learning community decision

Nebraska advaNce sheets

212 283nebraskareports

ConCLUsIonthedecisionofthedistrictcourtisreversed.Weremandthe

causetothedistrictcourtwithdirectionstoremandthecasetothepsCtoenteranordernotinconsistentwiththisopinion.

reversed aNd remaNded With directioNs.Wright and stephaN,JJ.,notparticipating.

sarpy couNty farm bureau, a Nebraska NoNprofit corporatioN, et al., appellees, v. learNiNg commuNity

of douglas aNd sarpy couNties, et al., appellaNts, aNd sarpy couNty treasurer, rich James, iN his official capacity, et al., appellees.

___n.W.2d___

FiledFebruary3,2012.no.s-11-805.

1. Constitutional Law: Statutes: Appeal and Error.Whetherastatuteisconstitu-tionalisaquestionoflaw;accordingly,thenebraskasupremeCourtisobligatedtoreachaconclusionindependentofthedecisionreachedbythecourtbelow.

2. Pleadings.apleadingservestoguidethepartiesandthecourtintheconductofcases,andthustheissuesinagivencasearelimitedtothosewhicharepled.

3. Legislature: Municipal Corporations: Taxation: Property. the levy of aproperty tax by a local governmental unit should not be treated as a state levyfor statepurposesmerelybecause theLegislaturehasauthorizedor required thelocal governmental unit to make the levy. the converse is also true; where theLegislaturehasauthorizedandrequiredlocalgovernmentalunitstomakeaprop-erty tax levyforstatepurposes, it shouldnotbe treatedasa local levyfor localpurposesmerelybecauseitismadebyalocalgovernmentalunit.

4. Taxation. the fact that a tax is for a governmental purpose does not auto-maticallymakeitforstatepurposesratherthanlocalpurposes.thisissobecauseinmany,ifnotmost,casesagovernmentalfunctionmaybeaccuratelydescribedashavingbothstateandlocalpurposes.

5. Statutes: Intent.Where state and local purposes are commingled in a statutoryenactment, thecrucialdetermination iswhether thecontrollingandpredominantpurposes are state purposes or local purposes. While this is a judicial ques-tion, there is no sure test by which state purposes may be distinguished fromlocalpurposes.thecourtmustconsidereachcaseas it arisesanddraw the lineofdemarcation.

6. Taxation: Statutes: Legislature: Intent: Evidence. Indecidingwhethera stateoralocalpurposepredominates,thelanguageofthestatutoryschemeisofprime

importance.acourtmayalsoconsiderthelegislativehistoryandevidenceintherecordrelatingtothehistoryofthetaxingschemeatissue.

7. Constitutional Law: Statutes: Presumptions.astatuteispresumedtobeconsti-tutional,andallreasonabledoubtsareresolvedinfavorofitsconstitutionality.

8. Constitutional Law: Statutes: Proof.theburdenofestablishingtheunconstitu-tionalityofastatuteisontheoneattackingitsvalidity.

9. ____:____:____.theunconstitutionalityofastatutemustbeclearlyestablishedbeforeitwillbedeclaredvoid.

10. Constitutional Law: Taxation. the power to tax being a sovereign power,constitutional provisions relating thereto do not operate as grants of power oftaxation to thegovernment, but aremerely limitationson a powerwhichwouldotherwisebeunrestricted.

11. ____: ____. Constitutional limitations on the power to tax must be strictlyconstrued.

12. ____: ____. a commutation occurs in violation of the nebraska Constitutionwhentaxfundsraisedinonedistrictaredivertedentirelytothebenefitofanotherdistrict.

13. Constitutional Law: Taxation: Public Purpose. a tax levy does not equal acommutationmerelybecausethetaxingdistrictisbroadenedtoreflecttheactualbenefits to the public. so long as all taxpayers receive the benefit of the taxesthey remit, the taxingdistrictpassesconstitutionalmusterwithoutoffending theprohibitionagainstcommutation.

14. Legislature: Taxation. the Legislature creates a taxing district when it grantsan entity the power to require the county clerk to levy a tax for the support ofthedistrict.

15. Taxation: Valuation: Constitutional Law.theobjectofnebraska’suniformityclause is accomplished if all of the property within the taxing jurisdiction isassessedandtaxedatauniformstandardofvalue.

appeal from the District Court for sarpy County:William b. Zastera, Judge. reversed and remanded with directions todismiss.

scotte.Daniel andkurtha.brashear, ofbrashear,L.L.p.,for appellant Learning Community of Douglas and sarpyCounties.

kenneth W. Hartman, elizabeth eynon-kokrda, and kellyr.Dahl,ofbairdHolm,L.L.p., forappellantDouglasCountyschoolDistrictno.1.

patrick J. sullivan and benjamin e. Maxell, of adams &sullivan, p.C., for appellant sarpy County school Districtno.1.


sarpYCtY.FarMbUreaUv.LearnInGCoMMUnItY 213

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thomas J. Culhane and MatthewV. rusch, of erickson &sederstrom, p.C., for appellees sarpy County Farm bureau,Johnknapp,andronWoodle.

Jeff C. Miller, Duncan a.Young, and keith I. kosaki, ofYoung & White Law offices, for appellee Douglas CountyschoolDistrictno.17.

Michael F. Coyle and patrick s. Cooper, of Fraser stryker,p.C., L.L.o., for appellee Douglas County school Districtno.66.

heavicaN, c.J., coNNolly, stephaN, and mccormack, JJ., iNbody,ChiefJudge,andsieversandcassel,Judges.

stephaN,J.In 2010, the Learning Community of Douglas and sarpy

Counties (Learning Community) established a common levyforthegeneralfundbudgetsofits11memberschooldistricts.1aftersarpyCounty levied this taxon realproperty, three tax-payersbroughtanactioninthedistrictcourtseekingadeclara-tion that the tax was unconstitutional.they alleged that (1) itwasaproperty taxforastatepurpose,2 (2) itwasacommuta-tionof taxes,3and/or (3) itviolated the requirement that taxes“beleviedbyvaluationuniformlyandproportionatelyuponallrealproperty.”4theLearningCommunity, eachof itsmemberschool districts, and the sarpy County treasurer were nameddefendantsintheaction.rulingoncross-motionsforsummaryjudgment,thedistrictcourtdeclaredtheLearningCommunity’scommon levy was unconstitutional as a property tax for statepurposes but did not reach the alternative grounds of allegedunconstitutionality. the Learning Community and two of itsmember school districts appeal.We reverse, and remand withdirectionstodismiss.

1 seeneb.rev.stat.§77-3442(2)(b)(Cum.supp.2010). 2 neb.Const.art.VIII,§1a. 3 Id.,§4. 4 Id.,§1.

I.baCkGroUnD

1.learNiNg commuNity structure

a learning community is a political subdivision authorizedbylegislationenactedin2006.5eachnebraskacityofthemet-ropolitan class is required to establish a learning communitywhichincludesalltheschooldistrictshavingaprincipalofficeinthecountywherethecityofthemetropolitanclassislocatedandall theschooldistrictshavingaprincipaloffice located ina county that has a contiguous border of at least 5 miles inaggregatewithsuchcityofthemetropolitanclass.6Inaddition,a learning community may be established at the request of atleast three school boards located outside a metropolitan area,providedcertainrequirementsaremet.7alearningcommunitysharestheterritoryofitsmemberschooldistricts.8

When the Legislature enacted the learning community leg-islation, it amended a statutewhichhadprovided that “[e]achincorporated city of the metropolitan class . . . shall consti-tute one Class V school district.”9 the statute currently pro-vides that each such city “shall contain at least one Class Vschooldistrict.”10

a learningcommunity isgovernedbya coordinatingcoun-cil.11 the coordinating council has, among other powers, theauthoritytolevyacommonlevyforthegeneralfundsandspe-cialbuildingfundsofitslearningcommunity’smemberschooldistricts.12section77-3442(2)(b)providesthatalearningcom-munity,foreachfiscalyear,“maylevyamaximumlevyforthegeneralfundbudgetsofmemberschooldistrictsofninety-fivecentsperonehundreddollarsof taxablevaluationofproperty

5 see 2006 neb. Laws, L.b. 1024, § 103 (codified at neb. rev. stat.§79-2101(reissue2008)).

