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Archive for Tuesday, November 2, 2010

Lawsuit challenges Nebraska tax on irrigated land in Republican River basin

November 2, 2010

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The Nebraska Supreme Court will decide whether a special tax levied on irrigated land in the Republican River basin between 2007 and last summer was legal, a ruling that could undercut the state's efforts to comply with the Republican River water agreement.

A group of 91 landowners hope the court will reject the irrigated land tax for many of the same reasons it decided last year to reject a property tax imposed by three natural resource districts to pay for increasing Republican River flows downstream to Kansas. Both those taxes were created by the same 2007 law, LB701.

The landowners say it's not fair to tax one part of Nebraska to pay for something that benefits people who don't pay the tax because the state is responsible for complying with the river compact.

"The legislative history of LB701 clearly indicates that the Legislature knew and intended that no other natural resources district would ever gain authority to levy the occupation tax authorized in LB701," Lincoln lawyers Janelle Lust and Katherine Vogel wrote on behalf of the landowners.

But the state argues the tax on irrigated land is different than the property tax that was declared unconstitutional because anyone who doesn't want to pay the tax can simply stop irrigating their land. And the state argues that the landowners paying the tax on irrigated land benefit from it because the money is supposed to pay for measures that will increase the amount of water available in the Republican River.

"Appellants object to the occupation tax because they want other Nebraskans to pay for managing the water they use and from which they receive a benefit through increased crop yields and profits," lawyers for the state and natural resource districts wrote.

A Lancaster County District judge upheld the tax on irrigated land in a March ruling that the landowners appealed. The case is scheduled to be argued before the Nebraska Supreme Court on Wednesday.

Since this lawsuit was filed, state legislators approved an amendment to the law authorizing the tax on irrigated land. That change, which took effect in July, makes the tax available to any natural resource district that has had to develop a formal water-management plan. That's why this lawsuit applies only to the taxes collected between 2007-2010.

The Republican River starts in eastern Colorado, flows into Kansas and up to Nebraska and returns to Kansas in Republic County. Its basin covers almost 25,000 square miles. Under a 1943 river compact signed by the three states, 49 percent of the river's water is allocated to Nebraska, 40 percent to Kansas and 11 percent to Colorado.

In 1998, Kansas sued Nebraska, alleging its neighbor to the north violated the compact by allowing thousands of wells to tap the river and its tributaries.

The three states settled that lawsuit, and the U.S. Supreme Court's decree approved the settlement. But Kansas officials have continued to complain that Nebraska is taking too much water. Kansas and Nebraska are working with an arbitrator to resolve their latest disagreement over the river.

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