NACO Says Jefferson County Will Not Lose $8.5 Million Grant Under New Tax Relief Plan

By Gordon HopkinsWhile there are still a number of unanswered questions about how Governor Jim Pillen’s recently passed property tax relief package, LB (Legislative Bill) 34e, will impact local governments, one question has been answered: Board approved bonds are exempt from the zero/inflation index cap imposed by the bill.This comes as a relief to Jefferson County Commissioners, who feared they may have to abandon $8.5 million in money from the federal grant money intended for the long-delayed PWF (Pawnee City, Wymore, Fairbury) Road project. One element of that plan, a cap on the ability of local municipalities to raise tax revenue has caused consternation among some municipalities. This cap is set at the rate of inflation or zero percent, whichever is higher. There are some exceptions, such as law enforcement and emergency services.There is also an exemption for public approved bonds, meaning a bond that was approved by a vote of the people. What was not clear was if that exemption also applied to board-approved bonds.Commissioner Mark Schoenrock reached out to NACO (Nebraska Association of County Officials) legal counsel and explained, “After over three years of intense effort, Jefferson County received $8.5M in federal Community Project Funding from Senator Fischer and Congressman Smith to complete the PWF road project connecting Jefferson and Gage counties. NDOT (Nebraska Department of Transportation) has received the $8.5M and will administer the project. The project is currently in environmental review and engineering drawings and specifications are near complete.”“Estimated cost is $12.7M, so Jefferson County board will have to bond approximately $4.2M to complete the project in late 2025 or early 2026,” said Schoenrock. “It would be difficult or next to impossible for our county budget to pay for this bond within the zero/inflation index cap imposed by LB 34.”NACO legal counsel responded, “Yes, provided a publicly approved bond or a board approved bond is approved according to law and meets the definition below, the bonds would be exempt from the Property Tax Growth Limitation Act.”Legal counsel further explained, “‘Approved’ is not specifically defined; however, ‘approved bonds’ is.”Within section 1 of AM84 to AM73 to LB34 which has become the property tax measure being considered by the Legislature this special session, “approved bonds” is defined as:For purposes of the Property Tax Growth Limitation Act:(1) Approved bonds means bonds as defined in subdivision (1) of section 10-134 that are approved according to law, excluding any bonds issued to finance a project or projects if the issuance of bonds for such project or projects was the subject of a general obligation bond election held at the most recent regularly scheduled election and was not approved at such electionSection 10-134 defines, bond as any bonds, notes, interim certificates, evidences of bond ownership, bond anticipation notes, warrants, or other evidence of indebtedness;From section 4 of AM84 to AM73, it states: A political subdivision may increase its property tax request authority over the amount determined under section 3 of this act by: 1. The amount of property taxes budgeted for approved bonds.Julie Condon, Committee Clerk for the Office of Senator Tom Brewer (R-District 43), told FJN she had some doubts about that interpretation and would be reaching out to the Revenue Committee’s legal counsel for further clarification.

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