a coalition trying to hold together this fragile construct, and they have determined that it is necessary to try to defeat any amendment, no matter how reasonable, because to them the end justifies the means. Now that is very good if you are of "Machiavellish" school, but if we are moral people, then the means have to conform to that which is good in the same way that the end, itself, must be good if good is what we are seeking. To use an evil means to achieve an end that is supposed to be good is not justified, and I think Senator Hannibal would agree to that, and ha nods agreement. Now we have to take the next logical step. To use this bill as a means to give a windfall to the Highway Trust Fund, when the purpose of the bill is to give aid to education and reduce property taxes, is not right. We should adopt this reconsideration motion, then we should vote affirmatively for Senator Smith's original motion. Senator McFarland was correct in stating that we have been debating this bill for a good period of time, but the votes we have taken have not always resulted in that which is good for the public or good for the Legislature-. There are people who voted, or at least one person who voted for 775 who has regretted it ever since , and has fought courageously, in some instances, to try to rectify the harm that was done by that 25th vote, which has been a curse to this state, but a benefit to a certain selected group of elite interests. We have a bill before us today and, on a number of proposals that have been offered in the form of amendments, various senators have acknowledged that they voted against the amendment even though they knew the right thing to do would have been to support it.

11627

How can a bill be considered good when it causes so many to acknowledge themselves that they have to violate their conscience to vote against proposals that would make it fair and just? How can a bill, itself, be fair and just when so many unfair, unjust votes have to be cast, and so many ends be achieved which are unfair and unjust? Whenever you have a proposal such as that being considered by a legislative body, it is clear that it is a political action, pure and simple. If it were something other than that, Senator Moore would have voted differently than he voted on the amendment we had this morning designed to divert that money that would come. from this 1 percent increase onto automobiles to the purposes of this bill, but he couldn't vote to put that money where it would help overcome a shortfall that he, himself, has complained about. And now I don't see Sister Labedz here, but if she is within the sound of my voice,...

PRESIDENT: One minute.

SENATOR CHAMBERS: ...I hope she will return to the Chamber and help us come one step closer to doing that which is right by casting an affirmative vote for this reconsideration motion. I think that we are as justified in trying to get that money diverted from the Highway Trust Fund to the purposes of the bill, if it must be raised at all, or to make sure that that extra tax is not added, as those are who support raising this money and diverting it to the Highway Trust Fund under false pretenses. Mr. Chairman, if I am out of time, then I will sit down.

PRESIDENT: You have 15 seconds.

SENATOR CHAMBERS: Well, that is about long enough to sit down and turn on my light.

PRESIDENT: Thank you. Senator Smith, please.

SENATOR SMITH: Thank you, Mr. President. Members of the body, Gary Hannibal asked if I would try to reduce him to tears as the silver-tongued warrior over there is able to do. I don't think I am able to do that, Gary. You have such a hard heart. I have been watching your vote. You never vote with me, never do you vote with me. He is not going to start now, but, you know, Ernie, you have been helping me all this time. It is a lost cause, I shouldn't say this publicly, but I can tell you that we

11628

did make an impression, not on this body, at least to the point that we would have liked to made it on this issue today or yesterday, but there are some TV viewers out there, and Senator Crosby mentioned that today earlier, that are supportive and thankful and appreciative of our efforts. I have to tell you that. I have had phone calls in my office about that. So we know that it is sort of like pushing a noodle through a hole, you know, a wet noodle through a hole, can't do that, but we are going to try. Now that is not going to reduce you to tears, Gary, but it is going to make you laugh, probably. Again, it is a fairness issue. We didn't get what we wanted today. I like this one even better and I thank you for bringing it back as a reconsideration motion. Senator Haberman originally was the one that brought it to us, and I appreciate him bringing it, but I tell you that it is a fairness issue. We should not increase the tax for some money to go to another fund, which has nothing to do with education. They didn't want the money we offered them earlier from the 5 cent increase on this bill. I am just about ready to say maybe I don't want to support the bill anymore, if they don't want to do the things that we need to do to make this be a fair bill. So I am asking you one more time, those of you that are listening, as Ernie has said, find it in your hearts, Gary, come on, find it in your heart to give us one green light. Thank you.

PRESIDENT: Thank you. Senator Chambers, please.

