Utilities Section
Newsletter League of Nebraska Municipalities
July 2024
Special Session could impact municipal departments By Lash Chaffin, Utilities Section Director On July 25, the Governor called the Legislature into a special session to “fix the property tax crisis.” As part of this effort, the Governor brought forward LB 1. The 140-page bill includes a property tax cap on municipalities and counties which would be the greater of 0% or the consumer price index percentage. There would be exceptions to the cap for approved bonds, emergencies, service relating to imminent and significant threat to public health or safety not previously provided, interlocal agreements relating to public safety, unused property tax authority not to exceed 5%, and a 6% increase in compensation for understaffed law enforcement officers, firefighters, or corrections officers. LB1 would eliminate the existing lid on restricted funds for municipalities and counties. LB1 would not address the impact of tax increment financing issues created by a property tax cap. In the 2024 regular legislative session, the League and Nebraska Association of County Officials (NACO) negotiated a cap which was the greater of 3% or the consumer price index percentage with several important exceptions to the cap and clarifying language. The negotiated agreement also had extensive language on important exceptions. This negotiated cap 206 S 13th Street, Suite 800 Lincoln, NE 68508 (402) 476-2829 Fax (402) 476-7052
and important language was not included in LB 1. The League Executive Board voted unanimously to oppose a property tax cap on municipalities of 0% or the consumer price index percentage, whichever is greater. In addition, the League strongly opposes several other provisions in LB 1 which would be detrimental to municipalities. For example, LB 1 would increase the keno tax from 2% to 5% on municipalities and counties. LB 1 also would allocate “the increase in (state and local option) sales tax revenue received as a result of the changes made by this legislative bill” to the Education Future Fund; municipalities with local option sales tax would receive none of the funds from the expanded sales tax base due to eliminating sales tax exemptions and/or taxing other items previously not subject to a sales tax. In response to LB 1, at the request of the League and the NACO, Sen. Jane Raybould of Lincoln introduced LB 80 which will be supported by the League. LB 80 does include a property tax cap on municipalities and counties but that cap would be the greater of 5% or the consumer price index percentage. LB 80 would include a number of exceptions to this cap including approved bonds, capital
2024
LEGISLATIVE SPECIAL SESSION improvements, service subject to an agreement or modification of existing interlocal agreement, emergencies, unused property tax authority not to exceed 5%, public safety expenses, additional increase approved by voters, and replacement of revenue eliminated or reduced by the Legislature. LB 80 would eliminate the existing lid on restricted funds. LB 80 also includes extensive language to protect tax increment financing. LB 80 also would eliminate the annual pink postcard and possible joint public hearing requirement in current law. LB 80 also would eliminate the existing caps on occupation taxes. Watch the League Legislative Bulletin for ongoing updates on these important issues.
Check out the League’s Facebook page at www.facebook.com/leaguene. Be sure to “Like” us. Lash Chaffin Utilities Section Director Jackson Sash Utilities Field Representative