6 neb.rev.stat.§79-2102(reissue2008). 7 Id. 8 §79-2101. 9 neb.rev.stat.§79-409(supp.2005).10 §79-409(reissue2008).11 see§79-2101.12 neb.rev.stat.§79-2104(1)and(2)(Cum.supp.2010).



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subjecttothelevy.theproceedsfromthelevypursuanttothissubdivision shall be distributed pursuant to section 79-1073.”thatsectionprovidesasfollows:

on or before september 1 for each year, each learn-ing community coordinating council shall determine theexpected amounts to be distributed by the county treas-urers to each member school district from general fundpropertytaxreceiptspursuanttosubdivision(2)(b)ofsec-tion77-3442andshallcertifysuchamountstoeachmem-ber school district, the county treasurer for each countycontaining territory in the learning community, and thestateDepartmentofeducation.suchpropertytaxreceiptsshall be divided among member school districts propor-tionally based on the difference of the school district’sformula need calculated pursuant to section 79-1007.11minus the sum of the state aid certified pursuant tosection 79-1022 and the other actual receipts includedin local system formula resources pursuant to section79-1018.01fortheschoolfiscalyearforwhichthedistri-butionisbeingmade.

each time thecounty treasurerdistributesproperty taxreceipts from the common general fund levy to memberschooldistricts, theamount tobedistributed toeachdis-trictshallbeproportionalbasedonthetotalamountstobedistributed to eachmember school district for the schoolfiscal year. each time the county treasurer certifies apropertytaxrefundpursuant tosection77-1736.06basedonthecommongeneralfundlevyformemberschooldis-trictsoranyentity issuesanin lieuofproperty taxreim-bursement based on the common general fund levy formemberschooldistricts,includingamountspaidpursuanttosections70-651.01and79-1036,theamounttobecer-tifiedor reimbursed to eachdistrict shallbeproportionalonthesamebasisaspropertytaxreceiptsfromsuchlevyaredistributedtomemberschooldistricts.13

section 77-3442(2)(g) provides that a learning communitymay, each fiscal year, “levy a maximum levy of two cents on

13 neb.rev.stat.§79-1073(Cum.supp.2010).

each one hundred dollars of taxable property subject to thelevy for special building funds for member school districts.the proceeds from the levy pursuant to this subdivision shallbedistributedpursuant tosection79-1073.01.”neb.rev.stat.§79-1073.01(Cum.supp.2010)provides:

amounts levied by learning communities for specialbuilding funds for member school districts pursuant tosubdivision (2)(g)of section77-3442shallbedistributedby the county treasurer collecting such levy proceeds toall member school districts proportionally based on theformula students used in the most recent certificationof state aid pursuant to section 79-1022. each time thecounty treasurer certifies a property tax refund pursuantto section 77-1736.06 based on the levy of a learningcommunity for special building funds for members [sic]schooldistrictsoranyentityissuesaninlieuofpropertytax reimbursement based on the levy of a learning com-munity for special building funds for member schooldistricts, including amounts paid pursuant to sections70-651.01 and 79-1036, the amount to be certified orreimbursed to each district shall be proportional on thesame basis as property tax receipts from such levy aredistributedtomemberschooldistricts.

any amounts distributed pursuant to this section shallbeusedby thememberschooldistricts forspecialbuild-ingfunds.

a levybya learningcommunity limits thepermissible lev-iesbyitsmemberschooldistricts.subjecttocertainexceptionsnot applicable here, a school district which is not includedwithinalearningcommunityisauthorizedto“levyamaximumlevy of one dollar and five cents per one hundred dollars oftaxable valuation of property subject to the levy.”14 However,school districts which are members of a learning community“may levy for purposes of such districts’ general fund budgetand special building funds a maximum combined levy of thedifference of one dollar and five cents on each one hundred

14 §77-3442(2)(a).



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dollarsoftaxablepropertysubjecttothelevyminusthelearn-ingcommunitylevies.”15

originally, a learning communitywas required todistributetax receipts directly to its member school districts.16 but thatsystemofdistributionwaschangedbylegislativeamendment17as a cost-savingandefficiencymeasure.Currently, thecountytreasurer for each county containing territory in a learningcommunity distributes funds to the member school districtsfromthelevytaxreceipts.18

theLearningCommunityinvolvedinthisactionwasestab-lished in 2009. It has its own separate and distinct boundar-ies, but shares its territory with the public school districts inDouglasandsarpyCountiesasfollows:DouglasCountyschooldistricts nos. 1 (omaha public schools), 10 (elkhorn publicschools), 15 (Douglas County West Community schools), 17(Millard public schools), 54 (ralston public schools), 59(bennington public schools), and 66 (Westside Communityschools); and sarpy County school districts nos. 1 (bellevueschool District), 27 (papillion-La Vista public schools), 37(Gretna public schools), and 46 (south sarpy District 46).each member school district retains its separate status as apolitical subdivision, as well as its boundaries and systemofadministration.

priortoadoptingits2010-11budget,theLearningCommunitysolicited input from its member school districts and con-ducted public hearings on the proposed budget and levy. onseptember 16, 2010, the Learning Community’s coordinatingcouncil adopted a 2010-11 budget which included a commonlevy for the general funds of its member school districts of$0.95per$100of taxablevaluationofproperty subject to thelevy.the common levy for special building funds of memberschool districts was set at zero.the council certified the levy

15 §77-3442(2)(c).16 see§§79-1073,79-1073.01,and79-2104(1)and(2)(reissue2008).17 2009neb.Laws,L.b.392,§§13to16.18 neb.rev.stat.§79-1041(Cum.supp.2010).

to the Douglas and sarpy Counties boards of equalization19and certified the expected distributions from revenues gener-ated by the levy to the member school districts, the affectedcountytreasurers,andthestateDepartmentofeducation.20onoctober 5, 2010, the sarpy County board of Commissionerssitting as the board of equalization of sarpy County leviedpropertytaxeswhichincludedtheLearningCommunity’scom-monlevy.

2.district court proceediNgs

this action was commenced on December 21, 2010, in thedistrictcourtforsarpyCountybysarpyCountyFarmbureau,John knapp, and ron Woodle (collectively the taxpayers).sarpyCountyFarmbureau is anonprofit corporationwith itsprincipalplaceofbusiness insarpyCountyandpayspropertytaxesinthatcounty.knappandWoodleareresidentsofsarpyCounty and pay property taxes there. the taxpayers sought adeclaratory judgment that theLearningCommunity’scommonlevy was unconstitutional, because it was a property tax forstate purposes,21 because the tax and its distribution consti-tuted a commutation of taxes,22 and because it was not levieduniformly and proportionately.23 named defendants were theLearning Community, each of its member school districts,and the sarpy County treasurer. the taxpayers prayed that§§ 77-3442(2)(b) and 79-1073 be declared unconstitutional,that the tax levies and their distribution be declared void andillegal, and for suchother relief as thecourtdetermined tobejustandequitable.

the taxpayers subsequently filed a motion for summaryjudgment. three of the defendants, namely, the LearningCommunity, Douglas County school District no. 1 (omahapublic schools), and sarpy County school District no. 1

19 seeneb.rev.stat.§13-508(Cum.supp.2010).20 see§79-1073.21 neb.Const.art.VIII,§1a.22 Id.,§4.23 Id.,§1.



