Sarpy County settles lawsuit over mistaken distribution of ‘in-lieu-of tax’ funds, but Douglas County lawsuits ongoing

LINCOLN — Sarpy County has agreed to settle a lawsuit involving the mistaken distribution of millions of dollars of in-lieu-of tax funds.

 The Sarpy County Board on Tuesday voted to pay $2.7 million over five years to four school districts that sued after underpayments were discovered in a state audit in 2021.

Originally sought $6.5 million

The Platteview, Gretna, Millard and Omaha school districts had initially sought $6.5 million that they maintained they were owed. The Nebraska State Auditor’s Office found that the Sarpy County Treasurer’s Office had misinterpreted how in-lieu-of tax payments made by the Omaha Public Power District were to be distributed, resulting in some underpayments and some overpayments.

Instead of paying property taxes, OPPD pays “in-lieu-of” tax payments based on 5% of its annual revenue from electric sales.

Angi Burmeister, who chairs the Sarpy County Board, said in a press release that she appreciated the “good-faith work” by the school districts toward the settlement.

Lawsuits are still pending in Douglas County, where the Treasurer’s Office there made the same misinterpretation of state law regarding the in-lieu-of tax distributions.

Omaha schools oppose reimbursement

About $26 million a year in mistaken in-lieu-of-tax payments — both underpayments and overpayments — were discovered in May by the Nebraska State Auditor’s Office.

In one recent court filing in those lawsuits, the Omaha Public Schools opposed a legal request by the Westside Community Schools and Douglas County Treasurer John Ewing to require OPS to repay about $5.4 million over six years for alleged overpayments made to the Omaha district.