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Senators stick to proposal to end business tax incentives program despite second thoughts

December 21, 2018

No take-back was granted this week on a recommendation by a legislative task force to end the Nebraska Advantage Act a year early in 2019.

The Economic Development Task Force, a 10-member group of senators charged with identifying priorities for the state each year, released its report Friday, including calling for acceleration of sunset dates for the Nebraska Advantage Act and the Nebraska Rural Advantage Act to Dec. 31, 2019.

That would require a bill being introduced and forwarded to the full Legislature and senators passing the bill.

The Advantage Act allows a taxpayer in a qualified business to earn and use tax benefits based on investment and employment growth.

The task force also recommended terminating the Beginning Farmer Tax Credit, the Historic Tax Credit and the New Markets Tax Credit during the session that begins in January. They are by law to end Dec. 31, 2022.

The task force had made the recommendation a week ago, but Chairwoman Sue Crawford asked for reconsideration this week to allow more discussion, especially for four members who weren’t there to vote. Crawford said Tuesday that she had a change of heart on her vote to recommend the early sunset to the Advantage Act.

But the majority of the committee wanted to continue to include the recommendation in the report.

Nebraska Chamber of Commerce and Industry President Bryan Slone said this week the chamber didn’t oppose debate on tweaking the tax incentive programs to make them more effective, but the state needs tax incentives to compete for investment by businesses and to bring more jobs.

Gov. Pete Ricketts would like to see improvements made to the Advantage Act, he said Thursday.

“What I would like to see is more accountability and transparency. I would like to make the statutes easier to use for businesses. And I’d like to focus on higher-paying jobs,” he said after a news conference scheduled on another issue.

Tax incentive packages are a way to get businesses to look at Nebraska, but more important to selling them on coming here are a great workforce, great regulatory environment and competitive tax environment, he said.

“Long term, that’s sustainable with regard to how we do economic development,” he said.

The 2018 task force report lists six priorities to improve Nebraska’s overall economic development climate and to invest in state workers.

“This report highlights the importance of workforce, community and innovation,” Crawford said.

Besides the tax incentives recommendation, the priorities are:

* Job training and workforce development, focusing on the worker pipeline and mid-career retraining to help fill business needs.

* Rural and urban community building and quality of life.

* Strategies to support and encourage emerging businesses and entrepreneurial opportunities.

* Methods to use, access or create capital for investment.

* A focus on high-quality, high-impact investments.

The recommendation to move up the sunset date for the Nebraska Advantage Act by a year was prompted by the desire of some task force members to have a substantive discussion on whether it needs to be fixed or whether new incentives, such as for workers, should take its place.

The act, which took effect in 2006, allows a taxpayer in a qualified business to earn and use tax benefits based on investment and employment growth. It originally was to end on Dec. 31, 2015, but was extended to 2017 and then to Dec. 31, 2020.

It has the largest expenditures of the state’s incentive programs for businesses. It replaced the Employment and Investment Growth Act (LB775), in place since 1987. It originally was to end in 2015.

Task force members, in discussing and studying the act, identified that its application and compliance were too complicated; it was not transparent enough about who qualifies for the credits and what would be received; it was too narrow in the kinds of businesses that can qualify, ruling out new and emerging industries.

Members of the task force are Sens. Crawford, John McCollister, Joni Albrecht, Mike Groene, Brett Lindstrom, Paul Schumacher, Curt Friesen, John Stinner, Dan Watermeier and Justin Wayne.

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