SENATOR CHAMBERS: Mr. Chairman, and members of the Legislature, I am pleased to hear what Senator Smith had indicated Senator Crosby had said about the viewers paying attention to what is being said here, and I can see why they would, because this is literally a pocketbook issue for them. The senators grow weary. The senators feel that the die is cast and, therefore, there is no justification or necessity in continuing to try to be fair to the public. But through the eye of the television camera, there are some people who will be aware of what is being attempted here and those who are attempting to bring some justice. And I believe that if they see those of us on the floor who are trying to prevail continually fail, they should direct their attention and effort to the Governor in encouraging her, if this monstrosity reaches her desk, to veto it unceremoniously. And I don't think there is even required a justification for the veto that has been given by virtue of many of the statements made on this floor, a majority of the votes that have been taken. This has been an exercise in 775 philosophy, junior. The reason we,

11629

who oppose it, cannot prevail is that we don't have a ConAgra on our side. We don't have a teachers' union on our side. All we have are the ones who are going to be the victims by paying a higher rate of tax and not receiving what they are promised. In fact, it can be analogized to the high sales tax that a person pays on a vehicle. You must pay it before your vehicle can be licensed but it is money spent for nothing. You have no tangible benefit from the sales tax money you outlay to license and register your vehicle. This high tax increase, the sales tax and the income tax, will not produce anything tangible for the citizens and there are going to be senators hopping and skipping around here when they talk to the electorate like the Governor was forced to do when she stated that her bill was not going to be a tax increase and everybody knew it would. They cannot deny this bill is a tax increase, but where they misrepresent the situation is to tell the public what they are going to be given in return. You are going to see some fancy dancing. They will be skittering around like a sore-footed cheetah on a hot plate when they try to dance their way out of what they have done, and they will be saying, well, you know, you were supposed to get a tax reduction as far as property taxes are concerned. That is what we meant, go read what we said. Well, what did the Governor say that was rejected by the people on this floor whenever they discussed her bill that was supposed to change the tax structure and be revenue neutral? They said the Governor knew it would be a tax increase because it was stated repeatedly and it. could not be successfully challenged. It is not going to be successful when they try to challenge the fact that the taxpayers are not going to get what they are being promised. So they will have to fib. They will have to say they didn't understand that the bill that they spent so much time crafting, that they spent so much time debating, was a piece of legislation that they did not understand. Sometimes there can come a flush of victory on this floor of the Legislature because this is an isolated cocoonized existence. There is not an appreciation while on this floor of how people outside this Chamber really feel and are reacting to the damage being done by this Legislature. But when people leave...

PRESIDENT: One minute.

SENATOR CHAMBERS: ... this Legislature, go back to their districts, or give talks to various groups and organizations, there will be a lot of hemming and hawing, a lot of shifting and attempts to evade what the people ask, an attempt to befuddle

11630

and bewilder the people, but it should not work. If it were not an issue that will be brought to their remembrance every time they look at their paycheck, the public could probably be tricked on this like they have been on a lot of other things done by this Legislature, but when they look at that paycheck and see a reduction in what they take home, the first thing they are going to say is how and when did it happen? Then when that is explained to them that the Legislature did it, they are going to say, why? And when people say, well, it reduces your property tax, and they look at it and see, in fact, that it has not done that, they will say, I nave been doubly taken by the Legislature again and it is going to be like one of those children that everybody loves until it turns out to be a little monster, then you don't find a mother or father who wants to claim it.

PRESIDENT: Time. Senator Chambers, you may close if you like.

SENATOR CHAMBERS: Mr. Chairman, I will let that be my close.

PRESIDENT: Okay, thank you. The question is, shall the Smith amendment be reconsidered? All those in favor vote aye, opposed nay.

SENATOR CHAMBERS: Mr. Chairman....

PRESIDENT: Senator Chambers.

SENATOR CHAMBERS: ...I would like, a call of the house and a roll call vote.

PRESIDENT: Okay, the question is, shall the house go under call? All those in favor vote aye, opposed nay. Record, Mr. Clerk, please.

CLERK: 14 ayes, 1 nay to go under call, Mr. President.,

PRESIDENT: The house is under call. Will you please return to your seats. Unauthorized personnel, please leave the floor, and those not on the floor, please return to the Chamber. Please look up to see if your light is illuminated. Senator Labedz and Senator Schmit are the only two excused. Senator Conway, would you light up, please, that is your light. Senator Conway, thank you. Senator Schimek, please. Thank you. Senator Wesely and Senator Hall. We are all here now except the two that are

11631

excused, and the question is, shall the Smith amendment be reconsidered? All in favor respond to the Clerk on a roll call vote aye, opposed nay. Mr. Clerk.

