LINCOLN, Neb.—A Nebraska Supreme Court ruling leaves water officials with little more than hope as they try to get into compliance with the Republican River water agreement:
Hope that water supplies are plentiful; hope that a tax on irrigated land isn’t also struck down by the court.
In a ruling released Friday, the Nebraska Supreme Court upheld a lower court decision that special property taxing authority approved by the Legislature is unconstitutional. It means residents of southwest Nebraska won’t be paying more property taxes to help increase Republican River flows downstream to Kansas. Colorado is also part of the compact.
The ruling has “really thrown a wrench into things,” said Mike Clements, manager of the Alma-based Lower Republican Natural Resources District.
Water officials and state lawmakers said they didn’t know of any immediate plans to try to replace the property tax authority with another revenue source.
The ability of natural resources districts in the river basin to collect more property taxes was granted by state lawmakers in 2007, at the same time Kansas was complaining of Nebraska’s overuse of Republican River water.
Kansas says Nebraska has violated the agreement by using billions of gallons in 2005 and 2006 more than Nebraska had any right to. Now, Kansas wants millions of dollars from its northern neighbor.
Natural resources districts in the Republican River basin already set property taxes. But the 2007 law gave them the authority to collect more.
The money collected was supposed to repay bonds that would finance measures to send Kansas the water it is owed in future years. Those measures included buying water from farmers, paying farmers to take land out of irrigated production and maybe even pumping groundwater into the river to send to Kansas.
The high court said the additional property taxing authority was primarily for state, not local, purposes, and was therefore unconstitutional.
“It is clear from the legislative history that LB701 has the purpose of ensuring the state’s compliance with the compact and additionally addressing the water problems in the Republican River basin,” says the court’s opinion, written by Judge Lindsey Miller-Lerman. The court pointed to comments made by managers of the three natural resources districts in the basin that received taxing authority under LB701.
The court added that the “plain language” of the law “is to ensure compliance with the compact.”
Attorney General Jon Bruning, responding to the ruling, said “compact compliance will always require a partnership between local managers and users and the state.”
“The nature of the partnership is what’s at issue here. We respectfully disagree with the court’s ruling.”
The high court’s reason for concluding that the taxing authority in LB701 is unconstitutional differs from the reason given by Lancaster County District Judge Paul Merritt in May. He ruled that the taxes amounted to unconstitutional “special privileges” by allowing just three of the state’s natural resources districts—all in the Republican River basin—to set the property taxes.
A pending lawsuit from some of the same landowners who thwarted the property tax poses another threat to the 2007 water law.
The second lawsuit argues that another tax authorized by the law—a per-acre tax on irrigated land—is unconstitutional. If the tax stands, it could generate money for the compliance measures.
But the new tax is too new, and untested, for bond sources to be certain that revenue from the tax would retire any bonds issued.
Sen. Mark Christensen of Imperial, who shepherded LB701 through the Legislature two years ago, said he may try to pass a measure this year to remove a requirement that revenue from the tax on irrigated land be used to pay off bonds.
He may also have a request for Gov. Dave Heineman and the Legislature: That they forgive an approximately $9 million loan from the state that was used to pay farmers for sending water to Kansas.
The loan was supposed to be repaid with the special property taxes and the tax on irrigated land.
About $8 million has already been collected. Water officials say it is unclear what can be done with it in light of the court ruling Friday and pending lawsuit.
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