Sales tax eyed as funding source for water

2013-01-20T03:30:00Z 2013-08-30T14:41:05Z Sales tax eyed as funding source for waterBy ART HOVEY / Lincoln Journal Star

As a guy who owns agricultural land in the Holdrege area, Tom Carlson doesn’t find much to like about drought.

But the new chairman of the Legislature’s Natural Resources Committee makes one exception when he looks at the continuing drought’s effect on the state’s supply of surface water and groundwater.

“It’s helped everybody realize there’s not an unlimited supply and we’d better be careful,” Carlson said. “There’s nothing wrong with that.”

Greater public awareness in agricultural settings and in Lincoln -- where people were cited by police in 2012 for violating watering restrictions -- also could be important as state lawmakers wrestle with the idea of creating a fund to pay for special water challenges.

A year after they agreed to carve out a quarter of a cent from the state’s sales tax for roads, setting aside another quarter of a cent to generate as much as $50 million to $60 million a year is being mentioned as possible funding source for water.

“That may be what we talk about,” Carlson said of upcoming committee action.

Also under discussion is a water users’ fee that would be paid by everybody, regardless of whether they have a town or rural address.

Already in the funding mix is a $3.3 million per year transfer of money from the Environmental Trust Fund to the Nebraska Department of Natural Resources.

Gone is a special checkoff fee on corn and sorghum producers put in place in the 1990s to fund the ethanol industry. It had been generating about $13.5 million per year.

Gov. Dave Heineman and others wanted to extend at least part of that 7/8 cent per bushel collection beyond its 2012 expiration date for water purposes. The Legislature repealed it instead.

“I think we’ve got to find another way to fund,” Carlson said.

Complying with the Republican River Compact and restoring flows in the Platte River for threatened and endangered species are two pressing problems for the state.

Other states suffering from drought are looking in new directions. Texas lawmakers, for example, are talking about building more reservoirs to get through periods of dwindling water supplies.

Dave Aiken, a specialist in water law at the University of Nebraska-Lincoln, sees suggestions for using the sales tax to solve water problems in Nebraska as “local push-back” from irrigators and others who want all taxpayers to help pay for solutions.

“They’d rather pay for this on the state’s nickel rather than the local property tax nickel,” Aiken said. “So I really think that’s the issue.”

He saw pressure from ag groups to repeal the water checkoff as playing out along similar lines: “’We like the money; we don’t like the tax. So let’s figure out a tax we like better. And a tax we like better is always a tax that somebody else pays.’”

Jay Rempe of the Nebraska Farm Bureau Federation, the state’s largest farm organization, wasn’t ready to endorse the water sales tax idea.

“I will say our policy supports a broad-based funding source for water and the funding needs that are there,” Rempe said. “Our members have always believed this is a statewide issue and that everybody benefits from proper management of our water resources.”

Mark Broham, executive director of the Environmental Trust, said its board typically doesn’t make policy endorsements. But Broham himself thinks the size of water challenges goes beyond the magnitude of what can be done with $3.3 million per year.

“I think the sales tax idea is something that needs to be strongly considered because of the amounts of money that are needed for this problem.”

Aiken didn’t go that far.

“Arguably, there’s justification for some state investment in this area,” he said. “But in my opinion, there needs to be some balance between state and local.”

Natural resources districts and their locally elected boards of directors are the ones who regulate groundwater, Aiken pointed out.

“I think, if we believe in local control, then I think there needs to be a substantial local (funding) component to go with that.”

On the other hand, “if the point of this funding effort is to get local entities, NRDs, out of the financing business, one, I think that’s a mistake in policy, and, two, it’s not going anywhere.”

But Carlson said it makes no more sense to put the whole burden for funding statewide water solutions on agriculture than to make Lincoln and Omaha responsible for municipal water solutions because they use 90 percent of the municipal water.

“It’s absolutely ridiculous to say to agriculture, ‘You’re responsible for all this. You pay for the whole thing.’”

Reach Art Hovey at 402-473-7223 or

Copyright 2015 All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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