Unfunded and underfunded mandates are a persistent and growing problem for cities, counties, and school districts. As a member of the Government, Military, and Veterans Affairs Committee and former city council member, I am aware of the tasks, services, and office space that the state requires cities and counties to provide — often with little to no reimbursement for the costs associated with these services and programs.
As a candidate for the 2022 Nebraska governor’s race, I’ve promised to share little-known information about issues that keep your property taxes high — issues that have easy fixes but are never properly addressed at the state level. I’m going to be sharing several blogs on this topic. I’ll be using Sarpy County for many of my examples because that is where I live and the area with which I am most familiar. However, all counties, municipalities, and schools experience these unfunded/underfunded mandates.
As I walk you through this long list of unfunded/underfunded mandates, it’s important to understand that counties are creatures of the state. Therefore property taxes are the only avenue available to address these costs. This is particularly true because state aid to political subdivisions, such as counties, was eliminated in 2011 with the promise that it would one day be reinstated when the state budget got back on its feet.
Further limits continue to be proposed and are not compatible with the cost-shifting that the legislature has done and continues to do in terms of unfunded mandates.
In 2014, the Government, Military, and Veterans Affairs Committee released a report on LR 582 regarding the size and scope of unfunded mandates to counties. Senator Sue Crawford, who introduced the resolution, worked with committee counsel, the Nebraska Association of County Officials, and others to research the issue and publish the results of their findings. In 2019, Senator Wayne introduced LR 149, which updated Senator Crawford’s earlier study regarding unfunded mandates to counties and the funding source used by counties to pay for these unfunded mandates.
The 2014 report, which is still available on nebraskalegislature.gov under Standing Committee reports, detailed 16 actionable steps the legislature could take to address some of the most pressing unfunded mandates to counties from Arthur to Douglas. These include:
- Restore state aid to counties
- Increase user fees such as marriage licenses, permits, and registrations, and index these for inflation
- Increase amount retained by counties for documentary stamp collection
- Appropriate money to counties to cover the cost of supervision and transportation of juvenile offenders by law enforcement
- Compensate counties for costs associated with housing state prisoners in county jail facilities, including pre-trial detention for defendants who are later convicted of state crimes
- Require DHHS, Probation, and other state offices to pay for their own office space and maintenance costs
- Compensate counties for printing of ballots, ballot space for election to statewide office, constitutional amendments, and referendums
- Compensate counties for verification of signatures for ballot initiatives
- Require the state of Nebraska, rather than the county, to pay for costs associated with an autopsy and grand jury if a prisoner dies in state custody
In the years since the publication of the LR 582 report, Nebraska has made little to no progress on these unfunded mandates and has even added new ones. Meanwhile, the state continues to point to local government as the reason your property taxes are high, while each year adding to the financial burdens with new mandates and with other issues I’ll address in later blog posts. In 2018, Sarpy County taxpayers paid over $8.1 million in costs directly associated with unfunded mandates. It will be millions more in 2021.
Mandates and Public Safety
LB 605, the criminal justice reform package the legislature passed in 2015, is one such example. The legislature originally set aside $500,000 for reimbursement for costs incurred by counties. Because of the bill, a reimbursement fund was created and operated by the Crime Commission. LB 605 required the commission to establish criteria for counties to qualify for reimbursement through a demonstration that the increased county jail costs were a direct result of LB 605. The sentiment of most senators at the time was that counties would not see an increase in jail costs as a direct result of LB 605.
Unfortunately, that has not been Sarpy County’s experience. Sarpy County has seen a significant increase in county jail costs as a direct result of LB 605. In 2019 alone, using the definitions and criteria established by the Crime Commission, Sarpy County incurred a total cost of $241,368 and only received $68,160 in aid, a difference of $173,208.
