Transcript prepared by the Clerk of the Legislature,

Transcriber's Office


Committee on Revenue LB 181, 271

February 27, 1997


Page 60

LB 271


GEORGE KILPATRICK:  Thank you, Senator Kristensen and other members of the Committee.  Again, my name is George Kilpatrick, introducing LB 271 on behalf of the Committee, a majority of whom signed on to the bill, and Senator Warner who is indicated as the chief sponsor of this particular piece of legislation.  Again, this is not a new subject.  We have had the vehicle fee schedule around for years.  The notion behind this bill, well, there is a couple' or three ideas behind this bill.  First, is the manner in which it has traditionally been bought, that the current vehicle valuation system that we have, and what we do currently is place a value that is more or less uniform on vehicles across the state and then have the subdivisions levy their rates against that, as they do on any other type of property, but as a uniform valuation without regard to what the actual value of the automobile might very well be, and that has resulted in a certain amount of confusion amongst taxpayers.  I know we have gotten a number of complaints in


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our office, I assume your offices have, too, about the notion of the value that might be placed on a particular motor vehicle.  This bill responds in part to that notion.  It also deals with LB...  the consequence of 1114 in a couple of respects.  In the first place, by adopting a uniform schedule of taxation, not uniform schedule of valuation, a uniform system of taxation, it will remove essentially motor vehicles from the property tax equation in the sense.  that whatever relief is provided by 1114, whatever shortfall is caused by 1114, will have no impact on motor vehicle owners.  Whatever the benefits or consequences occur will be felt by real estate owners, not motor vehicle owners.  Now if you own a motor vehicle and not real estate, that may not be a good consequence, but, nonetheless, most of what you folks have reacted to, and the phone calls and letters we get, is on real estate taxation and motor vehicle valuation as opposed to the high taxes and such as a percent of valuation on motor vehicles.  okay.  The other thing that it does, is it provides for different distribution of revenue from what is current.  And currently, as you know, the bill calls for 65 percent of the proceeds of the motor vehicle fee, as it is called in this bill, to be distributed to schools via the equalization formula, 20 percent to counties pursuant I ant to the highway allocation formula, and IS percent to cities also via the highway allocation formula.  As I have discussed with most of ...  all of you, in fact, at different times in the past, the ...  that certainly is not set in stone.  It was designed last year to try and respond to last year's situation with regard to property tax.  But again, given 1114, given what other items may come as part of the package in terms of aid for schools, aid for cities, the last year's aid package for cities, what we may do for counties and some of the other 30 pieces of legislation you may have before you, that those numbers can be adjusted to try and achieve what you feel is best to determine the relative share of the money from this particular tax relative to what is available to them through property tax and other means.  Those are, I guess, the three-fold provisions of the bill.  I do want to make mention to a couple of things, the bill summary discusses the ...  a couple, I guess, suggested amendments or consequences, there is a provision that calls for maintaining the same registration for four years for trucks, even though the schedule, as designed now, goes down in each of those years, that is a leftover from the old vehicle fee schedule bill, that maintained the same fee for three years


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for trucks and some other vehicles, one year only for passenger cars, and it talks about buying a car in the year prior to its model year and maintaining it in two years.  It should be uniform for both passenger vehicles and trucks.  'This bill didn't pick up that change regarding the trucks and other motor vehicles.  It is mentioned in your bill summary as a suggested amendment.  There is also ...  perhaps ought to be some consideration of an issue that we sent out of this committee earlier -his year, Senator Schellpeper's bill LB 86, which again is in the same area, if you buy a motor vehicle in the year prior to its model year, should there be a reduction in the second year or not.  There is a number of things you could do, split the difference, have part of the reduction a month-to-month adjustment, that sort of thing.  LB 86 says the reduction has to be at least 12 percent.  This bill has no reduction at all.  You may want to harmonize, I guess, those conflicting aspects regarding that issue.  I also received a communication from the Department of Motor Vehicles this morning suggesting that the weight classifications within the bill for cabin trailers were not exactly the same weight classifications that the various registration fees are for cabin trailers.  Most of those weight divisions within the bill are based on the registered weights of vehicles and vary and have some impact on registration fees.  For whatever reason, whether they have changed since we first ...  the bill was first drafted years ago, or whatever it was, or what., that didn't track over properly.  So some consideration should be had to creating a classification for cabin trailers under one thousand pounds, cabin trailers one to two thousand pounds, and cabin trailers two thousand pounds and over.  You may want to consider eliminating the lowest self-propelled mobile home classification since, again, there isn't a registration classification with that Amount, and that is contained in this letter that I'll have copied and distributed.  (Exhibit 25.) Are there any questions?


