LB 306 (1998) - Motor Vehicle Tax and Fee Laws

As introduced, LB 306 would have created the Government Efficiency Commission and would have required certain local government capital construction projects to be approved by the commission. However, the bill was substantially changed by the adoption of various amendments and its original provisions were eliminated. As amended, LB 306 contains provisions that change various dates in the property tax administration calendar and provisions relating to property tax levy procedures, the allocation of property tax levy authority, special elections for overriding property tax levy limits, and motor vehicle taxes and fees.

LB 306 makes several changes to the property tax calendar. For instance, the bill amends Neb. Rev. Stat. sec. 13-508 (the Nebraska Budget Act) to require each governing body responsible for certifying a property tax levy pursuant to Neb. Rev. Stat. sec. 77-1601.02 to file with the levying board, on or before October 14 each year (formerly October 31), a certified copy of any resolution passed setting a tax levy. Also, the bill changes from August 31 to August 20 each year the date by which the county assessor must certify, to each governing body empowered to certify a tax levy, the current taxable value of the taxable real and personal property subject to the applicable levy. The bill changes a number of other dates in the property tax calendar as well.

Additionally, LB 306 was amended to include portions or provisions of four bills.

The provisions of the Revenue Committee amendment to LB 935 were added to LB 306. The amendment eliminates the "preliminary" property tax levy, which was first enacted by Laws 1996, LB 1085. Thus, LB 306 outright repeals Neb. Rev. Stat. sec. 77-1601.01 and makes related changes to Neb. Rev. Stat. secs. 77-1601, 77-1601.02, and 77-3445. The bill changes, from November 1 to October 15, the date by which a county board of equalization must levy taxes each year for the current year. The bill also provides that the property "tax request" for the prior year will be the property tax request for the current year for purposes of the levy set by a county board of equalization, unless the governing body of the county, municipality, school district, sanitary and improvement district, natural resources district, educational service unit, or community college passes by a majority vote a resolution or ordinance setting the tax request at a different amount. Current law requires a special public hearing to be held before such a resolution or ordinance can be adopted, and LB 306 requires the notice of public hearing to contain certain information, including the dollar amount of the prior year's tax request and the tax rate needed to fund that request; the tax rate that would be needed to fund last year's tax request if applied to the current year's valuation; and the proposed dollar amount of the tax request for the current year and the property tax rate that would be needed to fund that tax request. Any levy that is not in compliance with Neb. Rev. Stat. secs. 77-1601 and 77-1601.02 will be construed as an unauthorized levy pursuant to Neb. Rev. Stat. sec. 77-1606.

Provisions of LB 1054 were added to LB 306. The bill provides that the property tax levy authority of (1) all political subdivisions other than school districts, community colleges, natural resources districts, educational service units, cities, villages, counties, and sanitary and improvement districts (e.g., a rural fire protection district) and (2) political subdivisions subject to the rules of Neb. Rev. Stat. sec. 77-3443(2) governing the allocation of property tax levy authority (e.g., a city airport authority established under the Cities Airport Authorities Act) will be determined by the county board of the county in which the greatest portion of the political subdivision's valuation is located. The bill also provides that in the case of any political subdivision that receives taxes from more than one county and that is subject to the rules of Neb. Rev. Stat. sec. 77-3443(1) governing the allocation of property tax levy authority, the political subdivision's property tax levy authority can be allocated only by the county in which the greatest portion of the political subdivision's valuation is located. However, if an allocation by a county would cause another county to exceed its levy authority under Neb. Rev. Stat. sec. 77-3442(8), the bill provides that "the second county may exceed the levy authority in order to levy the amount allocated." (LB 306 also provides that Neb. Rev. Stat. sec. 773443 applies to the "additional" property tax levy permitted by Neb. Rev. Stat. sec. 3-504(12) for airport authorities established under the Cities Airport Authorities Act.)

Several provisions of LB 994 were amended into LB 306. One such provision requires political subdivisions that are subject to the rules of Neb. Rev. Stat. sec. 77-3443 governing the allocation of property tax levy authority to submit, on or before August 1, a "preliminary request for levy allocation" to the county board, city council, or village board that is responsible for levying such taxes and requires such county board, city council, or village board to determine a "final allocation of levy authority" for its political subdivisions. Also, the bill allows a political subdivision (other than a Class I school district) that is subject to the rules governing the allocation of levy authority to exceed a final levy allocation with voter approval if the vote to exceed the allocation is "approved prior to October 10 of the fiscal year which is to be the first to exceed the . . . final levy allocation." However, if a political subdivision fails to make a preliminary request for levy allocation, the bill prohibits the political subdivision from using the levy allocation override procedures which otherwise could have allowed the governing body of the political subdivision to ask voters to override the final allocation of levy authority. The bill also provides that no final levy allocation may be changed after September 1, except by agreement between the political subdivision and the governing body that determined the final levy allocation.

Other provisions that also relate to the procedures for holding an election to exceed a property tax levy limit or a final allocation of levy authority, such as a provision which allows a resolution or petition calling for a special election to override a property tax levy limit or final levy allocation to be filed with the county clerk or election commissioner no later than 30 days before the date of the election are also included in the bill. (The bill makes a coordinating change to Neb. Rev. Stat. sec. 32-559 so that the usual 50 days allowed for filing for a special election does not apply to such an override election.) Furthermore, the bill permits a political subdivision (other than a Class I school district) to rescind or modify a previously approved excess levy authorization before its expiration at a primary, general, or special election, but the vote to rescind or modify must be approved before October 10 of the fiscal year for which it is to be effective.