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(bellevue school District) filed cross-motions for summaryjudgment.afterconductinganevidentiaryhearing, thedistrictcourt sustained the taxpayers’ motion. It determined that theLearning Community’s common general fund levy made pur-suantto§77-3442(2)(b)anddistributedpursuantto§79-1073wasanunconstitutionalpropertytaxleviedforastatepurpose.It reasoned the legislative history showed that learning com-munities were created to pool the resources of the memberdistricts in order to allow for a redistribution of tax dollars.although not requested to do so, the district court also deter-mined that the statutes authorizing learning communities tolevy for special building funds of member school districts24and todistribute such revenues25wereunconstitutional for thesame reason. the district court did not reach the taxpayers’alternativeconstitutionalclaims.accordingly,thedistrictcourtdeclared §§ 77-3442(2)(b) and (g), 70-1073, and 70-1073.01tobe“unconstitutionalasinviolationofneb.Const.art.VIII,§1a.”

the Learning Community, omaha public schools, andbellevue school District (collectively appellants) perfected atimely appeal. We granted the Learning Community’s motionto stay the order and judgment of the district court pend-ing resolution of the appeal and a second motion by theLearning Community to expedite the appeal. separate briefsand notices of constitutional question were filed by each ofthe threeappellants.theappellee taxpayers fileda jointbrief.appellee Douglas County school District no. 17 (MillardschoolDistrict)filedaseparatebrieftakingnopositiononthemerits of the appeal but urging this court to adopt a prospec-tiveremedyifitdeterminesthatanyofthechallengedstatutesare unconstitutional. Douglas County school District no. 66(WestsideCommunityschools)didnotfileabriefbutadvisedthe court by letter that it joined in Millard school District’srequest.nootherpartyhasappearedonappeal.

24 §77-3442(2)(g).25 §79-1073.01(Cum.supp.2010).

II.assIGnMentsoFerrorappellantsassign,restatedandsummarized,thatthedistrict

court erred in (1) finding the common general fund levy wasan unconstitutional property tax for a state purpose, (2) find-ing unchallenged statutes to be unconstitutional, (3) grantingthe taxpayers’motionforsummary judgment,and(4)denyingappellants’motionforsummaryjudgment.

III.stanDarDoFreVIeW[1]Whether a statute is constitutional is a question of law;

accordingly, we are obligated to reach a conclusion indepen-dentofthedecisionreachedbythecourtbelow.26

IV.anaLYsIs

1.prelimiNary matters

[2]beforeaddressing themeritsof theconstitutional issuespresented in this appeal, we consider two preliminary mat-ters raised by appellants. First, they argue that because thedistrict court was not asked to rule on the constitutionality of§§ 77-3442(2)(g) and 79-1073.01, which authorize a learn-ing community’s common levy for the special building fundsof its member districts, it erred in doing so. We agree. theconstitutionality of these statutes was not raised in the com-plaint.a pleading serves to guide the parties and the court inthe conduct of cases, and thus the issues in a given case arelimited to those which are pled.27a sua sponte determinationby a court of a question not raised by the parties may violatedueprocess.28Wehold that thedistrict court’s conclusion that§§77-3442(2)(g) and79-1073.01 areunconstitutional is void.becausethedistrictcourtlackedauthoritytoaddressthisissue,we likewise lack suchauthority, andouranalysis is limited totheconstitutionalityof§§77-3442(2)(b)and79-1073.

26 Kiplinger v. Nebraska Dept. of Nat. Resources,282neb.237,803n.W.2d28 (2011); Yant v. City of Grand Island, 279 neb. 935, 784 n.W.2d 101(2010).

27 seeSpanish Oaks v. Hy-Vee,265neb.133,655n.W.2d390(2003).28 seeid.



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second, appellants urge us not to reach the constitutionalissues presented on the premise that they are nonjusticiablepoliticalquestions.appellantscontendthatthetaxpayers’com-plaints about the common fund levy are simply challenges topolicy decisions made by the Legislature about the appropri-ate structure of and funding for public education. accordingto appellants, this is the heart of the legislative policymakingfunctionandthiscourtisnotaproperforumforresolvingsuchbroad and complicated policy decisions. We agree that broadpolicydecisionsaretheLegislature’sprerogative.buthere,weare specifically asked to determine whether the Legislature’schosen means of implementing a particular policy violatespecific provisions of the state Constitution.this is a judicialfunctionwhichthiscourtisobligatedtoperform.29

2.property tax for state purposes

(a)GeneralbackgroundandCaseLawarticle VIII, § 1a, of the nebraska Constitution provides:

“the state shall be prohibited from levying a property taxfor state purposes.” this provision was first adopted in 1954and was amended to its present form in 1966 after nebraskaadoptedastatesalesandincometax.30thepurposeofthepro-visionwastorequirethestate,afteritadoptedsalesandincometaxes,toleavetherealmofpropertytaxation.31accordingly,nostateinterestorfunctioncanbefinancedbymeansofpropertytaxes; all “traditional” state interests and functions must befinancedbymeansotherthanpropertytaxes.32

29 seeDavis v. General Motors Acceptance Corp.,176neb.865,127n.W.2d907(1964).

30 see,State ex rel. Western Technical Com. Col. Area v. Tallon,196neb.603,244 n.W.2d 183 (1976), citing State ex rel. Western Nebraska Technical Com. Col. Area v. Tallon,192neb.201,219n.W.2d454(1974);State ex rel. Meyer v. County of Banner,196neb.565,244n.W.2d179(1976).

31 Garey v. Nebraska Dept. of Nat. Resources, 277 neb. 149, 759 n.W.2d919(2009);Swanson v. State,249neb.466,544n.W.2d333(1996).

32 Swanson, supra note31,249neb.at476,544n.W.2dat340.

We first addressed articleVIII, § 1a, in Craig v. Board of Equalization.33 In that case, a taxpayer alleged that a statuterequiring thecounty to levyproperty taxes topayfor thecareof its indigent mentally ill residents in state institutions wasunconstitutional. noting a prior case in which we held thatwhile the institutionswere runby thestate, “‘maintenanceofthe insane isnotnecessarilya stateburden,and therefore it iswithin the power of the legislature to require that the tax belevied and collected by each county for the purpose of reim-bursing the state,’”34 we concluded that although the statutecommingledstateandlocalpurposes,itdidnotcontravenetheprohibitionofarticleVIII,§1a.

Later the same year, this court decided R-R Realty Co. v. Metropolitan Utilities Dist.35 the challenged state statuterequired counties andmunicipalities to levy a taxonpropertywithin a metropolitan water district in order to provide firehydrants. We rejected the taxpayer’s argument that the taxwas levied for a state rather than a local purpose, stating: “Ifwe were to accept the reasoning urged by the plaintiff, anyproperty tax for governmental purposes levied by a city orcounty under legislative directions fixing a maximum amountandamaximumlevywouldbecomeataxlevybythestateforstatepurposes.”36

In Kovarik v. County of Banner,37 a county alleged thatrequiring it to use county funds from property tax revenueto pay attorneys for defending indigent county residents wasa state purpose and violated article VIII, § 1a.although weagreedthattheservicesdidbenefit“countlesspeople,notonlyinthecounty,butalsointhestateandcountry,andperhapsinthe entire world,” we also determined that the “mere chancethat the collective benefits may be universal does not alter

33 Craig v. Board of Equalization,183neb.779,164n.W.2d445(1969).34 Id. at783,164n.W.2dat447,quotingState v. Douglas County,18neb.

601,26n.W.378(1886).35 R-R Realty Co. v. Metropolitan Utilities Dist.,184neb.237,166n.W.2d

746(1969).36 Id.at240,166n.W.2dat748.37 Kovarik v. County of Banner,192neb.816,224n.W.2d761(1975).