SENATOR KRISTENSEN:  Questions?  Senator Schellpeper.


SENATOR SCHELLPEPER:  George, you mentioned in your...  I guess it came from the Department of Education, about it being unconstitutional, are they concerned about that?


GEORGE KILPATRICK:  What we discussed last year was that the


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present Article 8, Section 1, allows us to value and tax motor vehicles differently from other types of property.  It has been there for years on the condition that subdivisions receive money in proportion to property taxes.  The distribution formula that we have here does not do that.  It distributes.  to those three entities, and it is based on an equalized formula.  Last year, as you recall, we put 292 and then ultimately Amendment 2 on the ballot, to try and revise that portion of the Constitution to allow this revenue to be distributed as the Legislature saw fit.  In this, the argument exists that in this form, that this bill would need a constitutional amendment, the issue turning on is this a tax as restricted by Article 8, Section 1 or is it a fee more in the lines of a registration fee that doesn't have to comply with that constitutional issue.


SENATOR SCHELLPEPER:  Would it be advisable to ask for an AG's opinion or do you think your opinion is just as good as his.


SENATOR KRISTENSEN:  I can answer that.


GEORGE KILPATRICK:  Well, I won't answer that, but...


SENATOR SCHELLPEPER:  I mean I don't want to put something ..out if it is going to be unconstitutional, is what I am saying.


GEORGE KILPATRICK:  Well, another possibility is to do some ,of both and we talked about that this morning,- the, possibility of having a fee that would be distributed to subdivisions ...  or I'm sorry, a tax that would be distributed to subdivisions as well ell as a smaller fee that we would be more free to distribute as the Committee saw fit.  That may be another approach to that issue.




SENATOR KRISTENSEN:  Any other quest ions?  Thank you, George.  Senator Warner has assigned a half an hour for this bill so we are looking at 4:25.  Can 1 see a show of hands of those in support?  One, two, three,.  four, five.  Okay, in the opposition?  You are not going to be here, well, okay, since we have got no one in opposition...  there is one?  Okay, let's do this.  How about if we divide up, give


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20 minutes for proponents and we will give 5 minutes for the opponents and that will sort of go along ...  this is a bill that has been before the Committee for a number of years.  I think the Committee is familiar with it.  Cathy, welcome and...


CATHY LANG-MORRISSEY:  Thank you, Senator Kristensen, ,members of the Revenue Committee, my name is Catherine Lang-Morrissey, property tax administrator for the state of Nebraska.  I appear today in support of LB 271 in a very limited capacity.  There are many issues regarding the valuation and taxation of motor vehicles of which I will leave to the prerogative of the body that determines our tax policy and that is the Legislature.  But I am here today in support of this bill because it tells me how to value motor vehicles.  Motor vehicle valuation is the responsibility of the Property Tax Administrator.  I'm required to set those values and to publish a manual which will be used by the taxing official who values and taxes those, to set the taxes on individual motor vehicles across the state.  It is my firm belief, both from a.  legal perspective and a policy perspective, that the Legislature must specify the policy for the valuation of motor vehicles.  I am here today to .urge you to use LB 271 in some manner this year for implementation in 11998, to.  specify the manner in which you would like me to value motor vehicles.  I am here to tell you today that right now in statute there is no direction whatsoever.  That gravely concerns me.  There are many legal terms to a ...  to characterize that and I may leave it to other testifiers today to use perhaps stronger terms, but I am very concerned about the unbridled discretion that may have been granted to the Property Tax Administrator since there is no stated policy in the law.  We currently have $151.7 million in taxes that come from the class of motor vehicles.  The document that I have asked to be passed out .to you is far more complicated than it needs to be for the presentation today.  (Exhibit 26) It is for you for other purposes as well, but you will notice, as you proceed down to the second half of the page, you will notice value by sector, taxes by sector, motor vehicles are listed there.  If you go all the way over to the 1996 column, you will see .that the value for motor vehicles is listed and the total taxes of $151.7 million are collected, representing a little less than 10 percent of the total property taxes paid in our state..  There are a couple of technical issues that are in