Moving forward to the passage of a newer bill, LB 383, Sarpy County no longer receives any reimbursement for the housing of state prisoners. For Sarpy County taxpayers, the true cost of holding a state prisoner as calculated in the County’s Indirect Cost Allocation Plan for the 2020 Fiscal Year is $136.63 per day. The 11,172 prisoner days multiplied by a daily rate of $136.63 equals an annual cost to local taxpayers of $1,526,430. The total prisoner days for the 2020 Fiscal Year was 59,376.
Did you know that your district court judges are state employees? Sarpy County is required to pay for the bailiff (personal secretary) for each judge and for a law clerk who is shared by all three judges. Personnel costs are $321,633, not including health and dental insurance.
Sarpy County also pays for expenses such as court-appointed counsel, law library costs, supplies, computers, and furniture. Sarpy County juvenile court judges are also state employees. The county is required to pay for a bailiff for each judge, as well as a file clerk and a part-time receptionist. Personnel costs are $22,847. Sarpy County also pays for court-appointed attorneys, evaluations, and supplies. Legislation regarding court-appointed attorney and guardian ad litem fees caused attorney fees in the current budget to increase from $292,657 in 2015 to $476,853 in 2021.
Let’s not forget the courtrooms. Sarpy County is required to provide courtrooms for each county, juvenile, and district court, including custodial services and utilities. At a square foot cost of $20, the annual cost of these spaces are estimated as follows:
- County court: $231,060
- Juvenile court: $83,800
- District court: $290,900
Sarpy County is also required to provide security for these courtrooms. This includes sworn deputies, civilian security officers, and various security equipment. The actual cost for the support services for fiscal year 2021 was $2,838,908. At least 60% of this cost was for court security.
Since we are talking about the costs of crime to our counties, it shouldn’t surprise you to know that because of insufficient state funding for the Nebraska LETC (Law Enforcement Training Center), there is a significant backlog for recruit training positions. Because of the delay in enrolling recruits at the LETC, my county and several other jurisdictions have been compelled to start their own Law Enforcement Training Academy at county and city expense.
The county’s contribution is $20,000 per year plus the cost of county staff provided as instructors. To be fair, these costs are offset somewhat by not having to pay for mileage to Grand Island and for meals at the LETC. There are additional expenses for the Sarpy County municipalities who participate as well.
As a result of these concerns, I have asked for an interim study to be held this month. This is a public safety issue as well as an underfunded mandate issue and needs to be addressed before it becomes much worse.
Nebraska statute requires an autopsy and grand jury hearing for anyone who dies in state custody, including state prisoners who die in state prisons. Since 2002, the costs to Johnson County, in Senator Slama’s district, have amounted to $150,859.97 alone. Legislation to address this issue has been introduced repeatedly in 2015, 2017, 2018, and 2019 with no bills advancing from the committee. The county, once again, gets stuck with the expense. This is especially burdensome for our counties with smaller populations and should be a red flag to our farmers and ranchers who pay massive amounts of property taxes.
Office Space and Mandated Fees
I’d like to next address the costs to counties to provide the Department of Health and Human Services (DHHS), Probation, and other state offices space and maintenance costs free of charge. This is an issue that everyone from former state Senator Deb Fischer to Senator Anna Wishart has tried to tackle, with no relief.
Beginning in 1983, in exchange for the state taking over many of the health and human services functions previously provided by counties, counties were required to maintain — at no additional cost to DHHS — facilities used for the administration of public assistance programs. This might seem like a great idea until you see the costs. The net value of the space provided to DHHS in Sarpy County is approximately $1.3 million. Housing DHHS employees in county courthouses also limits the amount of space available for services directly supporting court functions, such as probation officers.
In 2014, Hall County appropriated $600,000 to purchase an office building just to house all its probation officers, who are state employees. In Lancaster County, lease and equipment costs for probation (adult and juvenile) and DHHS topped $725,000 in 2018-19. Adult and juvenile probation costs in Sarpy County total almost $358,000.