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the fact there is a definite and substantial benefit accruing tothe counties.”38 We noted that historically, counties had beenresponsibleforfundingcriminalprosecutions,andfoundnoth-ing about the constitutional amendment which indicated anintent to remove that historical responsibility from counties.We concluded that the purpose was predominantly local innatureandthatthelawdidnotviolatetheconstitution.

our first case holding a statute to be in violation of arti-cleVIII, § 1a, was State ex rel. Western Nebraska Technical Com. Col. Area v. Tallon (Tallon I).39 Inthatcase,theLegislatureattemptedtogrouppreviouslyindependentjuniorandtechnicalcolleges into a “new statewide independent system of techni-cal community colleges.”40 a state board was to control thenew system, and it was given power over budget, qualifica-tions and credentials of instructors, training program content,andadmissionpolicies.thesystemwas tobefinanced inpartbyaproperty tax levy. Inaddressingwhether this taxviolatedarticleVIII,§1a,wenoted:

the fabric of an educational system is woven of manythreads. It is impossible to separate the threads whichproclaim a state purpose from those which proclaim alocal purpose and difficult to pick them out or identifythem in the overall pattern. It is transparently clear thatthestatehas,andshouldhave,anabidingpurposetofur-theralleducationalopportunitiesfor itscitizens,whethertheparticularinstitutionorsystemiscontrolled,operated,andfinancedbylocalunitsofgovernmentunderthepro-visionsofstate law,orwhether it iscontrolled,operated,andfinanceddirectlybythestategovernment,alsoundertheprovisionsofstatelaw.41

but noting that our task was to discern whether the primarypurposeof thenewsystemwasastatepurposeora localpur-pose,wereasoned:

38 Id.at824,224n.W.2dat766.39 Tallon I, supra note30.40 Id. at204,219n.W.2dat456.41 Id.at209-10,219n.W.2dat459.

Under the act with which we are concerned here, thestate has assumed the direct control of major policydecisions which affect the operation of each of theseven community college areas, and the statute reflectsa purpose to control the operation of all seven areas for the benefit of the residents of the state as a whole.theprovisionsrequiringthat the tuitioninanytechnicalcommunity college area for any resident of the state ofnebraska shall be the same as for a resident of the par-ticular area is a strong indication of the legislative pur-pose to benefit residents of the entire state as contrasted to residents of particular local areas.thedirect controlby the state over capital expenditures . . . together withthe complete and direct control of the individual budgetof each technical community college area, demonstratethedominanceof thestateasopposed to the localareasinallmajormattersofcontrolandoperationofthestatu-torysystem.42

after our decision in Tallon I, the Legislature took anotherapproach to creating a system of technical colleges, and itsnewstatutoryprocedurecamebeforeusinState ex rel. Western Technical Com. Col. Area v. Tallon (Tallon II).43thenewpro-cedure no longer centralized state control, but instead gavetechnical community college areas many of the same powersasotherpolitical subdivisions, so that theyoperatedmuch thesame way as public school districts, “on a strictly local basissubjectonly toguidelines laiddownby theLegislature.”44Weconcluded that this new system, which authorized the areadistricts to levy property taxes, did not violate article VIII,§1a.Wenotedinpartthatthemerefactthattheareaschoolsreceived state aid did not render their operation a state func-tion,because“[s]tateaidtoschoolsnecessarilyinvolvesacom-minglingofstateandlocalpurposes.”45

42 Id.at211,219n.W.2dat460(emphasissupplied).43 Tallon II, supra note30.44 Id.at607,244n.W.2dat186.45 Id.at605,244n.W.2dat186.



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InState ex rel. Meyer v. County of Banner,46acountychal-lenged the constitutionality of a state statute requiring it touse its property tax revenue to maintain county and districtcourts, prosecute state criminal violations, and conduct stateand national elections. these functions had traditionally beenfinancedby counties, and the constitutional amendment “doesnot affect the use of property taxes by a county . . . or otherlocal subdivision. Counties . . . and other taxing subdivisions. . .have traditionally reliedandstill relyuponproperty taxesas their major source of revenue.”47 We concluded that thestatutoryrequirementthatsuchexpensesbepaidbythecountyfromitspropertytaxrevenuewasconstitutional.

a somewhat similar situation was presented in Rock Cty. v. Spire.48 there, the Legislature enacted a statute giving soleresponsibility for the administration of social services pro-grams to the state. part of the statutory scheme required thatallequipment thathadbeenusedbycounties for theadminis-tration of public assistance programs was to be transferred tothe state. these items had been purchased with property taxmoneyscollectedfromcountyresidents.thecountycontendedthatbecausetheitemshadbeensopurchased,convertingthemforstateuseviolatedarticleVIII,§1a.Werejectedthisargu-ment,reasoning:

although the state has assumed responsibility for theadministration of social services programs, providingsuch services to people in need still remains a matterwhich is of local concern. Certainly, historically, thecounty has been responsible for certain of the costs ofsocial services programs, including, obviously, the costof purchasing the furniture and equipment at issue here.Undertheownershipof[thestate],thecounty’sfurnitureandequipmentwillcontinuetobeusedforpredominantlylocalpurposes.49

46 State ex rel. Meyer, supra note30.47 Id.at568,244n.W.2dat181.48 Rock Cty. v. Spire,235neb.434,455n.W.2d763(1990).49 Id.at447,455n.W.2dat771.

Swanson v. State50 involved a constitutional challenge tolegislation51 which reorganized certain school districts andprovidedforacommonlevyforthebenefitofmultipleschooldistricts grouped together as a Class VI school system. thelegislation affected Class I school districts, which maintainedonly elementary schools, andClassVI school districts,whichmaintainedonlyhighschools.Underpriorlaw,propertywithina Class I school district which had not chosen to becomepart of an affiliated school system was taxed only in anamount necessary to support the schools of that district andthe ClassVI district where its students attended high school.affiliated Class I districts, however, were taxed as if all theschooldistricts in theaffiliated systemwerepartofone largedistrict. Hence, affiliated Class I school districts effectivelypaid property taxes to support other Class I districts, whileunaffiliatedClassIdistrictsdidnot.

thechallengedlegislationcreateda“ClassVIschoolsystem”outofClassIandClassVIdistricts.eachsystemincludedonehighschoolandeachoftheelementaryschoolswhosestudentswould attend that high school. each district within this localsystem maintained its independent school board and operatedas an independent entity. but the property of residents withinthe local system was taxed based on the amount necessary tosupport the entire system, not just the elementary district andhigh school district affiliated with that property. the propertytax levy was uniform throughout each local system, and theproceeds were distributed proportionally to the individual dis-tricts within the system. state aid was based on the resourcesandneedsofthewholesystem,ratherthanontheresourcesandneedsofeachindividualdistrict.

a taxpayer alleged the legislation violated article VIII,§ 1a, because under it, state aid to individual school districtsdepended on the common levy for the system. It was undis-puted thatunder the legislation, stateequalizationaid tosomeschool districts, including the district in which the taxpayerresided,wasreduced.thetaxpayerarguedthattheLegislature

50 Swanson, supra note31.51 see1993neb.Laws,L.b.839.



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had“ineffectestablishedapropertytaxforastatepurpose,toexpandproperty taxbases so as tomakepossible the redistri-butionofequalizationaid.”52

In addressing this issue, we reviewed our decisions inTallon I and Tallon II and emphasized our conclusion inTallon I that the legislative scheme at issue was unconstitu-tional, because it was primarily for the benefit of the state asa whole. We found a lack of state control in the scheme inSwanson;thestatehadnocontroloverthebudgets,programs,personnel,oradministrativerulesandregulationsoftheschooldistricts within the new systems. We held that because the“state has assumed neither control nor the primary burden offinancial support” of the new systems, nor had the state con-ditionedthepropertytaxlevyonsomethingthatwouldbenefitthe state, the levy was not unconstitutional as a property taxforastatepurpose.53

Morerecently,inGarey v. Nebraska Dept. of Nat. Resources,54weheldthatapropertytaxwasunconstitutionalbecauseitwaslevied for a state purpose. In that case, residents and taxpay-ersofnatural resourcesdistrictschallengedastatestatute thatauthorized any district with “‘a river subject to an interstatecompact among three or more states’” to annually levy apropertytax.55Legislativehistoryclearlydemonstratedthatthecontrollingandpredominantpurposeofthetaxwastocreateafundtoenable thestate tocomplywithaninterstatecompact.becausethebenefitwaspredominantlytothestateasawhole,weheldthatthetaxwasunconstitutional.

