Nameplate capacity tax distribution to community colleges advanced

Lawmakers gave first-round approval May 1 to a proposal intended to correct an unintended consequence of a recent change in the way community colleges are funded.

Owners of private renewable energy generation facilities pay a nameplate capacity tax in lieu of personal property taxes on equipment used to generate electricity.

Niobrara Sen. Barry DeKay, sponsor of LB50, said counties where the infrastructure is located distribute the revenue to local political subdivisions based on the amount of property taxes they levy. When lawmakers eliminated most of community colleges’ property tax levy authority in 2023, he said, they inadvertently reduced nameplate capacity tax revenue to community colleges by a corresponding amount.

Community colleges lost approximately $550,000 in nameplate capacity tax revenue last year, DeKay said, and the amount will increase over time.

To correct the problem, he said, LB50 would require counties to allocate 5% of nameplate capacity tax revenue to the community college area in which the renewable energy generation facility is located before distributing the rest to other political subdivisions.

The bill advanced to select file on a vote of 38-0.