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the bill.  I will not take up any time to review those with you today, and would offer the assistance of the division in crafting any technical revisions to the bill based on the questions that we do have, and I will leave those for the Counsel of the Revenue Committee.  But I cannot urge you strongly enough to use this bill as a vehicle to specify the manner in which you would like me to value motor vehicles, be it the methodology stated in LB 271 or any other methodology, and I will carry it out professionally and expeditiously.  I would Answer any questions.


SENATOR KRISTENSEN:  Thank you, Cathy?  Any questions by the Committee?  Usually you have sent us a letter with technical things explained, and I assume that we would appreciate that as well...


CATHY LANG-MORRISSEY:  We will do that again.


SENATOR KRISTENSEN:  ...  and not take it up today.  Thank you.


LOY TODD:  Senator Kristensen and members of the Committee, for the record my name is Loy Todd, I'm the Executive Vice President and Legal Counsel for the Nebraska New Car and Truck Dealers Association.  Obviously this bill has been around for a long time, a lot of years before.  I have tried a lot of different methods of demonstrating to the Committee one basic fact about our current taxation on motor vehicles, and that is that it is not legal.  It is not constitutional and it won't withstand a lawsuit.  Now, Cathy has been much more careful than I need to be in telling you that, but that is fact.  You know I have smashed cars to tell you that that has no effect on their value..  I have...  I'm not going to set.  any on fire today, I'm not going to do any of that kind of stuff for you, but the fact is ...  and, in fact, the next bill that is going to be presented to this Committee is very well going to demonstrate the fact that the actual fair market value of your motor vehicle, in this 'state, has almost nothing to.  do with how it is taxed.  You can't have a property tax system that is based on virtually nothing.  What we have now is a schedule that is thought up by somebody in a back room, the Department of Revenue, that is .based on some manufacturer's suggested retail prices set by my industry.  Then, it is arbitrarily assigned some depreciation.  A schedule is supposed to be published, I


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have never seen it, and sent out to the counties, and then what we do is we tax, based upon it.  How can we have a property tax that is supposed to be-based on value, that is supposed to be somewhat tied into that, that has nothing to do with value?  We can have two identical make, model, year cars, I one worth nothing or virtually nothing and the other worth thousands of dollars and they are taxed the same.  To take it into the real estate arena, it would be like paying that if we have one builder who builds houses, we are now going to go around and figure out the average value of a house that that builder builds, and that is what we are.  going to, tax you from now on.  Don't care whether he built you a million dollar house and you a.  fifty-thousand dollar house, the average value of the house he builds is what we are going to do.


SENATOR SCHELLPEPER:  You better turn that around, he is the lawyer, I'm not.


LOY TODD:  I understand.  But that is fact.  And we have been very lucky, we have been very lucky in this state, nobody has ever sued to examine this whole thing because it, is probably not worth it for any one individual to sue.  And, fortunately, also my association doesn't believe in doing that.  We are not interested in upsetting the tax system of the state.  So we are not going to finance any lawsuits, at least we don't plan to..  But you have got a system that doesn't work.  We have suggested many years now that you replace it with an age-rated system..  This bill....divides into two parts.  The first part is that it replaces our current method of valuation with something that is real.  At least it is age-rated.  and it is based upon, some categories of value that are established with something real and it comes over the depreciation schedule.  It is really a pretty good method of doing it.  It is measurable and it is something the Department of Revenue and other people can use.  The other thing the bill does, and we don't have an opinion on it, and that is.  that it now takes the monies generated, the $151 million generated by the.  motor vehicle taxes, and it dictates how they will be distributed.  Traditionally, when we introduce this legislation or ask for it to be introduced, what we say is that money will follow the property tax and go like 'the property tax has gone historically.  This bill varies from that and, instead, it dictates in pretty strict terms who gets it and how.  It is


