Revolving fund alternative is cutting water allocations

LB 651, the Water Resources Revolving Loan Fund Act, was heard last week in the Natural Resources Committee. I would like to discuss it, other related water issues, and some amendments I offered to the committee.

LB 651 was introduced to establish a state fund for Natural Resources Districts -- NRDs -- to use as a financing mechanism for local water resource projects to assist with water management. The concept is similar to the Drinking Water Revolving Fund.

LB 651 would be funded from the $9 million owed by the Republican NRDs to the Water Contingency Cash Fund. When these funds are repaid according to LB 1094 from 2008 into the Water Contingency Cash Fund, LB 651 would transfer these funds to the Water Resources Revolving Loan Fund to be available as loans to NRDs across the state for local projects. This would be a tool for NRDs to use into the future, because water issues across the state are not going away.

The current occupation tax can still be used to repay funds owed the state by the NRDs. If the occupation tax were found unconstitutional, then the Revolving Loan Fund would be empty until the Legislature authorized another source.

With no extra funding source for NRDs to help with local water issues, the only alternative is allocation cuts. Depending on weather, allocations could be cut to 4 to 6 inches across the basin. Cuts have always been a local option, and can still be done.

Funding in LB 701 allowed NRDs to maintain reasonable allocations for economic stability in the basin. Without this, we will have significant allocation cuts.

What are the drawbacks or benefits to water allocation cuts? Benefits include simplicity and no additional taxes. Drawbacks include farmers planning for substantially lower yield goals by applying water evenly, or planning to irrigate only half their acres and leaving half the acres non-irrigated. Then property taxes could be lowered on the non --irrigated land to dry land values, alternating between two different pivots, one irrigated one year, and the other the next.

Remember, as yields or irrigated acres are reduced; fewer inputs of seed, fertilizer, and fuel will be needed. Less trucking and grain to sell will result in less money to be spent in the local economy. Locally, economic development is tough already and will be even harder to achieve with reduced yields, profits, inputs, and services needed in the area. This is not a good option, because it would reduce property tax revenues year to year for counties, schools, and fire departments, which already have tight budgets.

Some have said, "This is a state issue, the state should pay, and nothing will change." This simply is not true. Either the state has to buy surface water or augment the stream in water-short years or cut allocations. With the current economy, the state will not throw much money at the issue when they can cut allocations! Provided we continue to receive abundant rains, we will not have to use the lower allocation approach.

I offered two amendments to LB 651 for the Natural Resources Committee to consider. One amendment would create a new law that automatically refunds unconstitutional property taxes without the need to file a claim. This would apply to LB 701 property taxes. The current law states you had to file a protest within 30 days of paying your property taxes. This simply is not RIGHT! If you paid them and they are determined to be unconstitutional then you deserve your money back!

Another amendment I presented to the Natural Resources Committee would remove controversial language believed by the district court to have created special legislation. The new language would allow an NRD in a river basin determined fully or over appropriated to levy the current occupation tax.

As always, please do not hesitate to contact me with opinions, question, or concerns.