CLERK: (Roll call vote taken. See pages 1546-47 of the Legislative Journal.) 21 ayes, 25 nays, Mr. President, on the motion to reconsider.

PRESIDENT: The Smith amendment will not be reconsidered. Anything further on it, Mr. Clerk?

CLERK: Mr. President, I have nothing further on the bill at this time.

PRESIDENT: We are back on the bill, believe it or not. Senator Withem, would you like to speak on the advancement of the bill? The call is raised.

SENATOR WITHEM: I would just ask for a voice vote to advance the bill.

PRESIDENT: There happen to be a couple of other lights on.

SENATOR WITHEM: Oh, okay. Yeah, I will speak very briefly, Mr. President. I appreciate very much your giving me the opportunity to do so. We have before us now a very major piece of legislation. We also have before us, as a body, tremendous pressures that are being put on us not to act on this proposition. You have been told all morning, and from opponents on the floor, you have been getting letters from people like the Omaha Chamber of Commerce, ConAgra, of all people, ConAgra, you know, has the best interest of the state at heart, the State Chamber of Commerce, giving you reasons why not to vote for this bill, and I think because we spent so much time talking, focusing on the specifics of the bill, it might not be a bad idea to start the discussion by talking about-why we need to pass this bill, and what will happen if we don't. What will happen if we don't act on this piece of legislation? What will happen, if we, as a Legislature, do not do what we need to do by addressing the crisis we have in this state in the way in which we fund education? If that is an amendment on the desk, I'd, you know, defer and let us take up the amendment, if there is going to be one filed. No, okay, okay. What we have right now is a situation where we have a variance in the amount of dollars that are spent per pupil between school districts of better than

11632

three to one. Some students are suffering by with very little spent on their education. Others happen to live in districts with a large property tax base that have a great deal of education spent... a great deal of dollars spent on their education. We have a situation where there are some people in our state that are able to pay a property tax to support schools of less than 1 percent of the value of their property. Others have to pay more than 3 percent of the value of their property. We have a situation, admittedly at our own devising, we have a situation where, if we don't pass something in the area of school finance this year, we're going to see the system that we do have sunset. We did that to ourselves as a Legislature a year ago, committing ourselves to resolve the problem. So far as a Legislature, we have been letting the people know that we are going to do that. We need to continue to do that. We're in a situation where, if we don't do something about property taxes this session, we're going to see, I think, a proposal brought to us by the citizens through the initiative petition that will certainly, certainly tie our hands way beyond anything that any Legislature has ever had its hands tied before. We have the court sitting on this particular case at this point, trying to make a decision as to whether what we have is fair or unfair. We have a situation where the same consultant that looked at Texas, looked at Kentucky, looked at Montana, has looked at our situation. Very many of the indicators that courts look at show that our situation is worse than those other states. So let's get away from looking at the specifics of whether a particular thing is on this bill that should be there or a particular item that shouldn't be on the bill that's included and start looking at what is going to happen if we adjourn this session, go home, not doing anything about property taxes. Senator Warner indicated to you this morning and he shared the information with me, if we pass nothing, if we pass nothing, there will be a 16.49 percent increase in property taxes at the same time that Mr. Jaksha is out there with his petition saying that we need to put a lid not just on state government, but on local government and on all of the subdivisions. If we do nothing, 16.49 percent increase in property taxes, something that this state cannot stand. We have to take a stand, we have to move forward. This bill has been amended, not tremendously, frankly, most of the main thrust of this bill is still before us. If we don't act this session, nobody is going to. We have to pass this bill and I would urge you to support the advancement.

PRESIDENT: Thank you. Senator Rod Johnson, followed by Senator

11633

Elmer and Senator Chambers.