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not up to us to say who gets the money.  I don't think that ,is the appropriate thing for us to do.  But I want to point out that distinction in this bill because it is different and it probably does take a constitutional amendment in order to do some kind of categories like that.  If you don't want to do that, I can sure show you how.  I can sure show you how to go back to the current methods of distribution.  Nobody loses from this and we can do it, but if you base it upon age rather than some hypothetical value, some unreal value, you know we can make it work with or without a 'constitutional amendment.  Another thing I need to point but to you.  Most of the problems we have with.  illegal registrations in this state, most of the problems we have with the "In Transits", we have had bills to do something about that, those kinds of things, are because our taxes in this state on a newer motor vehicle are simply too high.  They are unrealistic, they are unfair, they are too high.  We.  have done survey after survey.  We are always in the top two or three places in the country as far as taxation of motor vehicles.  People scream at this Committee and at the Legislature constantly about our property taxes.  Our property taxes are nothing as far as in comparison to other states.  I mean, we are in the middle.  We might be high middle, big deal.  Cars, we are in the top three.  Sometimes we are in the top two, with the new motor vehicles.  I will point out to the Committee that this does have a minimum tax .that you will be looking at, it is five dollars.  You are talking.  about an older motor vehicle paying five dollars to be operating on the roads.  This thing more evenly distributes the taxation of motor vehicles.  I won't belabor the point.  I would, as the Department has, I would urge somebody to do something this year before the state faces losing the $150 million of revenue.


SENATOR KRISTENSEN:  Questions?  Senator Hartnett.


SENATOR HARTNETT:  Loy, in this bill we have, it says, "Manufactured adjusted retail price", three categories.  How many would fit under the $17,000, in the middle category of $17,000-$27,000, and $25,000 and above?  I guess my question for a person in your industry or representing your industry and so forth, is that enough, or should we have another category for some people that I know, you know, the...take care of the Mercedes and the...  I have a few that .are ....  yeah, yeah, there are a few in my area, Lexus and so


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forth, you know that.  would be what, $5O,000 or something ,like that?


LOY TODD:  That is in this bill.  There are categories based upon that.  You have an over $40,000 category in this bill, Senator.,


SENATOR HARTNETT:  Oh, is there?  I was just...


LOY TODD:  Yeah, yeah, that wasn't traditionally the way, the traditional way was...


SENATOR HARTNETT:  Okay, then I'm...


LOY TODD:  So I think this deals with that.


SENATOR KRISTENSEN:  Senator Schellpeper.


SENATOR SCHELLPEPER:  .Loy, this bill still, as I read it# doesn't do anything to grandfather in the old pick-UPS.  out in the country or cars, right?


LOY TODD:  No, it wouldn't let anybody continue to do what they have done historically and that is...


SENATOR SCHELLPEPER:  And we have talked about this.


LOY TODD:, Yeah, there is a minimum value out there that I think is kind of used out there, I think it is about $300.  Then you apply the mill levy to that value.  This wouldn't let someone who is now driving, let's say, a 1992 Ford Taurus to be held harmless with whatever changes were made.  You wouldn't be able to compare, I mean, you would now with this bill be able to compare what you paid last year with this.  There have been suggestions in the past, I think Senator Lynch offered an amendment one time, that would have said, well, you can stay under the old system as long as you continue to own that car and then when you trade, it you can go to something else, you know, a lot of things could make it work, but, I don't know what the fiscal impact of that would be.  My guess would be that this bill raises about twenty-five to thirty million dollars the way it is.


SENATOR KRISTENSEN:  Senator Hartnett has a quick question.


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SENATOR HARTNETT:  Loy, there is no categories if it is over $27,000 and...


LOY TODD:  Okay....


SENATOR KRISTENSEN:  We will let you work that out on your own time.


SENATOR HARTNETT:  I guess my know, should we have, you know, should we have another one a bump up above that?


LOY TODD:  I wouldn't see any reason not to.  In fact,


Senator, I think page 7.  line 11 ...


SENATOR KRISTENSEN:  That is ...  let's work that out.


LOY TODD:  Certainly.


SENATOR KRISTENSEN:  Yeah, okay.  Any other questions?  Thank you very much.


LOY TODD:  Thank you.


