LINCOLN, Neb. (AP) — Nebraska lawmakers who want to update the state’s largest tax incentive program for businesses are getting ready to try again with a lot of confidence, despite a major setback that stalled their package earlier this year.
Senators who worked on the new incentives said they strongly believe the measure will pass in the 2020 session, just in time to replace the state’s current program before it expires at the end of that year.
“We as a state are not going to not have a package,” said Sen. Mark Kolterman, of Seward, the proposal’s lead sponsor. “I can almost guarantee that.”
Nebraska’s tax incentives have faced increased scrutiny in recent years amid suggestions that they are inefficient and the money is going to companies that would have come to the state anyway. In neighboring Iowa, state officials faced criticism for giving Apple $208 million in tax breaks to build two data shortage centers in Des Moines in a deal that would create at least 50 jobs. Business advocates defend the credits as necessary to compete given that every state offers them.
Nebraska’s influential business groups suffered a rare and surprising defeat in May when lawmakers rejected the “ImagiNE Nebraska Act” because of a spat over property taxes. Several rural lawmakers helped sink the measure after their top priority, an unrelated property tax package, failed to advance. Business and farm advocates have been at odds in recent years over who should get priority for tax breaks, with farmers arguing that their property taxes have soared over the last decade as farm incomes declined. The Nebraska Chamber of Commerce & Industry counters that tax cuts and incentives will make the state more attractive for investment.
“We’re very worried about our ability without incentives to compete with states like Iowa and Minnesota,” said Bryan Slone, the group’s president.
Supporters said the new incentives bill would allow Nebraska’s incentive program to continue but make it more transparent, easier to use, and do a better job of holding companies accountable for their progress in creating jobs. It also would focus more on attracting higher-paying jobs than the current “Nebraska Advantage Act” program.
Kolterman said the bill likely would have passed this year if not for the opposition from senators who wanted to lower property taxes, and he doesn’t plan to make any major changes.
Sen. Lou Ann Linehan, chairwoman of Nebraska’s tax-focused Revenue Committee, said she’s confident lawmakers can reach an agreement this summer that would allow both business incentives and property tax reductions to advance.
“We need an incentive package,” Linehan said. “Are we going to be the only state in the union without one? No.”
Republican Gov. Pete Ricketts said he remained hopeful lawmakers would update the state’s tax incentive program to keep Nebraska competitive, but “we can’t take it for granted.”
“We need to make the case for why this is the program we want to have moving forward,” Ricketts said in an interview.
Supporters may still face a challenge from lawmakers who helped sink this year’s business incentive measure. Rural lawmakers who have pushed hardest for property tax cuts said they’ll work with other senators on incentives, but only if they’re tied to a property tax package.
Sen. Tom Briese, an Albion farmer, said he’s concerned that “one will get left behind while the other advances” if the bills remain separate. Rural senators are outnumbered in the Legislature and are likely to lose another seat when lawmakers draw new districts for themselves in 2021, but they still have enough influence to block measures they oppose.
“Business incentives and property tax reform have to advance together, or neither should advance,” Briese said. “The best way to ensure that is to have them both in one bill.”