Borrowing authority for municipalities proposed

Cities and towns in Nebraska would have the express authority to borrow funds to purchase property or construct improvements under a bill heard by the Urban Affairs Committee Jan. 20.

LB152, introduced by the committee, would allow municipalities to borrow from state- or federally-chartered banks, savings banks, building and loan associations and savings and loan associations.

Under the bill, funds could be borrowed for any purpose for which a municipality is authorized by law to purchase property or fund improvements. Loans would not be restricted to a single year and could be repaid in installments.

Lynn Rex of the League of Nebraska Municipalities testified in support of the bill. Municipalities sometimes need to borrow on a short-term basis to deal with cash flow issues and for cost-saving purposes, she said.

Rex said that some city attorneys believe this authority to borrow funds already exists, and having the authority spelled out in state law would remove any ambiguity.

“We need to have express authority,” she said.

Jack Cheloha, representing the city of Omaha, also supported LB152. He said Omaha likely would rarely use the bill’s authority but would like to see state law be made consistent on the subject.

“It typically isn’t necessary for us to borrow on a short-term basis,” Cheloha said.

Mary Jane Truemper of Omaha testified in opposition to the bill, saying it was moving too fast through the legislative process. In addition, she said, while voters know exactly what cities and towns use bonds for, that may not be the case when municipalities borrow from financial institutions.

“I also think the term public purpose is a little ‘loosey goosey,’” Truemper said.

The committee took no immediate action on the bill.