Bill eliminating city, county and NRD aid clears second round

State aid to municipalities, counties and natural resources districts is a step closer to elimination under a bill advanced from select file Feb. 23.

LB383, introduced by Bellevue Sen. Abbie Cornett at the request of the governor, would remove the aid programs from state law. The bill’s fiscal notes estimates the savings to be $44 million over the next two fiscal years.

Omaha Sen. Brenda Council offered an amendment, defeated on a 6-35 vote, that would have reduced transfers to the Property Tax Credit Cash Fund by $22 million in each of the next two fiscal years.

The fund provides a credit toward real property taxes for landowners in the state. The Appropriations Committee preliminary budget report includes a $220 million appropriation for the cash fund in the next biennium.

Council opposed the bill, saying the most effective, efficient and fair way to provide property tax relief is through state aid to local governments. Therefore, funds should be diverted from the state’s property tax credit to fund state aid programs, she said.

Norfolk Sen. Mike Flood spoke in opposition to Council’s amendment, saying that funding for the Property Tax Credit Cash Fund should be discussed with the budget bills later in the session. The full savings of LB383 is needed to prevent deeper cuts to Medicaid provider rates or state aid for education, he added.

Council introduced another amendment, defeated 4-35, to reinstate the county jail reimbursement program, which is scheduled for elimination next biennium in favor of the new county aid program that would be discontinued under LB383.

Council said counties currently are provided $3.9 million in reimbursement for incarcerating state prisoners. The state has an obligation to pay counties for the service they provide to the state, she said.

Flood spoke in opposition to Council’s second amendment, saying jail reimbursement provides retroactive payment for state prisoners that applies back to the day they were brought into custody.

“I object to the idea that there is a state responsibility created when we arrest somebody,” Flood said.

Cornett also spoke against Council’s amendment. The state has not fully funded jail reimbursement, she said, so reinstating the program would offer false promises.

Omaha Sen. Heath Mello offered an amendment that would have made state aid to cities, counties and natural resources districts optional starting in fiscal year 2013. He said the amendment would give the Legislature flexibility to fund aid programs through the appropriations process during the next budget cycle.

Flood said Mello’s amendment would create an expectation that the next Legislature would fund aid programs. Education funding, Medicaid costs and state operations will require any extra revenue that is available at that time, Flood said, and passing the amendment only would delay local budget planning.

Omaha Sen. Steve Lathrop offered and later withdrew an amendment to Mello’s amendment that would have required the state to resume the aid programs in two years.

Lathrop said senators often express displeasure with unfunded federal mandates, but eliminating a local funding source to meet the state’s budget is the same type of expense shift.

Mello’s amendment was defeated 11-32 and LB383 advanced from select file 34-9.