Neb. court rejects water tax lawsuit

Neb. court rejects water tax lawsuit

	Published : Wed, 31 Oct 2007 23:17 By : Agencies Print this Story

LINCOLN, Neb. (AP) - Residents of the Republican River basin upset about having to pay more taxes to send water to Kansas suffered a setback Wednesday.

The state Supreme Court declined to consider a lawsuit filed by nine residents of the basin who want to scrap new property taxes that natural resources districts in the basin have set to buy surface water to send Kansas.

The new taxing authority is a main pillar of a plan approved by the Legislature to help meet a three-state water compact that Nebraska is expected to break, potentially making the state liable for millions in damages and an irrigation shutdown in the basin.

Plaintiffs had asked the state's high court to take up the case rather than filing it in county district courts. Now they will have to take that route -- one they had tried to avoid for fear it would produce multiple outcomes in multiple courts, causing delays and confusion.

'We did feel, because of the ramifications of the case, there was a strong possibility it could be heard in the Supreme Court,' said Angus Garey, a McCook resident who is one of the plaintiffs. 'Obviously, the court felt otherwise.'

The lawsuit will be filed in one or more district courts in counties where the new taxes are expected to be levied, Garey said.

The sale of bonds to pay for a large water lease agreed to this summer was postponed when the lawsuit was filed, putting more than 100 farmers in a financial fix. Irrigation districts that leased roughly 38,000 acre feet of irrigation water to the natural resources districts to send to Kansas did so with the understanding their farmers would be paid for the water in November.

But because the bonds that are supposed to be repaid with the new property taxes couldn't be released because of pending litigation, neither can a nearly $9 million check to pay farmers for the water.

That problem, 'does not go away,' if the lawsuit is filed in district courts, said Dan Smith, general manager of the Middle Republican Natural Resources District.

'They should look to the state for funding,' said Garey, who added that the taxes already approved by the resources districts should be halted until the court case is resolved.

Garey and other plaintiffs in the lawsuit said the property taxes aimed at helping meet the state compact unfairly target only residents of the basin. That, they said, violates an article in the state constitution that says, 'the state shall be prohibited from levying a property tax for state purposes.'

Meeting terms of the compact that directs how much Republican River water each state can have is a responsibility, 'shared by all Nebraska citizens, not exclusively those residing in the vicinity of the Republican River,' the lawsuit says.

Among the defendants in the lawsuit are the state Department of Natural Resources, and the three resources districts granted the new taxing powers: The Upper, Middle and Lower natural Resources Districts.

Officials with those groups have declined to comment on the case.