SENATOR R. JOHNSON: Mr. President and members, I rise, one, to support the advancement of the bill and, number two, to respond to a point that was made actually yesterday, but I waited to this point to make some comments. There were some points made yesterday by Senator Schmit that there are those of us supporting LB 1059 in order to cover our back sides because of LB 361 passing and the large number of ag land valuations going up. That is not the purpose that I am supporting this bill and I am not concerned that passage of 1059 will suddenly jeopardize the ag land valuation amendment that is on the ballot for November- That is, I think, a separate issue, but they are somewhat interrelated, but the fact of the matter is that the time has finally come for us in this state to respond to a question of tax equity. And, yeah, I'm hearing a lot from my farmers out there who are complaining that their ag land valuations have gone up substantially, but if we, as Senator Withem has just indicated, if we don't do anything, what is the alternative? There is no safety net following this bill. If we fall, we fall a long ways, 16.49 percent, as he has indicated. That's on top of the increases in the ag land valuation area. I didn't vote for 361 because I wanted to. I felt it was the only responsible action that this Legislature had last year. That was brought about, not by this Legislature, but by the courts telling us. We could be in the same situation in school finance if we don't respond to this issue and I think 1059 is a responsible action to respond to a crisis that has occurred. We know Mr. Jaksha's petition is going on out there. We know that the court system has a lawsuit filed that could very well throw out our current education finance plan and so I guess I don't see much choice. I guess I feel like we're almost in the same situation that we were with LB 361. We either make a commitment to do this, or we suffer the consequences, and I guess I'm ready to take the consequences of 1059. I'm in a lucky position, unlike some of you. Every school district in my legislative district benefits under the package so it's an easy vote for me. I realize there are many of you, however, that don't have that luxury and I commend you and I admire you for the decisions you're going to have to make because it's the same decision that many of us in the rural areas had to make last year with 361. It's my hope that the amendment that's on the ballot, LR 2, will pass and we can come back in next year and start arguing about how we're going to value ag land separate and distinct from this school finance package, but I really don't see this as a

11634

significant threat to its passage. -That success or failure will, I think, largely depend upon how active the farm organizations of this state respond to that situation and to date I haven't seen much action, but I'm sure, as the fall grows closer, we'll see more and hear more from the farm organizations on the ag land valuation side. But I wholeheartedly support the package. It is finally coming to a point where we have waited in this state for years and years and years to deal with tax equity and this bill, more than any other I have seen in my eight years here, is attempting to bring about some equity in the support of education.

PRESIDENT: Thank you. (Gavel.) Could We hold it down a little bit, getting a little noisy up here too, but if you could hold your conversation down, we'd appreciate it a little. Senator Owen Elmer, please, followed by Senator Chambers and Senator Hall.

SENATOR ELMER: Thank you, Mr. President. I haven't spoken very much on this bill either, Senator Johnson, and support it for many of the same reasons that Senator Withem and Senator Johnson have already explained. And people that are accusing us, that are trying to pass this bill, of passing it off as a tax decrease, that's not true. It is absolutely not a tax decrease. It's a shift that over 85 percent of the people that I have surveyed in my district says should be made from property to sales and/or income. We all realize people that hold larger portions of property will probably be benefited by this bill. People that have lesser amounts of property will probably pay a little more under this bill. The average taxpayer in Nebraska will pay no different than he would otherwise. We have seen reams and reams of paper from the Department of Revenue on what 1059 would do. We have seen very little from the Department of Revenue of what would happen if we do not do this. It's going to be disastrous out there in the property tax section of this taxpaying state if we do not pass this bill. And I hope we have the courage to stand back, look at it from the very foundation of equity per student in' tax base, in equity in what the whole population does to support our schools and support this bill to the bitter end. Thank you.

PRESIDENT: Thank you. Senator Chambers, please.

SENATOR CHAMBERS: Mr. Chairman and members of the Legislature, after having debated an issue as long as this one has been

11635

debated, a senator can sometimes become a little unclear on what he hears, so I've got to ask Senator Elmer a question if I may.

PRESIDENT: Senator Elmer, please.

SENATOR ELMER: I'll make the attempt, Senator Chambers.

SENATOR CHAMBERS: Senator Elmer, you said you had surveyed the people in your district and what percentage of them wanted this bill to be passed?

SENATOR ELMER: I said that the survey asked, should property tax be supplemented by an increase in sales or income tax? Almost 85 percent said yes.

SENATOR CHAMBERS: Oh, but you didn't ask them about this bill, in your survey?

SENATOR ELMER: I asked them if they wanted property tax to be shifted. I didn't address this bill specifically.

SENATOR CHAMBERS: So then that survey may not have any bearing on how your constituents would feel if they knew what the contents of this bill really are. Is that a possibility?

SENATOR ELMER: I would hesitate to say, Senator Chambers, but I would assume that they still believe. that property tax should be reduced or should be supplanted or remain, how do you best say it? To be shifted from the dependence on property to sales and/or income.

SENATOR CHAMBERS: okay, so let's forget the questions that I asked before so I can ask you this question independent of all of that. Is it your understanding that the people in your district will be paying less overall in taxes with LB 1059 than they currently do now with-out it?

SENATOR ELMER: Some will pay less, some will pay more.

SENATOR CHAMBERS: Will a greater number pay less?

SENATOR ELMER: I'm not sure about numbers. The property as a whole will pay less. The net income for the district, compared to what the state is now, will be more.

