Legislative Testimony for LB204: Require approval of voters for bonds under the Interlocal Cooperation Act

The Platte Institute believes this bill helps to increase local transparency.  While Nebraska local subdivisions hold bond referendums in most cases, there are some that go without the input of voters.

Most of Nebraska’s local subdivisions have the need to issue debt from time to time to fund certain projects, such as new buildings, roads, bridge, etc. This is typically done using general obligation bonds where low-interest loans are used to finance projects that are above-and-beyond the scope of the subdivision’s annual operating budget. When local governments are spending above-and-beyond the scope of the annual operating budget, it is hard not to believe that all bond referendums will eventually lead to property tax increases. While cities and counties are not required to increase their property taxes to pay for the bonds, most eventually increase property tax rates to pay for the increased debt service.

On page 2, lines 26 and 27 it stipulates that “the question of issuing bonds may be submitted at the statewide primary or general election.” We support the stipulation because special elections are expensive and also result in less voter turnout than a general or primary election.  Thus, this provision would allow more voter involvement increasing the transparency of bonds.

When subdivisions issue bonds without voter approval it results a lack of accountability and transparency with respect to local government debt.  Lowering taxpayer exposure to municipal debt starts with two key rules: (1) all debt should be put to a referendum vote concurrent with a general or primary election, and (2) governments should report the full financing costs and expected repayment plan for any debt before a vote or put the tax increase amount associated with such debt on the ballot. LB204 makes strides to accomplish these two key rules, and the Platte Institute supports this attempt at more government transparency.

LB204 makes strides to accomplish these two key rules, and the Platte Institute supports this attempt at more government transparency.

Thank you for the opportunity to testify today.  I am happy to answer any questions the committee may have.