Some agricultural producers in Nebraska were reminded again this month that the future of water won’t come cheap.
An occupational tax was recently passed by a southwest Nebraska water district, which could add up to hundreds of thousands of dollars in additional costs for land owners over the tax’s 25-year duration.
The tax will be applied on irrigated land in the Twin Platte Natural Resources District, based in North Platte, Neb., and used to fund a water project — reportedly the largest stream flow augmentation project ever in Nebraska.
At $10 per acre per year, the occupational tax would add up to an additional $7,000 expense each year, or about $175,000 all together by 2038, for John Morgan, a McPherson County, Neb., producer, whose 2,400-acre operation includes about 700 irrigated acres.
Morgan, who also has about 300 head of Angus cattle, said that’s a large input cost, on top of many others, that he can’t recover.
“I have to pay this tax each year, but I can’t pass that on to the buyer. I’m still at the mercy of the markets, which I have no control over ... and will constantly change over the years,” he said.
Ann Dimmitt — integrated projects manager at Twin Platte, a district that encompasses Arthur and Keith counties, and portions of Lincoln and McPherson counties — said she’s heard from many others concerned like Morgan.
The tax was approved at a September board meeting, and letters went out to residents in the district in recent weeks.
Since then, Dimmitt said she’s done plenty of explaining about where the tax dollars are going.
The occupational taxes will go toward paying Twin Platte’s share of the Nebraska Cooperative Republican Platte Enhancement Project, known better as N-CORPE.
In this proposal, four natural resources districts in southwest Nebraska — including Twin Platte — purchased about 19,500 acres in southern Lincoln County last year.
Twin Platte and the three other districts involved — the Upper, Middle and Lower Republican districts — paid $83 million for the land.
About 15,800 of those acres have been irrigated, and ceasing irrigation of those acres in the future will allow groundwater — otherwise pumped to irrigate crops — to be stored in the underlying Ogallala Aquifer. By retiring the 15,800 irrigated acres on the tract, the N-CORPE project will generate a savings of about 45,000 acre feet of water per year.
That stored water then can then be piped from approximately 30 groundwater wells into the Republican and Platte Rivers when needed to meet river flow obligations.
All together, the project is expected to cost between $120 and $130 million — with the occupational taxes from land owners in the four districts paying for the project.
With the land bought and the occupational taxes now being passed by the districts, it’s catching some producers off guard, Dimmitt said.
“Some people have been surprised by the letters they’re receiving, but these discussions of the project have been going on for years,” Dimmitt said, referring to the eight Twin Platte public hearings and 120 board meetings held in the last 10 years, which included discussions on the project.
“It wasn’t at all an easy choice,” said Dimmitt, explaining that the Twin Platte board struggled with the decision, but felt that applying the occupational tax on irrigated land — instead of putting limits on groundwater pumping, that could have put crop production at risk in dry years — was the best route to go. “We have obligations to meet ... and with that come tough choices.”
Dimmitt said that, once the reason for the occupational tax is explained, the concerned producers are more understanding.
Morgan and others say they understand that meeting future of water needs will require plenty of dollars, but feel owners of irrigated land were treated unfairly by the Twin Platte District.
The Twin Platte District covers 2.6 million acres, but only the owners of the district’s 343,156 acres of irrigated land are paying the occupational tax.
“I know we use the majority of it (water), but everyone uses it, and we’re the only ones paying,” Morgan said of the occupational tax, which will be applied for 25 years — the duration of the project’s bond issue.
The N-CORPE effort comes in response to a state law passed in 2004, that requires natural resource districts in the upper Platte Basin in Nebraska to impose moratoriums on new groundwater irrigated acres in a large stretch of the river that was deemed over-appropriated — or having an imbalance between water supplies and demands.
The natural resources districts in the over-appropriated area initially have to return the Platte River to 1997 conditions, and ultimately back to a fully appropriated condition.
For the Republican River, more water is needed for future dry times to meet requirements of a 2002 compact settlement with Kansas. The goal is to have N-CORPSE operational by 2014.
N-CORPE has been a source of controversy for some time.
According to reports, some questioned the speed at which the four districts pulled together to negotiate for the property and form N-CORPE.
Some expressed concerns that the loss of corn production on the 15,800 acres of land would harm feed supplies for cattle feeders.
Another concern has been the loss of property tax dollars school districts collect from the large tract of land.
The project was even the focal point of an unsuccessful lawsuit.
And now, some producers are concerned about the additional taxes they’ll be paying for some time. ❖