Opinion No. (1982) ( 1982 )

REQUESTED BY: Senator John W. DeCamp Nebraska State Legislature State Capitol Room 1116 Lincoln, NE 68509

Dear Senator DeCamp:

In your letter of September 24, 1982, you request our opinion on the constitutionality of a proposal to eliminate the personal property tax on business equipment. ArticleVIII, Section 2, of the Nebraska Constitution provides that the Legislature may classify personal property in such manner as it sees fit, and may exempt any of such classes. It appears that the proposal to exempt this class of personal property comes squarely within the terms of this constitutional provision. Business equipment appears to be a reasonable class, for the purpose of exemption, and we can see no constitutional impediment to such an exemption.

You also say that to relieve the narrowed tax base, $25 million would be appropriated from sales and income tax to the counties based on the formula contained therein. Since you did not include with your letter a copy of the proposed reimbursement formula, we obviously cannot comment upon it. We remind you of the difficulties that were encountered in formulating a valid reimbursement formula after the total exemption of business inventories, agricultural income producing machinery, livestock, etc. Similar difficulties may be encountered in reimbursing the taxing subdivisions for losses incurred because of the imposed exemption. We cannot, however, comment upon these matters without having seen the proposal.

Very truly yours, PAUL L. DOUGLAS Attorney General Ralph H. Gillan Assistant Attorney General