SENATOR KRISTENSEN:  We have got about 8 even minutes left and I would like to get to as many proponents before I move to the opponents as I can.  Thank you.  Governor, welcome.


BOB CROSBY:  Members of the Committee, my name is Bob Crosby.  Again, I represent Better Nebraska Association, which is now in its 49th year.  The chief objective of Better Nebraska Association is to support the.  state's highway system, county roads, municipal streets.  We support this bill because we think it will bring in more money for counties and municipalities.  it requires application of the money on their county roads and city streets.  For- that reason and for all the reasons that Loy Todd just mentioned, Better Nebraska Association supports the bill.  With regard to the categories.' I'm not able to answer questions.  Are there any other questions?


SENATOR KRISTENSEN:  Thank you.  Governor.  Senator Schellpeper.


SENATOR SCHELLPEPER:  Bob, I'm sure you don't believe everything that Mr. Todd says.


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BOB CROSBY:  I decline to answer that question.  Are there any other questions?


SENATOR KRISTENSEN:  Any relevant questions?  I see none, thank you, Governor.  We appreciate your patience with us.


RON SEDLACEK:  Mr. Chairman, members of the Revenue Committee, for the record my name is Ron Sedlacek, I'm representing here today the Nebraska Chamber of Commerce and Industry.  We just wanted to enter our testimony In favor of the concepts behind LB 271, that is the age-rated motor vehicle fee schedule.  We have taken this issue across the State of Nebraska in the last couple of years over legislative forums to gauge what kind of response there would be among the people, and it seems to be well accepted to have such a fee schedule.  Over 80 percent of those attending those forums across the state were supportive of changing the way in which we tax motor vehicles.  I just wanted to convey that information to you.


SENATOR KRISTENSEN:  Very good.  Questions?  Thank you very much.  Mr. Cuca will be glad to let you go first.


VIVIAN HARTWIG:  I am Vivian Hartwig, Thurston County Assessor from Pender..  You each have a copy.  LB 171 is a bill to eliminate provisions relating to the valuation and taxation of motor vehicles and, instead, impose fees on the same.  I am asking that the exemption referred to in paragraph 3, Section 2 be stricken from the bill.  Section 2, paragraph 3 reads, "Motor vehicles owned by Indians as defined in 25 U.S.C.  479." That is Paragraph 3, Section 2, about the second page.  Native Americans are not exempt from fees.  es.  They are charged for the following fees.  marriage license, title, recording, UCC filing, certified copies,.  witness fees, registration, license plate fees, drivers license, civil fees of $44, dissolution fees of $69 and the $10 out-of-state motor vehicle inspection fee.  Thank you for your consideration.  Are there any questions?..


SENATOR KRISTENSEN:  Very good.  Questions?.  Thank you for being with us.  Appreciate your patience with us today.


BUD CUCA:  Senator Kristensen and members of the Committee, my name is Bud Cuca, C-u-c-a.  For the record, I represent


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the Nebraska Motor Carriers Association.  I am somewhat .ashamed to admit that I do believe most things Mr. Todd says.  And we, too, support, the bill for one business reason and one tax.  policy reason.  The business reason, very candidly, I have got two sorts of members that own trucks, one pro-rated under the IRP system, which remains unaffected by this bill.  We do have a number of our membership that .own trucks that are registered at the county level.  Like the general population of vehicles, some are, winners, I some are losers.  Been talking about it in our legislative committee, what this bill does is more evenly spreads the tax out, so it is mote predictable from year to year.  As a .budgetary proposition for most companies and as a planning proposition for most companies, this is a good thing.  I think the levelization of the tax over the years is probably also a good tax policy thing and I think it will generally, after accepted,, be considered a fairer piece of taxation.  The other tax policy implication that we believe is positive is the way 271 is set up.  It probably relates better the usage of the roads by the vehicles than does the current system.  Those vehicles that are now very minimally taxed use the roads and benefit from the roads just as vehicles that are taxed at a very high rate.  This levels that out quite a bit and I think in a fairer way.  So the relationship between the highway use, road use, and the tax on it is much more correlated under 271 than it is under the current system.  Clearly, I would echo what Governor Crosby had to .say about the added benefit to the Highway Trust Fund.  We are advocates of'highways, we think one of the fundamental things I government must provide the citizenry is an infrastructure and I think this bill enhances your ability to do that.  So with that, Senator Kristensen, I will take any comments that you have.




