Bill would reinstate aid to municipalities, counties

State aid to municipalities, counties and natural resources districts (NRDs) would be reinstated under a bill heard by the Revenue Committee Feb. 20.

Under LB1053, introduced by Wilber Sen. Russ Karpisek, the first $300,000 in excess funds under the Municipal Equalization Fund (MEF) would be distributed to municipalities. Funds would be distributed only to municipalities that have not adopted a local option sales tax by Jan. 1 of that fiscal year.

Karpisek said after eliminating aid in 2011 to meet state obligations, now is the time to give it back.

“I think it would do just as well to give back to cities, counties and the NRDs the state aid so they would not have to raise their property taxes,” he said. “We have a lot of money in the [state’s cash reserve fund]. I don’t know why we don’t go back and reinstate some of the things we cut.”

The bill also would require the Legislature to appropriate additional aid to counties based on a percentage of the total real and personal property valuation of all counties. The percentage would not be less than .0075 percent and no more than .0125 percent. Of that amount, each county would receive $30,000 and the remaining funds would be distributed to counties proportionally.

Renee Fry, executive director of the OpenSky Policy Institute, testified in support of the bill. She said a lack of state aid has placed pressure on cities and counties to cut services.

“Local service responsibilities have increased while state support for local governments has decreased,” she said. “Restoration of state aid would also be highly likely to bring down property taxes.”

Jack Cheloha, representing the city of Omaha, also supported the bill. He said that cities provide many services, all of which require funding.

“Through the years state aid to cities was something we could count on, something that was sustainable,” he said. “Now that times are better, we think anything you could do to help us out would be great because we’d like to rebuild the relationship between local governments and the state.”

LB1053 includes a provision that would authorize the Legislature to appropriate additional aid to municipalities, although it would not be required. Any aid would be distributed based on a ratio of the specific municipality’s population to the total population of all incorporated municipalities.

The Legislature also would be authorized to appropriate aid to NRDs based on the total amount of property taxes levied by a specific NRD in relation to the total amount of property taxes levied by all NRDs in the state.

The aid under the bill would take effect on July 1, 2014.

No one testified in opposition to the bill and the committee took no immediate action on it.