LB 306 also provides that a property tax levy to pay for a public library; museum; war memorial, monument, or statue; and visiting community nurse, home health nurse, or home health agency is subject to the property tax levy limits of Neb. Rev. Stat. sec. 77-3442 and the allocation rules of Neb. Rev. Stat. sec. 77-3443. The bill also provides that the maximum levy established by Neb. Rev. Stat. sec. 77-3442(6) for incorporated cities and villages includes amounts levied to pay for such a public library; museum; visiting community nurse, home health nurse, or home health agency; or war memorial, monument, or statue, and that the maximum levy established by Neb. Rev. Stat. sec. 77-3442(8) for counties includes amounts levied to pay for such a public library or museum.

Provisions relating to motor vehicle taxes and fees are also changed via the passage of LB 306. The bill provides that in-lieu-of-tax payments made by public power districts are in lieu of motor vehicle taxes and fees. The bill requires a county treasurer to distribute motor vehicle tax funds upon receipt from the State Treasurer to taxing agencies within the county in the same proportion that the levy of each such taxing agency bears to the total of such levies of all taxing agencies in the county. If a taxing district has been annexed, merged, dissolved, or in any way absorbed into another taxing district, the bill requires any apportionment of motor vehicle tax funds to which such taxing district would have been entitled to be apportioned to the successor taxing district which assumes the functions of the former taxing district. The bill also requires the Department of Motor Vehicles to on or before March 1 of each year-furnish to the State Treasurer a tabulation showing the total number of original motor vehicle registrations in each county for the immediately preceding calendar year, which will be the basis for computing the distribution of motor vehicle tax funds as provided for in Neb. Rev. Stat. sec. 60-305.15(2) (which requires the State Treasurer to distribute all funds in the Motor Vehicle Tax Fund to the county treasurers 'in each county in the same proportion as the number of original motor vehicle registrations in each county bears to the total of all original registrations within Nebraska in the immediately preceding registration year). The bill also provides that motor vehicle tax receipts constitute "other actual receipts" for purposes of Neb. Rev. Stat. secs. 79-1018 and 79-1018.01, which deal with district formula resources and local system formula resources for purposes of Nebraska's school finance law.

LB 306 defines the phrase "assembled motor vehicle" to mean "a motor vehicle that is materially altered from its construction by the removal, addition, or substitution of new or used major component parts." The bill provides that the "make" of such a motor vehicle will be "assembled" and its "model year" will be the year in which the motor vehicle was assembled. The bill also provides that the base tax for assembled passenger cars, trucks, utility vehicles, and vans up to five tons will be $60 and that the base fee for assembled passenger cars, trucks, utility vehicles, and vans up to five tons will be $5. With respect to both motor vehicle taxes and fees, the bill requires all assembled motor vehicles other than passenger cars, trucks, utility vehicles, and vans up to five tons to follow the schedules of the motor vehicle body type. The bill also provides that if a motor vehicle registration expired during 1997, the taxes and fees on renewal must be calculated under the law as it existed on December 31, 1997, regardless of when the taxes and fees are paid, and beginning January 1, 1998, permits certain persons (e.g., the transferor, lessee, or last registered owner of a motor vehicle) to timely file a claim for credit or refund of the fee and tax for the unexpired months in a registration period. The bill also provides that any person entitled to a credit or refund of tax pursuant to Neb. Rev. Stat. sec. 77-1240.03, as such section existed before January 1, 1998, must be subject to the credit and refund provisions provided for by the bill.

The bill eliminates references to the Property Tax Administrator (PTA) in Neb. Rev. Stat. sec. 60-3005 and replaces them with references to the Department of Motor Vehicles (DMV). For instance, the bill requires the DMV rather than the PTA to (1) determine the value of new passenger cars, trucks, utility vehicles, and vans weighing up to five tons and (2) certify such determination to the proper county official of each county by November 15 of the prior year (formerly September 1 of the prior year). Any affected person may file with the Tax Equalization and Review Commission (TERC) an objection to the DMV's determination, but on such appeal, the DMV's determination of the manufacturer's suggested retail price will be presumed to be correct, and the party challenging the determination will have to bear the burden of proving it incorrect. (The bill also makes a coordinating change to Neb. Rev. Stat. sec. 77-5007 giving TERC the power and duty to hear and determine appeals of decisions of any county board of equalization granting or denying an exemption from motor vehicle taxes and fees and DMV decisions determining the taxable value of a motor vehicle.) The bill also provides that a tax-exempt organization may appeal to TERC a decision of a county board that denies the organization an exemption from the motor vehicle tax.

The property tax administration calendar is also changed by LB 306. The bill provides that the county assess or or county clerk must certify to the PTA by November 27 each year the total taxable value and Certificate of Taxes Levied. The bill also requires the tax list to be completed and delivered to the county treasurer on or before November 22 each year.

The portions of LB 1153 concerning the due date and manner of paying property taxes by a railroad company and a public service entity were amended into LB 306. The bill provides that such taxes are due and payable in the same manner as other property taxes pursuant to Neb. Rev. Stat. sec. 77-203. As amended by Laws 1998, LB 1104, sec. 77-203 provides that (1) "[a]ll property taxes levied for any county, city, village, or other political subdivision" are "due and payable on December 31 next following the date of levy except as provided in Neb. Rev. Stat. sec. 77-1214" and (2) "[c]ommencing on that date taxes on real property will be a first lien on the property taxed until paid or extinguished as provided by law" and "[t]axes on personal property will be a first lien upon the personal property of the person to whom assessed until paid."

LB 306 passed with the emergency clause 42-1 and was approved by the Governor on February 12, 1998.