AGO Opinion 93046

June 10, 1993
Opinion 93046

Distribution of in lieu of the tax funds pursuant to LB 348

Governor E. Benjamin Nelson

Don Stenberg, Attorney General
Steve Grasz, Deputy Attorney General

You have requested our opinion as to whether the Department of Education may distribute in lieu of tax funds in the manner prescribed in section 43 of LB 348, 93rd Neb. Leg. (1993). This bill has been approved by the Legislature and presented for your consideration. Due to the time restraints inherent in this situation, we have necessarily limited our review of this bill to the specified section and issue.

Apportionment of School Funds Pursuant to LB348, S43(2)

Section 43-of LB 3~8 amends Neb. Rev. Stat. S 79-1303 by deleting the previous requirement that school or saline land be given an appraised value of "one hundred forty three percent of the appraised value." The use of the 143 percent of valuation factor was held unconstitutional by the Nebraska Supreme Court in 1991. Barrels v. Lutjeharms, 236 Neb. 862, 464 N.W.2d 321 (1991). Notwithstanding the clear holding ~f the court in Bartels, the Legislature re-enacted the same provision in 1992. Consequently, the Commissioner of Education sought the opinion of this office as to whether he could apportion the school funds of the state pursuant to the 143 percent of valuation factor contained in $ 79-1303 (Cum Supp. 1992).~ In Op.Att'y Gen. No. 93035 (May 4, 1993),

Of the Commissioner of Education, rather than the Department of Education, has a statutory duty to distribute the general school fund paid over to him by the State Treasurer.

We advised the Commissioner such apportionment would be unconstitutional under Barrels and that he should seek a proper amendment to the statute.

Section 43(2) of LB 348 amends $ ~9-1303 to read as follows~

The county superintendents shall certify to the Commissioner of Education the tax levy for school purposes of each school district and the nonresident high school tuition levy of the county in which the school land or saline land is located and the last appraised.

The purpose of applying the applicable tax levy for each district and for the nonresident high school tuition fund in determining the distribution to the districts and to the nonresident high school tuition fund of the counties of such amounts.

Thus under LB 348, school funds would be apportioned pursuant to "the last appraised value of such land" and not at 143 percent of the appraised value. If such a valuation avoids conferring a "benefit or bonus upon the school districts with school lands to the detriment of the school districts without trust lands" and thus, avoids the "violation of the duty of the state as trustee to treat all beneficiaries of the trust fairly and impartially" as found in Bartels ~. Lutjeharms, 236 Neb. at 868, it would withstand constitutional challenge.

We see no facial constitutional infirmity or legal impediment to the Commissioner distributing in lieu of tax funds in the manner prescribed in section 43 of LB 348. We understand the "appraised value" of school-land may differ from-.-the market value of school land. Barrels ~. Lutjeharms, 236 Neb. at 867. Furthermore, the appraised value of school land is determined by the Board of Educational Lands and Funds. The appraised value of taxable agricultural land is determined by the Department of Revenue. Section 77-1360.01 (Supp. 1992) provides a method whereby the Department of Revenue determines a market-derived capitalization rate of agricultural land. It then provides that this rate shall be adjusted so that agricultural land shall be assessed at eighty percent of market value. The method used by the Board of Educational Lands and Funds is quite different. See Barrels ~. Lutjeharms, 236 Neb. at 867. We have no facts before us, however, which would allow us to conclude the use of the appraised value factor in apportioning school funds is constitutionally invalid. A determination of whether this difference would result in a benefit to school districts with school lands to the detriment of districts without such lands would likely require expert factual court also specifically indicated that one legislature cannot impose a legal obligation to appropriate money on succeeding legislatures.

There are no Nebraska cases which specifically adopt the general rule stated above. However, the general rule appears to be grounded upon the constitutional power of the Legislature to legislate. Iowa-Nebraska Light & Power Co. v. City of Villisca, supra. Article III, Section 1 of the Nebraska Constitution vests the legislative authority of the state is the Legislature, and it is clear that Legislature has plenary authority limited only by the state and federal constitutions. Orleans Education Association v. the School District of Orleans in Harlan County, 193 Neb. 675, 229 N.W.2d 172 (1975). Given the Nebraska Constitution and Nebraska law concerning the authority of the Legislature, we believe that the Nebraska Supreme Court would adopt the general rule stated above with respect to the authority of one legislature to bind succeeding legislatures.

We would also note that the Nebraska Supreme Court did indirectly consider the general rule discussed above in State ex rel. Douglas v. Nebraska Mortgage Finance Fund, 204 Neb. 445, 283 N.W.2d 12 (1979). That case involved a challenge to the constitutionality of the statutes creating the Nebraska Mortgage Finance Fund, and one argument advanced by opponents of that legislation was that the statutes at issue impermissibly restricted the discretion of future legislatures to revise, amend or repeal the Act in question. The Nebraska Supreme Court stated that the Act did not restrict future legislature from changing the law. Obviously, had the general rule discussed above not had some application in Nebraska, there would have been no need to discuss the impact of the legislation upon future legislatures, and the Courtcould have-simplyrejected that argument out of hand.

Consequently, based upon the authorities cited above, we believe that LB 507 is unconstitutional as legislation which would improperly attempt to bind or restrict the authority of legislatures to pass legislation which might impact the population in correctional facilities in Nebraska.

Sincerely Yours,

Attorney General