Corporate Tax Incentive Plan Blocked in Legislature

May 24, 2019, 5:19 p.m. ·

Sen. Mark Kolterman debates corporate tax incentives Friday (Photo by Fred Knapp, NET News)

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A proposed update of Nebraska’s corporate tax incentives failed in the Legislature Friday.

The corporate tax incentive bill, dubbed the ImagiNE Nebraska Act, had been strongly promoted by business organizations, including the Omaha, Lincoln, and state chambers of commerce. It would give companies tax breaks in exchange for creating jobs and investments in Nebraska.

The bill got the second of three approvals it required earlier this week. But later that same day, senators failed to advance a proposal to cut property taxes that was supported by farm organizations. So Friday was widely seen as payback time.

Anticipating that possibility, Sen. Mark Kolterman, chief sponsor of the corporate bill, pleaded with his colleagues not to link the two. “As we talk about this today, I want it to be a very civil conversation. I don’t want to hear ‘I don’t support this because I don’t get this, and I don’t support this because I don’t get that.’ I don’t think we should do that,” Kolterman said.

Sen. Matt Williams urged support for the bill, LB720, asking those who were disappointed in the failure of the property tax plan to put aside their differences. “You step up and accept the responsibility of working together for positive change. That’s what LB720 is all about,” Williams said.

And Sen. John McCollister suggested tax incentives are a necessary evil. “It’s a sad fact of life that in this current economic era, corporate incentive programs are what we need to do. They are a fact of life. Competition by states for new and expanding businesses is like any other form of competition. In our system, there will be winners and losers. And all of us want to keep Nebraska healthy – economically healthy,” McCollister said.

But supporters’ pleas failed to move a determined minority of opponents. Among them was Sen. Tom Briese, chief author of LB 183, the property tax plan that failed Wednesday. “Several of us who weren’t intending to do so on Wednesday changed our minds and voted to advance 720, with the understanding that this would be a package deal. One eighty three stalled, now 720 has to stall,” Briese said.

“It’s not about getting our way. It’s not about spite, anger, frustration or any of the above -- we were sent here to work through our emotions. We were sent here to do what’s right for Nebraska. What I’m proposing is about coming together to do what’s right for Nebraska. We need a package,” Briese said.

Sen. Mike Groene, another supporter of property tax cut legislation, said the corporate tax incentives would cost the state too much, for an uncertain return. “It’s too rich in benefits. Way too much of the tax credit benefits in 720 are geared more as a tax cut for existing businesses, for normal business activities involving growth and depreciation of assets,” Groene said. “Nebraska’s not a wealthy state – we aren’t. Our citizens are overtaxed as is. Any economic development plan that uses any of our limited tax dollars -- and yes, these are tax dollars that are being used -- must assure the public that any dollar used is maximized,” he added.

Sen. Julie Slama offered a simple explanation for her opposition. “I am opposed to LB720’s advancement this year for one simple reason: I refuse to prioritize corporate incentives over property tax relief,” Slama said.

After three hours, Kolterman moved to invoke cloture, to cut off debate and vote on the bill itself. Cloture requires a two-thirds vote, or support from 33 of the 49 senators. Kolterman’s motion got only 30 votes, with 18 senators opposed, killing the proposal for this year.

Groene said later the failure of LB720 will force business groups to negotiate with property tax interests over the summer, to try and come up with a package that satisfies both for consideration next year.

In other action, senators gave final approval to a series of bills. Among them was one to raise the age for smoking or vaping from 18 to 19. Another was to legalize the cultivation of hemp in Nebraska.

Senators approved a proposal to enhance college savings plans by giving a tax break to employers who contribute, and provide state matching dollars for contributions from low and moderate income parents.

Other bills approved would make it a crime and allow people to sue if someone posts or threatens to post sexual images of them without their permission. And yet another would extend the statute of limitations for sex trafficking, and abolish time limits altogether if the person trafficked was a minor.