Bill would provide for optional state aid to counties

The Legislature would have more flexibility in determining the amount of state aid to counties under a bill heard by the Revenue Committee Jan. 27.

The county aid program for fiscal year 2011-12 requires that the Legislature appropriate between 0.0075 percent to 0.0125 percent of the statewide property tax valuation for distribution to counties. The funds are then allocated using a base amount of $30,000, with the remaining balance distributed to each county based on real and personal property valuation.

The program’s minimum appropriation for the next fiscal year is estimated to be $11.6 million.

LB96, introduced by the committee, would permit the Legislature to choose not to fund the county aid program by allowing appropriations between 0 percent and 0.125 percent of the statewide property tax valuation.

Cornett contrasted the bill with LB383, which she introduced at the request of the governor. Instead of completely eliminating state aid to counties, which LB383 would do, LB96 would give the Appropriations Committee more flexibility in determining the appropriation for state aid for counties, she said.

“It would probably be preferable, in the end, to eliminate [state aid] rather than not tell [counties] how much they are getting year to year,” Cornett said.

Hall County supervisor Pamela Lancaster spoke in opposition to LB96. She said that balancing the state’s budget on the backs of local governments would leave them with only one option.

“At this point, every single dollar counts,” Lancaster said. “We have no place to go but to property tax.”

Lancaster said Hall County would lose $175,000 if the Legislature enacts LB96, a cut that would come at a time when public safety and infrastructure are lacking. She said the county has had to grind up some paved roads and return them to gravel due to the current lack of maintenance funds.

Deb Schorr, chair of the Lancaster County Board of Commissioners, also opposed the bill. Flat property tax valuations and increased salary and health insurance costs of $2 million annually, coupled with the elimination of state aid, could result in a property tax increase, she said.

“Losing another revenue source, even if it is only 2 percent [of the county budget], is a deep concern,” Schorr said.

Schorr said the county has already cut $1 million from its general fund expenditures. She listed a $400,000 reduction in community mental health center programs as an example of county budget cuts.

Fred Uhe, representing Sarpy County and testifying in opposition, suggested that the Legislature consider removing fee limits set by state law so counties could find revenue sources other than property taxes.

Tapping funds allocated to the state Property Tax Credit program was suggested as an alternative to cutting county aid by Larry Dix, representing the Nebraska Association of County Officials. Citizens would prefer a reduction in property tax credits over a property tax increase, he added.

The committee took no immediate action on the bill.