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LIBA Supports JPA Bonding Reform – LB 132

The Lincoln Independent Business Association requests your support for LB 132 as a measure to control taxes and spending while also increasing transparency.

LB 132 closes a loophole in the Joint Public Agency Act, Neb.Rev.Stat. § 13-2501 et seq., which currently gives Joint Public Agencies (JPA) broad authority to bond with little oversight.

The Nebraska State Legislature passed the Joint Public Agency Act in 1999 with the goal of encouraging local governmental units to cooperate with other governmental units to make the most efficient use of taxing authority and powers to best serve the needs and development of local communities.

The Act allows public agencies to create a separate political subdivision, Joint Public Agency or JPA, by contract. JPA’s are governed by a board and capable of exercising any power and performing any service which at least one of its participating public agencies s is authorized to perform.

A loophole in the JPA Act allows JPA’s to issue general obligation bonds, bonds paid out of the general tax levy, with very little oversight.

For example, if a city or a school district wished to issue general obligation bonds to build new facilities their governing boards would hold a public hearing, and vote to send the bonds to the ballot and the community would vote on the bond issue. If the same city and school district formed a JPA to issue bonds the JPA board could simply vote to approve and publish notice after the fact.

As a result of this loophole, government agencies can form JPA’s simply to gain access to more tax revenues. Instead of the JPA act enabling more efficient government, this loophole encourages spending and bureaucracy.

LB 132 closes the loophole by making JPA’s follow the same bond issuance procedures as their participating public agencies.  Therefore, it returns JPAs to their intended purpose of facilitating cooperation and enabling government to more efficiently serve Nebraskans.  For these reasons LIBA asks for your support of LB 132.