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November 20, 2003

Task force backs sales-tax allocation for water
by Nancy Gaarder, Omaha World-Herald

KEARNEY, NE - Money is so important to changing the way Nebraska handles its water resources that the state should divert a portion of its sales tax to pay for financial incentives and other conservation measures, a committee studying the issue recommends.

Guaranteed funding is critical, says the Nebraska Water Policy Task Force, which Wednesday wrapped up deliberations on a legislative proposal that will be presented to lawmakers in January.

The group is recommending that a tiny fraction of a cent of the state's 5.5-cent-per-dollar sales tax rate be reallocated to a Water Resources Trust Fund.

Doing so would place about $11.1 million a year in the proposed fund. About $6.7 million of that would be spent for water-related work that the state already does. The rest, about $4.5 million, would be new spending, but the state could save an estimated $3 million of that by filing fewer water lawsuits.

The plan will probably face a tough go in the Legislature because state sales tax revenue is not easily earmarked for special interests. Right now, the only set-aside is on motor vehicle sales taxes for roads projects.

If the plan fails, the water projects will probably have to compete against other priorities for state money.

Recognizing that the state is in financial straits, task force members said the money is needed to keep compromises among competing interests from unraveling.

The 49-member task force has been working for about 18 months on proposed legislation. The group reflects interests as varied as power companies, groundwater irrigators and environmentalists.

"We can craft the best water legislation in the world," said Dave Sands, a task force member, "but if we don't have the money to enact it, it's not going to be the best."

Roger Patterson, director of the Nebraska Department of Natural Resources, said the money would be used for such things as compensating farmers for lost income if they converted irrigated land to dryland farming, and for building projects to store more water.

One of the compromises at risk, said Don Kraus of the Central Nebraska Public Power and Irrigation District, would give groundwater irrigators incentives to cease some of the pumping that is depleting surface water.

Tom Schwarz, who represents central Platte River irrigators, said those incentives are particularly important if the task force's work is to lead to an increase in water levels in Lake McConaughy. That's because irrigators upstream from McConaughy would be included.

Patterson said adequate funding would probably allow the state to accomplish the proposed legislation's initial goals through voluntary measures. If money is lacking, he said, the state could force irrigators to cut back on water use. But that would only worsen tensions.

The state might not have much choice about some changes in water use because of a Platte River agreement among Nebraska, Colorado, Wyoming and the federal government. That agreement will adjust use of the Platte to allow endangered species to survive.

Much of the direct administration of the proposed new law would be handled by natural resources districts.

The task force also is recommending that NRDs have more leeway to raise taxes. The group will propose that the Legislature lift the 2.5 percent cap on NRD budget growth and the 4.5-cent limit on NRDs' property tax levy.

State Sen. Elaine Stuhr of Bradshaw said the task force may have difficulties with financing, but the timing is good.

"Maybe it's the drought," she said, "but water, no matter where you go, urban or rural, is on the minds of everyone."

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