On May 20, Judge Merritt ruled LB 701 unconstitutional. He ruled that the provision that caused the tax to apply only to three of the Republican River Basin NRDs violated the closed class section of the Nebraska Constitution. He also imposed an injunction on the collection of the property tax portion of the bill. The occupational tax, which is the bulk of the money, remains in place.
There were three primary questions the Court addressed.
The first dealt with - is the tax a State obligation that the State should fund and not the tax payers of the Republican River Basin? The Court ruled that it was acceptable to place the tax on the property tax payers of the Basin because it was of primary benefit to the local people while at the same time it happened to help the State in its obligation.
The second dealt with - is the transfer of tax obligation from the State to the local district legal? The Court ruled that it is legal.
The third dealt with - is the limit on who can be taxed constitutional? The tax was only placed on the property tax payers and the irrigated land of three NRDs to the exclusion of all others. The Court ruled that this was unconstitutional as it unfairly targeted one segment of the population.
The Court has ruled that the tax on the irrigated land is acceptable but any tax on non-irrigated property in the Basin is not acceptable.
Court Order
PDF File