BUD CUCA:  Or questions that you have.


SENATOR KRISTENSEN:  I see none by the Committee.


BUD CUCA:  Thank you very much.


SENATOR KRISTENSEN:  Is there anyone else that wanted to, quickly that's ...  do proponents.  That will end the time.  We will move next to the opposition.


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STEVE OLTMANS:  Senator Kristensen, fellow members of the Revenue Committee, I I'm Steve Oltmans here.  representing the Papio-Missouri River Natural Resources District in Omaha, Nebraska.  You heard most of this during the hearing on LR 45CA, so I won't take a lot of time.  My elected officials that hire and fire me made it clear to me that I should say that they want to see 1114 implemented so we are here primarily because of that stand and planning to do the best we can under that scenario.  LB 271, of course, assuming that LR 45CA is passed, and our only concern with the bill is the distribution formula.  Other than that, and if you look at the attached page, you will see that NRDs will lose about two million dollars of revenue or about 8.6 percent of their revenue.  (Exhibit 27.) In our case in the Papio, we would lose a little over 11 percent.  So that is significant, of course, particularly when we are looking at a zero-based budget besides, so we would ask you to consider to add NRDs to the distribution formula in the bill, and that is our message and our concern.


SENATOR KRISTENSEN:  very good.  Questions by the Committee?  Senator Hartnett.,


SENATOR HARTNETT:  What was your assessed valuation in your Papio Natural Resources District in '95?


STEVE OLTMANS:  Right at twenty billion.


SENATOR HARTNETT:  What is it in '96?


STEVE OLTMANS:  It went up in 196 it went up about eight percent.


SENATOR HARTNETT:  Eight percent.


STEVE OLTMANS:  District wide, yeah.




STEVE OLTMANS:  We can make this up with an increase in tax levy, of course, I mean, but my elected folks...


SENATOR KRISTENSEN:  They don't want to do that.


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STEVE OLTMANS:  ...  don't want to do that for obvious reasons.






SENATOR.  KRISTENSEN:  okay, any other questions?  Thank you very much.  Anyone else in opposition to LB 271?  Neutral testimony?  How many neutral?  A couple.  You guys can quickly do neutral, and we would appreciate that.  Thank you.


LARRY BARE:  Senator Kristensen and Senator Warner..


SENATOR KRISTENSEN:  Senator Warner is in control once he is here.


LARRY BARE:  For the purpose of the record, my name is Larry Bare, I'm the Financial Director for the City of Lincoln.  We are here really...  I'm here only to comment on one aspect of the bill and I understand this is part of the package.  I believe this is a comment I made last year.  George, I think in his introduction, said that you intend to use the highway allocation formula to determine the amount of money that any individual jurisdiction would receive.  You use whatever formula you would like, but we would ask you not to use the highway allocation distribution system.  This is money that is currently going to our general fund.  This is money, however much you decide we should get back, put it back in our general fund.  That is where it is coming from, that is where it ought to go.  Very simple comment.  You decide the amount however you want, but don't have a double impact on us.  If it goes up, if it goes down, we will deal with that.  We will trust your eminent fairness but don't take it out of an unrestricted fund and put it into a restricted fund., That would be my only comment.


SENATOR WARNER:  Questions?  Lincoln has zero property tax that goes into streets?


LARRY BARE:  Basically, Senator, we are not ...  we are funding most , if not all, of our street-related stuff out of the wheel tax.  So we use very little general funds for streets, correct.


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SENATOR WARNER:  It is either the wheel tax or the Motor fuel tax.


LARRY BARE:  Right, right.


SENATOR WARNER:  That's it.  Any other questions?  If not, thank you, Larry, for your comments.


LARRY BARE:  If we did we could do, you know, what we could do, but we can't.  Thanks, Senator.


SENATOR WARNER:  One more neutral.


