LINCOLN, Neb.—Residents of the Republican River basin angry about paying higher property tax bills for a water problem they say is a statewide responsibility have taken their argument to the state Supreme Court.
In a lawsuit filed Tuesday, nine residents asked the state’s high court to stop new property taxes from being passed along to people in the region that covers a wide swath of southwest and south-central Nebraska. The taxes were approved to help Nebraska win a high-stakes water battle that crosses state borders, and the Republican basin is at the center of the fight.
Losing could make the state liable for millions of dollars in damages to Kansas and force a shutdown of irrigation in a region whose economy heavily depends on it.
But plaintiffs in the lawsuit say the property taxes aimed at helping meet a state compact unfairly target only residents of the basin. That, they say, violates an article in the state constitution that says, “the state shall be prohibited from levying a property tax for state purposes.”
Meeting terms of the compact that directs how much Republican River water each state can have is a responsibility, “shared by all Nebraska citizens, not exclusively those residing in the vicinity of the Republican River,” the lawsuit says.
“We regret having to take this action but taxes have only been levied against real estate in the Republican River basin to pay for the state’s … obligation,” said Angus Garey, a McCook resident who is one of the plaintiffs. “Singling out the Republican River basin to tax for compliance with this is not only unfair and unjust, but it’s also contrary to the Nebraska Constitution.”
Among the many defendants in the lawsuit are the Department of Natural Resources and its director, Ann Bleed, who is the state’s chief water official. She declined to comment on the lawsuit.
Earlier this year, Nebraska lawmakers passed a bill that allows the three natural resources districts that control groundwater use in the Republican basin to set tax levies of up to 10 cents per $100 of assessed property value on all Republican River basin residents. The bill also allows them to set fees on irrigated land of up to $10 per acre.
The money is primarily used to buy and lease water to send to Kansas. Resources districts have approved both the fees and taxes, and revenue from them is expected to pay off bonds issued to lease the surface water.
Nebraska is expected to be declared out of compliance next year with the three-state compact that divvies water among Nebraska, Kansas and Colorado. Though compliance is measured over multiyear periods, Nebraska has failed to stay below its water-use limit since reaching a settlement with Kansas in 2002.
Dan Smith, general manager of the Middle Republican Natural Resources District, said people have told him that if the taxes will help resolve the water problem “it’s worth it.”
“What they claim is you can’t collect property taxes for state interests and I guess what I would say is the (new water law) wasn’t specifically set up for state interests,” Smith said of the plaintiffs. “We looked at it as additional authority for the districts.”
“The districts have the authority for groundwater management—if we don’t do it, the state can take over that authority.”
Using its new tax-setting authority, the Middle Republican district, a defendant in the lawsuit, last month set a tax rate of about 4.7 cents per $100 of property value, equal to about $47 for every $100,000 of value. That will show up on tax bills later this year, unless there is action from the state Supreme Court.
Coupled with a fee on irrigated land of $7.04 per acre, the district hopes to collect about $2.93 million, and the money would be enough to pay off the bonds that have already been issued in one year.
The district might then try to rely only on the fees for irrigated acres—and not levy a property tax—to pay off bonds in the future.
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