(b)Legalprinciples[3]the levyofaproperty taxbya localgovernmentalunit

shouldnotbe treatedasa state levy for statepurposesmerelybecause the Legislature has authorized or required the local

52 Swanson, supra note31,249neb.at476,544n.W.2dat340.53 Id.at478,544n.W.2dat341.54 Garey, supra note31.55 Id. at 152, 759 n.W.2d at 925, quoting neb. rev. stat. § 2-3225(1)(d)

(reissue2007).

governmental unit to make the levy.56 the converse is alsotrue; where the Legislature has authorized and required localgovernmental units to make a property tax levy for state pur-poses,itshouldnotbetreatedasalocallevyforlocalpurposesmerely because it is made by a local governmental unit.57Construing the constitutional amendment to prohibit only adirect statewide property tax levy by the state itself wouldemasculate theamendmentandrender itvirtuallymeaninglessandwhollyineffective.58

[4-6]thefact thatataxisforagovernmentalpurposedoesnot automatically make it for state purposes rather than localpurposes.59thisissobecauseinmany,ifnotmost,casesagov-ernmentalfunctionmaybeaccuratelydescribedashavingbothstate and local purposes.60Where state and local purposes arecommingledinastatutoryenactment,thecrucialdeterminationis whether the controlling and predominant purposes are statepurposes or local purposes.61While this is a judicial question,there is no sure test by which state purposes may be distin-guished from local purposes.62 the court must consider eachcaseasitarisesanddrawthelineofdemarcation.63Indecidingwhether a state or a local purposepredominates, the languageof thestatutoryschemeisofprimeimportance.64Wemayalsoconsider the legislative history65 and evidence in the recordrelatingtothehistoryofthetaxingschemeatissue.66

56 seeR-R Realty Co., supranote35.57 seeTallon I, supra note30.58 Id.59 R-R Realty Co., supra note35.60 seeKovarik, supra note37.61 see,Garey, supra note31;Tallon I, supra note30.62 Id.63 Id.64 see,Garey, supra note31;Swanson, supra note31;Tallon II, supra note

30;Tallon I, supra note30.65 Garey, supranote31.66 Id.;Rock Cty., supra note48;State ex rel. Meyer, supra note30;Kovarik,

supra note37;R-R Realty Co., supranote35.



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(c)statutoryLanguagethe taxpayers urge us to focus on only the common levy

provision in the learning community legislation. but the con-stitutionality of the common levy cannot be considered in avacuum. Instead, it must be considered in the context of thelearning community legislationofwhich it is an integral part.InbothTallon IandTallon II,weexaminedthestatutoryenact-mentasawholeanddidnotfocussolelyonthefundingmech-anism at issue. We conducted a similar analysis in Swanson,andconcludewemustdosohere.

Various provisions of the learning community legislationclearlyrelatetolocalissuesbyauthorizingorrequiringalearn-ingcommunity toprovideeducational services to the studentsandschooldistrictswithinitsterritory.Forexample,alearningcommunity must adopt a diversity plan designed to increasethesocioeconomicdiversityofenrollmentateachschoolbuild-ing within the learning community.67 Learning communitiesemployanopenenrollmentattendancesystem,wherebyastu-dent residing in the learning community may apply to attendany school building within the learning community even ifthat school is not within the school district where the stu-dent resides.68 a learning community may also establish andadministerelementarylearningcenterswhichserveasresourcecenters forenhancing theacademicsuccessofelementarystu-dents.69the elementary learning centers may offer classes forfamily members, extended learning and summer school pro-gramming,healthservices,tutoring,supportservicesprograms,andresourceadvisors.70

Wealsonotethatthelearningcommunitylegislationautho-rizesa learningcommunity to levyaproperty taxfor thegen-eral fund budgets of its member school districts, but does notrequire a common levy.71 and by establishing a “maximum

67 neb.rev.stat.§§79-2110and79-2118(Cum.supp.2010).68 see§§79-2104(8)(Cum.supp.2010)and79-2110.69 §79-2104(11)andneb.rev.stat.§79-2112(1)(Cum.supp.2010).70 neb.rev.stat.§79-2114(reissue2008).71 see§77-3442(2)(b).

levy . . . of ninety-five cents per one hundred dollars of tax-able valuation,”72 the statute leaves the amount of any suchlevy to the discretion of the learning community’s coordinat-ingcouncil.

but it is also clear that a learning community council hasno discretion regarding the distribution of the proceeds of thecommon levy. section 77-3442(2)(b) directs that such distri-bution be “pursuant to section 79-1073.” that section directsthat such proceeds be divided among member school districtsin accordance with a formula that uses specific numbers cal-culated under sections73 of the tax equity and educationalopportunitiessupportact.74Whiletheactdeterminesstateaidto education, the state aid formula is different from the com-monlevydisbursementformula.

(d)LegislativeHistorythe legislative history related to learning communities is

extensive.althoughthetaxpayersandthedistrictcourtfocusedononlyaspecificandrelativelysmallportionofthehistory,weconcludethatourtaskistoexaminethehistoryasawhole.75

the examination begins with the history of L.b. 1024, the2006 bill that established learning communities.according totheIntroducer’sstatementofIntent,L.b.1024

wouldprovide foranew typeofeducational serviceunit(e.s.U.) to be referred to as a learning community. theterritory of the learning community would form a singletaxbaseforpurposesofacommongeneralfundlevyanda common capital fund levy. the governing board for alearning community would be composed of one schoolboardmemberfromeachmemberschooldistrict.

studentswouldberesidentsofthelearningcommunityand would be able to attend school in their attendance

72 Id.73 neb.rev.stat.§§79-1002(reissue2008)and79-1007.11and79-1018.01

(Cum.supp.2010).74 neb. rev. stat. §§ 79-1001 to 79-1033 (reissue 2008 & Cum. supp.

2010).75 seeGarey, supranote31.



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area or in any other school in the learning communitythat had capacity. transportation would be provided ifthe student did not choose the closest school. schooldistricts could operate focus schools with authorizationfrom the learning community board and be eligible foradditionalresources.

. . . once in a learning community, the boundaries ofanyschooldistrictcouldonlybechanged throughaplansubmitted by the learning community board to the stateCommitteeforthereorganizationofschoolDistricts.theboundariesfordistrictsinthecountiesthatarerequiredtobeinalearningcommunitywouldremainastheyexistedon January1, 2005until aplan is approvedby the com-mittee. Within the first 5 years, the learning communityboard would be required to submit a plan that assuresmember districts do not have more than 25,000 studentsand that equalizes economic diversity between memberschooldistricts.76

Duringcommitteedebateonthebill,itsprincipalintroducerstated that it was intended to address “the metro area schoolorganization issue.”77 the senator stated that by enacting thelegislation,

Weachieveanopportunityforcooperationbetweenschooldistricts that is locallydirected.thebenefitof individualschool districts and thevarietyof choices theyoffer stu-dentsandparentsisretained.thefinancialunderpinningsof districts are made more equitable. student mobilityand opportunity [are] enhanced. the possibility of focusprograms or campuses that serve the entire metro areaiscreated.78

the principal introducer also stated that the learning commu-nity “would be responsible for a common financial base” and

76 Introducer’sstatementofIntent,L.b.1024,Committeeoneducation,99thLeg.,2dsess.(Jan.30,2006).

77 Id.,CommitteeoneducationHearingat15.78 Id.at16-17.

would deal with “the broad issue of diversification of schoolswithinthatlearningcommunity.”79

alsoduringfloordebate,onesenatornotedthatthelearningcommunitylegislationwas“forthepurposeofworkingtointe-grateour schools, for thepurposeof creatinga common levy,forthepurposeoftryingtoaddresstheproblemsinomaha.”80anothersenatorstated,“andIthinkLb1024isaboutthemet-ropolitan area becoming one family of schools, one learningcommunity, far larger than justonecity,oneschool,butallofustogether,workingtosolvetheproblems.”81

oneof“theproblems”inthemetropolitanareawasabound-ary issue.at the time that the Legislature first considered thelearning community legislation, a nebraska statute providedthat“[e]achincorporatedcityofthemetropolitanclass...shallconstitute one Class V school district.”82 the principal intro-ducer of L.b. 1024 stated: “the issue we attempt to addressinLb1024camestormingontothesceneinJuneoflastyear,when ops, omaha public schools, proposed to expand itsschool district boundaries to the city limits ofomaha . . . .”83othersenatorsechoedthethought.onestated:

I ask you, why are we here? We are here because ofboundaries. We are here because no school board in themetro area—none—was willing to sit down and discussthe issue of boundaries, to discuss the issue of the seg-regated areas. no one was willing to sit down and talkaboutgivingupterritory,givinguppartoftheirlittlefief-domand/orgrowing.thatiswhywearehere.84

anothersenatorobserved:now we’ve got a situation where some of our districts,someofourchildren,areinonefight.Itisourresponsibil-ityandnobodyelse’stostopthatfight.Lb1024provides

79 Id.,FloorDebateat12969-70(apr.10,2006).80 Id.at13166-67(apr.11,2006).81 Id.at13548-49(apr.13,2006).82 §79-409(supp.2005).seeL.b.1024,§23.83 FloorDebate,L.b.1024,99thLeg.,2dsess.12405-06(apr.4,2006).84 Id.at13157(apr.11,2006).



