Opinion ID: 1298035
Heading Depth: 2
Heading Rank: 1

Heading: l.b. 1 and l.b. 7

Text: L.B. 1 provides in part: Section 1. That section 77-103, Reissue Revised Statutes of Nebraska, 1943, be amended to read as follows: 77-103. The terms real property, real estate, and lands shall include mean city and village lots and improvements, cabin trailers or mobile homes which shall have been permanently attached to the real estate upon which they are situated, mines, minerals, quarries, mineral springs and wells, oil and gas wells, overriding royalty interests and production payments with respect to oil or gas leases, units of beneficial interest in trusts, the corpus of which includes any of the foregoing, and privileges pertaining thereto, and pipelines, railroad track structures, electrical and telecommunication poles, towers, lines, and all items actually annexed to such property, and any interest pertaining to the real property or real estate. The sole test for determining whether an item is a fixture or an improvement shall be whether there is actual annexation to the real property or real estate or something appurtenant thereto. Unless specifically enumerated in this section, real property and real estate shall not include machinery and equipment used for business purposes or center pivot or other irrigation systems of a type used for agricultural or horticultural purposes. Sec. 2. The changes made to section 77-103 by this legislative bill are expressly intended to apply to all litigation concerning ad valorem property taxes for the 1989 calendar year, including all litigation pending on the effective date of this act. [Sections 1 and 2 underscoring indicates amendatory new language.] Sec. 3. This act shall become operative on January 1, 1989. Sec. 4. If any section in this act or any part of any section shall be declared invalid or unconstitutional, such declaration shall not affect the validity or constitutionality of the remaining portions thereof. [Sections 3 and 4 are amendatory new language.] The State concedes that the Legislature cannot, by definition, create a class of exempt personal property under the authority granted under Neb. Const. art. VIII, § 2, by defining property which clearly constitutes real property to be personal property. L.B. 7, § 1, which is entirely new legislation, provides: (1) The Legislature finds and declares that the levy and collection of property taxes upon the personal property of car line companies, which is composed of railroad rolling stock, has been enjoined by federal court order as a discriminatory tax in violation of section 306(1)(d) of the Railroad Revitalization and Regulatory Reform Act, 49 U.S.C. 11503(b)(4). (2) The Legislature finds and declares that, as a result of such court action, the Nebraska Supreme Court has ordered that the personal property of certain other taxpayers must be treated the same as that of such car line companies, which is in the same class for taxation purposes, but not taxed by virtue of federal court order, thereby diminishing to a potentially substantial degree the property tax base of local governmental subdivisions and consequently jeopardizing the continued adequate funding of essential public services provided by those subdivisions. (3) The Legislature further finds and declares that some types of agricultural and manufacturing products and natural resources must or can more efficiently be transported over rails due to size, weight, and other restrictions or conditions and the transportation of such products is vital to the commerce and industry of the state and that therefor it is in the best interests of the state to enact legislation to encourage the maintenance in and through the state of railroad rolling stock which is the means of transporting such products. (4) Therefor, the Legislature finds and declares that a rational basis exists to classify railroad rolling stock as a separate and distinct class of property and to exempt the class from property taxation pursuant to the authority granted under Article VIII, section 2, of the Constitution of Nebraska. (5) It is the express intention of the Legislature that the changes made by this legislative bill shall affect all state litigation pending as of the effective date of this act. This language has been codified at Neb. Rev.Stat. § 77-202.47 (Reissue 1990). L.B. 7, § 2, amended Neb.Rev.Stat. § 77-202 (Cum.Supp.1988) regarding personal property which is exempt from taxation. In its first 10 subsections, L.B. 7, § 2, reiterated the same exemptions which existed under § 77-202 (Cum.Supp.1988), amended by L.B. 7, while subsection (11) (§ 77-202(11) (Reissue 1990)) provided for a new exemption of personal property as follows: (11) Railroad rolling stock shall be exempt from the personal property tax. Railroad rolling stock shall mean locomotives, freight cars, and other flanged-wheel equipment operated solely on rails and owned, leased, or used for or in railroad transportation. For tax year 1989, this subsection shall apply to railroad rolling stock upon which no levy has been made or upon which no tax may lawfully be collected. L.B. 7, § 9, states: This act shall become operative on January 1, 1989. L.B. 7, § 10, recites: If any section in this act or any part of any section shall be declared invalid or unconstitutional, such declaration shall not affect the validity or constitutionality of the remaining portions thereof. The State contends that L.B. 1 and L.B. 7 render these appeals moot, and argues: [T]he enactment of LB 7 effectively eliminates and moots any claim of a lack of equalization of appellant's personal property with the personal property of railroads and car companies for tax year 1989 as, by virtue of the Legislature's establishment of a separate class of exempt personal property consisting of railroad rolling stock under the authority granted pursuant to Article VIII, Section 2, of the Nebraska Constitution, appellant's claim improperly seeks equal treatment with property which is separately classified and exempted from taxation under state law, and not other taxable property in the same class. ... In short, LB 7 removes any basis for appellant to assert a lack of equalization with regard to the taxation of its personal property under Nebraska law in relation to the personal property of railroads and car companies operating in Nebraska for 1989, as found in the Court's prior decision in [ Northern Natural Gas Co. v. State Bd. of Equal., 232 Neb. 806, 443 N.W.2d 249 (1989) ]. Briefs for appellee at 13-14. Regarding L.B. 1, the State presents an argument much in the same vein as its argument for retroactivity of L.B. 7, that is, the statutory definition of real estate, contained in L.B. 1 as an amendment to § 77-103 (Reissue 1986), renders these appeals moot. The State's reliance on events subsequent to the Board's action in August 1989 has presented an unusual procedural aspect to these appeals. Responding to the State's position of mootness, the appellants' reply brief contains several propositions on the mootness issue raised for the first time in the State's briefs. In our reading of the appellants' reply brief, we construe the various legal propositions stated by the appellants to be assignments of error which would have been asserted in their initial briefs if L.B. 1 and L.B. 7 had been in existence and, therefore, relied upon by the Board in its action taken in August 1989.