11636

SENATOR CHAMBERS: Well, the important people in your district will probably pay less though, right?

SENATOR ELMER: I think that depends on who you call important, Senator Chambers.

SENATOR CHAMBERS: The ones with the greatest land holdings.

SENATOR ELMER: The farm people that hold large tracts of land will pay less.

SENATOR CHAMBERS: And, in most instances, the ones with the big money wield the power and are deemed to be the most important people, aren't they, in the ordinary course of things?

SENATOR ELMER: I wouldn't say our farmers out there wield much power, Senator Chambers.

SENATOR CHAMBERS: No, no, I'm not talking about the farmers. I mean in the ordinary course of events those who have the money wield more power than those who don't have it.

SENATOR ELMER: (Laugh.) Senator Chambers, you're trying to get me to say something that's not true.

SENATOR CHAMBERS: Okay, so then the ones who have the more power are those with the least money. That's what you're saying?

SENATOR ELMER: I don't think that anyone out there wields any great amount of power at all.

SENATOR CHAMBERS: Okay, thank you. What Senator Owen Elmer is saying is that those with the least money have the most power. So since farmers have the least money in this society, they have more power than anybody else so what are they always crying about? I don't understand. If, on the other hand, the important people in his district are the ones who will benefit from this bill, then I don't see where it would take any courage for him to cast a vote which is going to be in line with what the important powerful people in his district want. It doesn't take any courage to vote for this bill. This is a political bill. We know that. The public may not know it. All they're going to see it as is a gouge when it comes and then we will see what we shall see, but we will only see it in our imagination

11637

because the Governor has ridden back to town. And for the ladies in this body, usually they make a man the hero, here comes Zorro...

PRESIDENT: One minute.

SENATOR CHAMBERS: ... here comes Superman, here comes Batman, here comes the cavalry. Well, in this case, here comes the iron Lady, tall, shiny black boots, a whip in her hand, studded wrist irons and she is going to start whipping these senators right into line and I'm going to enjoy it. I might even get up there on the cart with her and we'll ride as she whips into line these people who are going to pull that cart, but I'm going to see how many votes there are going to be to advance this bill to Final Reading and I'm going to have a call of the house and I'm going to call for a roll call vote and we're going to see how many of them vote to override the Governor. We're going to see how many of them vote to pass this bill and we'll know who is going to gain politically. I wonder what my friend, Senator Howard Lamb, is going to do. I'm just going to watch and, Senator Lamb, I'm going to hold my breath until you vote and to prove it, here's my hand, (whew) I'm holding my breath, and I won't let it go until you vote, but I'm definitely going to vote against this bill.

PRESIDENT: Thank you. Senator Hall, please, followed by Senator Lamb.

SENATOR HALL: Question.

PRESIDENT: The question has been called. Do I see five hands? I do. And the question is, shall debate cease? All those in favor vote aye, opposed nay. Voting on ceasing debate. Record, Mr. Clerk, please.

CLERK: 26 ayes, 8 nays to cease debate, Mr. President.'

PRESIDENT: Debate has ceased. Senator Withem, are you going to close?

SENATOR WITHEM: Senator Moore.

PRESIDENT: Senator Moore, for what purpose do you rise?

SENATOR MOORE: (Mike not on.) Yes, I'd like to give the first

11638

minute of my closing to Senator Scofield.

PRESIDENT: Senator Scofield, you have a minute.

SENATOR SCOFIELD: Thank you, Senator Moore. It occurs to me the question of equity, educational equity is a central question surrounding this bill and I want to just relate a little story to you that I've thought about many times as we've debated this bill. As some of you know, I went to high school in Chadron. My first teaching job out of college was at Omaha Westside. In fact, Sandy Meyers was one of my students. I tell you, I walked around with my mouth open for the first three weeks, as a new teacher, because I, frankly, didn't know that there was a high school anywhere that had that range of offerings. It was a wonderful school. It was a wonderful teaching experience. it is one of the best schools in the nation. But that really taught me a lot about educational equity those two years in terms of what the offerings are like in the schools around this state. And I'll tell you, Chadron High was one of the better high schools and still is one of the better high schools in the panhandle of Nebraska, and so I think that there are clear examples around of the real problems that there are in terms of educational offerings that students have to pick from. Right in my own district Crawford is in great trouble and the offerings available at that school, not even 30 miles down the road, are very, very different from those in Chadron. That's a very isolated instance but in terms of the perspective that gave me...