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an excellent way of doing that. It provides a learningcommunityinwhicheveryoneisfullytothetable.85

the issue of boundaries also appeared as the learning com-munity legislation evolved. L.b. 1024 froze school districtboundaries in the learningcommunity subject to later redraw-ing,while2007neb.Laws,L.b.641,permanentlyfrozeschooldistrictboundaries.

the legislative history of L.b. 1024 also reflects concernabout educational issues unique to a metropolitan area. onesenator stated that L.b. 1024 encouraged “suburban districts”“tobe involvedwith theurbandistrict inmaking sure that allchildrenhavethebestopportunitiesforeducationalsuccess.”86theprincipalintroducerofL.b.1024stated,“oneofthemainobjectivesofthelearningcommunityistoaddress...theissueof integration within the entire learning community . . . .”87Hestated that the legislation“basically involvesacooperativearrangementforfunding,foraddressingbuildingneeds,andforaddressing whatever student mobility issues and educationalopportunity issues that may be available, and the last may bethe most important.”88another senator described the learningcommunity structureasone inwhich thememberdistrictsare“interrelated,”explaining,“We’retryingtofindawaytobringbetterdeliveryofservices,tobringthebenefitsoflocalcontroland shared responsibilities in the larger group all together inonebill....”89

It is alsoevident that theLegislatureconsidered the impactof a learning community’s common levyon state equalizationaid.one senator remarked, “not only arewe as aLegislature,through our policies, making equity . . . but the sharing ofthe property tax amounts throughout the learning communitymake a significant difference on the funding side of things.”90

85 Id.at13159-60.86 Id.at12417(apr.4,2006).87 Id.at12994(apr.10,2006).88 Id.at12423(apr.4,2006).89 Id.at13548(apr.13,2006).90 Id.at12440(apr.4,2006).

the principal introducer of the legislation stated during floordebatethat

part of this proposal is the formation of a learning com-munity and a common operating levy within that learn-ing community and a sharing of that entire communityresource.You’re right that any one of these or any otherdistrict in the learning community that happened to berelatively low on property tax resources would rely rela-tively more on state aid. but . . . that’s the way it doesnowhappeninouraidformula.91

onecolloquyduring floordebateonL.b.1024 isparticularlyinstructive, and because various parties rely on portions of it,wequoteitatsomelength:

senator HoWarD: thank you.as you know, youandIworkedcloselyontheissueofthecommonlevyandI’mverysupportiveofthat.Ithinkthat’sawaytoaddressthe needs of all children equally. but my question is thecommon levy, and I know that you can understand thisand really canhelpmebetterunderstand it, the commonlevyisusedtoequalizetheresourcesamongdistricts.amIcorrectinthat?

senatorraIkes:Yes.senator HoWarD: My second part of this ques-

tion then, would you see this issue, would you see thisas . . . this equalization, this funding being used for apurpose for the state, a more general purpose regardingthestudents?

senatorraIkes: I’mnot sure I followyourques-tion, senator. are you talking about the common levywithin the learning community and its implications forstatewidefinanceorpolicy?

senatorHoWarD:Well,myquestionreallyis . . .andI’msorry if I’mvague.I’llhave to try tophrase thisbetter tobe . . . tohave somemore clarity in it.but thelevy will result, no matter what the levy is, that amountof money will come from property tax, is that correct? Imeanthesourceofit,whenyouboilitrightdown.

91 Id.at12811(apr.6,2006).



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senatorraIkes:right.senatorHoWarD:soifwetakethatthenandlook

atthatmoneythat’sgoingtobeusedforeducationalpur-poses for all students, is this considered a state purpose,since education funds come from the state, it’s governed...theeducationalprogramisgovernedbythedecisionsmadebythelegislativebodyforthestate,andisthelevygoingtobeusedforastatepurpose?

senator raIkes: no, the levy is to support thelocalschoolsystem.

senator HoWarD: but isn’t that the state?aren’tweultimately responsible for that?and Iknow it’s localin that many of the decisions are made locally and bythe school boards, but ultimately isn’t this the state thatisresponsible?

senator raIkes:Well, it’s a shared responsibilitybetween the state and local districts, and the local prop-erty tax is the local share of the financing of the schooldistricts.

senator HoWarD: okay. I think I have a betterconceptofthis.sothatthelevy,thecommonlevywouldbe divided by the committee, no longer being called aboard,nowcalledthecommittee,theywould...

senatorraIkes:It’sacouncil.senatorHoWarD:...theywouldmakethe...senatorraIkes:Coordinatingcouncil.senatorHoWarD:thankyou.thanks.thecoun-

cil.We’vechangedthatnameafewtimes.buttheywouldhave the leverage to make the decision regarding thefunding.

senator raIkes: they . . . that council has theauthoritytosetthecommonlevyuptoamaximum...

senatorHoWarD:andthatwouldbe...senator raIkes: . . . much the same as an indi-

vidual school board now has the authority to set a localschooldistrictlevyuptoamaximum.92

92 Id.at12852-54.

In 2007, the year after the Legislature enacted L.b. 1024,it considered L.b. 641, which was introduced by the samesenator who had introduced L.b. 1024 the previous year. Hedescribedthebillasoneofseveral“introducedthisyeartodealwithwhatwehavecometoknowasthemetroareaissue.”93

as with L.b. 1024, the floor debate on L.b. 641 includeda discussion of the school district boundary issues which pre-cipitated the learning community legislation.94and there wasfurther discussion of educational goals, with one senator not-ing that theproblemwhich thebill sought toaddresswas“anachievementgapforminoritystudentsinomahathatmustnotbepermittedtocontinue.”95speakingonthesubjectoflearningcommunitystructure,anothersenatorremarked:

but you’ve got to have a governance to be able to com-mingleandsendassetsandresourcesanddollarstoareasof the two-county learningcommunity thatneed thespe-cial aid to make good things happen so that we improveeducation and learning and ultimately test scores andeverything else that’s important to us thatwe talk about.Qualityeducationiswhatwe’reworkingon.96

the floor debateonL.b. 641 also included adiscussionofthe impact of a learning community’s common levy on stateaidtoeducation.theintroducerofL.b.641explainedhowthecommonlevywouldwork:

Let’s assume that the learning community council estab-lishes a common general fund levy of 95 cents. thatwould be levied against all the valuation in the entirelearning community and that money collected from thatwould be distributed to the learning community schooldistricts in proportion to their needs, the needs as calcu-latedinthestateaidformula.97

93 FloorDebate,L.b.641,100thLeg.,1stsess.54(May9,2007).94 Id.at54-56.95 Id.at72.96 Id.at103.97 Id.at148(May21,2007).



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Inresponsetoaquestionofhowlearningcommunityoperatingcostswouldaffectthestate’sbudgetovertime,hestated:

there are effects sort of going both ways.the idea of acommon levywithin a learning communitywherebyyouhave a sharing of high valuation and low valuation dis-tricts actually does, I’ll say, free up state aid money forthestate.soyoumayviewthatadditionalstateaidmoneythat is available as funding that could be made availablefor learning community operations. I will tell you that Iamhopeful,atleast,thatthelearningcenters,thelearningcommunity councilwill be successful in getting leverag-ingmoneyfromthecommunityinthemetroareatohelpsupportsomeoftheseprograms.98

During floor debate on 2008 neb. Laws, L.b. 1154, whichmadeadditionalamendments to the learningcommunity legis-lation, the principal introducer explained that the proceeds ofthecommon levydidnotgo to the learningcommunity itself,but,rather,totheindividualschooldistrictswithinthelearningcommunity “in proportion to need.”99 He described the com-monlevyas

a critical part of theneeded funding arrangement for theeducational opportunities in the learning community. Itenhances the provision of educational opportunities, theopen enrollment provisions, and it also enhances thenotion that you get, at least financingwise, equal educa-tionalopportunitiesforstudentsinthemetroarea.100