We should also discuss fees set by state statute. Most civil process fees have not changed since 1981. These fees include serving a search warrant, subpoena, or summons. Other inadequate fees include marriage licenses, permits, and registrations. The Sarpy County Register of Deeds office does most of the work required to file land records in the county, yet is required to send over $3.2 million of the documentary stamp tax collection to the state in fiscal year 2021. Almost all the fees charged by county offices are set by state statute. Many of these fees fall short of generating sufficient revenues to cover the cost of providing the required services.
Elections and Mandates
Elections and election law take up quite a bit of our time in the Government, Military, and Veterans Affairs Committee, so I am keenly aware of the costs to counties for printing ballots, ballot space for elections of statewide office, constitutional amendments, and referendums. Current state law requires counties to conduct elections at all levels of government. It also allows counties to prorate the costs of elections and bill some of these costs to political subdivisions.
For example, in 2010, Lancaster County was able to recoup approximately 1/3 of its costs of the election from political subdivisions based on a formula that includes ballot space and number of precincts. There is no provision to allow counties to bill the state for constitutional amendments, judicial retention, or ballot initiatives.
In Sarpy County, state and federal races, for which there are no reimbursement methods, cost the county $54,000 during the 2014 election, which represented 62% of the Sarpy County Election Commissioner’s costs for that election cycle. In 2016 and 2018, 50% and 70% of the general election costs were not reimbursable and attributable to state and federal candidate costs.
Mandates for Schools
I’d also like to discuss unfunded mandates to school districts, another entity that relies on property taxes to provide public education and related services to students and their families. This time, I am going to focus on bills introduced in a recent session to give you an idea of how large and pervasive this issue is.
First, a word about definitions. For school districts, an unfunded mandate is defined as additional work without new funding. These bills include changes to worker’s compensation benefits, which are mandated without funding to cover increased costs, to mandates regarding curriculum and activities that result in costs associated with in-classroom teaching, professional training, and running parent involvement curriculum.
Changes in curriculum require expenditures for school districts’ curriculum toolbox process, which involves teachers choosing and vetting materials, alignment to state standards, and development of the curriculum guide and corresponding assessment tools. This requires either paying certified staff for additional hours during the summer or providing substitutes for them during the school year, in addition to the purchase of classroom materials to fulfill the curriculum requirements.
Any training required by the state requires additional funding for individuals that are part-time hourly employees like paraprofessionals, drivers, riders, food service, etc. They would be paid for the length of the training. In addition, training takes time and therefore we lose productivity which translates into additional dollars for more staff, supplemental payment for additional time, overtime, etc.
In recent years, the legislature passed legislation requiring additional training or instruction that did not include additional funding or reduction in requirements for schools. This includes dating violence training, substance abuse teaching, return-to-learn protocols for students, and suicide awareness and prevention training. These are all very worthy and important issues facing students and schools, which is why legislation was introduced and passed by this body. However, the legislature has not funded these initiatives, instead relying on school districts to provide the services and training without reimbursement.
Nebraska has been largely unwilling to address unfunded mandates and has added new unfunded mandates each year. Legislative attempts to remedy existing unfunded mandates are repeatedly shut down or languished in committee year after year. Yet the state takes no responsibility when it comes to the role it plays in property taxes being so high across Nebraska.
If we are unwilling to address unfunded mandates or curb the state’s use of them moving forward, we face leaving cities, counties, and school districts with even less funds available to address the costs we force them to incur.
The next time you hear a politician say sentences like “create better transparency,” or “hold local government accountable,” be sure to take a closer look at the bill they are asking you to support. What is the price tag to your local municipalities, counties, or schools? Does it really solve a problem or is it yet another feel-good bill that does nothing but continue to add to the cost of government?
It’s time we take a look at these issues and start breaking down what is necessary and what has value. If these programs have value, then the state should reconsider how they fund the programs and quit kicking the “property tax can” down the road.