Douglas County treasurer is sued over millions of ‘in-lieu-of-tax’ errors

Westside School District claims it is owed at least $11 million in tax revenue

By: - July 20, 2022 4:01 pm

(Getty Images)

LINCOLN — Douglas County Treasurer John Ewing has joined his Sarpy County counterpart in getting sued over the mistaken distribution of millions of dollars of in-lieu-of-tax revenue.

The Westside Community School District, in a lawsuit filed July 1, is seeking at least $11 million in tax revenue the district maintains was wrongly distributed to other school districts in Douglas County during 2019-21.

The lawsuit is similar to one filed last year in Sarpy County by four school districts: Omaha, Millard, Gretna and Springfield Platteview. They claim that they were underpaid by about $6.5 million during those three years because of mistaken calculations by the Sarpy County treasurer.

Taxes paid by OPPD

The two lawsuits concern in-lieu-of-taxes funds from the Omaha Public Power District, which the utility pays, based on a percentage of its electric sales, instead of local property taxes.

Last year, OPPD paid about $26 million of in-lieu-of-taxes in Douglas County, tax revenue that is then distributed to the school districts, cities and the county.

But the Nebraska State Auditor’s Office alerted Sarpy County in 2021 that the way the county was distributing the tax payments was incorrect.

A similar alert was sent in May to the Douglas County Treasurer’s Office.

It stated that the Westside, Elkhorn, Millard and Ralston school districts had been underpaid by amounts ranging from $800,000 in one year to $4.2 million. Meanwhile, the Omaha School District, the City of Omaha and Douglas County had been overpaid by up to $5.6 million.

In both cases, the Auditor’s Office recommended that the counties correct the mistakes.

It wasn’t immediately clear whether other Douglas County school districts that received less in-lieu-of-tax payments than they were owed will file lawsuits.

Jim Frederick, a spokesman for the Ralston Public Schools, said that district was still working with the County Treasurer’s Office to resolve the mistakes.

Officials with  Westside schools did not respond immediately to a request for comment Wednesday.

Not asking for refunds

It’s unclear ishow far back these school districts may be able to recover mistaken payments. Ewing said Wednesday that his office continues to meet with the Westside schools and other taxing entities involved in the mistaken distributions, which go back to 1960.

“We’re pretty confident that it won’t go back that far, but we’re having discussions with the various school districts,” Ewing said.

He said the county is asking the entities that were overpaid to participate in a resolution.

Previously, Ewing has said his office had not understood the state formula for distributing in-lieu-of-tax revenue as well as it should have and that it was an honest mistake that had continued through several county treasurers.

Douglas and Sarpy Counties are the only two in the state affected by the mistaken distributions.

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Paul Hammel
Paul Hammel

Senior Reporter Paul Hammel has covered the Nebraska state government and the state for decades. Previously with the Omaha World-Herald, Lincoln Journal Star and Omaha Sun, he is a member of the Omaha Press Club's Hall of Fame. He grows hops, brews homemade beer, plays bass guitar and basically loves traveling and writing about the state. A native of Ralston, Nebraska, he is vice president of the John G. Neihardt Foundation.