County sales tax to pay certain federal judgments authorized

A county may impose a sales tax to help pay a federal judgment against it under a bill passed by lawmakers April 18.

Sen. Myron Dorn
Sen. Myron Dorn

Introduced by Adams Sen. Myron Dorn, LB472 authorizes a county board to adopt a resolution to impose a sales and use tax of 0.5 percent on transactions within the county to pay a qualified judgment, which the bill defines as a judgment rendered against a county by a federal court for a violation of federal law.

Dorn has said the proposal is intended to help the residents of Gage County. In 2016, a federal judge awarded more than $28 million in damages to the six men and women wrongfully convicted of the rape and homicide of a Beatrice woman in 1985. The individuals, commonly known as the “Beatrice Six,” had sued Gage County in federal court after DNA evidence exonerated them.

The state tax commissioner will administer the tax and collect any sales and use tax imposed under LB472 in the same way that state sales and use tax is collected. The commissioner will remit the monthly proceeds to the county after deducting a 3 percent administrative fee.

The tax will end after the judgment is paid or after seven years, whichever is earlier, and it may be used only to pay judgments of more than $25 million.

Counties currently may impose a sales and use tax to pay for public safety services and interlocal agreements. LB472 prohibits a county from imposing that tax if it imposes the one authorized by the bill.

The bill requires any county that imposes a sales and use tax in order to pay a qualified judgment to set its property tax levy at the 50-cent maximum for each year it imposes the sales and use tax. The county must use revenue from that levy to pay the judgment.

Senators voted 43-6 to pass LB472.

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