CHICAGO — Nebraska voters on May 11 will decide whether to expand state law to allow cities, counties, and villages to issue tax-exempt debt on behalf of nonprofit organizations for capital projects.
Nebraska is one of nine states that presently do not allow nonprofit organizations — with some exceptions, such as hospitals, colleges, and K-12 schools — access to tax-exempt financing.
The ballot measure would amend the Nebraska constitution to allow for authorization on the state level to comply with the federal tax code permitting 501(c)(3) charitable organizations access to tax-exempt revenue bonds if they have a government entity willing to issue the debt on their behalf.
It will be the third time the measure has appeared on the ballot in Nebraska. Voters rejected similar amendments in 2002 and 2006.
The American Red Cross has pushed for the measure for more than 10 years. Proponents — such as lobbyists for the Nebraska Bankers’ Association — said the resolution is an effort to broaden financing tools for nonprofit groups such as museums, Goodwill Industries, the YWCA, and the Red Cross.
Goodwill officials have said they would move forward on several multimillion-dollar projects if they can access tax-exempt debt, according to local reports.
Following the two rejections on previous ballots, proponents this time enlisted supporters from both the Democratic and Republican parties, as well as local chambers of commerce, and formed a group called Yes for One to publicize the effort. Former University of Nebraska Cornhuskers quarterback Eric Crouch was tapped to be its spokesman.
The state’s unicameral Legislature unanimously approved the resolution March 12 after the Urban Affairs Committee held a hearing on the measure.
“The amendment excludes groups like parochial schools and churches, because the project has to be deemed for a public purpose,” said Laurie Holman, research analyst for the Urban Affairs Committee. “It’s mostly to finance expansions so that the groups can increase the amount of services they provide.”
The amendment would prohibit a municipality from imposing a tax to back the bonds and would prohibit the use of condemnation for the purpose of acquiring the property on behalf of the nonprofit group.
Current Nebraska law allows municipalities to issue tax-exempt debt on behalf of nonprofit groups if the group is engaged in manufacturing or industrial activity or located in a blighted area.
County hospital authorities are allowed to issue tax-exempt bonds on behalf of nonprofit hospitals and other health care providers, and the Nebraska Educational Finance Authority is allowed to issue tax-exempt debt on behalf of private colleges and universities.
In addition, the Nebraska Investment Finance Authority is allowed to issue bonds on behalf of certain nonprofit groups, usually those operating in blighted areas.
If voters approve the ballot measure, it will take effect immediately.