(e)Dispositionbecausealearningcommunityisapoliticalsubdivisionhav-

ingdefinedboundarieswhichcircumscribe itsoperationalandtaxing authority, its property tax levy is not facially “for statepurposes.”butour jurisprudence requires thatwe lookdeeperto determine whether the Legislature has attempted to “avoidor circumvent [the] constitutional mandate” of article VIII,

98 Id.at29.99 FloorDebate,L.b.1154,100thLeg.,2dsess.117(Mar.26,2008).100Id.at115.

§ 1a, “by converting the traditional state functions into localfunctionssupportedbypropertytaxes.”101

[7-11]Weundertake this analysis in thecontextof familiargeneral principles.a statute is presumed to be constitutional,andall reasonabledoubtsare resolved in favorof itsconstitu-tionality.102 the burden of establishing the unconstitutionalityof a statute is on the one attacking its validity.103 the uncon-stitutionality of a statute must be clearly established before itwill be declared void.104 the power to tax being a sovereignpower, constitutional provisions relating thereto do not oper-ate as grants of power of taxation to the government, but aremerelylimitationsonapowerwhichwouldotherwisebeunre-stricted.105Constitutional limitationson thepower to taxmustbestrictlyconstrued.106

one factorwemustconsider iswhetheroperationalcontrolof the entity supported by the property tax lies with the stateor with the local entity.107 In Tallon I, we concluded that theLegislature had assumed direct control of major policy deci-sions which affected each of the seven technical communitycollege areas which were financed by a property tax. thisincludedcontrolovercapitalexpenditures, the right tocontrolanddirectfacilitiesandtrainingavailableineacharea,andthe“complete and direct control of the individual budget of eachtechnical community college area.”108 but in upholding therevisedlegislationinTallon II,wenotedthatthecollegeswereno longer dominated by the state, but, rather, were governedbyareaboardswhich“exercisethesamepowersandfunctions

101Swanson, supranote31,249neb.at476,544n.W.2dat340.102Kiplinger, supra note26;Yant, supra note26.103Id.104Id.105Dwyer v. Omaha-Douglas Public Building Commission,188neb.30,195

n.W.2d236(1972).106Id.107see, Swanson, supra note 31; Tallon II, supra note 30; Tallon I, supra

note30.108Tallon I, supranote30,192neb.at211,219n.W.2dat460.



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as other political subdivisions.”109We noted that the technicalcommunity colleges were “now in largely the same positionas our school districts. they operate on a strictly local basissubjectonlytoguidelineslaiddownbytheLegislature.”110theabsenceofoperationalcontrolbythestatewasalsoakeyfac-tor in upholding the legislation before this court in Swanson.there,wenotedthatthelegislationdidnotgivethestate“con-trol over individual budgets, capital expenditures, availabilityof programs, whether and how to hire personnel, or admin-istrative rules and regulations. all of these decisions remainwithintheprovinceoftheindividual...schooldistricts.”111WeconcludedthattheClassIandVIschooldistricts“maintain[ed]their autonomy and independence in all respects except theirgroupingforpropertytaxsupport.”112

operationalcontrolwithinalearningcommunityissimilarlylocal.theschoolboardsofthememberdistrictsretaincontrolovertheirbudgets,educationalprograms,andotheroperationalmattersinmuchthesamemannerasifnolearningcommunityexisted. operational control over programs of the learningcommunity itself, such as diversity plans, open enrollment,andelementarylearningcentersrestswiththelearningcommu-nity’scoordinatingcouncil,notwithanystateagency.

ourpriorschoolfinancingcaseshavealsoexaminedwhetherthe challenged property tax levy is mandated by the state orleft to the discretion of the local taxing authority. InTallon I,weconcludedthatwhilethestatutedidnotrequireareaboardstocertifya levyofonemill, it effectivelyenforced that resultbyvoiding any state appropriation to an areawhosemill levywaslessthanthatamount.thelegislationwhichweupheldinTallon II empoweredbutdidnot require localcollegeareas tolevy property taxes, and we noted this factor as a part of thebasisforourconclusionthatthetaxdidnotviolatearticleVIII,§1a.andupholding theproperty taxchallenged inSwanson,

109Tallon II, supra note30, 196neb.at606,244n.W.2dat186.110Id. at607,244n.W.2dat186.111Swanson, supranote31,249neb.at478,544n.W.2dat341.112Id.

we reasoned that the state had not “conditioned state fundingontheperformanceofsomeact,orthelevyingofsometax,tobenefitthestate.”113

similarly, a learning community is not statutorily requiredto levy the property tax challenged in this case. section77-3442(2)(b)provides thata learningcommunity“may levy”a property tax of up to $0.95 per $100 of taxable valuationfor the general funds of its member school districts. Unlikethestatute inTallon I, there isnopenalty for failing todoso.to the extent that a learning community elects to levy, thetaxing authority of its member school districts decreases; andconversely, to the extent that a learning community elects notto levy, the authority of its member school districts increasessubjecttothestatutorymaximumlevy.114

but the taxpayers urge us to focus on § 79-1073, whichdirects that the proceeds of a learning community levy bedivided among member school districts in accordance with aformula which utilizes numbers calculated according to theprovisions of the tax equity and educational opportunitiessupportact.the taxpayersargue that through thisstatute, thestate, not a learning community, controls the distribution ofrevenuefromalearningcommunity’slevy.theyallegedinthecomplaintthat

[w]hattheLegislaturehasdoneinthelearningcommunitylegislation is to convert the traditional state function ofproviding“equalizationaid”(i.e.,providingstatesalesandincome tax dollars to school districts that have a greaterneed and less ability to generate property tax receipts)intoalocalfunctionsupportedbypropertytaxes.

they argue the common levy thus serves a state purpose byusing“propertytaxfundsto‘equalize’aidtoeducationwithintheLearningCommunityandthussavethestatefromcommit-tingadditionalaidfromothersources.”115theycontendthatasaresultofalearningcommunity’scommonlevy,“thestateof

113Id.114see§77-3442(2)(c).115briefforappelleetaxpayersat24.



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nebraska is able to reallocate state education aid and is ableto avoid making an additional commitment of income tax orsalestaxproceedstosomeschooldistrictswithintheLearningCommunity despite knowing that additional aid is needed bythosedistricts.”116

For purposes of our analysis, we assume without decid-ing that the Learning Community levy challenged here willdecrease the amount of state equalization aid which wouldotherwisebepaidtooneormoreoftheschooldistrictswithinthe Learning Community. We further assume without decid-ing that thisdecrease inequalizationaidwould save thestatefrom committing additional aid from other sources. basedon these assumptions, the state may derive some financialbenefit from the learning community legislation and, specifi-cally, thecommonlevyauthorization.but themerefact thatastate-authorized taxsupportsagovernmentalpurposedoesnotrender it a tax for state rather than local purposes.117 Indeed,the“meregrantingofstateaiddoesnotrenderaschoolopera-tion a state function.”118 rather, given the commingled stateandlocalpurposes,thedispositiveissueiswhetherachievingareduction instateequalizationaid inorder tobenefit thestateas a whole was the controlling and predominant purpose ofthelegislation.119

In Tallon I, we struck down the proposed legislation underarticleVIII, § 1a, because, although state and local purposeswerecommingled,therewasa“strongindicationof[a]legisla-tivepurposetobenefitresidentsoftheentirestateascontrastedtoresidentsofparticularlocalareas.”120Incontrast,neitherthelanguageof the legislationbeforeusnor its legislativehistoryindicates that the Legislature’s predominant purpose was tosavemoneyforthebenefitofthestateasawhole.Muchofthelearning community legislation demonstrates a predominantly

116Id.at25.117Swanson, supranote31;Rock Cty., supranote48.118Tallon II, supranote30,196neb.at606,244n.W.2dat186.119see, Swanson, supra note 31; Tallon II, supra note 30; Tallon I, supra

note30.120Tallon I, supranote30,192neb.at211,219n.W.2dat460.