RICH JAMES:  Good afternoon again, I am Rich James, Sarpy County Treasurer, and I also am the assessor of motor vehicles in Sarpy County.  I am neutral on this pretty much.  I just wanted to point one thing out.  In Section 2, which follows, the same conversation you heard earlier on Indians not being exempt from taxes, if, in fact, any of these things we ..create are truly fees as opposed to a tax, this bill exempts nonresident military who claim another state as their residence, it exempts them from paying these fees.  The Soldiers and Sailors Relief Act, as I understand it, does not exempt military members who choose to register their cars in Nebraska, does not exempt them from fees.  So I think the Committee might want to take a look at that.  Sarpy County has 87 percent of the nonresidents vehicles in the state of Nebraska of which there are twelve thousand and change total as of the end of 195, Sarpy county has almost 10,500 of those.  I would suggest some of those members probably will choose to go back to their home state if we go to a fee based system because- they may discover it is cheaper inlet's say Illinois than it is to do it here with a fee-based system, but many of them Will find that it is still cheaper here even though the cost of living for them on vehicles is going to go up.  I just wanted to bring that to the Committee's attention because when you start talking ten thousand plus vehicles at whatever, pick a dollar ,amount, we are talking quite a few dollars to Sarpy County as well as the rest of the state.  That is all I have, if you have any questions.  (Exhibit 28.)


SENATOR WARNER:  Currently that is how many are registered?


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RICH JAMES:  At the end of '95




RICH JAMES.  In Nebraska, there are 12,018 at the end of 1995, and I have no reason to think those numbers have changed significantly.


SENATOR WARNER:  18 the age of the motor vehicles, would you say, there is nobody who would probably know ...  would you say that they tend to be less than three to four years old or would they tend to be older?


RICH JAMES:  With the nonresidents, I would say...


SENATOR WARNER:  Do you have any idea?


RICH JAMES:  ...  making a wild educated guess, I would say in the four-year range.


SENATOR WARNER:  The reason I ask, there was an article that UNO business put out here just within a month or so and it was comparing Omaha's taxes with other states ...  not other states but other towns in the country, and they cited automobiles as one, and property tax as two of the places where we were high, but, I'm...  it struck me that if military are registering here and we have these high registration fees, it must be higher in their home state if they...  if, in fact, they have that option to choose.


RICH JAMES:  Well, the nonresident, who claims another state as his state of residence, does not pay property tax here in the State of Nebraska.




RICH JAMES:  Okay, so he is either going to register his car for $26 the first time he registers it or a truck for $29.


SENATOR WARNER:  Oh, okay, I forgot.


RICH JAMES:, So a fellow from Louisiana...


SENATOR WARNER:  Strike.  Yup.


Committee on Revenue LB 271

February 27, 1997

Page 76


RICH JAMES:  So, which is rather cheap.  I don't know how many other states you are going to find...




RICH JAMES:  ...  a car registered, and that is only the first year when he buys a plate.  The next year it costs him $20 to register his car for a year.  So it is...a lot of people find that is cheaper.  I'll say this.  When they buy a new one, many of them will go back to their home state, and I can't give you a number on this, let's say they live in Oregon, they will go back to their home state and register it in Oregon, because they don't have to pay any sales tax, or pick a variety of other states with lower sales tax.  They will register it in Oregon and a year later they will be registering at my counter, at which point we charge them no property tax and they got out of paying sales tax.  Now I can't give you numbers on that, but I know it happens.


SENATOR WARNER:  Okay.  Thank you very much.  That will ...  is everyone done that is neutral?  That will then complete the hearing before...I do have a letter from the Department of Motor Vehicles indicating their review of the bill, with some suggestions, that may be needed for the Committee to look at, that I won't take the trouble to read it, but it will be made part of the record and one of the suggestions for possible amendments.  So with that, that will complete the hearing on LB 271.  We will go to LB 429, Senator McKenzie, and our little sheet shows that you were to start at 4:30 and here you are.




SENATOR WARNER:  Excuse me, not quite, about a half hour off.


SENATOR KRISTENSEN:  Well, it was technically the end,'s okay.


SENATOR WARNER:  Yeah, I'm a half hour off.  Well, not bad.


SENATOR McKENZIE:  Well, Senator Warner, I have to tell you it is a pleasure to be here as in Natural Resources Committee we are, we have Just spent 45 minutes talking about brain worms, so...