PRESIDENT: Your minute is up.

SENATOR SCOFIELD: ...this bill has a real reason to pass, if only for the educational equity reasons. Thank you.

PRESIDENT: Thank you. Senator Lamb, you have a minute.

SENATOR LAMB: Well, Mr. President and members, I guess I should have talked on a bunch of the amendments so I would have gotten an opportunity to talk after the bill has been amended, but I don't think I've got time enough to go into the things. I've got a number of things I'd like to talk about and I'll just start in with some people say there is no other option, there's no other option. Let me point out that LB 866, my priority bill, is there. I've asked Senator Barrett to special order that bill. I have put some amendments up there which modify the

11639

committee amendments and there is an option, there is an option. This bill, as you know, I served on the commission and there are a number of things in this bill that I like, but as far as I'm concerned this bill is not ready to go. It does some good things but it certainly cannot be considered a fair and equitable formula and you can just look at the printout and you see that before you put on the Band-Aid of the minimum 60 cents, some schools are going to have really low levies, like 7.5 cents or 37 cents. Now, we're talking about inequities in our present situation and certainly there are, but here, as I read the printout, we've got levies there from $2.00 down to zero and Crawford is the situation where it's zero. What we're getting into is a school aid bill which will probably be here for another 23 years, like the last one, but it is not properly worked out. Now is the time to do it. Now is the time to do it. We're not going to get it done in this session, but what I'm saying is it should not be passed this session. We should build on what has been done so far and then do it next session. Right now, we could go another year with an extension of LB 84 or some similar thing and there is 866 sitting right there ready to do it and so I just don't believe the bill is in proper form. My minute is probably used up.

PRESIDENT: Yes, your time is up and Senator Moore wants the balance. Thank you. Senator Moore.

SENATOR MOORE: Yes, Mr. President and members, you know, Senator Lamb has concerns. In our spirit of trying to ... we've spent two days on this bill, actually three days of debate. We've been through them and if some of Senator Lamb's concerns actually been addressed in the amendments that have been adopted to this bill on Select File, you know, the time has come. it's one of those things that Senator Chambers thinks it takes courage to oppose the bill and I guess he and I just simply disagree. And I've had more than-one people, some gently, some not so gently inform me that I've pretty well ruined my political future by pushing this bill. And if that be it, so be it. But, nevertheless, the time has come, let's move this puppy over.

PRESIDENT: Thank you. The ques... Senator Chambers requested a call of the house and a roll call vote. The question is, shall the house go under call? All those in favor vote aye, opposed nay. Record, Mr. Clerk.

11640

CLERK: 25 ayes, 2 nays to go under call, Mr. President.

PRESIDENT: The house is under call. Will you please record your presence. Senator Schmit is the only one excused, so everyone else should be here. We're looking for Senator Wesely, Senator Lynch, Senator Schellpeper, Senator Pirsch, Senator Landis, Senator Emil Beyer. Senator Wesely and Senator Beyer are here now, so that is it, and there is a roll call vote. Oh, Senator Lynch is not here. I thought I saw him. Okay, we'll wait for Senator Lynch. Senator Lynch is here and the question is the advancement of the bill. Roll call vote in regular order. If you'll hold it down so the Clerk can hear your response. Mr. Clerk. I

CLERK: (Roll call vote taken. See pages 1547-48 of the Legislative Journal.) 34 ayes, 12 nays, Mr. President, on the advancement of LB 1059.

PRESIDENT: The bill is advanced. Anything for the record, Mr. Clerk, at this time.

CLERK: I do, Mr. President.

PRESIDENT: The call is raised.

CLERK: Mr. President, your Committee on Enrollment and Review respectfully reports they have carefully examined and engrossed LB 220A and find the same correctly engrossed, LB 369A correctly engrossed, LB 880A correctly engrossed and LB 1146 correctly engrossed, those signed by Senator Lindsay. Enrollment and Review reports LB 1141 to Select File with E & R amendments, LB 1141A, LB 958, LB 571A, LB 1222A to Select File. (See page 1548 of the Legislative Journal.) A communication from the Governor to the Clerk. (Read communication. Re: LB 348, LB 542, LB 594, LB 965, LB 1032, LB 1236 and LB 1094. See page 1549 of the Legislative Journal.) Two study resolutions, Mr. President, will be referred to the Exec Board. (Re: LR 382, LR 383. See pages 1549-50 of the Legislative Journal.) Senator Lamb has amendments to be printed to LB 866. (See page 1551 of the Legislative Journal.) That's all that I have.

11641