local purpose in that operational control remains local anda learning community provides a number of distinctly localservices. similarly, when viewed as a whole, the legislativehistory makes it clear that the learning community legislationwas enacted to resolve specific, local problems and that thepredominant purpose of the legislation was not to benefit thestateasawhole.

our conclusion is bolstered by the fact that we upheld ataxing scheme nearly identical to that at issue in this case inSwanson, and we see no reason to deviate from that opinion.UnderthelegislationchallengedinSwanson,stateequalizationaid to some school districts was decreased and the districtswere allowed to increase their property tax requirements.thetaxpayerchallengingthelegislationarguedthattheLegislaturehad effectively established a property tax for a state purposeby expanding property tax bases to allow redistribution ofstate aid. We rejected the argument, noting that the districts“maintain[ed]theirautonomyandindependenceinallrespectsexcepttheirgroupingforpropertytaxsupport.”121

We are required to presume a statute is constitutional.122 Inlight of that presumption and based on the language of thelearning community legislation and its legislative history, wecannot conclude that the controlling andpredominant purposeof the legislation which authorized the common levy was toutilize property tax revenue to reduce or redistribute stateequalizationaidtoschools,therebysavingthestateasawholesales and income tax dollars. Instead, viewing the statutorylanguage,thelegislativehistory,andtheevidencebeforeus,weconclude that the controlling and predominant purpose of thelearningcommunitylegislationwastoaddresscomplexeduca-tionalissuespresentedwithinmetropolitanschooldistricts.Wetherefore conclude that the Learning Community’s commonlevy for the general funds of its member school districts is ataxleviedforsubstantiallylocalpurposes,anditdoesnotcon-travenearticleVIII,§1a,ofthestateConstitution.

121Swanson, supranote31,249neb.at478,544n.W.2dat341.122see,Kiplinger, supranote26;Yant, supranote26.



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3.prohibitioN of commutatioN

the district court did not address the taxpayers’ alternativearguments that the common levy is an unconstitutional com-mutationofproperty taxand/oranonuniformtax thatviolatesthe nebraska Constitution. because these are issues of lawbased upon undisputed facts, and they have been briefed bytheparties,weaddressandresolvethemintheinterestofjudi-cialeconomy.

[12] article VIII, § 4, of the nebraska Constitutionprovides:

[t]he Legislature shall have no power to release or dis-chargeanycounty,city, township, town,ordistrictwhat-ever,ortheinhabitantsthereof,oranycorporation,ortheproperty therein, from their or its proportionate share oftaxes to be levied for state purposes, or due anymunici-pal corporation, nor shall commutation for such taxesbeauthorizedinanyformwhatever[.]

this proscription against commuting a tax prevents theLegislature from releasing either persons or property fromcontributing a proportionate share of the tax.123 a commuta-tionoccursinviolationofthenebraskaConstitutionwhentaxfunds raised in one district are diverted entirely to the benefitofanotherdistrict.124

Peterson v. Hancock125 is the only case in which we havefound an unconstitutional commutation of taxes. that caseinvolved a statute authorizing the levy of a property tax inall elementary school districts. to receive funds from thelevy, however, a school district was required to have fiveor more pupils, and some of the districts taxed did not. Weheld, “the only conclusion that can logically be drawn isthat districts having less than five pupils are required to paythe blanket levy on all their property into the fund for thesolebenefit ofdistrictswith fiveormorepupils.”126although

123Kiplinger, supranote26.124Swanson, supranote31.125Peterson v. Hancock,155neb.801,54n.W.2d85(1952).126Id.at812,54n.W.2dat92.

we noted the Legislature’s “laudable” intention of inducingsmallerelementarydistrictstoconsolidate,weheldthestatutewas unconstitutional because it was “levied upon one districtof the county for the exclusive benefit and local purpose ofotherdistricts.”127

[13] In Swanson, we rejected a claim that the school sys-tem’s common levy resulted in an unconstitutional commuta-tion of taxes. Citing the rule that a “commutation occurs inviolation of the nebraska Constitution when tax funds raisedin one district are diverted entirely to the benefit of anotherdistrict,”128wereasoned that the taxingdistrictwhich imposedthecommon levywas theClassVI school systemand thatnocommutation occurred, because the proceeds of the commonlevy benefited the taxpayer’s district. Distinguishing the casefrom Peterson, we concluded, “a tax levy does not equal acommutationmerelybecausethetaxingdistrictisbroadenedtoreflecttheactualbenefitstothepublic.solongasalltaxpayersreceive the benefit of the taxes they remit, the taxing districtpasses constitutional muster without offending the prohibi-tion against commutation.”129 We applied this same principlein Kiplinger,130 holding that landowners within certain naturalresourcesdistrictswhoreceivedabenefitfromprojectsfundedby an occupation tax imposed on irrigation within those dis-tricts did not establish that the tax violated the constitutionalprohibition against commutation. the taxpayers ask that wereconsiderandlimitthisprinciple,arguingthatitwouldpermitthe Legislature to create expansive taxing districts in order toevade the constitution’sprohibitionsof commutation.but thatis not the case before us, and this court does not issue advi-soryopinions.131

127Id.at813-14,54n.W.2dat93.128Swanson, supranote31,249neb.at471,544n.W.2dat337.129Id. at474,544n.W.2dat339.130Kiplinger, supranote26.131see Stewart v. Advanced Gaming Tech., 272 neb. 471, 723 n.W.2d 65

(2006).



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[14]aswenotedinSwanson, theLegislaturecreatesa tax-ing district when it grants an entity the power to require thecounty clerk to levy a tax for the support of the district.132Here, that taxing district is a learning community, a politicalsubdivision with defined boundaries and specified authorityto provide services and levy taxes within those boundaries.alearningcommunity’scommonlevyoperatesinamannersimi-lar to thatwhichweupheld inSwanson, in that itbenefitsnotonly theschooldistrict inwhich the taxpayersreside,butalsoother school districts within the learning community. none ofthe proceeds are expended outside the learning community.133Weconclude thata learningcommunity’scommon levyunder§77-3442(2)(b)doesnotviolate theconstitutionalprohibitionagainstcommutationoftaxes.

4.uNiformity clause

[15] the uniformity clause of neb. Const. art. VIII, § 1,provides: “taxes shall be levied by valuation uniformly andproportionatelyuponallrealpropertyandfranchisesasdefinedbytheLegislatureexceptasotherwiseprovidedinorpermittedbythisConstitution....”theobjectofnebraska’suniformityclause is accomplished if all of the property within the tax-ing jurisdiction is assessed and taxed at a uniform standardofvalue.134

as we have noted, a learning community, not its memberschool districts, is the taxing jurisdiction which imposes thecommon levy challenged here. Swanson involved a commonlevybya school systemcomprisedof several schooldistricts.alearningcommunity’scommonlevytaxesallpropertywithinthe learning community at the same rate. as in Swanson,because the member school districts within the learning com-munityarepartofthesametaxingdistrictandthelevyisuni-formthroughout thatdistrict, thecommonlevyisuniformanddoesnotviolatetheuniformityclause.

132Swanson, supra note31.133see§79-1073.134County of Douglas v. Nebraska Tax Equal. & Rev. Comm.,262neb.578,

635n.W.2d413(2001);Constructors, Inc. v. Cass Cty. Bd. of Equal.,258neb.866,606n.W.2d786(2000).

V.ConCLUsIonthedistrictcourterredinaddressingtheconstitutionalityof

§§ 77-3442(2)(g) and 79-1073.01, because the issue was notpresentedbythepleadings.Wehavejurisdictionandanobliga-tion to decide the constitutional questions presented to us, astheyarenotmerelypoliticalquestions.thestatutorylanguage,the legislative history, and the record as a whole demonstratethat a learning community’s commongeneral fund levyunder§ 77-3442(2)(b) serves a predominantly local purpose, not astate purpose. because all members of a learning communityreceive benefits from the taxes levied and the levy is uniformthroughout the community, no commutation occurs and thereis no violation of the uniformity clause. the judgment of thedistrict court is therefore reversed, and the cause is remandedtothatcourtwithdirectionstodismiss. reversed aNd remaNded With directioNs to dismiss.

Wright, gerrard, and miller-lermaN, JJ., notparticipating.



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learning community decision

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